George Gilder made a name for himself with his instant classic Wealth and Poverty. Published in 1981, it appeared at precisely the right moment, explaining the principles of supply side economics, while revealing that the left didn’t have a monopoly on intellectuals. It also showed that the conservative movement had serious thinkers of its own.
I read Wealth and Poverty back in my college years when it was fresh off the presses. It changed my life in ways too numerous to list here. I gave it a refresher read several years ago and was well rewarded for doing so. It’s one of those books that changes things, that spawns imitators and movements. So is his new bookKnowledge and Power, at least I think so.
In fact, I suspect that it may be the most important economics book of the 21st century. I had the pleasure of sitting across a Skype connection with Gilder at the other end at a Discovery Institute conference. To listen to the interview which ran almost a full hour, click here. For a partial transcription of the interview, read what’s below and the remaining two articles in the series.
Jerry: “First, let’s start off with the major question. Every great book has a big idea; what’s your big idea? What’s the big idea in Knowledge and Power?”
George: “That capitalism is chiefly a knowledge system, rather than an incentive system. After all, when the Neanderthal in his cave had the same set of physical appetites and natural resources that we have today — the difference between our lives and the lives of Stone Age penury is the growth of knowledge, which is a process of learning which depends on falsifiable experiments. A great result of the research in Knowledge and Power is that crony capitalism necessarily fails because it thwarts the emergence of knowledge. Knowledge comes from experiments that can either succeed or fail. If they’re guaranteed ahead of time, information theory tells us that they cannot yield real profit; any profit they yield is extorted from the rest of us.”
Jerry: “So, perhaps moral objections to crony capitalism – the unfairness of it – are true, but beside the main point. Crony capitalism makes us stupider.”
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