Notes:BC1.EF.Returns of Giving

2014/12/16 User:Jeff

Most of the notes below are quotes from Gilder's Wealth and Poverty.

1. Capitalism begins with giving.

   The first paragraph, third chapter (The Returns of Giving) of George Gilder's Wealth and Poverty:

   "Capitalism begins with giving. Not from greed, avarice, or even self-love can one expect the rewards of commerce, but from a spirit closely akin to altruism, a regard for the needs of others, a benevolent, outgoing, and courageous temper of mind.

   "Such a universal trait as self-interest--altogether as prevalent in any socialist backwater or deadening bureaucracy as in the realms of great enterprise--will reveal virtually nothing of the rare sources of riches in human society. Not taking and consuming, but giving, risking, and creating are the characteristic roles of the capitalist, the key producer of the wealth of nations, form the least developed to the most advanced."

2. The gift is the secret of the creation of wealth.

   Feasting and potlatching illustrate a capitalist tendency to assemble and distribute wealth. But many primitive societies, for all their gift giving remained poor. Many Theorists have focused on voluntary exchange as the secret of the creation of wealth. The crucial question with regard to gift giving as a prototype of capitalism is the source of capital gains, or increase in the total value of the society's goods. How do societies become rich?

   Trading itself provides part of the answer. A voluntary exchange presumably improves the positions of the parties. Free market transactions continually improve the distribution of goods in a community by moving them from owners who value them less to owners who value them more.

   Adam Smith argues that the extent of the market determines the possible range for the division of labor, the process of increasing specialization that he sees as the source of economic growth. . . The progress of economies can indeed be measured by the extent of the system of exchange. But . .

   • It is not the exchange that elicits the goods and generates the increase in their value; it is the gift that evokes the desire to reciprocate and thus induces exchange. The gift comes first.

   It is not the market that expands the division of labor. It is the process of invention and specialization--the production of new goods--that expands the market.

3. Capitalism requires an understanding of the needs of others.

   The anthropological evidence suggests that capitalism begins with the gift and continues with competitions in giving. These competitions succeed in generating new wealth largely to the extent that they are contests of altruism, defined as a regard for or orientation toward others.

   A gift will only elicit a greater response if it is based on an understanding of the needs of the recipient.

4. What the givers were doing, by transcending barter, was creating a kind of money: a mode of exchange that by excluding exact contractual planning allowed for freedom and uncertainty.
5. Says Law

   Capitalism consists of providing first and getting later.

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