J. R. Simplot’s business was sorting potatoes. You see, before potatoes can be sent to market, someone has to throw out those that are too small or deformed or otherwise inferior. This wastes a lot of time and a lot of potatoes, but Simplot discovered that although such potatoes may be poor for some uses, they are just fine for others.
As George Gilder tells the story in his book Recapturing the Spirit of Enterprise, Simplot learned of a process to produce dried potato flakes, that is, instant mashed potatoes. He immediately saw two benefits: dried foods are cheaper and easier to store and transport, and the whole potato crop becomes usable. He grasped the opportunity for increased efficiency and invested all he could in the appropriate equipment. The industry boomed and everyone involved prospered—from the farmers to the distributors to the consumers. In this way, Simplot created wealth that had not existed before.
Hence, we see another great virtue of capitalism: It provides the framework and incentives for people to create wealth. Wealth is created when someone mixes human capital and natural resources either to produce a new product or to produce an existing product more efficiently, just as Simplot combined a new technology and a previously wasted resource to create a new and useful product.
It is crucial that those concerned about economic justice understand this aspect of capitalism. Rather than viewing wealth as a static “economic pie” to be divided up among a few, capitalism provides a way to “grow the pie” and, in this way, to provide economic opportunities for many more. I thank you for the support that enables us to demonstrate this understanding of the free market to our future religious leaders.
Fr. Robert A. Sirico