‘Tis the Season…to be a Capitalist

Yes, I know, Christmas is the celebration of the birth of Jesus, the greatest Gift of all and the advent of God’s Kingdom here on earth.  But at this time of the year especially, giving reminds us of what capitalism gets right all year long.

  donation fund

Here some quotes from George Gilder’s book “Knowledge and Power:  The Information Theory of Capitalism and How it is Revolutionizing Our World:”

“Capitalism begins with giving.  Free markets and exchanges are characteristic of capitalism, but they are a result of entrepreneurship ~ not a cause of it….

The anthropological evidence, detailed in the original Wealth and Poverty, suggests that capitalism begins with the gift and continues with competitions in giving.

A gift will elicit a greater response only if is based on an understanding of the recipient’s needs.  As any baffled beneficiary of a costly but unwanted Christmas present can attest, giving is difficult and requires close attention to the lives and longings, tastes and talents of others.  In the most successful and catalytic gifts, the giver fulfills an unknown, unexpressed, or even unconscious desire in a surprising way.

A successful gift startles and gratifies the recipient with the unexpected sympathy of the giver. In order to repay him, however, the receiver must come to understand the giver. The contest of gifts leads to an expansion of human sympathies…  

In deciding what new goods to assemble or create, therefore, the givers and investors must be willing to focus on others’ needs more than their own…

 Profit is thus an index of the altruism of an investment….

 The conventional wisdom, whether liberal or conservative regards charity or generosity as essentially simple ~ just giving things away without calculation or continuing concern with their true use.  The hero of this narrative is the anonymous donor, while the investor is seen as a Shylock, extorting usurious gains from lending money, or a Scrooge, extracting his profits from the exploitation of workers.  A welfare system of direct money grants financed by anonymous taxpayers through the choices of their elected representatives is, in this view, the ultimate expression of compassion and charity.

 Dumb money, however, does more harm than good.  It is extremely difficult to transfer value to people in a way that actually helps them.  Excess welfare hurts its recipients, demoralizing them or reducing them to an addictive dependency that can ruin their lives.  The anonymous private donation may be a good thing in itself.  It may foster an outgoing and generous spirit.  But society as a whole is more likely to become charitable and compassionate if the givers are given unto, if the givers seek some form of voluntary reciprocation.  Then the spirit of giving spreads, and wealth gravitates toward those who are most likely to give back, who are most capable of using it for the benefit of others, who are most knowledgeable and best informed, whose gifts evoke the greatest returns.  Even the most indigent families will do better under a system of free enterprise and investment than under a supposedly “compassionate” welfare system that asks no return.  The law of reciprocity ~ that one must supply in order to demand, save in order to invest, considers others in order to serve oneself ~ is essential for a humane society.

 At the heart of capitalist growth, however, is not the mechanistic homo economicus but conscious, willful, often altruistic, inventive man.  Although a marketplace may work mechanically, an economy is no sense a great machine.  The market provides only the perfunctory dénouement of a tempestuous drama, dominated by the incalculable creativity of entrepreneurs, making purposeful gifts without predetermined returns, launching enterprise into the always unknown future.  The market is the conduit, not the content; the low-entropy carrier, not the high entropy message.

Capitalism begins not with exchange but with giving, not with determinist rationality but with creation and surprisal.

 (emphasis mine)

***

Some interesting thoughts about poverty from the British doctor Theodore Dalrymple’s book “Life at the Bottom”:

What do we mean by poverty?  Not what Dickens or Blake or Mayhew meant.  Today no one seriously expects to be hungry in England or to live without running water or medical care or even TV.  Poverty has been redefined in industrial countries, so that anyone at the lower end of the income distribution is poor ex offico, as it were ~ poor by virtue of having less than the rich.  And of course by this logic, the only way of eliminating poverty is by egalitarian redistribution of wealth ~ even if the society as a whole were to become poorer as a result.

Such redistribution was the goal of the welfare state.  But it has not eliminated poverty, despite the vast sums expended, and despite the fact that the poor are now substantially richer ~~ indeed are not by traditional standards, poor at all. As long as the rich exist, so must the poor, as we now define them.

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