Dead Capital is like having a bent longbow stuck in a vise. It can’t unbend and release its potential energy. Since the Industrial Revolution, Capitalism has succeeded in the West but failed elsewhere (e.g. Latin America) due to dead Capital. Now even the West is threatened with the prospect of dead Capital and therefore death to the heart of Capitalism itself. The cause is the collective effect of the death blows dealt by Socialists (e.g. liberal left-wing Democrats) to our financial and economic system with increasingly more regulations that put our businesses’ Capital in a vise. The recent U.S. mortgage crisis has opened the floodgates for the left-wing (Socialist) liberals in U.S. government to accelerate this destructive trend.
The problem of dead Capital is why giving international aid to underdeveloped, struggling (e.g. Third World) countries is vain in the long run. It will never truly solve their economic problems. These countries are already sitting on mountains of unharnessed wealth that could make them prosperous. The remedy is ridiculously simple. Reestablish property ownership rights and liberate the Capital from the political vises that restrain their free use and ability to be converted from potential earning power to actual earning power. This is difficult or impossible under oppressive governments and regimes.
Bibliography: “The Mystery of Capital, Why Capitalism Triumphs in the West and Fails Everywhere Else” by Hernando De Soto, copyright 2000, published by Basic Books.