Fire and Knowledge

What is called “capitalism” might more accurately be called consumerism. It is the consumers who call the tune, and those capitalists who want to remain capitalists have to learn to dance to it. The twentieth century began with high hopes for replacing the competition of the marketplace by a more efficient and more humane economy, planned and controlled by government in the interests of the people. However, by the end of the century, all such efforts were so thoroughly discredited by their actual results in countries around the world that even communist nations abandoned central planning, while socialists governments in democratic countries began selling off government-run enterprises, whose chronic losses had been a heaven burden to the taxpayers.

Privatization was embraced as a principle by such conservative governments as those of Prime Minister Margaret Thatcher in Britain and President Ronald Regan in the United States. But the most decisive evidence for the efficiency of the marketplace was that even socialist and communist government leaders who were philosophically opposed to capitalism turned back towards the free market after seeing what happens when industry and commerce operate without the guidance of prices, profits, and losses.

—Thomas Sowell, Basic Economics (3rd Edition, Basic Books, 2007), p. 178.