• Email
  • Print

Life with Father

Wealth and Poverty

by George Gilder
Basic Books, 306 pp., $16.95

1.

In April of 1913, R.H. Tawney wrote in his commonplace book: “People want rights—freedom, in order that they may perform duties. The hardship of the wage-earner is not simply that he has insufficient food and housing, but that he is deprived of the means of performing certain primary duties, care of home, wife and family, direction of the industry by which he lives, a share in public life. Hence the way of freedom is also the way of duty.”1 Here is a vision of what the goals of a welfare state ought to be: to relieve distress, certainly, but also to recognize and enhance the sense of social membership. Welfare programs that don’t serve both these goals should be criticized and reformed.

One might say, charitably, that George Gilder’s Wealth and Poverty is an attempt at just such a critique and reformation, and, indeed, everything useful that Gilder has to say about welfare is already contained in Tawney’s “commonplace.” Except incidentally, however, it is not Gilder’s purpose to make specific criticisms or propose specific reforms. Instead, the failure of welfare programs to enhance social membership, when in fact they fail, is for him only a pretext for a general attack on the welfare state, modern liberalism, and social democracy.

Wealth and Poverty is a diatribe and a panegyric. It is a diatribe against egalitarian reformers, welfare bureaucrats, social workers, academic radicals, upper-class “defectors,” liberal editorialists, fashionable publishers, civil rights workers, and feminists—above all, feminists, who turn out to be the deepest and most dangerous enemies of capitalism. It is a panegyric for entrepreneurs, businessmen, risk-takers, investors, the thrifty poor, and aggressive males—above all, aggressive males, the true source of capitalist wealth. Gilder believes that welfare only makes the poor poorer, sinks them in the mire of dependency and moral decay. If they are ever to escape, what they need above all is “the spur of their poverty.” (Why there were ever poor people in the dim years before the welfare state is, on his view, very hard to understand: the spur of their poverty is the one thing the poor have always had.) What the wealthy need, by contrast, is more money. Their spur is greater and greater wealth—low taxes and capital gains. All the complex ills of the US economy today come down to this: we take too much money from successful businessmen, and we give too much money to the poor.

The refrain is familiar enough, and it makes for a defense of privilege that occasionally rises, as we shall see, to lyrical heights. But Gilder’s book does have its peculiar features, and chief among these is his view of Man and Woman. Even here, it would not be difficult to trace the sources of his argument; what is peculiar is the feverish pitch and the rising note of hysteria with which he presents it. The male of the human species, it seems, is not by nature a capitalist; he is not homo faber either, not a worker, producer, wage-earner. He is (even you and I) a hunter, fighter, sexual athlete, player of games. He is irresponsible, irrepressible, a hedonist of the fleeting moment—until he encounters Woman. The crucial civilizing role is played by the female, not only in some prehistoric age but here and now, everyday. Male energy is harnessed by womankind, like a roaring river by a dam. Only married men are likely to be responsible workers and potential capitalists, connected to the future through the wombs of their wives.

But when Man encounters not Woman but Feminist, this divinely or biologically ordained order is shattered. Instead of being enticed into home-making and wage-earning, he is driven back into the forests, or into the macho culture of the streets. And the effect is the same when the welfare state, beset by feminists, feeds money into the hands of women, depriving their husbands and lovers of the confidence and authority that only female dependency can provide. Off they go, in a rage of escapism and violence, “cuckolded by the compassionate state.”

All this is in support of a critique of Aid to Families with Dependent Children. Whatever truth there is in the critique—and there is not much—is Tawney’s truth. And once we recognize it for what it is, we might well extend the argument. Perhaps it is true, as Gilder claims, that married men are more productive than bachelors. That is not implausible since a bachelor, after all, has to attend to his own shopping, cooking, and cleaning—though I should note that it’s not true in the world I know best, the world of political philosophers. Think of Hobbes, Locke, Spinoza, bachelors all; even John Stuart Mill seems to have been as productive before he met Harriet Taylor as he was afterward, grinding out books and articles at a steady rate. But I suppose that’s not much of a sample. Let’s assume that Gilder is right about married men. There is also a growing body of evidence suggesting that men, and women too, work harder when (in Tawney’s terms) they have some say in the direction of the industries by which they live. A sense of effective membership seems to generate increased application and productivity.2 And so one might construct an argument for democratic workplaces along much the same lines as Gilder’s argument for patriarchal families. Needless to say, Gilder makes no such attempt. He is entirely taken up with Man and Woman, and has virtually nothing to say about citizens, colleagues, co-workers, managers, foremen, and so on.

2.

He does have a great deal to say about entrepreneurs, whom he admires, above all, because they don’t rely on the government. They take risks and strike out on their own—though I would have thought that married men connected to the future through the wombs of their wives would be a little more careful than Gilder suggests they are. His entrepreneurs are by no means rational calculators. They are dreamers, visionaries, believers in the “economy of hope” and the God of success. It is a “defiance of the odds” that generates economic creativity. And this great defiance is the work of…the petty bourgeoisie. Though two-thirds of all new business ventures collapse within five years, though “the median small businessman earns less than a New York garbage collector,” the will to succeed is indefatigable. Some 400,000 small businesses are started annually, and these brave initiatives are the crucial source of innovation and growth in the capitalist economy and of mobility in capitalist society. “Business is not only the best route to wealth in America; it is almost the only route for those without education. In business, moreover, the sky is the limit.”

Indeed. It is great fun to see the petty bourgeoisie thus returned to the stage of history, and I am entirely sympathetic to the effort to bring them back. But all this makes for a small part of the capitalist story, and Gilder is reluctant to tell the rest. He is uneasy with big business, corporate bureaucracy, old wealth. He doesn’t like efforts to reduce the risks of economic life, to stabilize markets, fix prices, control innovation. But this sort of thing is surely central to the internal development of capitalism. Just as generals want not only to win battles but to die in bed, so entrepreneurs want not only to make money but to die rich. They are prepared to take risks, but they have no romantic attachment to danger, and faced with what Gilder calls “the iron rule of gambler’s ruin,” they will do the best they can to improve the odds. And the best they can clearly includes the enlistment of governmental support. Big government may sometimes be, as Gilder has it, the enemy of entrepreneurial success, but it is by no means the enemy of successful entrepreneurs. It is more likely to be their instrument. But of capitalism as a system of power, Gilder again has nothing at all to say.

He writes only melodrama. The compassionate state cuckolds poor men, and the confiscatory state robs wealthy men. The liberation of women is paralleled by the “war against wealth.” Gilder’s presentation of tax statistics is quite extraordinary. By his calculations, rich Americans appear to be more heavily taxed than any of their counterparts in the Western world. Contrary to all the evidence of our senses, it is simply impossible to make money in the United States today. Gilder imagines John Kenneth Galbraith going into business to publish the books he writes. Galbraith invests a million dollars of his own money, and in his second year manages to produce a best-seller. Still, after all his work, and despite his literary and commercial success and his large investment, he nets after taxes only $5,719 a year. What are we to think, then, of those 400,000 entrepreneurs who will launch new businesses in 1981? They are not merely romantic dreamers; they are literally insane.

When Gilder recommends “diligence, discipline, ambition, and a willingness to take risks” to the poor, however, he assures them that it is still possible to do well in business and even to put together, after taxes, a small fortune. In this mood, he is full of success stories. Though he loves to talk about risk, there are no accounts of failure in Wealth and Poverty. But of course small businessmen do fail, even at increasing rates, and this has a great deal to do with the success of large-scale capitalism and very little to do with governmental intervention or with what Gilder tells us is the currently fashionable hatred of money-making and of money-makers (“the racism of the intellectuals”).

Consider the case of small retail stores. In 1978, according to Ezra Vogel, Japan had 1.61 million retail stores and the number was on the rise; the US, with twice the population, had 1.55 million and the number was falling.3 I am sure that cultural differences help to account for these figures, but there is another reason for them: in Japan, small stores are “protected by government rules about the penetration of large stores.” Sometimes, it seems, we can make room for entrepreneurs only by constraining capitalists. This is the work of the democratic state—a concession, in the Japanese case, to small merchants for the sake of neighborhood stability. One might imagine other concessions, improving the odds for entrepreneurial success, strengthening the petty bourgeoisie. But Gilder is not interested. His entrepreneurs are heroes, or they are nothing. What the poor must learn, “spurred by their poverty,” is that they have to work harder and take greater risks than anyone else. If they do that, and control their women, and believe in God, “the sky is the limit.”

3.

What is missing from Gilder’s book is any serious or sustained account of democratic politics. In a sense, democracy must always be a danger in his world. Where there is risk, people will seek security, protection against the endless explosions of capitalist energy. And politicians, so long as they must look toward re-election, will be eager to provide that security. Hence the welfare state, old age pensions, unemployment compensation, and so on. At first, working-class men and women formed voluntary associations, friendly societies, for mutual assistance. But groups of this sort have been overwhelmed by the advance of capitalism. American society today, as Gilder recognizes, is too mobile, urban, individualistic, atomized: “the old modes of private assistance…no longer suffice.” But the state, in the hands of egalitarian reformers, welfare bureaucrats, and so on, creates, he says, a vast and counter-productive system of over-insurance. The health of American capitalism requires a balance between security and risk, solidarity and competition. But that balance is long gone, security and solidarity have triumphed, and Americans, especially poor Americans, have been robbed of the opportunity to test “the miraculous prodigality of chance.”

I doubt that many American workers faced, say, with plant closings and large-scale lay-offs will recognize this portrait of our welfare state. It is a great deal shabbier in its treatment of the poor than Gilder acknowledges. But whatever degree of welfare we have achieved constitutes a democratic response to capitalism, and I cannot imagine any democratic way of restoring the discipline of hardship to which he is so ardently committed. Most of us are not heroes. Of course, the poor can be punished; there may well be, there apparently are, temporary electoral majorities in favor of doing that. But the long-term curtailment of the welfare state is radically unlikely without political repression. Within the limits of democracy, if there is to be hardship, there must also be a more equal sharing of risks and opportunities. It is in this direction that democrats might look for an alternative to “over-insurance.” Here is Tawney again, this time in 1912:

It is quite true that the bearing of risks is bracing, if it is voluntarily undertaken, because in that case a man balances probable gains and losses and stakes his brains and character on success. But when the majority of persons are hired servants, they do not decide what risks they shall bear. It is decided for them by their masters. They gain nothing if the enterprise succeeds; they have neither the responsibility of effort nor the pride of achievement; they merely have the sufferings of failure. No wonder that, as long as this is so, they desire above all security…. In such circumstances the plea that men should be allowed to take risks because it braces their character and calls for the fine qualities—which is true—is an attack not upon modern attempts at giving the wage-earner greater security, but upon the whole wage system…. To give men the will not to be poor, we must first of all give them control of the material conditions on which their lives depend.4

But an attack on the wage system, in the name of democratic risk-taking, is very far from what Gilder has in mind. For him, democracy is little more than a cowardly escape from the rigors of entrepreneurial life.

4.

With much of Gilder’s book I cannot deal here. He writes at a frenetic pace; he rides a hundred hobby horses. He is full of silliness, but he also gives us occasional glimpses of common sense. Beneath his larger arguments, there is a substratum of quiet, almost incidental recognitions: of how this or that welfare program went wrong, of how governmental services might be economized and bureaucracies made more efficient. But the whole purpose of the book is a defense of capitalism through grandiose inflation of entrepreneurial activity. Here is the lyrical Gilder, and I would fail entirely to give the reader any sense of what his book is like if I did not say something about the author as celebrant and singer of hymns.

Capitalism for him is a kind of altruism, the entrepreneur is the prototypical giver of gifts, and his enterprise is a “venture of reason…launched into a world ruled by morality and Providence. The gifts will succeed only to the extent that they are altruistic and spring from an understanding of the needs of others. They depend on faith in an essentially fair and responsive humanity. In such a world, one can give without a contract of compensation. One can venture without assurances of reward. One can…” and so on and on.

The capitalist invests money, according to Gilder, much as I give a dinner party. He hopes for financial return, as I hope for return invitations, but his first concern is to please potential customers as mine is to please my actual guests. Somehow I doubt that this is a useful account of the investment policies of General Motors. But it also doesn’t fit the newest and smallest entrepreneur. For while he may spend money in the mere hope of return—“search and you shall find, give and you will be given unto, supply creates its own demand”—his customers get only the goods and services they pay for. And caveat emptor is (until the rise of the regulatory state) the rule of the transactions. But “let the diner beware” is not the rule of my dinner party, else I would not long have guests.

Giving is obviously a feature of all exchange relationships; so is taking. But to argue as if the giver of gifts were always focused, ultimately, on personal advantage, is radically to misunderstand what is going on. “The essence of giving,” writes Gilder, “is not the absence of all expectation of return, but the lack of a predetermined return.” And then capitalism is moralized by analogy: “Like gifts, capitalist investments are made without a predetermined return.” The analogy is supported by reference to a number of anthropological writings—which is to say, Gilder attaches a few footnotes to his hymns.

His attitude toward the scholarly literature, however, is radically exploitative. More like an actual than a mythical capitalist, he takes what he finds useful from workers in the field, with little respect for the integrity of their enterprise. And he makes no effort to alert readers to arguments in the literature different from his own. Marcel Mauss, for example, closes his classic essay, “The Gift,” from which much later anthropological work follows, with an account of the solicitude and cooperation of the welfare state as a renaissance of gift-giving. Even more important for my immediate purposes is Richard Titmuss’s The Gift Relationship, a careful and suggestive study of blood donation in Great Britain. Here is an example of pure altruism. British blood donors cannot specify the recipients of their blood, and they are given no future entitlements in exchange for it. Unlike capitalists, they make their gift to strangers, with no expectation of return, and the gift expresses, Titmuss argues (on the basis of extensive interviews with donors), a strong sense of communal solidarity. For gifts of this sort, there is little room in Gilder’s world, and it follows that whatever wealth is generated there, it is bound to be an impoverished place.

5.

Gilder is full of what I suppose is male aggressiveness and what I am sure is entrepreneurial energy. But he is not full of new ideas. For all his talk of innovation, for all his embrace of fashionable theories (above all, his spiritualized version of supply-side economics), what he finally has to offer is Horatio Alger and Life with Father. His book is indeed a gift—to Reaganite intellectuals and politicians. He suggests that they imagine themselves as noble adventurers and heroes of the providential order when all they want to do and all they are going to do is apply the spurs: more poverty for the poor, more wealth for the wealthy.

  1. 1

    R.H. Tawney’s Commonplacebook, edited by J.M. Winter and D.M. Joslin (Cambridge University Press, 1972), pp. 56-57.

  2. 2

    See, for example, Martin Carnoy and Derek Shearer, Economic Democracy: The Challenge of the 1980s (M.E. Sharpe, 1980), pp. 170-172.

  3. 3

    Japan as Number I: Lessons for America (Harvard University Press, 1979), p. 195.

  4. 4

    Commonplacebook, pp.33-34.

  • Email
  • Print