There are some genuine insights here, but this book is generally disappointing and repetitive. After reading The Spirit of Enterprise, Gilder's excellent history of the Simplot family--which improbably built a starter fortune growing potatoes in Idaho and then, more improbably, built a titanic fortune financing Micron Technology and the development of DRAM--this book was a terrible comedown.
You'll see Karl Popper's ideas on falsifiability fully explained to the reader twice (and just nineteen pages apart!), you'll see Kurt Godel and his incompleteness theorem appearing in inexplicably repetitive instances, as well as other examples of poor organization and editing. The reader gets the impression that this was just a loose collection of essays intended for serial publication in some online magazine. Sadly, they were never cleaned up once combined into a book.
Honestly, this book should have been shortened into a New Yorker article, one of those too-long New Yorker articles nobody reads.
A few thoughts on George Gilder as a thinker. As someone who "grew up" professionally during the 1990s and 2000s, I'm part of a generation of investors with deeply mixed feelings about Gilder. We all hung onto his every word in the late 90s when he wrote lovingly about the "Telecosm," that is until everything went off a cliff with the collapse of the telecom bubble.
Granted, it looks like Gilder suffered at least as much as his readers. And even after the tech/telecom crash and the catastrophic bankruptcies of Global Crossing, Exodus Communications and many other names Gilder promoted [*], one still has to respect this guy's ability to think big and cogently explain technology trends and themes. Gilder sings out eloquently about the future, about technological innovation, about the world of the possible. This gift that he usually has, and the fact that he didn't live up to it in this book, is why Life After Capitalism is such a disappointment.
[*] Note: That Wired article I linked to gives us another gift, a generous gift, teaching the dangers of epistemic arrogance. Gilder shows how people confidently misremember and re-narrate reality so they could be right all along, as he makes the hilariously false claim "I knew that it was going to crash, I really did." A world-class example of "postdicting."
Notes:
Prologue:
1) We use the term "after capitalism" or "post capitalism" because we're not actually practicing capitalism at all; we can better define it is "a new generation of government rules" or "emergency socialism."
2) He considers this new post-capitalist era to begin in 1971 with emergency monetarism, with Nixon and Milton Friedman delinking money in gold, leading to what the author calls "a hypertrophy of finance."
3) Four canonical propositions:
Wealth is knowledge
Growth is learning
Information is surprise
Money is time
4) "Time is the only money that politicians and their bankers cannot print or distort, counterfeit, or fake."
Chapter 1: Life after Capitalism
5) As a global surge of capitalist abundance liberates the poor, capitalism's critics have found a new capitalist victim--the Earth itself. ...abundance becomes poverty because it despoils the world. This argument--an argument not for socialism, per se, but for government directed economic sustainability--is the argument that has apparently won the day."
6) "We face the prospect of a life after capitalism and its most negative sense: a life of scarcity, deprivation, and fear."
7) Noting Adam Smith's "error" that capitalist theory was on foundation of rewards and punishments rather than on human ingenuity, creativity and accumulating wisdom. "Smith came tantalizingly close to identifying the true source of wealth, which is knowledge."
8) On learning curves, Moore's law as an example of a learning curve, as is a cost curve, where prices drop with every doubling of units sold (like eggs, trucking miles, memory, bandwidth, etc).
9) [This makes me really wonder: if Moore's law flattens out, will we have a lot more inflation going forward? The tech learning curve has played such a role offsetting inflation thanks to semiconductor economics: God help us if this mean reverts.]
10) Money as "tokenized time" earned in productive processes. "When you run out of money, you're in fact running out of the time to earn more money."
Chapter 2: Money Is Time
11) Are we measuring prices incorrectly with "manipulated government money" and "sloppy inflation adjustments"? "The real price is the amount of time it takes to earn the money to buy goods and services."
12) William Nordhaus and his discussion of the price of lighting over time: down to 1/6000th over two centuries.
13) [I fear that this a "9th inning book" about the deflationary era that extrapolates deflation into the future precisely when the deflationary era is about to end.]
14) The time it takes to work to pay for Thanksgiving dinner: this is helpful, but really you should also look at inflating things like a house, a car, healthcare, college tuition, etc.; things that have declined in quality while they've increased in price!
15) The concept of a "time-price" of things: enough rice for a day's meal in India has gone from 7 hours of labor (there) in 1960 to an under an hour today. "Everyone benefits from this kind of economic progress, but the poor benefit the most."
16) "Nowhere in these time-prices is there any sign whatever of a declining middle class standard of living or diminishing purchasing power." [Five years from now we'll look back at the sentence and see how hilariously non-predictive it was...]
17) On Malthusian thinking: Paul Ehrlich, Bertrand Russell, Charles Trevelyan, all using ends-justifies-the-means logic. "Sustainability" as the latest flavor.
18) "...time-prices recognize that money is merely the device that enables the scarcity of time to be translated into transactions and valuations as tokenized time."
Chapter 3: The Myth of Economic Man
19) All the standard positions--libertarian, leftists, supply-sider, socialist--all assume that humans respond to incentives... we just have to pick the right incentive. "While we can readily observe and describe incentives at work, creativity is hardly observable at all except in its effects. We know why we prefer cheaper prices to expensive ones, or higher salaries to lower ones. But it is much harder to imagine the cascades of invention and innovation that make these things possible. So we reduce them all to responses to incentives."
20) "...economic theory cannot explain the invention of radically new goods and services." [It's probably even worse than this: it doesn't want to explain it because it might destroy justification for centralization and command and control systems. Better to just wave it away and pretend it's not there.]
21) Interesting reading coincidence here for me: stumbling on passages here about Claude Shannon and Information Theory while just reading about him in Thomas Bass's book The Eudaemonic Pie which I just finished! Information as the separation of content from conduit; information as "unexpected information" or "surprise" which could take place on a wire across some distance of space, or even across time like in evolution.
22) Plectics: the study of complexity and its underlying simplicity (neologism from Murray Gel-Mann).
23) On Kurt Godel's incompleteness theorem: "...every logical system, including mathematics, is dependent on premises that it cannot prove. These premises cannot be demonstrated within or reduced to the system itself. They stand outside."
24) Just like biology can't be reduced to chemistry and physics, economics and entrepreneurialism can't be reduced to incentives and prices and rules; the spontaneous order of economics is usually (unintentionally) screwed up when placed under government-imposed "order"; it creates chaos and destroys wealth.
25) On Information Theory: Distinguishing the substrate or the hardware layer (or the brain or the system) from the information that comes from the system; distinguishing the spontaneous order of a system from the function layer that sits on top of it; a type of logos.
Chapter 4: Growth Is Learning
26) On the market playing the role of falsification or affirmation through profits and losses or success or bankruptcy; this is another type of learning curve that is misunderstood as the effect of incentives.
27) Taking conclusions about the Laffer curve and fitting it to the learning curve or the experience curve; how as you increase the volume of something the price declines by a certain ratio; Moore's Law as a great example of a learning curve.
28) Cost curve of the Fairchild 1211 chip, from $150 to 15 cents from 1964 to the early 1970s.
29) [Note that increasingly oligopolistic markets won't allow for these kinds of cost curves going forward. This is not something we are likely to see in a neo-mercantilist/neo-feudalist era we're in now.]
30) Quantum tunneling electrons used for semiconductors below 5 nanometers, cooler and faster and use less power.
31) On how the internet facilitates explicit learning but does very little for tacit knowledge. Or procedural knowledge for that matter.
32) Note the "learning rate" of fiber optic communications capacity: an 11,000 fold advance of data per unit of distance in 9 years. See Corvis Communications for example. [This reminds me of Gilder's writing in the late 90s early 2000s about the fiber optic boom, he was wrong though because he missed the overcapacity build and the mispricing of equities that happened at the same time; not only that but most of the carriers (like Exodus, Global Crossing, Level3, etc) didn't really have a viable franchise or a protected moat: fiber optic capacity is perfectly fungible and expanded way ahead of the market's needs, and none of these companies had the balance sheets to survive a long multiyear winter.]
Chapter 5: Wealth Is Knowledge
33) The "materialist superstition": Gilder's expression for the idea that wealth consists of resources, land, stuff, things that are intrinsically scarce, and thus implying that wealth is a zero-sum game and really defaults to who has power.
34) "All of these assumptions collapse before Thomas Sowell's judgment that 'The Neanderthal in his cave had the same natural resources at his disposal as we have today.' The difference is chiefly a difference in knowledge."
35) Economics' "slippery slope" to the presumption of material exhaustion. (This is the same argument Julian Simon put forth in The Ultimate Resource.)
36) "Above all, though knowledge is the sum of what is known, each increment to knowledge, each new item of information, always comes as a surprise. Paradoxically, just as all human experience teaches us that there is a path, it teaches us that the next step is always unknown."
37) "Hayek explained that central planning fails precisely because it claims to know what it cannot, and therefore obscures surprise and cancels knowledge."
38) Entrepreneurs seen as "a function of the model" in the materialist superstition rather than the driver of the model.
Chapter 6: Material Information
39) On the development of the internet, the innovation of packet-switched networks, the rise of digital communications replacing analog and the use of spectrum in fiber optics and wireless systems.
40) Note the predecessor idea to packet switching was container shipping (!) where you make a standard container and ship materials in it rather than breakbulk shipping that had to be handled individually and manually. This is "tokenized transport."
Chapter 7: A New Stone Age or a New Carbon Age?
41) The author is struck by a CO2 sucking contraption on the cover of Wired magazine; this chapter offers a contra-argument against climate alarmism, then it offers a dreamy discussion of the opportunities in graphene technology and what it can do. "A new carbon age"
Chapter 8: Economics Is Not About Counting Atoms by Gale L. Pooley
42) This chapter is leached from Pooley and Tupy's book Superabundance.
42) More ill-edited repetition here including the Thomas Sowell quote about the Neanderthal, but in this case using the word "caveman"... [It's a strange experience reading this book because of the poor editing, I keep thinking I've already read this part when I haven't.]
43) Discussion of "money prices" and "time-prices"; measuring changes in abundance by comparing the time-price for a product at a starting point and comparing it to the time price at an endpoint, then looking at the ratio of these two prices.
44) There's a problem with using wages in the time-price calculation, because wages inflate as well. Also, remember the fallacy implicit and all these calculations which is no one faces precisely the inflation rate, and no one earns precisely median wage: these are essentially made-up numbers that don't reflect anybody's individual situation. That said, looking at the cost of things in terms of time needed to work to pay for it is an intriguing way to think about abundance.
Chapter 9: An Efflorescence of Abundances (also by Gale Pooley)
45) Taking a list of 50 commodities (kind of like the old Simon-Ehrlich bet) and arguing that abundance is increased dramatically for all these things over time; likewise for a list of 43 metals and mineral commodities.
46) See also Julian Simon's paradoxical comment that the more we use non-renewable resources the more we find. In commodities investing there's an even tighter quote which is "the cure for high prices is high prices."
47) Interesting (albeit arbitrary) statistics on the abundance of nails: before the Industrial Revolution it took a minute for a blacksmith to produce one hand forged nail; today a worker can make 3,500 nails a minute; the time-price of a hammer is 1/18 of what it was in 1902 when Sears Rolex sold hammers for 53 cents.
48) Corn, meat, bicycles, pizzas, air conditioning, books, breakfast, household appliances, etc., all increasing in abundance (decreasing in time-price), despite tremendous population growth. [What would be truly robust, however, is to calculate the time-price of a share of the S&P 500 Index, or the time-price of a risk-free retirement, or the time-price of a single-family home, or the time price of a college education! These things almost certainly wouldn't have the decline curves of mass-produced or digitizable goods.]
49) [They do actually have a section here on housing affordability; as I suspected the time-price of housing has gone up, but they adjust for mortgage financing costs. Note that mortgage rates were way higher in 1980 than they were when this book came out, and likewise have already gone up a lot in recent years--they may certainly go back to 1980 level rates, who knows. But the way they look at housing affordability is misleading: they makes it look like housing affordability has gone up when it has clearly gone way down. Note also: the authors assume further that home construction quality is higher, home energy efficiency is higher: I highly doubt this.]
Chapter 10: Finance Rampant
50) On Gilder's frequent debates with [notorious midwit] Robert Reich over the years. Interestingly these guys had completely opposite beliefs (standard left/right) for many years but in recent years their beliefs are starting to converge on certain issues (like the hypertrophy of finance in the economy for example, Gilder cites "state client" companies like JP Morgan. These two guys are now moving to where Michael Hudson sits.
51) The author decries the amount of currency trading done [note that he's confusing the notional value of FX derivatives with the actual underlying currency value, these are not the same thing!]; rehashing 20th century monetary history; longing for a gold standard and less "currency churn" and a reliable backdrop for price information.
52) [Predictable] debates on regulation, the Reich view that more regulation is always better vs. the Gilder view that regulation causes the problems it claims to solve.
Chapter 11: The Bankers' Dilemma
53) State control of money is the problem; note how Milton Friedman, despite his libertarian/anti-regulation ideas still doofed out wanted the state to control money. Of course this gives the state all the power it ever wanted anyway (and wrecked all of Friedman's other views essentially). "So, despite his libertarian views and superb critiques of government power, Friedman ended up fostering federal government control of money as a lever for experts to regulate and stabilize the economy."
54) Note also that Friedman assumed much lower monetary velocity, and that MV would be much more stable: thus if you could control M and V were constant you could control the PT part of the MV = PT equation (Price x Transactions = GDP), thus giving rise to the illusion that you could titrate and control the economy via the money supply. The central fallacy was that monetary velocity is way more uncontrollable than economists would like to think.
55) He's making all the arguments that a Bitcoiner would make, and the reader gets the feeling that he's edging closer and closer to a climax of "getting it" with Bitcoin... but unfortunately he's not going to get it.
56) "Money mysticism": "...the idea that the money supply is a key driver of economic performance rather than merely a measure of it."
Chapter 12: Is Money a Commodity?
57) Per Gilder only is it a fallacy that the value of money depends upon its quantity [Wait: how can this possibly be a fallacy? Of course the quantity of money drives its value] a secondary fallacy is that money is a commodity. Gilder calls this fallacy "blindingly misleading" and claims that experts "conclude that money is valuable because it is essentially jewelry." "Instead, money is a side effect and measure of innovation, produced as evidence of creativity and new knowledge." [Note that it can also be produced by a government that wants to debase its own currency, something that happens repeatedly throughout history to anyone who's not blind to it. How can he write the prior chapter on Frieman's error and still not see that money can be diluted just as a company can dilute shareholders?]
58) "We cannot ultimately measure commodities by commodities that in turn are valued by commodities. If money is a commodity, it cannot also be a trusted measuring stick or a reliable unit of account." [This argument likewise doesn't make very much sense to me: what about the argument that money is a unit of account? You can't "measure" a unit of account, it is the measure itself.]
59) He also seems to grasp the "proof of work" component of gold: let's see if he gets it with Bitcoin, he seems to see the other use cases for cryptocurrency as well.
60) This chapter is quite poorly written; I suspect Gilder is outside his circle of competence here.
Chapter 13: Bitcoin Capitalism
61) [Note this YouTube video of Gilder shilling BSV (Bitcoin Satoshi Vision), by far the least important and least significant of the BTC offshoots. Horrendous. Damn, this guy got fooled nine ways till Sunday and has totally missed what Bitcoin is all about. Worst of all, it's terribly unfortunate to see that Gilder literally does not see the very same centralization and incentives problems in the Bitcoin forks that he spends so much time decrying in every other domain! Really ironic and disappointing.]
62) Metcalfe's Law (the value of a network increases by the square of the number of nodes) inverts into Metcalf's Law of Crypto: that network vulnerability increases by size of the attack surface--which is also the square of the number of nodes. [I can see how this can be true with websites like Facebook or Google, but for Bitcoin or any kind of cryptocurrency this is totally wrong: weirdly, he still gets the security part of network decentralization: "each additional user of a net resting on blockchains increases security."]
63) [His arguments basically amount to "I don't care about Bitcoin, what I'm really interested in is blockchain technology." It's unfortunate because this guy should be much more informed than a typical Boomer pundit.]
64) He loves the immutable ledger idea of it, yet he thinks that the hard cap is a technical flaw! Poor guy. He thinks the scarcity makes Bitcoin's price too volatile to serve as transactional money, he doesn't understand it's under price discovery still and that ease of transaction isn't the fundamental use case. He'd know all about this if he would have just read The Blocksize War. Gilder also doesn't appear to know that the units of Bitcoin are divisible, he thinks all it is is a volatile speculative asset. "The cap is fatal to Bitcoin as money."
65) He doesn't understand the costless, frictionless "store of value across time" argument either: this guy needs to listen to a lot more Michael Saylor! Honestly he has to do a lot more work on Bitcoin, a lot more work.
66) Also the Steve Hankey argument that other and better cryptocurrencies are on the horizon that don't have Bitcoin's scarcity. Again, this is such a tired argument they should put these on FUD dice. I guess at least Gilder isn't worried about boiling oceans.
67) It's really odd to have Gilder decry currency debasement two chapters ago, but yet he cannot grasp the usefulness of a nondebaseable asset. You really thought he was going to get it, but holy cow he really didn't. Astounding that he even cites Alan Farrington's Bitcoin is Venice, it's amazing he managed to read that and still thinks so shallowly about Bitcoin.
Chapter 14: Information Theory and Economics
68) This chapter repeats a lot of the rest of the book: more Godel, Boole, Shannon, etc.
69) Claude Shannon again: information is unexpected bits, entropy, surprise, it is not order; you need a low-entropy carrier to bear high entropy information, "in economics the low-entropy carriers are rules of law and property rights and constitutional liberties."
70) Information Theory upholds an abundance of ideas and projects whereas economics traditionally focuses on scarcity. Note, however, the various economists studying the role of ideas, see Paul Romer and his discussion of ideas as "recipes" which can be shared without diminution or exhaustion, which "is a canonical key to the economics of abundance and a core principle of information theory." Information theory as a supply-side idea as opposed to a demand side model.
71) Money's role in the dominant economic thinking which is sees it as a scarce commodity, an aspect of national sovereignty, with a limited supply based on the economics of scarcity. This results in the hypertrophy of finance, here's the author repeats the exact same statistics on foreign exchange markets from earlier in the book.
72) Money as a measuring stick rather than a commodity, it is a symbol system thus it renders values fungible and exchangeable, but a metric cannot be part of what it measures, see Godel. The thing is money should be an immutable thing like a kilo or a meter or other universally agreed-upon measuring sticks, but it isn't. when you fuck with the supply of money you fuck with its value, and governments fuck with the money supply all the time, thus money (at least fiat money) is simply not immutable in the way Gilder would like it to be.
Epilogue: The Tablets
73) "Perhaps the single greatest essay in the history of economics is 'I, Pencil' by Leonard Read, which refuted for all time every pretense of singular expertise. Read proved that no one in the face of the earth knows enough to make a wooden pencil."
74) On how Society can easily lose things, lose competence and expertise: see the Polynesians who lost their sailing skills, or Western governments losing their conception of constitutionally limited governments, losing their conceptions of Liberty, losing their ideas about authentic money, etc.
75) On a fiat economy with manipulated money propagating fake news, big media, and the academy, all of which follow the money.
76) On the paradox of we can only keep what we give away; the Nordhaus Effect, where innovators and entrepreneurs in corporations keep less than 2% of the value they create, the bulk of the value is unmeasured and unrealized by its contributors.
77) Laws of information in the new age of an economics of abundance: 12 Laws of the Infocusm
The Law of scarcity: scarcities are measurable in constrained economic models; economics justifies itself as a science of scarcity.
The Law of abundance: abundance is not measurable, economics as a discipline fails to capture it.
The Law of wealth: wealth is knowledge.
The Law of knowledge and time: time is what forces new learning and measures it in knowledge
The Law of money, money is time tokenized.
The Centrifuge of knowledge: that knowledge is dispersed so must power be dispersed to increase wealth
The Law of growth: growth is learning; learning is falsifiable by markets.
The Paradox of capitalism: you keep what you give away; savings are only valuable to the extent they are invested and given in collaboration with others.
The Law of information: Information is surprise, entropy.
Hirschman's Law of creativity: creativity always comes as a surprise: if it didn't we wouldn't need it and government planning would work.
Thiel's Law of monopoly: all businesses seek monopoly and succeed to the degree that they achieve it; innovation is monopoly by definition essentially.
The Law of the hierarchical universe: humans are creators in the image of their creator.
To Read:
George Gilder: The Scandal of Money
Marian Tupy and Gale Pooley: Superabundance
Claude Shannon: Collected Papers
Horace Judson: The Eighth Day of Creation
Michael Polanyi: Personal Knowledge
David Berlinski: The Advent of the Algorithm: The Idea that Rules the World
***Henry Adams: The Education of Henry Adams
***Marc Levinson: The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger
Jude Wanniski: The Way the World Works
Oskar Morgenstern: On the Accuracy of Economic Observations
Robert L. Schuettinger and Eamon F. Butler: Forty Centuries of Wage and Price Controls: How Not to Fight Inflation