What is capitalism?
It seems like a simple question, but many who pass as authorities in the court of public opinion are dreadfully wrong on the answer. Ludwig von Mises described capitalism as “essentially a system of mass production for the satisfaction of the needs of the masses.” Friedrich Hayek called it “the system of free markets and the private ownership of the means of production,” which is an “essential condition of the very survival of mankind.”
Perhaps the most succinct definition of capitalism comes down to this: a state of affairs where two private parties are free to enter into a contract where one acts and the other remunerates. As the Austrian School emphasizes, such a mutual agreement means both parties are necessarily better off than before or else such a transaction would not have taken place.