Volume 5, No. 2 (Summer 2002)
I appreciate the fact that the author attempts to construct logical rather than mathematical arguments, as seems to be the disease that has struck most of the economics profession at the present time. It is at this point that I begin my analysis of what Olson writes. Power and Prosperity is an attempt to examine governance in the post-communist world. Socialism collapsed in the U.S.S.R. and Eastern Europe, while China moves forward toward becoming a modern capitalist society. Yet, a decade after the hammer and sickle and the red star was hauled down from thousands of flagpoles, the dream of capitalist prosperity to replace the “workers’ paradise” has not materialized. In examining Stalin’s schemes, Olson says that they were created in order to maximize production and tax revenues to the Soviet state. While it is true that industrial production increased in the U.S.S.R. during Stalin’s realm, what Olson fails to point out is that much of the large-scale capital investment that was needed to perform this production increase came from the West. Instead, he makes it sound as though Russian economic growth of this period came from the genius of Stalin himself. While Power and Prosperity does include a number of logical insights into rich and poor societies, there are a number of similar works that I believe are better and easier to follow. Although I am encouraged that a mainstream economist has included some Austrian ideas (though not giving Austrians credit), in the end I must conclude that this is a clever but flawed volume.
