Book of the Month/August

Knowledge and Power

I owe a lot to George Gilder, and with his release of Knowledge and Power, that debt has increased significantly.

Decades ago, I first read Sexual Suicide, a book that later became Men and Marriage, and which I have read again several times in that form. I was greatly influenced by Wealth and Poverty when it first came out, and have enjoyed other books as well, the most recent example being The Israel Test. This book is a worthy companion to the others in a long line of worthy companions.

There are three things I want to say about this book, and then I will leave you to get your own copy.

The first is that Gilder is a contrarian, but a sane one. He is what any sane person would look like in an insane world, provided that sane person had the guts to say what he thought out loud. The book provides kind of a grab bag of examples. He has a delightful chapter on the need for insider trading, for instance. By outlawing insider trading, we are requiring people to trade stupidly, blindly.

And Gilder is a futurist, but one who knows how to invoke the spirit of Shannon and Turing in a winsome way — a way that gives us a kind of postmillennialism for math geeks.

He is clearly a conservative, but the kind of conservative — as I envision it — who commands the respect of careful libertarians. He shows how there are some things that the market cannot produce, things like a market economy itself. The free market is not a product in the free market. The free market must have a foundation outside itself — but once you have it, you have what Gilder calls a low (information) entropy carrier of high (information) entropy entrepreneurship. To change the image, the rules of the game are simple and few, and the refs aren’t playing for any of the teams.

But the best example of this is his continuation of supply-side optimism. He quotes Henry Ford to the effect that if he had given the public what they wanted, he would have given them a faster horse. Twenty years ago, what was the market like for smart phones? Anticipating a point to be made later, the gift of innovation creates the ability to receive it.

Second, Gilder’s deep understanding of information theory as applied to economics makes good sense out of his relationship to the Intelligent Design movement, which is all about information. As I read through this book, a phrase that kept coming to mind was in the beginning was the Word. Information is prior to any exchange, and this is because information is prior to everything.

One of the central ways that capitalism gets a bad rap is that it is treated (helped in this by some of its founders and advocates) as an impersonal system that will nevertheless work out best for everyone in the long run. There is an “impersonal hand” out there that has the impersonal capacity to transmogrify individual instances of greed and self-serving, turning it all somehow (magically) to the public good. Against this, the left offers faux-compassion, and this impersonalism of ours is one of the reasons it works.

In this construct, capitalism is thought of as a system of incentives, when it is actually a system of information. When the state barges into our transactions, it is true (Gilder would acknowledge) that they completely mess up the incentives, getting the carrots and sticks all muddled. This is true, but by far the greatest damage they do is by blocking the free flow of information.

The third thing is related to the second. Gilder’s concluding chapter on “The Power of Giving” is just glorious. That chapter begins with “capitalism begins with giving” (p. 273), and continues in that wonderful vein. “Profit is thus an index of the altruism of an investment” (p. 274). “Capitalism begins not with exchange but with giving” (p. 278).

“Capitalism offers nothing but frustrations and rebuffs to those who, by virtue of their superior intelligence, birth, credentials, or ideals, believe themselves entitled to get without giving, to take without risking, to profit without understanding, and to be exalted without humbling themselves to meet the unruly demands of others in an always perilous and unpredictable life” (p. 277).

“Capitalism asserts that we must give long before we can know what we want and what the universe will return” (p. 283).

“Capitalism is based on the idea that we live in a world of unfathomable complexity, ignorance, and peril and that we cannot possibly prevail over our difficulties without constant efforts of initiative, sympathy, discovery, and love” (p. 283).

I didn’t cry when I finished this chapter, but it did make me wish that I was the kind of man who could.

For those who love liberty (may their tribe increase), Gilder shows us a way of loving liberty that is courageous, not fearful, giving, not hoarding, future-oriented, not hide-bound, and I will say it, although he didn’t, fundamentally Christian. In the beginning was the Word.

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7 thoughts on “Book of the Month/August

  1. “…it did make me wish that I was the kind of man who could.”

    Do not fear Sir! You are. I know that because you have taught many to put on Christ, as you have as well. And part of that is being the “kind of man who could.”

  2. Years ago, George Gilder remarked that in a very real sense the US won the Vietnam War, because we obtained Vietnam’s most valuable resource — the Boat People.

  3. Your one-sentence, penultimate paragraph was rightly seized on by 1/2 of your first 4 comments. Its multifaceted, efficient expression of self-awareness grabbed me immediately. This is the first time I’ve seen your name and “mablog” (love the name). Thanks so much.

  4. “Capitalism asserts that we must give long before we [are able to receive]”
    This statement is genius. It is remarkable that it took this long for someone to articulate it.

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