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Capital De Facto
Arman Calbay, author
Economic freedom and entrepreneurial spirit are very important and this should be based on a strong economic theory, which in fact does not exist now. The objective economic theory is the topic of Capital de facto. The book's approach helped to reveal the most common economic misconception: the idea about the sale of labor force under capitalism. Even anti-socialists now believe this, but the book proves the opposite thesis in terms of economics, without taking too general philosophical reasoning of Ayn Rand and Friedrich Hayek. One of the consequences is that this new theory in economics will relegate Karl Marx's theory to the category of obsolete and erroneous. As thermodynamics did with the theory of phlogiston in physics. No one will turn to Marxism, except historians. Accordingly, socialists, both American and international (including Chinese), will lose the theoretical basis for their ideas of governmental socialism. More importantly, my theory offers a new framework for defending capitalism and economic freedom, especially in America, where entrepreneurial spirit and business-friendly thought have always been the foundation of the economy and financial prosperity. The book incorporates the principle of relativity and the mechanism of sustainable symmetry breaking into economic theory, which provides a new understanding of the nature of production, property rights, and the theory of value. Promising practical consequences include consistent models of economic growth, business practices, taxation, and pension reform.
Calbay makes a bold attempt to write a new chapter in economic theory–and to counteract resurgent interest in Karl Marx–by introducing to economics the principles of relativity and sustainable symmetry breaking, with the avowed goal of overturning Marxism once and for all. Calbay sets up three postulates from which the rest of his theory flows: that all the factors of economic production are equal (labor, land, and capital); that value is created from human ownership of a production factor; and that, in economic systems that don’t allow slavery, human labor can only belong to the individual. That foundation, he asserts, leads to a fundamental asymmetry in the relationship between capital and labor, in a non-slave society, since labor force cannot be sold but the capital can be.

Capital De Facto covers a large territory in a brief page count–as Calbay notes, it would require a dozen or more authors to explore every crucial element of capitalism. Still, readers may wish for more detail, as well as some attention paid to mathematical formalization, which the guide deliberately sets aside. Calbay’s core argument—that the relationship of individuals in the labor market is a contract between employer and employee for access to capital—would likely be more persuasive to skeptical readers if Calbay offered a more robust consideration of the power differential between labor and capital.

Calbay strives earnestly to disprove Marx–ultimately because “[c]ollectivism breeds dictatorship.” He asserts that the private ownership of capital is vital for the broader capitalist system, to avoid the dangers of collectivism and to promote freedom. He calls a society that pays “more attention to the conditions of the distribution of capital, rather than to issues of equalization of income,” and he takes time to explore older systems of production (such as slaveholding societies and feudalism) as he makes the case for the capitalist society as being the best way to preserve freedom.

Takeaway: Readers interested in understanding and defending capitalism will find provocative ideas in this economic treatise.

Great for fans of: Michael Heller and James Salzman’s Mine!: How the Hidden Rules of Ownership Control Our Lives, Hernando De Soto’s The Mystery of Capital.

Production grades
Cover: B
Design and typography: B
Illustrations: N/A
Editing: B+
Marketing copy: B