page_title: The double thank-you of capitalism
section_title: Trade creates mutual wealth
hierarchical_section_title: The double thank-you of capitalism / Trade creates mutual wealth
caption_attribution_description: Français&#160;: La caravane de Marco Polo voyageant vers les Indes.
context_page_description: The double thank-you of capitalism is the observation that, when a merchant and a customer exchange money for goods, each thanks the other, showing that the transaction is not only voluntary, but mutually beneficial. This is in contrast to the impression of a "fixed slice pie" that occurs in many other situations, with one side taking and the other giving, a thank-you likely to pass only one way. The double thank-you is used in economic discourse to illustrate the primary benefit of a free market, that where all actions are voluntary, any transactions must benefit both sides, and this enriches the general community.
context_section_description: The way such voluntary transactions create wealth can be understood by imagining two islands. One is rocky and dry, growing mostly grasses that provide significant grazing for herd animals. Meat is plentiful and (therefore) cheap, but fresh vegetables are rare and expensive. On another island, though, the land is rich and soft, the weather rainy, conditions great for vegetables but bad for the hoofed animals commonly raised in the area. So vegetables are cheap, meat expensive and difficult to obtain.
  A merchant might buy a large amount of the cheap meat from the rocky island, then make the dangerous voyage to the rainy island with his cargo. He can sell for far more than he paid, while still charging less than any other meat in the area. He can then buy a cargo of very cheap vegetables, return to the rocky island, and sell it at a much higher price that nonetheless seems like a bargain to its populace.
  After his round trip, not only is he far richer than before, but so are the citizens of each island, having access to "expensive" food at what seems to them like a bargain price. This simple trade has increased wealth for each part of two different transactions, without actually producing more goods.
  This creation of wealth does not just involve geographic separation, but also information asymmetry. A trader with resources or knowledge of two different levels of demand for a good can buy in one place while selling in the other, creating wealth in both through what is known in finance and economics as arbitrage.
caption: When Marco Polo or other traders traveled the Silk Road, they were bringing goods that were of relatively low value back home, and returning with goods that had been cheap where they went to trade.
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