Introduction
In the book, “Wealth and Poverty,” by George Gilder, capitalism is defined in a unique way. Gilder argues that giving and sympathy are at the center of capitalism and that all products and inventions are created with sympathy towards the recipient. Today, many people would most likely disagree with this sentiment, claiming that capitalism is centered on greed and that all businessmen are in their respective industries to increase their wealth. This is also what Adam Smith believed, claiming that all businesses were self-interested, and wanted nothing more than to squander competition. There were a few points in the 3rd chapter of Gilder’s book that I wanted to discuss in further detail, the first being his opinion of capitalism as a sympathetic giver, as well as the reliability of money and currency.
Giving and George Gilder
In chapter 3, “The Returns of Giving,” Gilder lays the foundation for his argument that giving and sympathy are the source of all capitalist endeavors. He references all the way back to ancient civilizations and their ways of trading as his inspiration for this concept. Gilder explains that ancient tribes used to throw feasts in order to gain popularity within their tribes. When members of the tribe partook in the feast, they were accepting the notion that they were not indebted to the feast-thrower. The members would return the generosity of the feast by giving the “Mumi” (feast-thrower) a gift of equal or higher value, whether that be their labor, or goods and services. This reciprocity amongst the earliest tribes is the simplified equivalent of today’s economy. Entrepreneurs invent and create new goods and services to fulfill a need of someone else, as the entrepreneur is sympathetic to the person’s needs. By coming up with something that will benefit others, inventing and entrepreneurship become sympathetic and generous rather than greedy or self-interested. Gilder goes on to explain that the entire system of capitalism relies on entrepreneurs' ability to determine what people need, and to what extent they can supply solutions for those needs.
Sympathetic Capitalism
As previously stated, Gilder has an extremely optimistic view of entrepreneurs and their drive to create goods and services. While I agree that most new innovations do a good job of satisfying the needs of the consumer, I do not think that all businesses are founded with this principle in mind. Many entrepreneurs want the fame that comes along with inventing and innovating. Even in Gilder’s example of early societies, the feast-thrower was throwing the feast not to give to the tribe members, but to earn the title of “Mumi,” which roughly translates to “Big Man.” It may not only be greed behind this desire for fame and recognition, but the idea that someone would give simply to receive gifts in return is too simple to describe the complexity of capitalism. Although gift-giving is a difficult task, the invention of money has altered the scope of capitalism. People are now able to trade goods and services without needing to gift any sort of good or service in exchange, simply a piece of paper that is equal to the good or service’s worth. Not only has this changed how and what people choose to consume, but it also alters the mind of the giver. Gilder argues that the consumer is tasked with the equally-difficult job of repaying the giver with some sort of reciprocity that is meaningful to them. This is the initial difficulty of inventing, to recognize the distinct needs of others. It is also the consumer’s turn to recognize the needs of the supplier, and if the supplier knows that the only thing they will be given in return is money, then the true nature of business is to sell in order to gain wealth. Whether or not that person chooses to invest their wealth into something productive is the true determining factor in deciding their motive for inventing. In addition to this, today’s big businesses shut out other forms of competition with their access to large amounts of wealth. Although this could be considered a side effect of the market “awarding the better giver,” it creates greed within large corporations to keep gathering sums of money. After a certain point, I begin to wonder when those giant corporations will ever have enough money. In addition to this, Gilder describes how, sometimes, “excessive welfare hurts its recipients, demoralizing or reducing them to an addictive dependency that can ruin their lives.” I think it is good that he addresses this because this is currently done by the same giant corporations that are earning the most money. They donate excess food and clothing to countries in Africa in order to get a subsidy in the form of tax reductions. In doing so, they perpetuate poverty in other areas of the world so they can stay excessively rich. This is greedy and self-interested, which is capitalism's nature in today’s economy.
Reliability of Money
Another interesting point made by Gilder was the invention of currency as well as its volatility. As previously stated, the currency created a common denominator between supplier and buyer. It allowed the gift-giver to receive anything they wanted in return for their services, rather than a pre-determined gift by the reciprocator. However, money creates a false sense of security between the buyer and seller. Inflation and other factors related to supply and demand can completely alter the worth of money. Money is only a slip of paper that is representative of gold or other elements such as plutonium. When the value of money changes, so does everything else. Gilder addresses this issue by saying, “In a collapsed economy, where trust everywhere fails, a man might trade an ounce of gold for a pound of corn. In a thriving economy, his ounce of gold might buy him half a ton of corn.” it is no secret that the value of whatever money is representing changes the value of money itself, but there is no doubt that money has completely altered the landscape of consumerism and capitalism today.