Capitalism is a very good description of our economic system. The modern economy revolves about the competence with which firms use capital entrusted to them. Successful, profitable firms, consistently invest in projects that return more than the cost of the capital they employ. They are strongly encouraged to expand. That is to make more of the economy’s scarce resources – people, natural resources and capital. Firms unable to cover these costs of capital are as strongly encouraged to waste less, that is to yield scarce resources to those firms that are able to put them to better use.
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