The journey started in 1761 when Ebenezer Kinnersley demonstrated heating a wire to incandescence and ended when Thomas Edison lost his company in the 1889 merger that formed Edison General Electric.
In the intervening period, countless thousands of scientists, engineers, entrepreneurs, and financiers around the world worked towards one objective: commercially viable, safe, and efficient generation and distribution of electricity to residences.
British scientist Michael Faraday discovered the fundamental principles of electricity generation in the 1820s by hooking up a wire from a generator connected to an efficient incandescent bulb. The discovery received a British Patent in 1880, and in 1881, the Savoy Theatre in London was the first public building in the world to be lit entirely by electricity.
From 1880, there was a “war” between George Westinghouse Jr. and banker J. P. Morgan joined with the Vanderbilt family. Morgan financed Thomas Edison’s large-scale low-voltage direct current (DC) and Westinghouse supported Nikola Tesla’s alternating current (AC).
At the end, the overall productivity, usefulness, and profitability of alternating current saw J. P. Morgan forcing Edison to shift to AC and move out of his own company.
As of 2017, according to the International Energy Agency, about 87 percent of the world’s population has at least some regular access to electricity. This is the Free Market at its highest fulfillment.
Not only does the free market explode the envelope of creativity but it also pushes the benefits to virtually everyone.
At its worst, “capitalism”—which is only one factor of the free market—is exploitative and repressive. But that is where and when government should step in to regulate but not to control the market. Certain monopolistic business practices are beneficial and should be tightly controlled by government, like highways and seaports.
But often the free market can even handle monopolies. There were dozens of cable TV providers in the NCR that over time became a virtual monopoly through mergers. Then competitive Internet greatly reduced the power of the “monopolistic” cable TV provider.
In 1914, Henry Ford shocked the manufacturing sector by increasing the wages of his employees. He raised the wage of his factory workers from $2.34 a day to $5 a day. Doubling the average wage helped ensure a stable workforce and increased sales since the workers could now afford to buy the cars they were making. He gave, without government intervention, $10,000,000 in profits to his employees.
Sub-Saharan Africa and its current 45 nations have contributed little to global economic and societal growth in the past 150 years. That is a fact, not a judgement. The reality of a very few leaders like Nelson Mandela and Jomo Kenyatta cannot outweigh the more numerous ones like Robert Mugabe and Idi Amin. Brutal, oppressive, and economically crippling colonialization is the primary cause.
Twenty-seven of the world’s 28 poorest countries are in Sub-Saharan Africa. Each of these countries has a poverty rate of over 30 percent. But the average life expectancy at birth in the region increased, from 46 years in 1990 to 61 years in 2018. Even with undoubtedly the worst governments on Earth, the people benefited from other nations’ free market innovations and advancements.
Overall, the most stable economic performance comes from those few that have the most economic freedom. In Rwanda, the government ended its monopoly on coffee, a move that let farmers freely trade with buyers from any part of the world. An estimated 50,000 households saw their incomes from coffee production double.
American economist George Gerald Reisman wrote about laissez-faire capitalism. “It is the ideal economic system. It is the embodiment of individual freedom and the pursuit of material self-interest.” Tom Luongo wrote: “The free market is a brutal thing. It’s unforgiving and uncompromising.” But it works.
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