How much capitalism is optimal for economic growth and stability? Or, equivalently, the question is how much socialism or government? Until now, no one appears to have posed this question, as most people tend to favour more and more of one or the other, in a political rather than scientific judgement. This post provides some tentative answers based on empirical evidence.
Under our definition, no economy is purely capitalist, because there is always a government which expropriates private property through taxes for government purposes; hence there are only degrees of capitalism. The degree of capitalism and the size of government are two sides of the same coin, as more capitalism means less government and vice versa.