Except that the premise is wrong - capitalism most definitely scales at that level. The railroads across America that were built in the 1800's were not a mandate by the federal government, they were private enterprises.
"From 1850-1871, the railroads received more than 175 million acres (71 million ha) of public land - an area more than one tenth of the whole United States and larger in area than Texas."
Your example doesn't contradict the author's point, it supports it.