The Separation of Economic from Political Power

Abstract

People who have political power want to maintain the status quo to maintain their positions in the hierarchy. People who have economic power want to disrupt it. When the same people hold both economic and political power, the incentives behind political power dominate. The result is stagnation. When people can gain economic power without having political power, those with economic power use it to create more value for others, resulting in the creative destruction that leads to economic progress. Those with political power will use it to protect economic power as long as they do not perceive that their power is threatened, which can lead to an exchange of protection for tribute that benefits everyone.