Economic Prosperity

". . . . no country, communist or capitalist, developing or developed, has the prosperity that it could have." (p. 174)

"Some people argue that the individual behavior required for markets occurs only in societies with appropriate common culture. . . .The argument here is that some types of markets regularly emerge whether or not the participants have anything in common, and sometimes even when participants have antipathy toward one another. These markets emerge spontaneously and some of them are literally irrepressible. I call them self-enforcing markets. By contrast, some other types of markets, which I call socially contrived markets, emerge only when a society maintains certain institutional arrangements. These special institutional arrangements are found on a continuing basis only in the richest countries of the world, but their profound importance is not understood even in these countries." (p. 174-175)

". . .Without the right institutional environment, a country will be restricted to trades that are self-enforcing." (p. 185)

"We can also see why it is no accident that the developed democracies with the best established individual rights are also the societies with the most sophisticated and extended transactions (such as those in futures, insurance, and capital markets) for realizing the gains from trade. They are generally the societies with the highest levels of per-capital income." (p. 187)

"At least when a society has the appropriate institutions and government policies, the overwhelming majority of the firms that make huge profits are doing a huge service to the population. . . .A great excess of revenues over costs means that the enterprise is almost certainly putting more value into the society than it is taking out." (p. 189)

". . . .it was natural to ask how a society can obtain the types of markets that generate the rapid and sustained growth that brings a cornucopia of wealth. If we bring all of the theory and evidence together at once, we see that. . . .only two general conditions are required for a market economy the generates economic success. . . .the first of these conditions is the paradoxical condition of secure and well-defined individual rights. Rather than being a luxury that only rich countries can afford, individual rights are essential to obtaining the vast gains. . . .and to obtaining the bounteous harvests that property-intensive and contract-intensive production can yield. . . .There is no private property without government -- individuals may have possessions, the way a dog possesses a bone, but there is private property only if the society protects and defends a private right to that possession against other private parties and against the government as well. . . . .The second condition required for a thriving market economy is simply the absence of predation of any kind. . . .one other kind of predation can and often does occur even in societies with the best individual rights. This is predation through lobbying that obtains special-interest legislation or regulation and through cartelization or collusion to fix prices or wages. . . ." (p. 195-197)

These insights are due to Mancur Olson and his book Power and Prosperity: Outgrowing Communist and Capitalist Dictatorships .