How does the generation and flow of information affect the actions of producers? As already seen, the free market's pricing system assures that the factors of production are allocated so as to satisfy consumer wants efficiently, while taking into account varying marginal disutilities of labor and other value-scale considerations (pp. 4.8:1-28). In this system, profit/loss is the signaling mechanism by which producers are informed of their success in satisfying consumer wants. Through the mechanism of competition, those producers who are most skillful at anticipating consumer demand will automatically acquire greater capital for future investment. A few producers may profit by luck alone; however, the law of averages ensures that pure luck will be an increasingly insignificant factor in the long run.

It is essential here to distinguish between luck (that is, pure chance) and skill. Sometimes it is said that certain people are just "born lucky," but this usage of the term "luck," which confounds the disparate factors of chance and skill, turns it into a pseudo-concept—or, to use Rand's term, an "anti-concept" (cf. p. 1.3:47). If one is indeed born with such an ability, then one's success ceases to be a matter of pure chance. The envious may derive emotional satisfaction from disparaging the achiever's accomplishments as mere "luck" (a viewpoint consistent with the altruist's perspective; cf. p. 3.8:2). Nevertheless, such conceptual gerrymandering obscures one's understanding of reality—a reality in which skill is rewarded by the market, while chance (because of the law of averages) ultimately plays an insignificant role in the vast majority of cases.