This is the most readable defense of capitalism I’ve read (and it’s more relevant than ever with the recent “Occupy Wall Street”-type protests):

Jay W. Richards. Money, Greed, and God: Why Capitalism Is the Solution and Not the Problem. New York: HarperOne, 2009.

Richards debunks eight myths, which are listed in the book’s table of contents:

1. Can’t We Build a Just Society? Myth no. 1: The Nirvana Myth (contrasting capitalism with an unrealizable ideal rather than with its live alternatives)
2. What Would Jesus Do? Myth no. 2: The Piety Myth (focusing on our good intentions rather than the unintended consequences of our actions)
3. Doesn’t Capitalism Foster Unfair Competition? Myth no. 3: The Zero-sum Game Myth (believing that trade requires a winner and a loser)
4. If I Become Rich, Won’t Someone Else Become Poor? Myth no. 4: The Materialist Myth (believing that intellect cannot create new wealth)
5. Isn’t Capitalism Based on Greed? Myth no. 5: The Greed Myth (believing that the essence of capitalism is greed)
6. Hasn’t Christianity Always Opposed Capitalism? Myth no. 6: The Usury Myth (believing that charging interest on money is always exploitive)
7. Doesn’t Capitalism Always Lead to an Ugly Consumerist Culture? Myth no. 7: The Artsy Myth (confusing aesthetic judgments with economic arguments)
8. Are We Going to Use Up All the Resources? Myth no. 8: The Freeze Frame Myth (believing that things always stay the same—for example, assuming population trends will continue indefinitely or treating “rich” and “poor” as static categories)
9. Conclusion: Working All Things Together for Good
10. Appendix: Is the “Spontaneous Order” of the Market Evidence of a Universe without Purpose?

Here are some excerpts from chapter 4:

Winston Churchill summed up the dilemma with characteristic wit: “The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of miseries.” Most of us know perfectly well that socialist solutions are worse than the disease. (p. 83)

_______

Imagine the total amount of wealth in the world as a big cherry pie . . . . If you cut one of the slices really thick, though, you’ll have to cut the other slices thinner. It’s a trade-off. This, we’re told, is the trouble with the world today. The rich get monster slabs of pie while the poorest of the poor get little slivers. It’s not fair. . . .

The cherry pie is actually a pretty good analogy, but for the wrong thing: it completely misrepresents a market economy. What is represents perfectly is the myth about the gap between rich and poor in a market economy. . . . [The pie is] a physical object; it has a pieish size and shape. It can’t shrink much, and it certainly can’t grow. . . .

But that’s not how wealth works in a market economy. (pp. 85–86)

_______

Even if the gap between rich and poor grows over time, it doesn’t mean that the poor are getting poorer, because the total amount of wealth may have gone up. The relevant issue is whether the lot of the poor improves over time, not how close they are to the richest member of their society. (p. 90)

_______

If trends continue, the gap between rich and poor will grow exponentially wider, even as the lot of the poor slowly improves. Except in the case of theft, this won’t be because the rich have extracted wealth from the poor. It will be because wealth creation is on a trajectory of accelerated returns in some places and is scarcely being created in other places. Again, the gap is not the problem. The problem is that some places aren’t creating much wealth. (p. 104)

_______

We rightly see poverty as a problem, just as disease is a problem. But the problem isn’t that some people are rich and some are poor, any more than the problem of disease is that some people are healthy. The problem is quite simply that some are poor. (p. 110)

Related:

1. Kevin DeYoung interviews Jay Richards.
2. Three Books on Politics