Technological Advance and Capitalism

There is a fantasy in some quarters that capitalism is what made the modern world of rapid technological advance happen.  It would be a good deal more accurate to say that technological advance made capitalism possible.  Capitalism doesn't really work in a technologically and economically stagnant world, because competition reduces return on investment toward zero.

Neither of the foregoing really captures the reality very well though.  Technological advance comes almost entirely from scientific advance, and historically, scientific advance comes almost entirely from socialized institutions like universities and government laboratories.  What capitalism is really good at, though, is exploiting technological advance to create economic change.  Socialism, by contrast, seems to be rather bad at that.


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