How modern capitalist economies work

Understand production, markets, firms, work, ownership, inequality, government, and economic change. Assess mechanisms and competing explanations.

Prerequisite: Arithmetic and percentages. No prior economics required. Eighteen lessons connect household and firm decisions to institutions, distribution, trade, public policy, and business cycles. Six interactive models and 36 worked exercises lead to a housing-and-energy case. Accounting facts, model assumptions, causal evidence, and value judgments remain distinct.

Lessons

1. 1

   What makes an economy capitalist?

   Start with ownership, wage labor, firms, markets, and the institutions that sustain them.

2. 2

   Production, income, and what GDP counts

   Follow a product chain without counting the same output several times.

3. 3

   Households choose within unequal constraints

   Connect budgets, care, risk, and opportunity cost to demand and work.

4. 4

   Prices coordinate, but under which conditions?

   Use supply and demand as conditional schedules, not as an explanation of every observed price.

5. 5

   Elasticity and who bears a tax

   Separate percentage responses, legal remittance, and economic burden.

6. 6

   Inside the firm: costs, authority, and profit

   Distinguish marginal decisions from total profit and explain why firms coordinate work internally.

7. 7

   Competition, monopoly, and economic rents

   Understand markups, entry barriers, network effects, and the limits of concentration measures.

8. 8

   Work, wages, and bargaining power

   Treat employment as a relationship with outside options, incomplete contracts, and institutions.

9. 9

   Ownership, finance, and residual claims

   Connect funding to control, risk, investment, and bankruptcy.

10. 10

    Investment, innovation, and long-run growth

    Separate replacing capital, adding capacity, and making production more effective.

11. 11

    Income, wealth, and inequality

    Measure the distribution before explaining how it arose or judging policies.

12. 12

    Trade, supply chains, and unequal gains

    Derive comparative advantage and examine the adjustment that a simple model leaves out.

13. 13

    Private profit and social costs can diverge

    Compare external effects, corrective prices, standards, and common-resource governance.

14. 14

    The state, public goods, and social insurance

    Examine why public action exists and why its design and accountability matter.

15. 15

    Employment, demand, and business cycles

    Connect spending decisions through income while keeping capacity and financial constraints explicit.

16. 16

    Varieties of capitalism and political power

    Compare institutions rather than treating one country or era as the universal model.

17. 17

    How to read competing economic explanations

    Compare models, causal evidence, and value judgments without turning schools of thought into slogans.

18. 18

    A housing and energy shock: connect the mechanisms

    Analyze production limits, ownership, work, finance, public action, and evidence together.