The Misesian

Confusion Worse Confounded

Life after Capitalism

Life after Capitalism: The Meaning of Wealth, the Future of the Economy, and the Time Theory of Money
by George Gilder
Regnery Gateway, 2023; 212 pp.

George Gilder looks at things in an original way, but this is not always a virtue. There is much good sense in Life after Capitalism, but to find it readers will have to wade through a great deal of mumbo jumbo. Let’s start with the good sense.

Gilder contends that the contemporary American economy is dominated by an elite group of bankers who greatly impede the efforts of creative entrepreneurs to promote prosperity. Here he finds himself in agreement with his longtime debating opponent Robert Reich: “Reich has become a relentless critic of what I call the ‘hypertrophy of finance’ in the U.S. economy. . . . Banking leviathans like JP Morgan Chase have been de facto nationalized by the Federal Reserve and the treasury as ‘too big to fail.’ . . . Not only are the big banks among the richest and most profitable institutions in the economy, but the financial divisions of large manufacturing corporations also dominate their corporate income statements.”

According to Gilder, much of the blame for this sad state of affairs comes from Richard Nixon’s abandonment of the gold standard (or what was left of it) in 1971. In ending the gold standard, Nixon was guided by Milton Friedman, who wrongly believed that the Fed could end recessions and cope with inflation by controlling the quantity of money: “By assuming that control over the money supply gives the government power to fund infrastructure and defense, provide jobs, promote innovation, and lower prices in each country, monetarism, like Keynesianism, not only invites but virtually requires a government monopoly on money. For ‘M’ to rule, however, money must have an inelastic element to multiply or push against. Velocity (or money turnover) must be reasonably stable and unaffected by changes in ‘M.’ . . . If velocity is not a fixed propensity, then consumers and investors and lenders can counteract any given monetary policy merely by changing the rate at which they spend or invest the dollars. In recent decades, they have neutralized every change in the money supply with a nearly equal and opposite change in turnover.”

Gilder’s book also contains excellent discussions of the “emergency socialism” imposed through the shutdown of the American economy during the hysteria over covid, and he is appropriately skeptical of climate alarmism. Gilder doesn’t “actually believe that carbon dioxide poses any threat at all.” Still another good idea comes from William Nordhaus and, following him, Gale L. Pooley and Marian Tupy, who contribute two chapters to the book. The prices of many commodities have risen in recent decades, but during the same period, hourly wage rates have also gone up. This enables economists to calculate “time-prices” for these commodities, and it turns out that people now have to exert fewer labor hours than in the past to get them. “We buy things with money, but we pay for them with time. This means there are two prices, money prices and time-prices. Money prices are expressed in dollars and cents, while time-prices are expressed in hours and minutes.”

I fear that this is where the mumbo jumbo begins. Time prices are what really matters, and money isn’t a commodity at all, even under the gold standard. According to Gilder, “The experts of money nearly all converge on one temptingly simple and blindingly misleading fallacy: the belief that in one way or another, money is a commodity. It is a material thing, valuable in itself because of its physical features and its scarcity. . . . People started treading stuff and got entangled in sticky asymmetrical wickets of barter. . . (Murray Rothbard wants a hot pastrami sandwich, but does the deli owner want a speech snippet on the futility of fractional reserve banking?) Through history, according to the theory, traders tested out one tradeable commodity after another to find one sufficiently fungible to sustain trade. . . . For many centuries, gold manifestly worked as global money.”

Gilder thinks this account of how money originated is dangerous, but his reasoning is bizarre: “[The theory] conveys the idea that money can be ordered into existence, which, on reflection, is obviously untrue, at least if the money is to be worth anything. . . . It suggests that the fabled ‘money supply’ obeys Say’s Law and creates its own demand, that money is a part of centripetal government power rather than a measuring stick of wealth.” In Gilder’s topsy-turvy world, an argument that money cannot originate just from a government decree has been transformed into its opposite.

How can Gilder deny that money is a commodity under a gold standard? Isn’t it bought and sold? According to Gilder, the difficulty with taking money to be a commodity is that money is a measure of value but a measure of something cannot be a part of the system it is measuring.

The answer to this contention is obvious; money isn’t a “measure” in this strict sense of the word, although the fact that the price of gold tends to be stable over long periods of time makes economic calculation easier under a gold standard. As Ludwig von Mises points out in The Theory of Money and Credit, “Although it is usual to speak of money as a measure of value and prices, the notion is entirely fallacious. So long as the subjective theory of value is accepted, this question of measurement cannot arise.”

Suppose, though, that Mises is wrong and money is a measure of value, in just the way Gilder thinks it is. Then, Gilder says, it can’t be a commodity, and this can be proved by applying a theorem of the great logician and mathematician Kurt Gödel. Gilder thinks that gold can properly be money, and he acknowledges that gold can be bought and sold, but he thinks that this doesn’t affect gold’s ability to be a measure of value because people mainly use gold jewelry as a store of value. (If you don’t see how this argument is supposed to work, blame him, not me.) “Money is a Gödelian logical system, reflecting Kurt Gödel’s ‘incompleteness proof.’”

Here is where we at last get to the full expression of the mumbo jumbo. According to Gilder, the incompleteness theorem “demonstrated that 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.” Gilder is talking about the second incompleteness theorem, but this theorem concerns the arithmetic of natural numbers; it is not about “all logical systems.” There are in fact completeness proofs for some parts of logic, and one of the most important of these proofs, the completeness proof for first-order logic, was also by Gödel. How the second incompleteness theorem is supposed to apply to money, if money is taken as a unit of measurement, escapes me.

Gilder has an agile mind, but he should not pretend to be a philosopher when he isn’t one.


Gordon, David, “Progress from Poverty,” The Misesian 1, no. 2 (March / April 2024): 5.

Note: The views expressed on are not necessarily those of the Mises Institute.
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