In the Schumpeterian mindscape of capitalism, the entrepreneurial owners are less captors than captives of their wealth. If they try to take it or exploit it, it will tend to evaporate. As Bill Gates puts it, he is "tied to the mast" of Microsoft. David Rockefeller devoted a lifetime of 60-hour weeks to his own enterprises. Younger members of the family wanted to get at the wealth, and now, after the sale of Rockefeller Center to Mitsubishi, command much of it. But they will discover they can keep it only to the extent that they serve it and thereby serve others rather than themselves.
Wealth is valuable only to the extent that others think it will be valuable in the future, and that depends on running the fortune for the needs of the customers rather than for the interests of the owners. Its worth will collapse overnight if the market believes the company is chiefly serving its owner, rather than the owner serving it, or that it is being run chiefly for the managers rather than for the people who buy its wares.
In feudal and socialist realms, in the Third World or behind the increasingly porous boundaries of communism, a register of the holdings of material things could capture a fixed distribution of wealth. There, riches reside chiefly in land, natural resources, police powers, and party offices, the last often held in perpetuity. Under socialism, a Forbes 400 might represent a dominant establishment that combines both political and economic clout.
Socialist regimes try to guarantee the value of things rather than the ownership of them. Thus socialism tends to destroy the value, which depends on dedicated ownership. In the United States, on the other hand, the government normally guarantees only the right to property, not the worth of it.
The belief that wealth consists not in ideas, attitudes, moral codes, and mental disciplines but in definable and static things that can be seized and redistributed is the materialist superstition. It stultified the works of Marx and other prophets of violence and envy. It betrays every person who seeks to redistribute wealth by coercion. It balks every socialist revolutionary who imagines that by seizing the so-called means of production he can capture the crucial capital of an economy. It baffles nearly all conglomerateurs, who believe they can safely enter new industries by buying rather than by learning them. Capitalist means of production are not land, labor, or capital but minds and hearts.
The reason for the huge wealth gap between John Kluge and Suzie Saintly, between Harry Helmsley and Harry Homeless, between each member of the Forbes 400 and George Bush, or between Bill Gates and inventor Dan Bricklin or any number of worthy men and women is entrepreneurial knowledge and commitment. Most of the wealthy are bound to the masts of their fortunes. They are allowed to keep their fortunes as long as they give them to others in investments. They know how to maintain and expand them, and the market knows of their knowledge. Thus they increase the wealth of America and the opportunities of the poor.
The wealth of America isn't an inventory of goods; it's an organic, living entity, a fragile, pulsing fabric of ideas, expectations, loyalties, moral commitments, and visions. To vivisect it for redistribution would eventually kill it. As Mitterrand's French technocrats found early in the 1980s, the proud new socialist owners of complex systems of wealth soon learn they are administering an industrial corpse rather than a growing corporation.
The most important question for the future of the poor of America is how we treat the rich. If we smear, harass, overtax, and overregulate them, our politicians will be shocked and horrified to discover how swiftly the physical tokens of the means of production collapse into so much corroded wire, eroding concrete, scrap metal, and jungle rot. They will be amazed by how quickly the wealth of America flees to other countries.
Most American entrepreneurs would stay in America. But the new global ganglion of telecommunications would allow them to invest their liquid funds elsewhere at the speed of light down a fiber-optic line. Young entrepreneurs, once determined to start in America the fortunes of future decades, instead would begin them overseas or not begin them at all, clinging instead to the corpse of a stagnant establishment. Their own worth and the wealth of the United States would decline sharply in the process. But within a few years, other countries would begin to thrive where the United States once flourished. During the past decade, the secrets of entrepreneurs have been spreading across the increasingly global mindscape of capitalism.
If the rich are worshiped and protected from change by socialism, the poor will suffer everywhere. High tax rates and oppressive regulations don't keep anyone from being rich. They prevent poor people from becoming rich. If the rich are respected and allowed to risk their wealth, and new rebels are allowed to rise up and challenge them, America will continue to be the land where the last regularly become first by serving others.
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"The Enigma of Entrepreneurial Wealth" from Recapturing the Spirit of Enterprise by George Gilder (ICS Press, 1992). Copyright © 1992 by George Gilder. All rights reserved.
George Gilder is a fellow of the Discovery Institute, in Seattle.
