Dilorenzo gives a clear picture of capitalism and why it is a win-win process. In a free, capitalistic system, capital is used to form a company to produce something that the founders of that company think people will want or need. If they are right, they will win by gaining more capital that will allow them to expand and produce other products. The products that they produce increase the wealth of the country. The consumer of those products wins by getting something that makes his life better in exchange for the capital that he has earned by helping to make such products. He votes by spending his money and the best products win. If the founders of the company guess wrong and the product does not succeed, the company may go out of business, declare bankruptcy, and its capital will be acquired by someone who has a better idea that may succeed. It is virtually a self regulation process.
A free capitalistic system has never existed in all of history. We may think that we have a capitalistic system in the U. S., but the government has never allowed it to attain its full potential. I remember being taught in a public school that government was necessary to control capitalism or it could ruin the economy. What I did not know at the time is that my teachers did not understand economics and had no concept of pure capitalism. They thought that governmental regulations were what made capitalism succeed. Dilorenzo makes a clear case, with ample backing, for why exactly the opposite is true. There is no question that the government has a role in making the playing field equal and that there are unscrupulous characters that must be held accountable; can you say Ponzi? However, many companies have learned that, if they support the right politicians, they can gain favor for their company by the government passing laws and making regulations that favor them and punish their competitors. Since competition is the true regulator of business, governmental intervention in this, politically motivated, manner causes the economy to suffer. We see that happening today. When the economy suffers, the government’s response is more regulation and favoritism, which seeming well intentioned, usually makes the problem worse. Their response to which is that they need to do more. Unfortunately, the politicians do not understand economics any better than my public school teachers. In addition they have a conflict of interest in supporting their large contributors.
How Capitalism Saved America is an excellent book; I highly recommend it to anyone who can think clearly when confronted with immutable reasoning.
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