“Here is the quickest way to determine if you are operating in an honest capitalist system or a corrupt imitation thereof: check the bankruptcy rates. For most of the last hundred years, the United States has had both the strongest economy and the highest bankruptcy rate of any reasonably large developed nation. By contrast, the old Soviet Union had a bankruptcy rate of essentially zero. Many state-owned enterprises were organized to function like businesses. They had managers and employees, bought materials, made and sold products. But none of them ever went broke.”

“And that told the whole story. Socialism, the socialists say, has never really been tried. And in a way that is true. The Soviet Union was not a socialist economy so much as it was a crony-capitalist economy. The Soviet government loved the nation’s businesses so much that it would never let them fail. The crucial mechanism for this failure rate of zero was an almost entirely fictitious currency, the ruble of infinite flexibility, endless liquidity, and minimal value to cover the lies.”

“Every Soviet business manager was well stocked with excuses for not meeting quote, or even better, with a sheaf of dummied documents proving he had. The government had no impersonal mechanism to punish the inefficient. In order to shut down a failed state business, the government would have to (a) tell the truth, which would mean confessing the government’s own mismanagement, and (b) take direct responsibility for things like layoffs, an unpleasant experience even for politicians who regularly get 99 per cent of the vote.”

From Panic- The Betrayal of Capitalism by Wall Street and Washington by Andrew Redleaf and Richard Vigilante

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