George Gilder believes that wealth is ultimately about knowledge rather than our possessions. Now if only government would stop suppressing that knowledge and discouraging innovation.

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If there is anything that makes people nervous about capitalism, it is surely the prospect of instability. Whether it is the boom-bust cycle or severe financial crises, the up-and-downs that seem to be part-and-parcel of life in market economies make us nervous. As a consequence, we look for forces and institutions that claim to inject greater stability into the economy. That usually involves turning to state intervention—sometimes of the deep and wide variety.

The problem with such efforts at top-down control is that it undermines the dynamism that underpins the economic growth that takes and keeps us out of poverty. This concern is central to Life After Capitalism: The Meaning of Wealth, the Future of the Economy, and the Time Theory of Money, the latest book by the economic and technological thinker George Gilder. Even more specifically, Gilder believes that bureaucracy, a long-term overreliance on loose monetary policy, and rampant cronyism are crippling the modern capitalist economy’s capacity to generate wealth.

That’s not an original claim, but what is original about Glider’s argument is his assertion that what ails contemporary economies is an underlying and fundamental clash between human creativity and the forces it unleashes and an attachment to power and control. Over his long career Gilder has written a great deal about the centrality of entrepreneurship to economic dynamism. In this book, however, he underscores two particular themes.

The first is just how much dynamism is being crushed by the quest for perpetual security via state action: so much so that we now experience “life after capitalism,” that is, managed decline overseen by a decidedly uncreative technocracy attached to the status quo of mixed economies. The second is that something distinctly non-materialist in nature—information and the getting and use of it—is the way out of our present conundrum of seeking to manage dynamism in ways that cripple it.

Core to Gilder’s argument is the need to move economics away from a science of scarcity and toward “a redemptive science of freeing human creativity to provide abundance where the only limits are those of time.” That in turn means challenging what Gilder calls “the materialist superstition” that “wealth consists of things rather than of thoughts, of accumulated capital rather than accumulated knowledge.” One reason for demanding such a shift, Gilder argues, is that it is pivotal for distinguishing capitalism from socialism insofar as the latter is bound up with “materialist and determinist premises.” As long as proponents of capitalism let themselves be locked into materialist and determinist outlooks, they limit themselves to the same mindset as socialists and, Gilder maintains, will fail to grasp that “It is man’s ingenuity that creates economic growth and wealth.”

Much of this is reminiscent of the thought of the economics and business professor Julian L. Simon, especially as expressed in his 1981 book, The Ultimate Resource. Simon is perhaps most famous for his decisive undermining of the population-bomb doomsters, personified by the biologist Paul R. Ehrlich. Simon showed that there was nothing to fear from population growth as soon as you recognized that the human mind—and lots of human minds—is capable for finding new and productive uses of any number of material resources and in ways that did not inflict terrible damage on the environment.

Gilder, however, takes this notion of the free human mind as the decisive factor in driving economic growth and applies it across the board to economic theory, technology, and our understanding of money. Looking at the question of incentives, for example, Gilder points out that they would yield nothing in terms of human action if there were not a creative mind capable of imagination that preceded them. “As you cannot understand the mind or even the body by pondering physics and chemistry,” he writes, “you cannot understand economics without explaining entrepreneurial creativity.”

From this standpoint, we understand that wealth is ultimately about knowledge rather than our possession of things or even how we arrange our possession of things. We also start to recognize that government efforts to deliver predetermined es cannot help but “suppress surprise, block information, inhibit knowledge, and thereby destroy wealth.” That is especially the case when government regulation effectively discourages innovation.

In this regard, a particular target of Gilder’s ire is the financial sector. Far from being a laissez-faire playground, Gilder notes that a great deal of the financial industry in America and elsewhere is “heavily regulated [and] larded with government guarantees, cheap access to central bank discount windows, federal deposit insurance, and limited liability.” This, he holds, is underpinned by a nexus of corporate-government cronyism.

The long-term consequences of these arrangements, and the control they seek to realize, are twofold. One is the enrichment of those banks and financial institutions that are close to political leaders. The other effect is a political one: a shift of emphasis in the economy away from innovators and entrepreneurs in the private sector and toward political leaders and public officials. In a way, Gilder claims, this was taken to absurd lengths during the pandemic:

Both the Trump and Biden administrations, with the collaboration of Congress, ordered tens of millions of Americans to cease or drastically curtail productive activity. This was politically possible only because Congress was able to fabricate, and the Fed facilitate handing out, what would eventually approach $10 trillion to suddenly unproductive workers and businesses. But money untied to production has no value. When, after a period of hoarding, Americans tried to spend that money, they found its value collapsing in the face of anemic production, twisted supply chains, and suicidal restrictions on energy production.

A worse effect, however, of viewing human beings primarily as users rather than as creators is the radical discounting of the importance of liberty. For if “life after capitalism” is characterized by anything, it is the widespread forgetting of the importance of Western liberal constitutionalism and the associated undermining of freedom of thought, enterprise, and association by ever-expanding bureaucracies.

Among other manifestations, this may take the form of DEI officials in universities declaring what you may or may not say, or civil servants in Washington, D.C., who are impossible to fire, or regulators whose raison d’être lies in the endless promulgation of rules and ordinances that surpass all understanding. In these circumstances, the only entrepreneurs who flourish are those who apply their creativity to the acquisition and new uses of power.

In the face of these formidable obstacles to economic creativity, however, Gilder is not a pessimist. For what pervades this book is Gilder’s confidence in free human beings and the creativity that is theirs by nature. Part of this is a question of humanity’s possession of reason and free will. Yet just as important from Gilder’s standpoint is the gift of human imagination. Even in the worst conditions and the absence of economic incentives, it is impossible to stop men and women from seeing in their minds as yet unimagined possibilities for themselves and those they love. As long as we maintain faith in that uniquely human capacity, we need never resign ourselves to the mediocrity of life after capitalism.