Capitalism is the theory that ‘capital’ is the bottleneck to production, that those who have capital are in the catbird seat. I mean ‘capital’ is no longer king. Capital no longer makes you competitive – creativity and flexibility does.

Mass production isn’t completely dead – commodities are still needed, and it’s hard to compete with a huge refinery if you’re trying to produce gasoline. But the bulk of the economy has moved away from generic items.

For instance, nobody could compete with Henry Ford’s Rouge complex. He could make simple, sturdy black cars for less than anyone on the planet. Pretty soon, though, people started buying cars in color, cars with a better ride, cars that protected you better against the weather.

In Wabash, Indiana, there are a lot of little companies making artificial joints and similar orthopedic surgery gizmos. Every few months, someone working for one of those little companies figures out a way to make a better joint, he quits, and sets up his own company producing that better joint. He becomes competitive and profitable within a few months if the product is right.

Capital equipment has become relatively inexpensive. Instead of needing 100 machines to produce something that requires 100 manufacturing steps, you can get by with a half-dozen machines that are quick and easy to set up. If you need to produce 100 pieces an hour to amortize the cost of the equipment, you might need $100 million to finance your inventory of raw materials and finished goods, and huge warehouses as well. With flexible equipment, you can produce to order, making 100 pieces a month, and your inventory requirement drops to less than $50,000. You aren’t capturing the whole market, just a small niche, but that’s OK, because it’s a highly profitable niche. Nobody else produces what you produce, and it’s exactly what your customer wants. And if it’s not, you change your product. That’s easy to do, because your production equipment is highly flexible.

So instead of thousands of wage slaves, you can operate a one-man shop in your garage, or a 10-man shop in your barn. I think of it as the New Emancipation Proclamation: capitalism is dead, and the wage slaves are free.