says that it each generation of americans will develop a clearer understanding of our american system of capitalism how it works and the comparative advantages it produces for all citizens it's then neither socialism n communism ever will become established in america so let's see if we can develop a better understanding of capitalism but first who will define for us the term capital that is and its economic sense alright joan for you define it for well money capital niamey that's right but only partially right let me demonstrate here is a dime suppose i take this diamond buy some ceramic clay now then my money which is capital has been converted into raw material which it logically follows must also be capital imo this clay into a child's toy animal you would regard the energy expended by me as capital now when i finish i bake this clay toy in my oven at home this oven or any machine i might use in achieving the final product must also be regarded as capital then i add the final touch and sell this to i for thirty nine cents higher at least i tr succeed i take the thirty nine cents reinvested in clay and start the cycle again employing again all the farms which capital may take as raw materials as energy as  machine and so on capital in a few words is money at work producing things and since i am in charge of the cycle i'm a capitalist yes i will fight if you have to borrow money like so many  used to produce goods for sale or in other words to produce new wealth look professional gain and i think that the kinds of capitalism yes there are and the differences can be vitally important state capitalism is often the first stage of socialism we might say that state capitalism exist when the government achieves a combination of ownership and control in business and the straight large enough to permit it to dominate the nation's economy and there are forms of capitalism which production and distribution are governed by cartels are monopolies fixing prices and permitting no competition the spawn existed in many european countries in the time of karl marx and hearing this century  socialism our communism gained control yes john and part of fact that we must emphasize is that american capitalism is quite unique and never had been a system quite like it in all history so let's examine the structure of american capitalis there are three great pillar the first and foremost of the is is look at tell us all right now is isn't that the principle of private ownership of property yes it  is this principle of private ownership is undoubtedly the most fundamental element in the structure of american capitalis consider for instance home ownership which is a right american goal for most of our people that is are to own one's own homes one's own property provides a real incentive for almost all americans to bring out their most productive efforts and the american system what yours is yours what you do with it is your business you can squander it away are you can work harder and produce more and have more the principle of the private ownership of property is the number one target of the socialist and communist they believe in government ownership and control karl marx in the communist manifesto wro the theory of the communist may be summed up in a single sentence abolition of private property so private property is the foremost pillar supporting the american system and our personal freedom that brings us to the second great pillar who can tell us what it is all right mary profit nodded yes indeed this is the stimulus that brings private ownership to life and expands its usefulness to society as a whole in one cent profit is property when an individual produces more than the basic living acquirements for himself and his family the surplus is profit which you can use as a sees fit and automobile is not a basic requirement for survival nor is a television set yet most american families want them and have them because all normal human want more than the bare necessities of existence the capitalist pig principle of private ownership gives them the privilege of earning and keeping enough well beyond their food and shelter requirements to afford to buy the other things they want but the first again is what about the individual who doesn't produce a product of his own or when i mean is right about the employee the worker well you remember we said that energy is capital ability is capital when we as employees work for someone else we're not selling our time we're selling our services our ability when we get paid if we save a little of our income we are profiting and we can become employers if we wish and if we can develop management capabilities many of america's greatest industrialists were employees who saved and develop their capabilities if we do not develop into employers we still can become producers our capitalist by investing our surplus our savings in some enterprise which is producing something eighteen million on an area americans own stock in businesses and industries if i borrow money from you to make my claim to as you would become producers since your capital would help produce my toys the business world is full of actual examples general motors for instance is just a group of people who with their dimes and dollars  producing products for sale there are more than half a million stockholders with their savings invested in general motors and why do they invest their dimes and dollars they want to make a profit it is a normal wholesome motivation  the profit motive and yet most converts to socialism and communism joined up because of the promise of personal benefit or profit what a clergyman be able to fill his church if he told prospected members that there is no personal reward our prophet and giving one's life to god how many of you students study and generate evening instead of having the momentary pleasure of some favorite pastime i think you would want to say that study can  what motivates you then a desire for learning and desire perhaps for good grades but with a belief that in the end you will render a more valuable service and receive more for it if you didn't hope to profit you wouldn't study what i'm trying to say is that the profit motive is active in most human behavior that's important to remember and now to the third of the three great pillars in american capitalism all right gary the open market yes the open competitive market where anyone can offer his wares for sale at whatever price he can get is a benefit not only to business and industry but to the individual as well let's go back to our top animal at last ration let's suppose that we develop an ability to make attractive little ceramic toys and the children all the nation want these toys we expand our enterprise probably on borrowed money and began making profit another time manufacturing seeing our ceramic toys cutting into his sales and profits that's some research and find that he can make an unbreakable tell i very much like ours and sell it for less money than we're getting at the same time making a profit he can do this because we have a free competitive market in america challenging achieve a consumer our buyer gains when we have this constant competition in the marketplace but best products at the lowest cost  have you ever seen one of the early automobiles manufactured in america it was really something to behold when it was manufactured only a few wealthy people going in automobiles and even for them it was likely to break down on a ten mile trip today there are more automobiles in america than there are families and almost every family owns one competition the free market brought this about henry ford was determined to outstrip other manufacturers he went after the mass market with his low priced model t produced with his remarkable mass production techniques he won the low price market but not for long others competed and competed so well that the product continued concentrate to improve what competition in the free market has done in the production of automobiles it has done for thousands of other things with private ownership of property the profit motive and the competitive free market american capitalism produces more wealth than the next ten nations all combined you and i benefit tremendously because of our great productive system american capitalism our individual efforts only this much and the russians just this much so let's remember these pillars of freedom and progress when we hear our see the socialist or the communists crying openly are secretly to undermine them unmatched in all history next week we should examine american capitalism so widespread distribution of wealth until then class dismissed political and economic system which has made america great watch for the next presentation of the american adventure