Ethics are those rules of behavior between individuals in an organized society; ethics is individual morality applied to living life in society.
What is the ethical principle animating an ethical society?
An ethical society operates under the doctrine of individualism — where each individual is regarded as an end to oneself. (Compare this to collectivist societies which regard the individual as a slave for the ends of others.)
Why is capitalism the ideal social system?
According to philosopher Ayn Rand, capitalism is the ideal social system as it is the one social system that permits the individual to be moral.
Or, in Ayn Rand’s words:
“The moral justification of capitalism does not lie in the altruist claim that it represents the best way to achieve ‘the common good.’ It is true that capitalism does — if that catch-phrase has any meaning — but this is merely a secondary consequence. The moral justification of capitalism lies in the fact that it is the only system consonant with man’s rational nature, that it protects man’s survival qua man, and that its ruling principle is: justice.” — Ayn Rand
Capitalism is the ideal social system as it leaves the individual free to be moral — free to act rationally in the pursuit of happiness — so long as one respects the equal freedom of others to do the same.
The principle that makes this possible is the concept of individual rights, what philosopher Ayn Rand identified as the bridge between individual morality and social politics.
To learn more about the Objectivist Ethics read Ayn Rand’s book The Virtue of Selfishness.