"Wealth is knowledge, growth is learning, information is surprise, money is time."
George Gilder's new book "Life After Capitalism" puts on display Gilder's formidable talent for profound-sounding generalizations, simultaneously sweeping and succinct. These are phrases that would work on a bumper sticker, or inside a fortune cookie, as well as in a hardcover book.
The title reference to "after capitalism" is itself provocative, especially coming from Gilder, whose 1981 book "Wealth and Poverty," edited by Midge Decter, helped to popularize supply-side economics and was frequently quoted by President Reagan.
It's somewhat reassuring to find out, 169 pages in, that, according to Gilder, "life after capitalism" is one "that will, in fact, be capitalism after all, a capitalism properly understood, with a future of prosperity, harmony, and real, immutable trust."
Before getting there, though, Gilder flings some arrows in unexpected directions. Milton Friedman, the Nobel laureate economist and libertarian writer, comes in for criticism: "on the issue of money, he has been proved wrong," Gilder says. Adam Smith is also a target: "Capitalist theory, at least from Adam Smith on, has rested on the same materialist superstition that sustains socialism."
Two of the book's 14 chapters are by Gale Pooley, an associate professor of business management at Brigham Young University–Hawaii. Pooley lays out the concept of a "time-price," an elegant way to quantify the growth in abundance by measuring the change over decades in, say, how many minutes an average wage-earner would have to work to buy an orange. The discussion is relevant to the analysis of inflation that is influencing Federal Reserve policy and, through that, everything from mortgage rates to stock prices. Toward the end of Pooley's discussion of the change in the time-price of a hammer ("you get 18.1 hammers today for the time-price of one in 1902"), he notes that the installed price of a nail has dropped significantly since nail guns became widely available. A construction worker using a nail gun can drive in nails much faster than can a carpenter using a hammer. Hammer prices, measured in work-time, have fallen, but the price of sinking a nail into a two-by-four has fallen even faster as a result of technological innovation.
Technological innovation has promise, but in describing that potential Gilder can sometimes come off as utopian. Describing a "flash graphene" technology championed by a professor at Rice University, James Tour, Gilder writes that it "has the power to profoundly transform the very fabric of the global economy and fundamentally alter the way we relate to the physical world." That could defeat deadly viruses, "overcome illnesses such as pancreatic cancers," "produce a cure for Down's syndrome," "fuse and repair severed spinal cords," "clean dirty air and water," "obviate all conventional trash disposal," and "banish counterfeiting, toxic organics, and rust." I hope Gilder is right about all this, but I came away less than totally convinced.
Similarly unpersuasive is Gilder's claim that "China, with its radically lower government spending (under 20 percent of GDP) than the United States' (37 percent as a share of GDP), may so far have provided a freer environment for business." Those statistics are misleading. In the past, the OECD has found in China "a large amount of off-budget spending by sub-national governments that is not officially recorded or sanctioned." The most recently available OECD/World Bank data, for 2021, on general government consumption as percent of GDP lists China at 15.9 percent and the United States at 14.4 percent. The CIA World Factbook, with older data (2017 rather than 2021) puts China at 14.5 percent and the U.S. at 17.3 percent. When the ruling Chinese Communist Party outlaws independent labor unions, imprisons lawyers, religious leaders, and journalists who criticize the government, and puts a million Muslims to work in forced labor camps, no wonder it looks to statisticians as if the government is getting some sort of bargain. Let Gilder apply some rigorous "time-price" analysis to the lifetimes that people in China spend enslaved to the unfree regime there.
Gilder does make a convincing case about his core point in the book: that time, rather than any material commodity or money, is "the reigning economic and physical scarcity that regulates the measurement of value." It's a natural realization for an 83-year-old author. And so perhaps the highest praise I can give this book is that I felt the time I used to read it was well spent.