Translated from MSZ 5-1981

George Gilder, “Wealth and Poverty”

Singing the praises of capital

“Vulgar economics actually does nothing more than interpret, systematize and turn into apologetics the notions of agents trapped within bourgeois relations of production.” (Marx, Capital Volume III, Penguin ed., p. 956)

Anyone who has ever wondered where this haggard cowboy Reagan got what it takes to be an economic policy-maker; anyone who has been looking in the “world of ideas” for the “theoretical concepts” and the “background” of these measures, and who therefore thinks that economic policy must in principle have something to do with reason and science; anyone who – instead of wanting to make even a single true judgment about the actual purposes of this man’s now abundant deeds – would rather seek an “understanding for this policy” – has now received what he deserves from the book trade: George Gilders’ “Wealth and Poverty,” according to “Zeit” “the economic primer” that Reagan keeps at his bedside and from which he takes his “right wing recipes” when he gets stuck; in a word: the best that modern economics has to offer in terms of accepted stupidities when it comes to justifying rule.

On the one hand, Gilder is completely in line with the cleanup operations in the economists’ camp: the fact that the state does not simply withhold the contributions paid into social insurance, but gives some of it back, i.e. the political concern that a significant proportion of the people might be deprived of any further use by prematurely keeling over dead, is held by economists to be the realization of their fiction of “demand-side management,” i.e. a measure “justified” by “economic constraints” and therefore very sensible. From this standpoint of reason come to power, the economists’ guild discovers a deeper reason in the state’s decision to spare itself a good many social costs for the sake of an arms buildup: this must be so because – on closer inspection – the old fiction of “demand management” no longer works today:

“Say’s Law was not only refuted, it was implicitly reversed, with cause and effect hopelessly confused.” Because: “demand creates it own supply”

Gilder does not even see such self-disclosures in matters of economic theory formation (you can turn everything around here!) as self-mockery (after all, the debate about which is the chicken and which is the egg is not supposed to be about economic objects, maybe he’s thinking of capitalist production and needs backed by the ability to pay). Whether supply should cause demand or vice versa, in both cases the question of which begins to have an effect only arises when all economic objects are equated with their effect on others (the thing about schnapps is that it gets you drunk). The completely vacuous idea of an “all-sided interrelationship” which is thus declared to be the essence of this economy actually gives these blockheads the freedom to see everything in connection with everything else without saying a word about the why, what and how. On the other hand, this idea contains a dogmatism that is really something: Supply creates its own demand or the other way around; in any case, capitalism should be seen as an event that always works out harmoniously because utlimately one thing affects the other... Gilder deserves credit for clarifying that modern economics is metaphysics, because economic activity is supposedly a question of belief:

“Demand creates its own supply –’give and you will be given unto’ … The belief that the good fortune of others is also finally one’s own does not come easily or invariably to the human breast. It is, however, a golden rule of economics ...”

…since the beginning:

“To reach out to others with offerings constitute the psychological and anthroplogical roots of capitalist wealth. Some of the prototypical capitalists seem to have been tribal leaders who vied with one another in giving great feasts.... Always there was some anticipation – even a virtual demand – for an eventual repayment of one kind or another. Indeed, in the feasting process, it was expected to be an enlarged return (‘with interest’) as another ‘big man,’ or mumi, as he was called among the Siuai in the Solomon Islands, would try to excel the offerings of the first.”

The capitalist gives the gift of a job to the worker and receives a “gift in return” – the “surprise of profit”: anyone can see that all economics stamps out the class conflict when it starts talking rubbish so aggressively!

In the gesture of the believer who senses and fights disbelief in the attempted proof of his god, Gilder takes sides in the name of the philosophical core of his discipline against all his colleagues who try to give it the appearance of economic objectivity. He presents himself as an enemy of science:

“Material progress is inimical to scientific economics: it cannot be explained or foreseen in mechanistic or mathematical terms.”
“The quality of capitalist society depends not on automatic mechanisms, but on the quality, creativity, and leadership of the capitalists.”
“Under capitalism, when it is working, the rich have the anti-Midas touch, transforming timorous liquidity and unused savings into factories and office towers, farms and laboratories, orchestras and museums — turning gold into goods and jobs and art.”

On the one hand, every economist is capable of such stupid twaddle (what does the leadership do then without money!?); however, these apologetic adages are normally regarded – and not without reason! – as the deepest wisdom of all the pretentious model-building and not as its opposite. They are all sycophants of the state and capital. Precisely for this reason, however, Gilder discovers a disavowal of the unifying standpoint in the “mechanisms” of the economists who “explain” the rule of capital by making them into one (Gilder would say: mere) “factor” that matters among other things. ‘It doesn’t work by itself’ – with the stupidest criticism that can possibly be made of the macroeconomic mechanisms, Gilder turns from the impudence of even wanting to search for “explanations” for capital to a celebration of the capitalists:

“This is a drama most essentially not of measurable money and machines, aggregates and distributions, but of mind and morale. Above the vast architecture of production, and surrounding it, is a statistically invisible atmosphere of moods and ideas, a phantasmagoria of images and visions of the future, which either admit, or eclipse, the sustaining light and power of the sun: the life-giving faith in the possibility that free enterprises can prevail among the unpredictable forms of wealth in the unknown world to come.”

Because Gilder has nothing to say about the capitalists, that is, the economic means that make them capitalists, but rather gives them the qualities that he praises, declaring them to be the bearers of a principle, he also discovers people in this community who do not measure up to this principle:

“The great secret of the American gentry is downward mobility. … they had to watch their grandsons grow hair to their shoulders, drop out of expensive schools financed by disappearing family wealth, and dabble with careers in art and carpentry, interspersed with unemployment checks, before they grabbed a briefly open slot in a government bureaucracy from which to instruct the poor on the ways of upward mobility.”

– which is the last straw. Because he sees every penny taken from the rich, every unemployment benefit as a “waste,” as the “death of society,” Gilder invents a “war against the rich” and launches a moral counterattack:

“The benefits of capitalism still depend on capitalists. The other groups on the pyramid of wealth should occasionally turn from the spectacles of consumption long enough to see the adventure on the frontiers of the economy above them – an adventure not without its note of nobility.”

All the apologetics that this guy still finds necessary consists of an indignantly added cliche –

“Material progress is ineluctably elitist: it makes the rich richer and increases their numbers, exalting the few extraordinary men who can produce wealth over the democratic masses who” (here comes the kicker) “consume it.”

– and unabashed cynicism:

“The war against the rich thus continues in the world's wealthiest country. The victims, though, of the war against wealth, even when they are inveigled to join its ranks, are always and inevitably the poor, the ones who still need a mobile society.”

Reagan certainly does not take prescriptions or even theoretical (even if only false) foundations for economic policy decisions from this bedtime reading; but maybe the pleasure he can still demand after his presidential work is done: that economists prove him right in his belief in America and its economic and political greatness. After all, such belief moves mountains when it is backed by the corresponding power.