- IS CAPITALISM DEAD? -

Capitalism is an outgrowth of the "economy of scale" principle.  Before the invention of the Spinning Jenny, cottage industry was a cheaper producer of yarn than any conceivable factory.  Before the steam engine, internal transport was by river or wagon, owned by individual entrepreneurs.  There was no economy of scale to increasing the size of a transport company above the teamster or the barge captain.  Sure, a wagon or a barge was a big investment, but not beyond the reach of a committed freeman.

The combustion engine, spinning jenny, railroad, overhead drive shafts and other engineering mechanisms changed all that. They produced a new concept, the "economy of scale".  The cost of the equipment required to gain economy of scale required large amounts of cash, and "capitalism" was born.

Before the industrial revolution (itself a derivative of the economy of scale) the only use for capital was to loan it to princes and other landed gentry, so that they could raise armies of conquest, or pay gambling debts.  In England money would not buy estates, only Gentry "to the manor born" could own estates.

The economy of scale produced capitalism.  Now the economy of scale is vanishing.

• Before long, a small automated factory to produce just about anything (including cars) will cost a few million dollars.
• Electrical power production will be distributed, photoelectric cells and wind turbines will destroy the power station industry.
• Newspaper production will be decentralized.  Journalists & cartoonists will become solo professionals, selling space on their web sites, like Matt Drudge or Trudeau.  (Many existing journalists were protégés, and will fail for lack of imagination).
• Middlemen warehousers will vanish.  Cars will come direct from the factory.  Airline tickets bought online from airlines.
• Education will drift from mass production (schools) to tutors who help students to achieve mastery per subject.
• Radio is already becoming the preserve of talk show stars, many of whom are actually more partners than employees.
• Skyrocketing executive salaries indicate the structural changes in capitalism.   Capital is less important, individual genius crucial.

The problem is, where will capital go?  Where can the drones and politicians and criminals safely invest their ill gotten gains?

Well - a government increase of taxes could slow the dispersal & dissipation of capitalism.  So could totalitarian government, or judiciously enacted legislation prohibiting (say) purchasing a car except those manufactured by a licensed factory, or reading news except that written by a licensed journalist.

The Princes of the new era will be the entrepreneur business and computer wizards.  Owning capital will be about as useful a store of wealth as owning land was at the beginning of the era of capitalism.   At the dawn of capitalism hereditary landowners lost out big.   All the farm workers migrated to the cities, and overseas farms could sell food cheaper than the local Baron's cost of production.
 

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