Americans didn't invent free market capitalism, but you might say they perfected it.

In doing so, they created more wealth for more people than any society in the history of the world.

To begin to understand this fascinating and complex story, we have to travel back in time

to the very first settlers of America. But before we get to the history, let me define what I mean by capitalism.

It's not an easy term to pin down because it developed over thousands of years of human interaction.

Adam Smith, the great English thinker, first described it in his famous 1776 treatise,

the wealth of nations. But he didn't invent it. For our purposes here, I define capitalism

as an economic system in which individuals freely decide what they will produce and who they will

serve. Since both parties have to consent, it's a system in which success demands that you

serve the needs of others before you are rewarded for your work. Now back to history.

When the first settlers arrived at Jamestown in 1607, then Plymouth in 1620, they were operating

under an economic system common to all European nations at that time known as mercantilism.

Under mercantilism, businesses, especially in the colonies, were operated for the benefit of the

state. While governments permitted the companies to make profits, their primary purpose was to advance

the national interest of England or Spain or France. The early American settlements were set

up to be self-sufficient so that the English government didn't have to support them.

And they had to stake out territory. That was key to the colonial game. If England held the

territory, Spain and France didn't. The early colonists began their adventure with what they

thought was a beautiful idea. They set up a common storehouse of grain from which people were

supposed to take what they needed and put back what they could. Lands were also held in common

and were worked in common. The settlers owned no land of their own. Though there was no name for

this system, it was an ideal socialist commune. And you can probably guess what happened. It began

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