Sychophantasy in Economics

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A Review of George Gilder’s Wealth and Poverty

by Louis O. Kelso and Patricia Hetter Kelso

In his Inaugural Address on March 4, 1933, President Franklin D. Roosevelt told the American people: “Only a foolish optimist can deny the dark realities of the moment . . . Plenty is at our doorstep, but a generous use of it languishes in the very sight of the supply.”1

Twelve years into the New Deal, Paul G. Hoffman, president of the Studebaker Corporation and Chairman of the Board of Trustees of the Committee for Economic Development, told a Senate subcommittee: “America’s capacity to produce a richly varied pattern of goods and services has been amply demonstrated. We have not yet shown a corresponding ability to maintain peacetime market demand at satisfactory levels.”2

Senator William Fulbright agreed. “Much has been said here about our productive capacity. We have already proved that in the war. We can produce. I don’t think there is any question about that. The real problem is on the consumption end.”3

In 1976 Secretary of Agriculture Earl L. Butz said: “Our productive capacity so far exceeds our capacity to consume, that we couldn’t even eat all the wheat we grow if it were free.”4 This is true of all agricultural commodities. The productiveness of the American cow is a national scandal. The government now spends $250,000 an hour to buy the dry milk, butter and cheese that farmers cannot sell;5 storage of surplus cheese alone — 560 million pounds of it — costs taxpayers about $1 million a day.6

Only in time of war, or in all-out preparation for war, does the capital plant of the U.S. economy operate anywhere near full capacity.

Meanwhile, on the American consumer front, growing numbers of middle-class Americans are helplessly watching their standard of living, never opulent at best, shrivel. Even before the Reagan Administration’s welfare cuts, the American family was in deep economic trouble. “You can’t squeeze blood out of a turnip,” a judge was quoted as saying in 1976. “Most people who come before me because they can’t agree on money matters simply don’t have enough money to live on comfortably. They can’t make it financially in marriage . . . and they can make it even less out of marriage.”7

A Tulsa, Oklahoma, divorce court judge explained in 1975 why his city’s divorce rate was more than twice the national average, and why the so-called affluent were coming into his court in increasing numbers. “I think the less wealthy people are just tired of the mundane life they are tied to. Let’s face it, a family of three kids with daddy making $3.00 an hour is a life sentence. Being stuck must be a horrible feeling and perhaps divorce is the way they see to get away.”8

As for women, legal experts generally agree that with or without the Equal Rights Amendment, “the vast majority of separated or divorced women can’t support themselves or their children on court-awarded alimony or child-support payments, even if they manage to collect every cent the courts awarded them.”9

The plight of old people, never enviable, has degenerated as inflation eats away the few assets that stand between them and public assistance. “We have senior citizens in their eighties, some very ill and half blind, who in financial desperation come in and ask us for jobs,” reported the director of an organization that works with senior citizens in the Bronx.10 The lines outside San Francisco’s St. Anthony Dining Room are swelling with middle-class people. One seventy-one-year-old woman told the director: “. . . I was hungry for about a year and a half. It took me six months to get nerve enough to eat here — it was either that or dying.”11

As for children, the Department of Agriculture has estimated that a child born in 1981 may cost at least $100,000 more to rear to the age of eighteen than a child born in I960.12 Abused, abandoned, and murdered children are now routine. If the trend continues, Americans may soon be as inured to the suffering of the young and the old as were Russians under the tsars or as residents are of modern Calcutta.

We might conceivably expect a book entitled Wealth and Poverty to have some relevance to the economic problems of real people such as these — fellow citizens, neighbors, and even ourselves. This expectation is heightened when the book in question is acclaimed by ranking members of the Reagan Administration and representatives of the business press. David Stockman, for example, assures potential readers that Wealth and Poverty is “Promethean in its intellectual power and insight. It shatters once and for all the Keynesian and welfare state illusions that burden the failed conventional wisdom of our era.” Nathan Glazer of Harvard University characterizes the book as: “A really remarkable analysis of American social and economic policy that demolishes a host of pieties as to the causes of poverty and the conditions that overcome it.” Malcolm Forbes, Jr. calls it “A first-rate analysis of the supply-side school of economics” and “‘must’ reading for the new year.”

But the title turns out to be misleading. Gilder does not distinguish between wealth and income. That wealth consists of “large possessions; abundance of things that are objects of human desire; abundance of worldly estate; affluence; riches; abundant supply; large accumulations; all property that has a money value or an exchangeable value; all material objects that have economic utility”13 will not be learned from Gilder, or even acknowledged as relevant. This perhaps is due to Gilder’s peculiar methodology. As he explains in the preface, this present work has sprung from an earlier one, Visible Man, a sociological venture in which he undertook to understand poverty by studying the poor. But that was reversing the proper order of things. Just as in physics it is necessary to study matter in order to arrive at an understanding of antimatter, in economics one can only understand poverty by considering what wealth is and where it comes from. Since Gilder also confides in his preface that he is a second-generation intimate of the Rockefeller family, and bound to David and Peggy Rockefeller by ties of love and gratitude, he would seem to have had a rare opportunity for field work.

Gilder’s close Rockefeller connection makes such assertions as the following not only puzzling but downright ironic.

Work, indeed, is the root of wealth, even of the genius that mostly resides in sweat.14

The only dependable route from poverty is always work, family and faith . . . in order to move up, the poor must not only work, they must work harder than the classes above them.15

Indeed, after work the second principle of upward mobility is the maintenance of monogamous marriage and family . . .16

An analysis of poverty that begins and ends with family structure and marital status would explain far more about the problem than most of the distributions of income, inequality, unemployment, education, IQ, race, sex, home ownership, location, discrimination, and all the other items usually multiply regressed and correlated on academic computers. But even an analysis of work and family would miss what is perhaps the most important of the principles of upward mobility under capitalism — namely, faith.17

Why is capital ownership omitted from this list? Surely, the most effective cure for poverty is to be born or marry into one of the five percent of American families which own virtually all of the economy’s productive assets. The next most effective cure would be to acquire one’s own viable capital estate in the same way that the rich have always done. Gilder to the contrary, the rich do not get or stay that way primarily through hard work, monogamy, procreation, and gullibility but through access to credit which enables them to buy and pay for capital out of its earnings.

Gilder appears to know nothing of business, corporate finance, or property law. He shows no awareness of how virtually all new capital is financed in the American economy, and he is entirely oblivious to the effects and implications of a system of finance which relentlessly makes existing significant stockholders and capital owners richer, while effectively barring all new entrants other than geniuses or extraordinarily lucky people into the capital-owning class.

Indeed, Gilder’s book would have been more accurately entitled “In Praise of Plutocracy.” It is simply a repackaging of the hoary old Puritan savings myths, or what Keynes called “the principle of accumulation based on inequality.” Its central argument is that the savings of the rich, and hence the rich as a class, are essential to the operation of a “capitalist” economy. By “sacrificing” present consumption to acquire savings, and then by putting them “at risk” to finance new enterprise and technological innovation, the rich perform a service bordering on the heroic. In Gilder’s rapturous prose:

The benefits of capitalism still depend on capitalists . . . Under capitalism, when it is working, the rich have the anti-Midas touch, transforming timorous liquidity and unused savings into factories and office towers, farms and laboratories, orchestras and museums — turning gold into goods and jobs and art. That is the function of the rich: fostering opportunities for the classes below them in the continuing drama of the creation of wealth and progress.18

Gilder’s concept of “supply” is nothing but an extended metaphor for rule by the few who own virtually all of the economy’s productive capital today, and who will own even more of it tomorrow no matter which economics faction gains control of national economic policy or which political party is in power. Business finance is designed to make the rich richer, and it does just that.

Inconveniently for plutocrats, however, the United States is still a political democracy committed constitutionally to economic democracy. Wealth concentration is repugnant not only to democratic ideals and sensibilities but to several guarantees of the Constitution itself. It is also structurally antagonistic to the private property, free market economy which is the proper economic complement of political democracy. Therefore, the reigning princes of plutocracy — the same interests President Franklin D. Roosevelt called “economic royalists” — find it necessary to repackage for political resale the old myths which rationalize their virtual monopoly of capital ownership.

Plutocrats also have a psychological problem in a political democracy. There is a phenomenon called wealth-guilt, which the German sociologist Helmut Schoeck analyzes most perceptively in Envy: A Theory of Social Behavior. It is not enough to be rich; the possession of wealth must somehow be justified in a social context where the overwhelming majority of people are poor and, so far as the “system” is concerned, destined to perpetual poverty. Riches must somehow be deserved, merited, sanctified. Thus, the apologist for wealth concentration must frame his defense with the sensibilities of the plutocrat in mind, as well as those of the larger society.

The rationalization of wealth concentration in a political democracy involves, first of all, diverting public attention from the phenomenon itself. Just as the apologist for war dislikes photographs of the slaughtered and wounded, the wealth apologist dislikes statistics depicting the distribution of wealth and income. He dislikes rigorous distinctions about what wealth is and what it means in the lives of real people, and also what its absence is like. He is not about to divulge the source of wealth even if he knows it, which, in Gilder’s case, he doesn’t. It is also necessary to maintain the illusion that the road to wealth in the existing order of things is not a footpath as narrow as that leading through the eye of the needle, but a highway broad enough to accommodate all manner of hopeful folk.

True, wealth and income is a taboo subject in polite society—i.e., society inhibited by the wealth-ignorance of the rich. Wealth statistics in the United States today are almost as crude as mortality statistics before Pasteur forced medicine to become a science. But enlightening statistics may be had. In 1977 Senator Russell B. Long, in an introduction to a symposium on Employee Stock Ownership Plan (ESOP) financing, stated:

Despite all the fine, populist oratory and good intentions of great men like Franklin Roosevelt, Harry Truman, Dwight Eisenhower, John Kennedy, Lyndon Johnson — the distribution of net worth among Americans today, in relative terms, is about the same as it was when Herbert Hoover succeeded Calvin Coolidge. The distribution for adult population is as follows: .001 % of the population have a net worth of $1,000,000 or more; .002% have $500,000-$1,000,000; 2.4% have $100,000-$500,000; 1.7% have $60,000-$100,000; 3.1% have $40,000-$60,000; 6.5% have $20,000-$40,000; 10% have $10,000-$20,000; 13% have $5,000-$10,000; 13% have $3,000-$5,000; 50.2% have less than $3,000.19

Gilder, however, mentions the statistical evidence of wealth concentration only to disparage it. Such conclusions as that “‘the top 2 percent of all families own 44 percent of all family wealth, and the bottom 25 percent own none at all’ ” and that “‘the top 5 percent get 15.3 percent of the pretax income and the bottom 20 percent get 5.4 percent'” are not relevant facts to Gilder but unfair statistical conjurations.20 They evidence a “mechanical concern” with wealth and income distribution, an unfortunate “distributionist mentality” which has afflicted conventional economics since Ricardo. This mode of thinking is “forever counting the ranks of rich and poor and assaying the defects of capitalism that keep the poor always with us in such great numbers.” Poverty body counts give the rich a bad image by implying that wealth creates poverty. But most menacing, they impute that the system is unfair, that the deck is stacked. Thus the distributionist mentality “strikes at the living heart of democratic capitalism (sic).”” It challenges “the golden rule of capitalism.”

Now Gilder has earlier regretted that even the great champions of capitalism such as Friedrich von Hayek, Ludwig von Mises, and even Milton Friedman, have not seen fit to “give capitalism a theology” or even “assign to its results any assurance of justice.” Their praise has been pragmatic and technical. Capitalism is good because it produces more wealth and liberty than its competitors. None of these defenders “cogently refutes the thesis that the greatest of capitalists — the founders of the system — were in some sense ‘robber barons.’ None convincingly demonstrates that the system succeeds and thrives because it gives room for the heroic creativity of entrepreneurs.”21 Gilder now takes it upon himself to fill this ideological vacuum. “Capitalism,” he states, “begins with giving.” And the golden rule of capitalism is: Unto him that gives shall be given.

Students of monopoly capitalism have long observed the tendency of this system to confirm one of the Bible’s many double-entry bookkeeping truths, Matthew 25:29, which promises: “Unto everyone that hath shall be given, and he shall have abundance; but from him that hath not shall be taken away even that which he hath.” This is the golden rule of plutocracy. He who owns the economy’s productive capital today will own even more tomorrow, thanks lo conventional business finance. And he who does not own capital, but who must make his productive input through labor, will be robbed of his little labor productiveness by the technological change which eliminates him and makes the capital owner even more productive. But though it fits the facts, this golden rule is not calculated to vindicate the ways of plutocracy to man.

Gilder needs a metaphor to illustrate his own economic beatitude, and he finds it in one of the more exotic customs known to anthropology, the potlatch. The capitalist system, Gilder declares, is an extended potlatch.

Webster’s Third International Dictionary defines potlatch as:

A ceremonial feast or festival of the Indians of the northwest coast given for the display of wealth to validate or advance individual tribal position or social status and marked by the host’s lavish destruction of personal property and an ostentatious distribution of gifts that entails elaborate reciprocation.

But Gilder’s metaphorical specifications have required him to sanitize the potlatch into an event the old Kwakiutl chiefs would never recognize. Expunged is the macho braggadocio, the enviously aggressive attempt to humiliate rivals by greater displays of “generosity” and a superior disdain for wealth. Gilder does not mention that the potlatch, like some of monopoly capitalism’s tribal practices, sometimes was used by rich chiefs to bankrupt poorer ones, nor that, far from being a “contest in altruism,” the potlatch was the literal precursor of the roast. Custom required the visiting chief to sit dangerously close to the fire, and when his host solicitously inquired whether the blaze was too warm for his comfort, to reply manfully that he was shivering with cold. This would be the signal for the host to order the fire piled even higher with wood, augmented on occasion with a few canoes or other goods. The guest had to impassively endure both the psychological and physical heat on pain of losing face.

Nor does Gilder perceive that the potlach had the obvious social function of limiting wealth concentration and power, while at the same time enabling ambitious chiefs to build their personal power bases. Indeed, as things worked out, the most astute chiefs became the richest. But Gilder uses the social sciences only as fishing ponds for exotic metaphors and bits of scholarly flotsam and jetsam that fit into his sychophantasy. As he has observed earlier, “How the rich are regarded and how they see themselves — whether they are merely rich or are also bearers of wealth — is a crucial measure of the health of a capitalist economy.22 Certainly that distinction is crucial to the self-esteem of the rich and social tolerance of wealth concentration. Gilder is eager to portray the rich not only as wealth-bearers, but as wealth-creators and wealth-dispensers. In that great extended potlatch which is the present primitive capitalist system, the capitalist financiers are the reincarnated spirits of the Kwakiutl chiefs, their boisterous vaingloriousness transmogrified into almost saintly altruism and social concern. Gilder’s capitalist is the feast giver who invites humanity to a magnificent spread. By accepting his invitation, humanity incurs a debt which it must repay with interest. But that is only right and just, as Gilder sees it, because the capitalist was the initial giver. The feast was his investment; the reciprocal gift, his returned principal; the interest, his profit. Gilder is so carried away by the pat beauty of it all that he stops just short of declaring that capitalism is love.

We dwell on Gilder’s fatuous potlatch analogy, and his equally fatuous golden rule of capitalism, for two reasons. First, because they are typical of both the substance and style of a book acclaimed by U.S. business and political leaders as “seminal,” “Promethean,” “brilliant,” “a really remarkable analysis of American social and economic policy,” and so forth. In Hans Christian Andersen’s fable, at least the emperor was real — only his resplendent new clothes were a fraud. But in Wealth and Poverty, there is neither emperor nor clothes. This is not a work of reasoned thought, but a vacuous public relations puffball — a pitiful attempt to make the public believe that “supply-side economics” has a credible theoretical foundation, or any theoretical foundation.

Our second reason for dwelling on the potlatch analogy and the golden rule of capitalism is that Gilder claims to have derived them both from one of the few valid truths in conventional economics — Say’s Law. Had Gilder understood Say’s Law — or, more to the point, if the economics profession did — the nation would have been spared from both supply lopside economics and its equally false antithesis, demand lopside economics. But ever since Jean-Baptiste Say discovered the truth that bears his name, economists have circled it blindly, like moths around a flame. They intuit its importance without being able to decipher its meaning.

Say’s Law, compressed into an aphorism — “Supply creates its own demand” — is, as everyone knows by now, the battle cry of the Supply Lopsiders, who have fabricated a rebellion against the Demand Lop-siders, representing the opposite side of Say’s equation. The goal of each is simply power over national economic policy, which neither can hold for long unless the public is persuaded that there is some ideological or practical difference between the two impostures, which there is not.

The Demand Lopsiders, flourishing the colors of the Left, want the economic game rules to maximize consumption through redistribution. The Supply Lopsiders, bearing the standard of the Right, want to maximize production by the plutocrats through accelerating the ownership concentration of technology-harnessing capital instruments.

Both sides invoke the authority of Say’s Law, which holds that in a market economy, if the government will refrain from interference with market forces, the purchasing power generated by production will be sufficient, over a given time period, to enable the purchase of all that is produced. In effect, therefore, Say’s Law states that if government does not interfere with the operation of the free market forces, depressions cannot occur. But depressions do occur, and they have been occurring ever since the burden of production began to be transferred to capital — machinery, land, and structures — at an accelerated rate in the opening stages of the industrial revolution.

Gilder’s understanding of the workings of a market economy, and of Say’s Law as an interpretation of the relationship between production and consumption in a market economy, is grossly defective, and for the precise reasons that economists, as a whole, including the Demand Lopsiders, fail to understand.

In the first place, Say’s Law does not relate to the production, use, financing, acquisition, or disposition of producer goods, i.e., capital goods, in any way. Nor does it relate to the production, use, financing, or acquisition of military goods which are not “consumed” in any sense contemplated by J. B. Say. The production, use, financing, and acquisition of capital goods are governed by capital theory, as Kelso and Adler pointed out twenty years ago in The Capitalist Manifesto (1958) and The New Capitalists (1961).

Adam Smith, whose words J. B. Say was interpreting when he announced his famous law, made this clear:

Consumption is the sole end and purpose of production; and the interest of the producer ought to be attended to only so far as it may be necessary for promoting that of the consumer. The maxim is so perfectly self-evident that it would be absurd to attempt to prove it. (Adam Smith, GBWW, Vol. 39, p. 287.)

Furthermore, Say’s Law, by its own terms, is inapplicable to any modern industrial economy, for in every such economy, the price of one of the two factors of production — labor — is usually distorted beyond recognition. Government, by authorizing and encouraging unions coercively and repeatedly to adjust upward the price of labor, and business, by acquiescing in such an adjustment as long as the costs can be passed on to the consumers, have simply made useless the most basic law of market economies.

This observation should not be interpreted as an anti-labor remark. It is merely anti-economist. We have repeatedly said in our writings that the economist’s face-saving liturgy that treats labor workers as the only true producers of goods and services, and capital as a mere mystical catalytic agent that makes labor more productive, is simply a “big lie” in the Hitlerian sense. The result of it has been that labor workers, along with both the unemployed and the unemployable, have been prevented from becoming capital workers as capital input grew to its overwhelming predominance through technological change — that is to say, they have been prevented from sharing in the production of goods and services as capital owners and from legitimately (i.e., through production) sharing in the consumption of such capital-produced consumer products.

In the light of this, Gilder’s Wealth and Poverty can only be seen as another intellectually dishonest and sycophantic stall-tactic on behalf of the plutocracy to suppress the spread of capital ownership to the ninety-five percent of consumers in the American economy who do not own it now.

In his own day, Adam Smith observed that the capital owners (the “mercantile class”) were already beginning to exploit the capital-less consumers — that, in the “mercantile,” i.e., capitalist, system

the interest of the consumer is almost constantly sacrificed to that of the producer; and it seems to consider production, and not consumption, as the ultimate end and object of all industry and commerce. (Smith, op. cit., p. 287.)

Thus the Supply Lopsiders carry on an old, though hardly honorable, tradition.

For many years, the authors of this review believed that society’s steadfast refusal to perceive that capital workers (i.e., capital owners) are themselves a factor of production and a creator of “value,” in the identical sense that labor workers are, was an unconscious anachronism whose corrective was a higher level of consciousness. We still assert this to be true in the case of the general public. But the owners of concentrated wealth, we have belatedly come to understand, have a vested interest in keeping the capital factor uncomprehended by the capital-less many. Their allies and confederates in this endeavor are the professional economists. Once it is admitted that capital workers make productive input in exactly the same ways — functional, moral, political and economic — that labor workers do, the macroeconomic game of capital monopoly will be over, and methods of finance that make the rich ever richer and keep the capital-less capital-less will end.

Then the question of who owns the capital plant will he understood as crucial and vital to the capitalist economy’s health, as well as to economic justice and opportunity. In a private-property economy, the income which a labor worker or a capital worker produces belongs to him. Thus the principle of distribution of a capitalist economy to be deduced from Say’s Law is: “From each according to his production, to each according to his production.” But this rule, applied to the concentrated owners of highly productive capital instruments, means that the few can produce everything required by the many, and therefore, because of Say’s Law, the many will be rendered underproductive or nonproductive, and thus forced to live partially or completely as wards of redistribution, boondoggle, welfare, or charity, supported by taxation and inflation.

All this does not mean that Gilder is wrong to say that the American Economics Establishment is in dire need of a new apologetics. Between 1929 and 1932, the private property economy of the United States broke down. It broke down because, as Kelso and Adler pointed out in The Capitalist Manifesto and The New Capitalists,23the enormous productive power of the tiny minority (about five percent) of the population who owned its capital could not provide adequate incomes to support the consumption of the labor workers, the unemployed, and the unemployable. As this became clear to the American people, they elected Franklin D. Roosevelt in the hopes that he would solve the problem. Relying on the demand lopside economics of John Maynard Keynes, they set to work to answer the question: “What can we do to alleviate the effects of poverty?” The result was the elaborate network of welfare and boondoggle channels that redistributed income from the middle-class labor workers and upper-class capital workers to the lower-paid labor workers and the non-workers. Gilder rails against such redistribution by the liberal demand lopside economists and their followers.

“When government gives welfare, unemployment payments, and public-service jobs in quantities that deter productive work, and when it raises taxes on profitable enterprise to pay for them, demand declines. In fact, nearly all programs that are advocated by economists to promote equality and combat poverty . . . reduce demand by undermining the production from which all demand derives . . . [demand] originates with productive work at any level. This is the simple and homely first truth about wealth and poverty. ‘Give and you will be given unto.’ This is the secret not only of riches, but also of growth.”24

This “essential insight of supply-side economics” happens to be false. The case for Supply Lopside economics cannot be built on the case against Demand Lopside economics. Without understanding that there are two factors of production that are in competition; that each individual needs to be productive through the ownership of both; that technological change, which continues day after day, has made production through capital ownership far more potent than production through labor; and that the individual freedom from toil which technology makes possible can be enjoyed only by capital workers, supply-side economics is as senseless as its demand-side counterpart. The Demand Lopsiders and the Supply Lopsiders are simply seesaw misinterpretations of the J.B. Say equation.

Economists will continue to be baffled by Say’s Law until they realize that under it, distribution is a function of production by each consumer. Only after that insight does it become obvious that true capitalism must be a capitalism of the many, not of the few. Gilder does not know what capitalism is. He is acquainted only with the limited dynamism of primitive or robber-baron capitalism. But that is also true of the members of the professional economics craft-guild. It is their expert ignorance that has made the Supply Lopside hoax credible. The concept of Democratic Capitalism, a system which distributes purchasing power to all consumers as a result of their direct participation in production — either as labor workers or as capital workers — or both — is beyond their theoretical comprehension, as long as they cling to the obsolete doctrines that were, and still are, the subject of their doctoral dissertations.

Meanwhile, the propertyless many must somehow be provided with purchasing power. That was the only lesson the Great Depression taught. Neither Gilder nor any conventional economist knows how to bring about this consumer demand except in the way which the Keynesians so thoroughly exploited: income redistribution. As the experience of the Reagan administration is demonstrating, without capitalist tools like the Employee Stock Ownership Plan (ESOP), government redistribution will continue because it must. Such capitalist financing methods can substitute capital-produced incomes for welfare, social security, and boondoggle.

Gilder and the Supply Lopsiders believe that to arrive at a truth, they need but invert a lie, and that the antidote to one wrong question is a different wrong question. They counter the question of the redistributive left, “How can we eliminate the effects of poverty?,” with the question of the capital-hoarding right, namely: “What can we do to revitalize the productive system?” A proper Democratic Capitalist question might be: “What can we do to make those who are involuntarily underproductive or nonproductive really productive or more productive?”

There is little in Gilder’s book to suggest this question, much less to answer it. In exposing many of the artful errors of the liberals, he undertakes to build a fortress around the institutions and policies that support the Divine Right of the Rich to Stay Rich and Get Richer, and to preserve the nonownership of capital by the overwhelming majority.

John D. Rockefeller stated Gilder’s message far more honestly, and certainly more succinctly, in 1905. To a reporter who asked him how he became rich, he replied:

I believe the power to make money is a gift from God . . . to be developed and used to the best of our ability for the good of mankind. Having been endowed with the gift I possess, I believe it is my duty to make money and still more money, and to use the money I make for the good of my fellow man according to the dictates of my conscience.25

 FOOTNOTES

1  America in Midpassage, Charles & Mary Beard (New York: The MacMillan Company, 1939). Vol. III, p. 208.

2  Paul C. Hoffman, President of Studebaker Corporation and Chairman of the Board of Trustees of the Committee for Economic Development, in Hearings on S. 380, the Full Employment Act of 1945, before a subcommittee of the Committee on Banking and Currency, U.S. Senate, 79th Congress, First Session, July-September 1945, p. 709.

3  Ibid., Page 845.

4  New York Times Magazine, June 13, 1976, p. 53.

5 San Francisco Chronicle, March 9, 1982, p. 7.

6  San Francisco Chronicle, Dec. 25, 1981, p. 14.

7  “Your Legal Rights As A Woman.” Family Circle, May 1976, p. 166.

8  New York Ttmes, Jan. 15. 1975. p. 16.

9  Family Circle, op. cit.

10  New York Times. Dec. 1. 1974, p. E-6.

11  San Francisco Chronicle, Nov. 25, 1981, p. 3.

12  “Cost of Rearing Child said to be $134,000,” New York Times, Nov. 12, 1981, p. B-5.

13  Webster’s Third New International Dictionary of the English Language, unabridged.

14  p. 51.

15  p. 68.

16  p. 69.

17  p. 72.

18  p. 63.

19  The American University Law Review, Spring 1977, Vol. 26, No. 3, pp. 515-16.

20 Typically, Gilder derides median statistics when they verify wealth and income concentration and then cites other median statistics in support of his contention that wealth and income distribution in the U.S. economy is not static but dynamic. (See pages 10 and 11.)

21  p. 6.

22  p. 50.

23  Op cit. In The New Capitalists, they predicted that if the Demand Lopside solution, rather than the capitalist solution, continued to be implemented, inflation would ravage the American economy and its markets would be taken over by foreign competitors, as in fact has happened.

24 Wealth and Poverty, op. cit., p. 45.

25  The Rockefellers, An American Dynasty, Collier & Horowitz (New York: Holt, Rinehart & Winston, 1976). p. 148.

— Originally published in THE GREAT IDEAS TODAY 1982, Encyclopædia Britannica, Inc.