Thus, for the poorest 10 percent of the population in highly capitalist countries, average per capita income is about $8,700 per year (or just under $35,000 per year for a family of four). For the poorest 10 percent of the population in the least capitalist countries, average income is under $950 per year (about $3,800 for a family of four).

Consider the thirty-five most capitalist nations in the world. On average, the poorest 10 percent of the population receives about 2.5 percent of total income in these countries. Indeed, if we look across all countries, we see that although there is some variation from nation to nation, the poorest 10 percent of the population typically gets between 2.0 and 2.5 percent of total income.

Once we get down to the thirty-five least capitalist nations, average income has dropped to but $3,900 per year. And because rates of economic growth are also higher in more capitalist nations, the differences in income between the most and least capitalist nations are growing over time. 1 Of course, this is a chapter about poverty, and the average income in a nation may bear little relation to the income earned by its poorest residents.

It is convenient for our purposes to divide all the nations in the world into five groups, ranging from “most capitalist” to “least capitalist.” Data limitations prevent doing this with every single nation. Nevertheless, it is possible to do it for about 140 of them, putting 35 nations into each of the four groups.

Of course, no country in the world is completely capitalist; in the United States, for example, less than two-thirds of resources are allocated by the private sector, while the rest are allocated by federal, state, or local governments. At the other end of the spectrum, even in Communist countries such as Cuba, Vietnam, and North Korea, markets play at least some role in allocating resources.

Despite a few ambiguities, then, it is possible to measure the degree of capitalism (or, as some would term it, economic freedom) in each country around the world. Doing so yields measures that seem to correspond reasonably well with what many people would think is true about the economies of those countries.

For example, using the measures constructed by Canada’s Fraser Institute, Hong Kong’s economy is rated the most capitalist, while the United States is sixth. Singapore, Switzerland, New Zealand, Canada, the United Kingdom, and Australia are other nations whose economies are judged among the ten most capitalist in the world. If you know much about economic prosperity around the world, you will be aware that these countries are also among the world leaders in real per capita income. Indeed, the association of capitalism with prosperity is everywhere quite strong.