Gilder: You DID Build That

AP Photo/Mike Groll, File

One of the most upbeat and, therefore, fun to read conservatives is George Gilder

I have been a fan of his since I read Wealth and Poverty in graduate school, both because he writes persuasively about the virtues of capitalism and Western Culture and because he can renew your faith in humanity without being (totally) a Pollyanna. 


Gilder's recent book review in The Claremont Review of Books is one example of this. 

Yes, I am doing a review of a book review. So sue me.

Gilder focuses on two books that promote a theory adjacent to degrowth called Limitarianism. The basic idea behind this concept is that the massive accumulation of wealth in the hands of a few--the centi-billionaires who have emerged in the latest tech boom for the most part--has caused the immiseration of billions. 

The wealth of a few causes the immiseration of the many, and therefore that wealth should be limited drastically. 

The issue raised by two new books from Europe is whether such enrichment and corporate enhancement is good or bad for the world. Limitarianism: The Case Against Extreme Wealth, a fiery polemic by Dutch feminist philosopher Ingrid Robeyns, and As Gods Among Men: A History of the Rich in the West, a comprehensive academic study of inequality by Italian economic historian Guido Alfani, want us to look beyond the immediate effects of wealth creation and pay attention to a larger, more sinister context. The authors maintain that events such as the A.I. boom make the rich richer and the poor poorer, an instance of capitalism’s inevitable degeneration into plutocracy. Robeyns also imagines that such wealth events are causing climate change and menacing the planet. Both books convey the impression that our wealth is a mirage, effectively nullified by the hidden costs of environmental damage and class exploitation.

Leftist writing about wealth creation is like flat-earth theorizing about physics. Lacking any grounded understanding of the subject, the two books deploy the usual pejoratives about “monopoly capitalism” without even attempting to explain how wealth actually arises in the modern world. Critiques of contemporary capitalism that fail to come to terms with its actual achievements spin their wheels, going nowhere.

Repeatedly quoting French economist Thomas Piketty’s Capital in the Twenty-First Century (2013), the two authors downplay new technology and focus on “slavery and colonialism” as playing “a central role in the Western World’s acquisition of wealth.” Since the late 1970s, says Piketty, we have been on the road to “a new quasi-feudal era in which the few would have almost everything, while the many would have almost nothing at all.”


Gilder rightly argues that this understanding of "wealth" is, in fact, fundamentally a misunderstanding of what wealth actually is. Wealth is not the accumulation of the limited resources of the Earth, as if there has only ever been one "pie" that gets divided up among all the people on the planet. Rather, wealth in the modern world--thanks to capitalism and evolving technology--stems from the application of creativity and knowledge either in the material world or even solely in the realm of the mind. 

It's ironic, in fact, that Gilder, the author, is debating this issue with two other authors. Each of them makes their living in a manner utterly divorced from the material world and material wealth. Almost everything they do and literally everything of value that they produce is entirely immaterial--they make their living by thinking and saying things that people find of value. 

Wealth is not stuff; more often than not, it is ideas and creations. In 2017 a single painting by Leonardo da Vinci sold for $560 million, yet the material of which it was made could probably only fetch a few dollars. 

Both Limitarianism and As Gods Among Men aim to curtail such emergent wealth. Robeyns seeks a global movement against “neo-liberalism” that caps all fortunes at €10 million. Wealth beyond that limit, she declares, is “immoral” and should be relinquished to government. “Via politics and institutional design, governments should try to make sure that no one accumulates more money than this,” she writes. “[I]t should be as hard a limit as possible.”

Although not explicitly endorsing a particular cap on wealth, Alfani claims to have identified close parallels between medieval feudal titans such as Cosimo Medici, wealthy beneficiaries of putative “fascism” such as the late Italian Premier Silvio Berlusconi, and modern tycoons such as Bill Gates, Elon Musk, and Jeff Bezos. He analogizes Medici’s bailout of the financial system of Florence during a crisis in the early 15th century to American banker J.P. Morgan’s saving the American financial system in the crash of 1907. In his view, nothing essential has changed. Alfani focuses on relative wealth: fortunes larger than ten times the median wealth in a society. Such fortunes, he believes, corrupt economic and political systems, spreading poverty in their wake.

The two books uphold a view of enterprise as a consequence of “greed” or “exploitation.” As Robeyns sums up, anti-limitarians believe “the mantras that ‘greed is good’ and ‘the sky is the limit.’” Both authors are concerned with inadequate rewards for idealistic academic professionals compared to greedy entrepreneurs. Successful inventors and entrepreneurs, Robeyns allows, should be rewarded like professors with “honorary doctorates” and other tributes. (Perhaps they could also be granted tenure and sabbaticals?) Meanwhile, she contends, “If [COVID era] governments had effectively taxed the [super-rich], they could have used the revenue to provide everyone with protective masks and home test kits.” Similarly, “[t]he $28 million it cost [Jeff Bezos] to fly into space for twelve minutes could have saved an estimated 6,200 lives.”


Capitalism--or, should I say, the most dynamic and important aspects of capitalism--are not in fact primarily characterized by greed. 

Incentives matter, although they matter the least, ironically, to the people who create the most innovations, such as Elon Musk and Steve Jobs, but the accumulation of massive amounts of capital in a free market economy are most often the results of people coming up with something radically new or especially valuable. 

Obviously, there are examples of ill-gotten gains or people getting rich off of some accidental or cleverly planned accumulation of stuff, but generally speaking, it is not stuff per se that makes people wealthy, but creating things of value. Even things like mining valuable ore requires using techniques and labor to turn a pile of dirt into something useful. 

And copper, by itself, is hardly worth a thing until you turn it into something useful, and that happens with the application of human intelligence. Before the invention of electricity, appliances, computers, lighting, and all the things we take for granted in the modern world, copper was worth little. 

Both Robeyns and Alfani conflate wealth with money. Believing that wealth is tantamount to money, they evoke images of Google founders Brin and Page and other titans frolicking in vast oceans of cash. To the authors, there is no difference between money income and wealth appreciation except that these capital gains escape taxation. Holding equities is deemed an insidious way of evading taxes on real gains.

Nonetheless, this conflation is spurious. Money is liquid cash and central bank reserves that can be immediately expended to buy things. Wealth, by contrast, is illiquid. It is invested. That means it is in use, embodied in projects and ventures contingent on future plans and expectations.

In enterprise, you can only keep what you give away. If you demand the cash back, you often jeopardize the success of your venture. Investments are defined by the possibility of failure. Those seven ex-Google A.I. Croesuses all run A.I. companies with no net profits. They could all go bankrupt at any time. As tenured professors, Robeyns and Alfani have scarcely a clue about the protean contingency of most entrepreneurial wealth.

For example, if the entrepreneur founders began selling the shares of their start-up companies in order to pay a “wealth tax”—as the authors of the transformer paper demand—the value of the shares would likely drop faster than they could sell. Even if the shares were nominally liquid, they are in practice unsalable by the owner-entrepreneur, since the result would be to make him less an owner-entrepreneur and thus deplete the key source of market value for the company.

As I detailed in Life After Capitalism (2023), wealth, unlike money, is essentially knowledge commanded by the owners. Wealth is not material resources as Robeyns and Alfani suppose, but a fabric of ideas and commitments, expectations and insights, experiments and projections, that together constitute the worth of the venture.


Think, for a moment, about a company like SpaceX. If you took away all the intelligence and creativity behind it the results would be nearly worthless. SpaceX was founded using the wealth Musk acquired through his partial ownership and sale of PayPal. If that wealth had been "limited" there would be no SpaceX, no Tesla, no Starlink, and no plan to go to Mars. 

We would be stuck with Woeing trying to get us back into space, and you see how well that is going. 

Musk almost went bankrupt because he poured all his money back into creating something new, and without his having done so, all of us would be immensely poorer for it. Musk's wealth is a result of not hoarding but of its opposite- he creates great things, and the money stems from that. 

That's how capitalism works. That's even how the "Robber Barons" got wealthy--generally by building new industries. 

Alfani concedes that “arguably society profits from the rise of entrepreneurial innovators,” but insists that “this process is not without victims.” Thus, “this picture of abundant opportunities for many should not be understood as one of improvement for all.” Alfani’s truism—opportunities for many are not improvements for all—is in fact deeply misleading as it implies a static “all.” Since world population under capitalism rose from a few hundred million in the 18th century to 4.4 billion in 1980 to 8 billion today, the improvement was indeed vastly greater for “all.” The per capita gains of wealth actually benefited some tenfold more people than the population at the outset. The chief benefit of wealth is many more people living many more years.

It is certainly true, and hardly an insight worth calling it such, that things are not always fair or perfect in capitalist societies. But that is not something distinct to capitalist societies in the least. In fact, opportunities for escaping poverty and getting around unfairness are far greater in capitalist societies than in any other. Generally speaking, the freer people are to deploy their talents and their wealth, the better off everybody is. 


You could, perhaps, eliminate much "unfairness" by making us all equally poor, but nobody would like the results. 

Freedom creates wealth because freedom liberates the human mind to create. One of the wealthiest people on the planet is J.K. Rowling, and she created that wealth by making hundreds of millions of people happier. No doubt much of that wealth is not sitting in a bank but has been invested in enterprises that produce products that people are happy to pay for. 

Ironically, both these books on limitarianism were likely written on computers, printed using high-technology printers, distributed on Kindles, written in air-conditioned and heated rooms under artificial light--none of which would have happened but for the inventions made possible only through capitalism. 

The fruits of the earth--the "stuff"--have existed since the beginning of time. But silicon as sand on a beach is nearly worthless. As computer chips, a tiny bit of it is immensely valuable and helps create vastly more value elsewhere. 

You see the point: limitarianism, as with socialism, grossly misunderstands capitalism, wealth, value, and everything that makes life possible in the modern world. Limitarians should pull out a dollar bill and a hundred dollar bill and contemplate this simple question: what makes them of different value.

It isn't the "stuff." They are basically the same thing materially. It is the ideas behind them. 

That is true of most things in this world. A TV without electricity, or content to watch, is worthless. Wealth is a built, not accumulated

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