The Nation's Pulse / Gildering the Lily
Haag, Ernest van den
GILDERING T*..'E LILY George is at it again ("Capitalism Is for Givers," TAS, February 1982). He's put himself in charge of showing that capitalists are nice guys and not nasty money grabbers...
...he is able to demonstrate the altruistic motives he b y E r n e s t van den Haag w i t h a . r e p l y from George G i l d e r so generously attributes to capitalists only by using an equivocating vocabulary...
...Does George want to be the exact reciprocal of Ayn Rand, the bard of selfishness...
...and (3) E q u a l i t y - - a l l the above are more equally distributed in capitalism than in any other industrial system the world has known...
...He was a professor a f t e r all, and professors have always thought that tenure makes them better than anybody else...
...The ars of MGM was not grana artis as pretended...
...The actual effects of capitalism are (1) Freedom--individual, economic, and political freedom--without which t h e r e can be n e i t h e r good nor bad morality, more freedom than can be associated with any other economic system the world has known...
...This is silly...
...Surely no more than any other economic system...
...YOU CAN LEARN TO MAKE IT HAPPEN IN THE POLITICS PROGRAM CHRISTENDOM COLLEGE Congressman Robert Dornan [R., Calif.] is one of th e participants in the Politics Program at Christendom...
...Literature, the arts, the humanities, and some purely intellectual activities are partial exceptions: They are not created only for sale...
...Nonetheless...
...Are there really Christian economic systems...
...Giving without predetermined returns, as in capitalism or the potlatch, is distinguishable from simultaneous exchanges: Barter, like socialism, must be planr(ed...
...George thinks that this effect is the motive of capitalists...
...George insists that capitalism is a Christian system, which "partakes of the very essence of good--productive human activity...
...It can...
...except insofar as wealth is always assembled for consumption, whatever the economic system...
...r ~ a p i t a l i s m , " George insists, "begins with giving...
...I find it quite legitimate nonetheless...
...But actually Gilder only presents evidence for exchanges...
...Smith actually used his i low opinion of businessmen to throw into relief the independently beneficial effects of the actions businessmen engage in to gratify t h e i r motives, selfish or unselfish...
...No man, neither I, nor certainly George, is merely a rational calculator of utilities, let alone pecuniary ones...
...Ernest ascribes to me a confusion about motives and effects...
...Otherwise, I am afraid that Ernest either misquotes me (there was no dash in my assertion that the system "partakes of the very nature of good productive human activity") or misstates my argument (I do not deny, on the contrary I insist, that a concern for effects is essential to charity), or misunderstands my point (one consuits anthropology not for historic lines of causation but for clues to human nature...
...The model can explain the effects of the market on anything connected with it--cars, crimes, fertility, or what have you...
...posture against Communism...
...Why is capitalism more spiritual (or whatever the opposite of " m a t e r i a l i s t i c " is) than feudalism or socialism...
...Can no religion be exclusively interested in salvation from, not in, this world, economy and all...
...I see no economs objections to Islamic, Buddhist, atheist, or idolatrist capitalism...
...thinks...
...Finally he makes a profit and usually he reinvests it, deferring still further his self-indulgent consumption of wealth...
...Now, why is George so bothered...
...2) Standards and levels of living higher than those of any other system, as ill u s t r a t e d by average purchasing power, health, longevity, education, leiSure...
...But that does not satisfy him...
...This helps us to understand reality--if we don't confuse the model with it...
...but then neither is his...
...Utility maximizing" includes maximizing any form of utility not excluding gratification of altruistic sentiments...
...Neither was donating work, or investments, or cars...
...Primitive gift giving did have the economic ("selfish") motivation which George feels even today's investors don't have...
...One more point...
...It celebrates, but does nothing to "assemble or distribute," wealth...
...Which is fortunate since Gilder, though trying hard, could not produce one...
...Adam Smith, to be sure, thought little, of businessmen...
...as the stockholders hoped, gratia pecuniae...
...Capitalism was exported from Europe where the potlatch was unknown...
...But he thinks the Pope is wrong in not realizing that capitalism is the system most apt to correct what he finds morally objectionable in the economic system...
...Here van den Haag falls into the same reductionist trap as Adam Smith, trying to inflate a concept of markets into a theory of capitalism...
...But George is obsessed with motives, not with the effects which interest profane people like myself...
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...George never bothered to find out anything factual about motives, not even by simply asking people, or by experimenting, to determine the relative importance of altruistic and egoistic motives...
...But there is no reason to believe that businessmen are worse than.dentists, professors, plumbers, r e p o r t e r s , government employees, or autoworkers...
...just as the latter do not explain markets...
...But George is discussing capitalists, not novelists or physicists...
...lust it...
...or less "fundamentally amoral...
...He used the economic model not to explain man and his motivations in general but only to explain the market mechanism, as Gilder himself acknowledges...
...I do believe that an altruistic orientation is more conducive to such effects than a selfish one...
...Why indeed should they be the selfless sorts George insists they are...
...In any event, hewas more right than George Gilder...
...So do the churches...
...We all have noncalculated and nonrational emotions and act on them...
...I don't think any other justification is needed...
...It is good or bad depending on whether food or poison is produced...
...Would exploitation by the many of the few be so much better...
...Perhaps Ford would have preferred to cultivate his garden, but there was no profit in it...
...that when Henry" Ford started to produce automobiles, he thought he would make a profit...
...But worse, Gilder confuses a methodological device--a model helpful in determining what would happen if someone were interested only in maximizing one thing or another under given conditions-with a depiction of reality...
...Effects matter, George...
...Investors who may suffer losses certainly don't intend their investing as gift-giving...
...It is not a gift ifI send $18 to The American Spectator and get a year's subscription...
...THE AMERICAN SPECTATOR' MAY 1982 23...
...Feasting and potlatching illustrate a capitalist tendency to assemble and distribute wealth," Gilder writes...
...George believes it is wrong to think that " c a p i t a l i s m is fundamentally amoral and materialistic...
...Because I believe the concept of selfinterest, like utility maximization, is meaningless or tautological (particularly when described as "not excludhag gratification of ahruisitc sentiments"), I think the sources of capitalist success need a better explanation...
...Wherefore, Adam Smith was right in his celebrated "it is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner but from their regard for their own self interest...
...Businessmen are bastards" the older Kennedy is said to have told his son Jack in a rare moment of candor...
...Neither intended selfless donations...
...In this world, however, effects matter...
...But my argument for the altruistic sources of capitalist wealth is based not on motives, which are notoriously difficult to ascertain, nor on the effects of capitalism, which do not explain its causes, but on the observable behavior of the capitalists who contribute most to the success of the system...
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...All that they "assemble or distribute" is consumption...
...But, to paraphrase Alfred Marshall, the organization of social life cannot rest on the best, it must rest on the strongest motives, if it is to be successful...
...But the potlatch, as does feasting, at best consumes, at worst destroys, wealth...
...The pursuit of money itself is no more likely to produce profitable automobiles, or frankfurters, than the hedonistic pursuit of pleasure is likely to achieve happiness...
...it was...
...The Pope thinks capitalist motives are bad and therefore capitalism...
...Feasting," on the other hand, occurs in all known economic systems, capitalist or not...
...God cares about motives, not effects...
...Ernest van den Haag Fordbam University New York City George Gilder replies: I never thought it would happen after all these years as a humble student of Ernest van den Haag, but I am afraid I am going to have to give him some urgently needed instruction...
...George attributes to Adam Smith " a crude homo economicus.., a utility maximizing agent...
...But, unlike Gilder, Smith realized that the free market prevents damag e from selfish motives and indeed causes them to produce beneficial effects...
...Solidly trained, be bases his political activity squarely on the natu.ral law...
...Religious truth has cohabited with many economic systems and is independent of them, as they are of it (even if religious institutions are not...
...In this he was no different from the men who worked for him, earning their wages by producing automobiles just as Ford was earning his income...
...The primitives wanted to get something back for their gifts: They hoped for a profitable exchange, just as today's investor hopes for a profitable return...
...He must begin by suppressing his own desire to consume (i.e., save) and continue with sacrificial effort and investment...
...I f religion is true its truth must necessarily apply to the economic s p h e r e , " he...
...What George seems to be opposing here is simply rational behavioi-, which always involves maximizing achieve22 THE AMERICAN SPECTATOR MAY 1982 ment of one's goals, altruistic or egoistic...
...I suspect that this is the least significant thing one can say about Henry Ford, with the possible exception of grandly declaring that he was selfinterested...
...nor did capitalism historically grow out of it...
...But such systems don't work except in small coherent groups such as families and monasteries...
...Even if Smith were wrong on the actual motives, what difference would it make...
...I suspect that when Henry Ford started to produce automobiles, he thought he would make a profit...
...But when he .earned his money by producing and selling cars Ford was in fact earning it, w a s n ' t he...
...Unlike Gilder, the Pope also attributes tO capitalism poverty, actually caused by the absence of capitalism...
...At any rate, even if the motives of capitalists were as selfless and morally splendid as Gilder believes they are, they wouldn't help, if the effects were bad...
...But why less...
...But they sell for profit...
...He's put himself in charge of showing that capitalists are nice guys and not nasty money grabbers and that capitalism, as a system, is based " not on selfishness, but on morally praiseworthy motives such as altruism...
...But the model does not replace engineering, psychology, biology, or theology...
...Yet the Pope shares Glider's own mistake: He confuses motives with effects...
...I do not understand why it is so difficult for defenders of capitalism to see the altruism in the process--or to note its congruence with the ideals of Christianity and other religions--while it is so easy for them to find evidence of selfish materialism...
...It is silly to call this exchange a (reciprocal) gift...
...Smith did not...
...The questions George asks and answers here make as much sense as asking whether capitalism is 'more musical or better tasting ihan other economic systems...
...Capitalism begins with giving...
...He denies that this "giving" is motivated by anything but a " s p i r i t closely akin to altruism...
...The man who sells me a frankfurter from a push cart seems to have t h e same motive...
...He wasn't "giving" the cars away...
...He wants praiseworthy motives as well..Yet, the motives are relevant only to the salvation of capitalist souls...
...Capitalism is immensely successful precisely because the satisfaction of mail's strongest motives is achieved in ways which benefit society...
...What's so terrible about wanting to make a profit...
...Of course, earning does involve giving (i'd say utilizing) effort, time, thought, imagination...
...Her view is not realistic...
...He may be an altruist as welll But he will go on selling frankfurters (or cars) only as long as it is profitableto do so...
...Surely the strongest and the best motives are not always identical --else there would be little sin and we could have a system based on altruism...
...No doubt he was right about some...
...It comforts the-envious to believe that businessmen are meaner than other people but there is no evidence to show that they are...
...Gilder writes, "the anthropological evidence suggests that capitalism begins with the gift and continues with competitions in giving...
...The successful giver, like the profitable capitalist, must be primar: ily concerned with understanding and satisfying the needs of others...
...Although this may motivate some m itself--work can be pleasant--the motive normally remains earning...
...And in capitalism most t h i n g s - - THE AMERICAN SPECTATOR MAY 1982 21 food, shelter, industrial products, cars, movies--are created for sale...
...Communists may have good motives (surely some did in the past) but the effects of Communism are hellish...
...People have more motives for creation than e i t h e r George or I could name (prestige, money, love, envy, power, boredom...
...From a Christian perspective, the economic motive is not the best of all motives...
...Productive human activity" is not confined to capitalism nor is it "the very essence of good...
...nor is an investment, even though the return is not known...
...There is some evidence that George does not distinguish theology from economics as much as he should...
...But he is wrong when he writes that I think "this effect is the motive of capitalists...
...But a benevolent motive cannot be legitimately derived from a beneficial effect...
...Ernest approaches the point when he acknowledges that "you don't get rich by aggression, by enslavement of others, by taking from them . . . you do get rich by catering to others by finding the least costly ways of producing what people want...
...Gilder concludes-that the Pope is right in opposing the "exploitation of the many by the few in a class society...
...The reductionist inanity of calling profit the primary g0al and motive of the capitalist isclear when Ernest wryly "suspect[s...
...Only in the exchange itself is profit the chief effect, transmitting information about the conditionof supply and demand, and registering how well the good or service responds to the needs or desires of others...
...But models, by definition, are meant to abstract from some aspect of reality to focus on others...
...Yet motives (which are anyway mixed) are irrelevant, or, if relevant, are not to be identified with effects...
...Has Marx prevailed in capitalist apologetics ? [] Do you favor a strong U.S...
...Only when he bequeathed most of his profits to the Ford Foundation was Ford "giving.'" His activity in producing cars, directed by the profit motive, was beneficial in its effects, probably more beneficial than the I:ord Foundation ever will be...
...There is more...
...The effects of capitalism--by any criterion I can think of--are better than those of any other system...
...In any case, neither illustrates a "capitalist" tendency: The potlatch never coexisted with any form of capitalism...
...He merely asserted that production--our dinner-does not and cannot depend on "giving" or "altruism...
...the returns come later as do the profits...
...Not that Smith denied (as Gilder seems to believe) any benevolent motive...
...whereas Gilder thinks capitalist motives are good and therefore capitalism...
...or, that they are better...
...You don't get rich by aggression, by enslavement of others, by taking from t h e m . . . you get rich by catering to others by finding the least costly ways of producing what people want...
...Now, fortunately, the effects of capitalism are great, as George knows...
Vol. 15 • May 1982 • No. 5
