I’ve become a lot more interested in economics since I started working at InsideWork. Like technology and creativity, it just seems to be an inescapable concept — nearly everything you see can be explained in terms of economics. Here’s a summary and some quotes from an essay I recently read called The Soul of Silicon by George Gilder.

Nutshell Summary

These are the basic ideas I gleaned from the essay:

1. The old way of looking at the world is based on the Newtonian, deterministic view which emerged from Newton’s laws in the 1600’s. This view was reflected by Adam Smith (economics), Karl Marx (sociology and politics), Charles Darwin (biology), and Sigmund Freud (psychology).
2. Quantum physics destroyed the old ideas of classical physics by introducing the idea that matter is not solid. This opens the door to introducing the immaterial into many different arenas of study.
3. The core of true capitalism is generosity, but capitalism has been bastardized by the greedy.
4. Analogously to physics, the core of true wealth is no longer material (Newtonian), but is based in thoughts and ideas. Entrepreneurs create value out of worthless resources.

Quotes

On the shifting form of capital in our modern world:

In our time, in particular, there exists another form of ownership which is becoming no less important than land: the possession of know-how, technology, and skill. The wealth of the industrialized nations is based much more on this kind of ownership than on natural resources.

The true capital of the current capitalist economy is not material. It is moral, intellectual, and spiritual.

The immaterial character of wealth transforms the modes of production. Wealth now comes not to the rulers of slave labor but to the liberators of human creativity, not to the conquerors of land but to the emancipators of mind.

On the role of the church in economics:

…the criticism [of capitalism] leads churches to abandon their supreme role of moral and spiritual leadership in economic matters, and it makes workers and entrepreneurs ashamed of their labor in satisfying the material wants of mankind.

If the church is truly concerned with the material problem of world hunger and poverty, it should temper its own efforts at distributing food and instead promote the moral and spiritual conditions of capitalist farming.

On the flaws of the economic worldview of the church:

Both sides [clergy and businessmen] implicitly accept what I have termed the materialist superstition: the idea that wealth comes chiefly from the self-interested manipulation, distribution, and consumption of material goods.

On the centrality of generosity in a capitalist system:

Capitalism begins not with taking but with giving.

The most successful gifts are those that are most profitable — that is, gifts that are worth much more to the recipient than to the donor.

The heart of the system must always be giving, not taking, or the body will run down and rot.

On the concept of wealth:

The problem is that the secular intellectual tends to reject the reality of anything he cannot see and feel. Wealth is believed to consist in things.

Particularly in this era, however, wealth consists not of things but of thoughts. An entrepreneur does not find value in a new product or pool of oil or computer design. He brings value to what was previously seen as worthless.

On the resource crucial to capitalism:

The crucial capital of the system is not the physical accumulation of natural resources and machines but the metaphysical capital of human life. The most essential capitalist act — the very paradigm of giving or investing without a predetermined outcome — is the bearing, raising, and educating of children.

On the role of the law:

Without equality before the law, private property cannot be preserved from the powerful, and the free exchanges of capitalism cannot take place. To give, you must first be able to own.

Links

• To read the original essay, go here: The Soul of Silicon by George Gilder (Forbes ASAP, 1998)