When most people think about capitalism they think of greed and the rich wanting to profit at the expense of everyone else. In contrast, Gilder shows how capitalism actually begins with giving to the economic market so that they can make a return and ultimately grow the economy. He uses gift giving as an example of how capitalists show sympathy by being thoughtful and precise when giving a gift in hopes that the recipient will be grateful and return the favor, therefore benefiting both parties. However, people do not know what they want before they are offered it, that is why innovation plays a major tool in advancing the markets to meet people's needs. Adam Smith is an economist that shares the belief that capitalism starts with giving, however, he believes it is purely for the capitalist to benefit while Gilder believes it is the entrepreneurial instinct to provide a want to the market. Both ways ultimately end up favoring the capitalist, the question is for their own reward or to help grow the market as a whole?
Capitalism Begins with Giving
As explained in the reading and the lecture videos, capitalism is believed to start with giving to a party in order to receive back from which creates wealth. This is not the popular opinion on capitalism and is not the way I thought about it before reading and learning about the economic markets. Gilder mentions how the introduction of trading has allowed this idea to expand even more. Trading allows there to be a mutual benefit between parties and is an excellent example of how giving something up can allow you to receive something that is more valuable to you. This also ties in with the previous modules explaining division of labor and comparative advantage to be able to specialize and trade for things of value by giving part of what you are supplying. Some economists refer to this as self sacrifice but I believe that it is not sacrifice, but strategy to grow the economic markets. Gilder states
The circle of giving (the profits of the economy) will grow as long as
the gifts are consistently valued more by the receivers than by the givers.(Gilders, p. 32)
This is how I imagine trading with comparative advantage ultimately works and can be seen as a "gift" giving back and forth through sympathizing with one another to help each party benefit in their own way. This is why open markets are such a widely used and fast growing economic market because parties can trade between one another and gain access to many different goods.
Motivation for Giving
Although economists like Adam Smith and George Gilder both agree that capitalism begins with giving, they may differ on the intent behind their generosity. There are many political and cultural forces that play a part in the economic market which may have influence on reasons why people make the decisions they do within the market. In an economy that is zero sum, meaning there is a fixed amount of wealth, then one would be obliged to make money at the expense of others if there is no possible growth in total wealth. This is where Adam Smith's ideology comes in where greed and self interest are the driving factors for capitalists. In that kind of market I believe there would be no other choice, if you can not create wealth, the only way to obtain it is to take it from someone else. There is also a cultural norm of reciprocity that allows one to give to another in hopes that the receiver will feel shame if they do not return the favor to the sender, allowing the sender to also gain from the "gift" they have given. Sympathy can help increase your chances of return if you pay attention and focus on the specific wants of the receiver to make them feel valued which will make them more appreciative and more likely to return the favor. The passage states that
Giving is the vital impulse and moral center of capitalism.(Gilders, p.35)
He believes that entrepreneurs give into the economy in different ways before knowing if any return will be received or if an enterprise will fail. They do this by investing, creating products, building businesses, and inventing jobs. All of these are efforts by entrepreneurs to give to the economy in hopes to grow it as a whole and to eventually benefit from these advancements.
Final Reflection
I believe that both George Gilder and Adam Smith make good points in the true intent behind a capitalist giving to an individual or economy. I think that Gilder's view in open markets makes the most sense where you can give your goods or services to create contacts and also be at a mutual agreement to receive something back as a notion of gratitude. This action of giving will help the sender benefit from the transaction and also grow the market place with more opportunities for trade. I believe this module followed the last one very well and I think that the strategies shown previously can help advance and support Gilder's view on capitalism beginning with giving.
Sources
Gilder, G. F. (n.d.). Wealth & Poverty. Google Books. Retrieved April 12, 2023, from https://books.google.com/books/about/Wealth_Poverty.html?id=9CUDLi3_M-4C