Power and Prosperity by Mancur Olson

Power and Prosperity

In the book Power and Prosperity, by Mancur Olson, it talks about the economic and social progression toward a stronger democracy. Throughout the book, Olson explains the differences and flaws of communist and capitalist economies. During the Cold War socialism was not really looked upon as a solution, due to the fact that Soviet Russia, or the USSR, and the United States were battling to show the globe what system created the greatest achievements. So, after the United States came out victorious and showed capitalism’s capability to achieve, governments, people, and general economies started to transition to capitalism. He explains that the reason communism failed to win the Cold War was due to the fact that Soviet Russia was running on a concept of communism while running on a foundation of a market economy which lead to the eventual collapse of growth and failure of sustainability. Although Professor Olson points out that perpetual subsidies for enterprise and failing businesses diminish incentive to use new resources and strategies in order to stay proactive, he believes that a controlled economy would work if running on a completely consistent foundation.

Olson understands the idea that incentive and capital gains are a necessity in prosperous societies. He argued that anarchy or capitalism, however, which he referred to as a “roving bandit,” is a concept based on greed and power. He felt an anarcho-capitalist type of economy actually steals from the less competitive or weak which, in turn, destroys them and, inevitably, creates the state of poverty. For example, Professor Olson claimed that "be the case that there can be a mutually advantageous trade-one with both a buyer and a seller gaini...

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...ball player in the league he was playing, yet he continued to practice and improve upon his game in order to avoid ever being second best. This same principle goes for a capitalist. An entrepreneur has the best business and the highest salary in the nation (aka Bill Gates) and continues to innovate and make the most profits for himself and his business. Now, according to the analysis of Power and Prosperity, the entire point of an economic system of a nation is to provide the most riches for government and to increase the standard of living of the people, in order to create a more stable democracy. Professor Olson felt that a controlled economy whether it be more socialist or communist would create a greater democracy but if capitalism provides the highest standard of living for the ordinary person, which contradicts his claim, this simply means he is wrong.