The Hidden Engine of Value
Why true capitalism is more than profit: the principles that distinguish lasting value from mere financial gain.
Over the decades I have heard many criticisms of capitalism, some honest, some less so, but almost all focus on distortions or perversions of the system. Now I am hoping to clear some of them up, so when I say “capitalism,” I don’t mean cronyism, mercantile scheming, state-dependent subsidies, speculative bubbles, or monopolistic abuse. Those are distortions, shadows, perversions. What I defend, what I fight for, is genuine capitalism. You can call it what you like, but this is the system of freedom, of creation, of enablement i.e. the one that actually works when left to do so.
Capitalism, in truth, isn’t a system you can write into law or dictate from above. It’s the natural byproduct of humans left free to think, act, and create without interference. It emerges wherever people are allowed to trade, innovate, and pursue their rational interests. Laws, markets, and institutions don’t generate it—they merely reflect it or facilitate it. Capitalism is human agency made visible: people producing and exchanging value because they can. Even under authoritarian regimes, it persists wherever freedom of trade exists—black markets are in effect capitalism in action.
So when I talk about capitalism, I mean a world where people are free to act, create, and exchange value without unnecessary interference. The state’s role is minimal but critical: it exists only to protect the conditions that allow creation to flourish, governing with the lightest touch necessary to safeguard individual rights. Not to dictate who may cross a border, what shape a banana should be, or which lawnmowers requires a permit. Its job is to protect liberty, not micromanage every trivial detail of life.
Capitalism, properly understood therefore, leaves people free to create and trade any good or service they can imagine. Want to be a banker, an artist, a travel blogger, or a cat whisperer? Go ahead. Nobody else gets a say but it must be through voluntary exchange and if they want buy what you’re trading, and only so long as individual rights are respected. That’s what I mean when I say capitalism: the space where human creativity is free, consequences are real, and value is measured honestly.
What actually matters is the act of creating value, turning thought, effort, and resources into something useful which leads to a profit. Profit, properly understood, is not the goal but the measure of whether what you created actually serves individual life life, yours or some elses. If people voluntarily exchange for what you offer, that is evidence that you have produced value. If they do not, that is evidence of the opposite.
Thus Financial loss is not cruelty, but it is feedback on your value as it forces you to confront objective reality. With this feedback, either what you created no longer serves others, or it never did and your job is to now self correct. In that sense, capitalism is not sentimental,It does not cushion you from the consequences of your judgments but acts as a reflection of them.
Lets briefly tackle some common objections.
If you think about it carefully, inequality under real capitalism is not something designed, imposed, or orchestrated by a central authority; it is an emergent property of free individuals acting according to their own judgment, abilities, preferences, and circumstances as individuals differ in talent, discipline, ambition, risk tolerance, foresight, and even in the sheer contingencies of luck.
Also the inputs differ so substantially from person to person, the outcomes will inevitably differ as well. Thus distribution of results is therefore not a moral verdict handed down by society, but the natural consequence of countless independent choices interacting over time.
That divergence in outcome may feel uncomfortable, particularly in a culture that often equates difference with unfairness, but discomfort is not the same as injustice. Injustice begins only when one person’s rights are violated—when life, liberty, or property are infringed through force or fraud. Outside of such violations, differences in wealth, status, or success are not moral failures of the system; they are simply reality expressing the fact that human beings are not identical in capacity, effort, or direction.
Now, on pollution.
If you choose to move to a polluted area, that’s your choice. However if someone sets up a polluting factory next to you, you have every right to stop them—but not because the state owes you anything, only because they’re infringing on your rights. Harm is actionable only when it violates your life, liberty, or property and provably so. Everything else is part of the cost of living in a world where people are free to act.
Next Poverty; in genuine capitalism is mostly the result of bad luck or poor judgment. To be blunt: if you fail to produce value, don’t expect others to subsidise you out of ‘fairness.’ Your struggle is your own. Assistance is only justifiable when it protects someone’s rights, not their feelings. The system doesn’t reward weakness or claims of ‘need’; it rewards achievement and value. That said, those with virtue i.e. Those who want to create but are limited, regardless of current status, will most likely receive voluntary assistance, and their position in ‘need’ is rarely permanent. Those who are vicious however may find that it is a permanent position for them, as they deserve.
Lastly, Externalities are handled the same way. If someone’s actions infringe on your rights, via say pollution, theft, or trespass, they are actionable through the state. If not, its not a rights violation so tough luck. The world doesn’t exist to shield you from every minor inconvenience or your own mistakes. True capitalism isn’t about forced equality or ‘fixing’ the world for everyone else, it’s about letting each of us act in our rational self-interest, to create, to protect our own life and values, and to keep what we earn.
In short, capitalism exposes reality as it is: inequality reflects differences in ability, choice, and effort. Rights violations are the only legitimate reason for state intervention and its raison d’être. Everything else—the whining about so-called ‘market failures’ or perceived unfairness—is irrelevant. If you want to thrive, you focus on creating value, protecting your own interests, and letting the system measure you honestly.
Many modern businesses, however, have lost sight of this. They chase profit primarily and try to acquire it not through better products or service, but by pandering to political trends or appealing to particular groups. Quick gain may come, but at the cost of quality, integrity, and long-term reputation. Ask Disney, Gillette, Bud Light, & Jaguar. Thus, profit pursued through politics, not through creation, is short-termist and corrosive. To see these principles in action and what happens when you ignore them, consider the story of Disney.
Disney: A case study
Disney is the perfect example when I think about this. Not because it is uniquely evil or uniquely virtuous, but because it shows brightly, in slow motion, what happens when creation gives way to extraction.
When Disney cared primarily about its work, it built world-leading, family-friendly entertainment with films and parks crafted with detail and conviction. While making Snow White and the Seven Dwarfs it was mocked as “Disney’s Folly.” It was expensive, risky, and unproven. Yet it was made anyway, because bringing something worthwhile into existence was reason enough. Then the Profit followed, not as the goal, but as confirmation that something of real value had been created.
Today, it serves as a case study of a different dynamic. Box office bomb follows box office bomb. Park prices climb steadily, turning what was once broadly accessible into something increasingly premium priced without the quality to match. Much of it’s engine now appears sustained by a deeply loyal adult audience powered by nostalgia—those who grew up with it and remain attached i.e. The ‘Disney adult’. There is nothing wrong with brand loyalty, but nostalgia can only go so far and is not a strategy for long term sustainablily.
The hard question for them is whether the next generation is being given something equally substantial to attach to as loyalty inherited is not the same as loyalty earned. When a company leans too heavily on the emotional capital of the past, it begins living off prior victories and fails to look to the future. This method of survival can persist for some time as devoted fans are remarkably patient. They will defend, reinterpret, and occasionally pre-purchase on trust alone.
But that patience can mask principle drift. If enough consumers continue buying regardless of quality, the pressure to improve weakens thus the feedback loop favours familiarity over excellence. It is rarely a dramatic collapse, but it is a gradual dilution. The brand does not fall, it coasts until it fades away into obscurity and administration.
That is why it is useful as a cautionary tale. When creation slows, and wuick profits accelerates—when accumulated goodwill from the past substitutes for new value—the market blurs. While there revenue may persist, the cultural weight and presence may not, and Markets, like audiences, are tolerant—until they are not.
In time, the company will face the full consequences of its current priorities. It may correct course and rebuild around making better product and creating value, or it may contract, restructure, or seek shelter behind scale and legacy. If its decline occurs, it will not be because markets failed. It will be because failed to live up to core principle of value creation. At that point, what remains is not total collapse, but shadow and a reputation that will be nearly impossible to repair, as its competitors fill the void.
It is with companies like Disney that show what happens when capitalists forget what it means to be capitalist. You have to create something of worth, and keep doing it. Lose that, and you lose your virtue and Money—the barometer of value creation which reflects it as profit falls. In that sense, financial decline doubles as moral feedback.
What makes something moral?
So what makes something moral? Simple individual life-serving value creation. Direct or indirect, it is the same principle: take resources, turn them into something more useful, and make your life better. When you get more out of the process than you put in, that is profit. Profit isn’t just money; it can be time, extra resources, or energy saved. All of it is about making life easier and more enjoyable, giving space to pursue what matters.
When I say “more of the things you love,” I do not mean leisure alone. I mean work you care about, even if it is not yet your main income. You might love painting, but work as a cashier until enough people want your art. The job you have helps sustain your life while your craft grows until a time the value of your craft becomes valuable enough to take over, and the transition happens naturally.
This is capitalism properly understood. Not mindless greed. Not short-term extraction or government bailouts but sustained creation, freely recognised and rewarded.
Real value creation is not just numbers on a balance sheet. Sometimes using more resources is the right choice. Take Paddington Station, for example. The decorative ironwork, vaulted ceilings, and detailed tiles, none of it made trains faster or tickets cheaper, but it gave people pride, inspiration, and a deeper experience while waiting. The profits that followed acts as a reflection of real value the it gives, not the primary reason for it. And that value is broader than money: it includes inspiration, beauty, efficiency, and the sense of pride and utility that lasts beyond a balance sheet.
That is when capitalism shows its true virtue. The virtuous capitalists understood what it meant to create: they were not counting every penny; they were instead building something worth experiencing, something that elevated life itself. Profit followed as a reward, not a goal.
However, excessive regulation distorts this; It drains creativity, imposes mediocrity, and prioritises compliance over creation. In contrast to Paddington station, Euston station is a lifeless, soulless, hyper-efficient concrete box, built in the age of regulations and balance sheet above all. The difference between them is intent and freedom, not cost or function. While the government’s role remains vital—to protect life, property, and rights—when government overreach replaces creation with bureaucracy, Mediocrity and ugliness follow.
Thus, true capitalism flourishes when creation comes first, whether by a baker or a corporation. Honest creators who produce life-serving value. Profit shows that their work matters and is of value to someone. Cronies, by contrast, exploit rules, bend laws, and lean on government-backed privilege rather than produce. Size does not make you virtuous; honesty in creation does. Even one principled individual producing real value can outproduce industries built on cronyism. For example, YouTube & the BBC vs Nebula.
Greed, in as a concept, is morally neutral. If it drives creation and service, it is moral. If it drives unearned gain or exploitation, it is not. Capitalism makes this visible: it rewards creation and punishes parasitic extraction while aligning self-interest with the growth of real value.
As a side note, some grey areas exist; defence contractors, for example, where the government is often the sole customer, and national security creates constraints. Their output can be morally complex depending on the government they serve. Yet grey areas are rare, and do not undermine the principle: honest creation and life-serving work define moral success under capitalism, and even offensive weapons can be used to save life when they are used to destroy the capacity of those who wish to destroy life.
In short, value creation is a quiet, human miracle which begins with a single act: kneading dough, drawing a line, writing a sentence, shaping wood into a chair. Most creation happens quietly, away from the public eye, measured not in applause but in small improvement in iterative design, slowly making the world better, richer, and more alive.
Therefore, profit, in its truest sense, measures the impact of value creation. It reflects that your work has value, that your effort produced something worth having. Profit shows how effectively your creation translates into the world and that somebody wants to trade for it. It is a mirror of resonance. And when it does, there is a quiet satisfaction beyond money: pride in the work itself, in the care, thought, and effort woven into every detail.
Profit comes in many forms not just cash but in time saved, effort multiplied, knowledge shared, or joy experienced. Each a real measure of value, as tangible to life as any sum of money. Money is only one indicator; the true measure is how much life is improved, enriched, or enabled by what you create.
The world is full of small wonders of creation that often go unnoticed: a chair built to last generations, a train station that lifts the spirit, a story that makes someone smile. Each act of creation is a refusal to let life be dull or ugly and proof that beauty, utility, and thoughtfulness are worth pursuing. Together, these acts quietly add value and wealth, producing profit and benefit even when that was never the aim.
This is what I love about and call capitalism; not the balance sheets, not “markets,” but the space this “system” gives people to create freely, to improve, to leave something of themselves in the world. To build something that matters. To act guided by reason, to produce life-serving value, and to be recognised for it. While profit is not the exclusive goal, it is the measure of value creation. The larger the profit, earned honestly, the stronger the sign that your work mattered. Profit when properly understood, is then a barometer of virtue in action.
Thus, creation is a conversation between the mind and the world. To create value well is to honour life itself, to honour yourself and others. That is the principle I fight for: the principle that turns work into joy, effort into meaning, and life itself into something worth living.
To have such flourishing creation requires a government that exists to protect individual rights, and nothing more. The state should not dictate economic policy, pick winners or losers, or control markets; just stop people from stealing, murdering and defrauding each other. Also the economy is not a machine but is an abstraction of countless voluntary trades, each an expression of human creativity and judgment. When freedom is respected, the result is mutual benefit. Only in this environment, voluntary, reasoned, and free from coercion, does value creation thrive.
So at its heart, real capitalism is about people turning thought and effort into something lasting. It is about quiet acts that make life richer, more useful, and more alive. It is about honouring reality, respecting others, and building things that matter. A system that protects rights, rewards creation, and leaves people free to act is a system in which virtue, effort, and ingenuity align. That is what I defend, that is what I fight for, and that is what I call capitalism: the space in which human creativity flourishes, guided by reason, and recognised for the life it brings into the world.
Those who operate through subsidy, regulatory protection, or political favour while presenting themselves as ‘capitalists’ are not merely confused about capitalism—they are evading it. When success depends on access to poltical power rather than the creation of value, what exists is not free exchange but managed advantage. When Enron falsified its books, when Purdue Pharma misrepresented addiction risks, when Theranos claimed medical capabilities it did not possess, and when Volkswagen deliberately rigged diesel engines to cheat emissions tests, the failure was not a flaw of the market—it was intentional deception. These actors did not create value; they traded on lies, manipulated perception, and subverted the principles of honest production, and where rightly punished for it.
The consequences however are not merely economic. Inpunished deception teaches that reality can be ignored, that success can be achieved through fraud rather than reasoned effort. It corrupts judgment, weakens trust in legitimate achievement, and undermines the moral framework on which productive human action depends. It is a cultural as well as a material corruption: when lying is rewarded, rational principles are devalued, and the recognition of genuine merit is obscured.
Such unearned wealth and influence are inherently unstable as profit detached from creation, maintained by falsehood or political privilege, cannot endure without constant reinforcement, usually by there friends in the government. However capitalism does not require these actors, and it does not protect them. If they fall, it is not injustice; it is reality reasserting itself. Let them be judged accordingly.
In the end, true capitalism honours creation itself; wealth that comes without effort or value may persist briefly, but only genuine, life-serving work leaves a legacy that endures. Those who produce life-serving value build not only wealth, but a reality in which human potential is recognised and amplified. Parasitic actors may briefly distort the scene, but genuine creation endures—visible in the products we use, the ideas we share, and the lives we improve.
Attempting to replace this system with collectivist system does not eliminate these actors; it either entrenches them further or hands power to those who rely not on value, but on coercion and force.
Genuine capitalism, by contrast, recognises all forms of value—financial, temporal, cultural, and personal—rewarding creation wherever it improves life, not merely where it increases cash. True progress comes only from protecting freedom, rewarding creation, and letting reality measure all claims.