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The book Good Capitalism, Bad Capitalism, and the Economics of Growth and

Prosperity is a scholarly book written by Robert Litan, William Baumol, and Carl Schramm. The

book mainly explains economic growth in the world and the types of capitalism. That is, it fist in

the field of economics, where it explains economic concept6s such as the GDP, per-capita

income, and poverty, among others. Indeed, the authors aim at expounding on growth of the

economy, and their analysis is quite convincing.

The first chapter of the book talks about entrepreneurship and growth. It talks about the

startling growth of the American economy in the last century (1). It explains the effects that

economic growth in advanced countries such as the United States of America has had on the

citizens of the country (2). Furthermore, the book gives a deep meaning of entrepreneurship and

the effect of this definition on business (3). It explains the factors that lead to growth of an

economy (3). Under this, the authors give an account of the two main reasons for economic

growth: “the increase of capital and labour in production and the growth and development of

technology and innovation” (4). Additionally, the authors continue to explain the meaning and

the determinants of innovation (5). The chapter also gives an account of the four elements of an

efficiently growing economy.

The second chapter of the book explains the importance of economic growth. The authors

show in the book the reason why people are usually interested in entrepreneurship (15). They

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postulate that everyone enjoys the growth of their country’s economy no matter what their

financial status in the economy is (15). The article also considers the existence of limits of

growth of an economy (16). With respect to this, the authors explain the skepticism of some of

the people on the continuation of growth of the economic due to some negative factors such as

the increase in the world’s population (16). The book explains why even though the growth of

the economy has increased by more than seven times in the last 40 years, economic growth

should still continue to be a concern to many countries (17). In addition, it answers the question

that if the growth of the economy can be affected by investments made on reducing the effects

that of environmental pollution (18).

Elsewhere, the book gives the relationship between the growth of the economy and the

happiness of its citizens. It explains why family relationships become distant and strained once

the economic status of the family improves (22). The book also explains why economic growth

matters in creating the attitude and emotion in a particular place as revealed by various surveys

conducted in different areas (22, 23). However, the book also provides a counter argument to this

by explaining that the growth of the Gross Domestic Product does not mean that the welfare of a

country has improved, but rather, it shows that the assets of the country in terms of capital and

labour investments have grown (25). The authors rebut this counterargument by explaining that

the growth of a country’s GDP has its merits like the improvement of peoples’ standards of

living.

The last chapter explains about the various types of capitalism and their importance to

economic growth. It describes the four categories of capitalism in minute details (61). The first

type is the state-guided capitalism that is mainly supported and guided by the state as it supports

the industries in the country that have a greater chance of success when compared to the others

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(61). Secondly, the authors talk about oligarchic capitalism, which is basically the control of the

wealth and power of a country by a small group of people or families (61). The third type of

capitalism is the big-firm capitalism which explains that the major economic activities in a

particular country are only controlled by some big specific enterprises (61). Finally, there is the

entrepreneurial capitalism which is mainly controlled by small and innovative organizations (61).

Furthermore, the authors give the advantages and disadvantages of each of the types of

capitalism (66, 71, 80). Indeed, that chapter gives detailed information on capitalism.

Considerably, Litan, Baumol, and Schramm give a detailed analysis of economic growth,

and their argument is quite persuasive. Noteworthy, the work mentions the challenges that come

with economic growth such as separation of families, which is quite a painful phenomenon. For

instance, when children are separated from their parents, they suffer a lot. Moreover, the authors

acknowledge the crucial role that laborers play in an economy; hence, the work supposes that

people who toil the most are the determinants of economic progress. In other words, the three

writers see economic growth as a sacrificial phenomenon, where some people have to suffer

while others gain. In short, the main message in the book is that capitalism and entrepreneurship

lead to economic growth, but the two cause so much suffering to laborers and households.

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Work cited

Baumol William J., et al. Good Capitalism, Bad Capitalism, and the Economics of Growth and

Prosperity. Yale University Press, 2007.

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