Over 40 years, George Gilder has published deep and insightful writing on many topics: technological futurism, supply side economics, the nation and culture of Israel, the philosophy of money. What’s more, these works have staying power: one of his earliest books, “Men and Marriage,” which explores the cultural impact of the sexual dynamics between the sexes, is experiencing a fresh round of interest and discussion in the wake of a re-issue by Canon Press, who has also made a documentary about the author’s life. 

Gilder’s latest book is a follow-up to “Life After Google,” about which I interviewed him in 2019. He told me via email that my review was “fabulous […] It was the most comprehensive—and comprehending!–job anyone did on the book.” You can read the review here and listen to the interview here. Naturally, I was excited to read the next phase of his thought. 

The Foundation of Wealth is Information 

So what is life after capitalism? Has Gilder finally surrendered to his critics’ narrative of a rapacious, socially destructive economic system? Surely not. After all, Gilder was the most recognized and vociferous advocate for supply side economics in the 80s, becoming known as Ronald Reagan’s “most quoted living economist.” 

No. What Gilder attempts to do in this book is revise and expand the traditional range of views on capitalism and economics—from the Marxists and Keynesians to the Chicagoans and Austrians. He does this by applying a new method of calculating abundance called “time prices,” integrating mathematician Claude Shannon’s information theory and resetting economics “upon its foundational truths: Wealth is knowledge, growth is learning. Money is time. Information is surprise.” 

Gilder argues that wealth is not ultimately defined by capital goods, commodities, raw materials and physical resources, or accumulated currency. Rather, wealth is information. Knowledge. Surprise. 

“The dollar value of the car evaporated in the seconds it took you to crash it against that wall, but its weight did not. The car’s value evaporated, not because the crash destroyed the atoms that made up the Bugatti, but because the crash changed the way in which these were arranged. That arrangement is information.” 

Similarly, someone once pointed out that the caveman had all the physical resources needed to build a computer but was missing the most important component: the information for how to build it. 

Gilder explains surprise and knowledge through the lens of a philosophical and mathematical framework known as Information Theory, the intellectual legacy of mathematician Claude Shannon and other academics in the mid 20^th century. Gilder’s deepest and most thorough exploration of these concepts is found in his 2013 book Knowledge and Power, which I highly recommend despite its density. But the central point is simple to grasp without a technical explanation: knowledge is what truly drives innovation, development, and material abundance in society. That is the first leg of the stool Guilder is building. 

The White Pill of Global Abundance 

The second leg of Gilder’s stool relies heavily on the work of two economists, Gale Pooley and Marian Tupy, and it emphasizes using time prices as a better measurement of money’s changing purchasing power. For the uninitiated, it’s a simple yet significant paradigm shift. It’s also a massive white pill, about which more in a moment. 

Since our economy is wholly manipulated by insidious government interventions, quantifying the true cost of goods and services in currency terms is no easy task. Debasement of the money supply exerts significant upward pressure on prices (“inflation” to the average citizen), yet at the same the innovations and advancements of the capitalists and entrepreneurs exert downward pressure (look at the “deflating” price of a new TV over the years). With this perpetual tug-of-war going on around us, is it a fool’s errand to even attempt to measure changes in prices over time? 

Enter Pooley and Tupy, who developed a deceptively simple calculation to solve this problem: 

“We buy things with money, but we pay for them with time. This means there are two prices, money prices and time prices. Money prices are expressed in dollars and cents, while time prices are expressed in hours and minutes.” 

[…] 

“Time is the only resource that cannot be recycled, stored, duplicated, or recovered. Time prices calculate the hours and minutes needed to earn the money to buy goods and services. Unlike money prices, time prices are unequivocal and universal. All other prices are circular. Measuring value by measured values, commodities by commodities.” 

If you divide the nominal price of an item into the average blue-collar wage of the time, it answers the question, “how many minutes or hours would I have to work to afford X?” It sidesteps entirely the confusion created by inflated currency and its reduced purchasing power, etc. Here are two examples: 

In 1902, Sears Robuck sold hammers for 53 cents. This sounds like a good deal until you realize that blue collar compensation was 15 cents an hour. A hammer cost 3.53 hours of work. Today, Home Depot sells a basic hammer for around $6.50, and a blue-collar worker earns around $33.39 in hourly compensation, wages, and benefits. This would indicate a hammer time price of around 12 minutes. You get 18.1 hammers today for the time price of 1 in 1902. 

[…] 

If the time price of a basic bicycle had stayed the same since 1910, one would cost around $2,216 today, 66.4 hours times $33.39. The time price has fallen by 95.6% from 66.39 hours to 2.94 hours. For the time required to earn the money to buy one bicycle in 1910, you will get 22.62 today. This represents a 2,162% increase in bicycle abundance on a personal level. 

I encourage the reader to gorge himself on the statistics jam-packed into chapter 9, “An Efflorescence of Abundances,” and marinate in the inevitable shock and delight they bring. The realizations will shock you with two prongs, one positive and one negative: First, what an incredible recognition that our wealth has grown exponentially as our “time prices” have dramatically declined. And on the negative side, how much more wealth and abundance would we have if our government hadn’t bled away so much of our purchasing power with their debasing shenanigans? It’s a white and black pill served together, and we’re fortunate that the medicine is strong enough to overcome the poison. 

The astonishing conclusion of Pooley’s and Tupy’s research is that the global abundance of the most widely used physical resources have dramatically increased over the last few decades, despite the consumption of those same resources increasing along with population growth: 

“[F]or every increment of population growth, global resources have grown by a factor of eight….[T]he only relevant scarcity is human lives. People are not a burden on resources. They are the ultimate resource.” 

Side note: Get this excellent coffee table book, Ten Global Trends Every Smart Person Should Know.

Left unaddressed was the dissonance between this white pill of global abundance and the sense across western society that it can’t possibly all be true. I believe that calculations offered by Pooley and Tupy are accurate, yet why does it feel like the rich are getting richer, the poor poorer, and the middle class is being squeezed in an economic vice? That Gilder leaves this tension unexplored is a significant miss in an otherwise encouraging section of the book.

Money: A Perplexing Miss on Bitcoin 

Money is the third leg of the stool. Gilder’s central thesis on money—that it needs to be rooted in an objective (and not a self-referential) metric so it can properly measure the subjective value of goods and services—is sound, and his argument is developed in greatest detail in 2016’s The Scandal of Money. The basic point is that money is supposed to be a measuring stick, and thus it should be rooted in objectivity. 

The one element of Gilder’s thinking that I admit perplexes me is his insistence that Bitcoin’s hard cap of 21 million coins is a flaw. As anyone who has spent more than 5 minutes with a Bitcoin maxi knows, the hard cap is considered one of its most important attributes, a parameter as sacred and inviolable as the laws of physics. The reasons for this are numerable, not least of which is that an uninflatable money supply is an essential contrast to the fiat currencies which are constantly manipulated by governments, always to their benefit and to our detriment. And while Gilder does vociferously oppose those fiat shenanigans that addict and entice abusive states, he thinks Bitcoin should and will be replaced by a digital currency that has a steady and consistent increase in its supply. 

I fail to follow his reasoning here. As Saifedean Ammous argues, the actual quantity of currency units in a society is irrelevant as long as it’s “hard”; prices are subjective, and they will always adjust relative to each other and the total volume of currency in an economy. Individual goods and their prices are the numerator, while the money supply is the denominator. Fiat expansion of the money supply is unethical because it dishonestly spreads out the claims on resources; it’s a surreptitious and hidden redistribution of wealth. Yet Gilder explicitly argues that as abundance increases, the money supply needs to necessarily expand with it. 

But this makes no sense to me. If money is a measuring stick, as Gilder is fond of saying, then why would we want the measuring stick to change? Prices should adjust relative to the unchanging measuring stick. 

I asked Gilder about this when I interviewed him in 2019. His answer, which I still find unconvincing, is available here. This is one major disagreement with him, and laymen like me would be well-served to hear a deep discussion between Gilder and a pro-hard-cap Bitcoin intellectual who matches him in knowledge and intelligence. There is so much we all agree on, and I’d like to see this wrinkle ironed out. 

Life After Capitalism 

Everything Gilder covers in this latest work can be summarized as follows: 

All the schools of economic thought, from the Marxists to the Monetarists, fail to recognize that people—with all their creative capacity—are the true source of wealth, innovation, and abundance rather than any other physical resource. 

Free people up and they will discover information (knowledge) that unleashes unfathomable growth in productivity for society. 

Refuse to meddle in the mechanics of money, and wealth will be measured and distributed correctly and justly. 

Everything else flows from these ideas. 

Gilder has proven many times over his ability to see around the corner of our technological society. He’s worth giving your attention.