Originally posted on Tuesday, July 9th, 2013
George Gilder, the living author most quoted by President Reagan, has published a new and amazing work, Knowledge and Power: the Information Theory of Capitalism and How It Is Revolutionizing our World.
Gilder, author of Microcosm and Telecosm (among other works) universally is considered the most high tech of the supply side thinkers. He often is referred to as a “Futurist.” The website of the Discovery Institute, which Gilder co-founded, observes:
“Mr. Gilder pioneered the formulation of supply-side economics when he served as Chairman of the Lehrman Institute’s Economic Roundtable….”
Gilder, on whom Wired did a cover story, enjoys well-earned prestige in the realm of digital technology. Thus his endorsement — and the reasons for his endorsement — of the gold standard carries with extra credibility. Gilder’s Futurist cred decisively refutes those who wish to consign the gold standard to the era of ox-carts and clipper ships. He writes:
“Could it be that the fundamental cause of the [2008 financial] crisis was that the monetary system, alone among the structures of capitalism, lacks a low-entropy physical layer?
“Over the centuries of monetary history, the remedy for unstable money has always been gold. Critics who say the gold standard has been eclipsed by an information standard based on the Internet do not grasp the essence of information theory, which measures the information content by its ‘news’ (expressed in digital form as unexpected bits or entropy). It takes a low-entropy carrier to bear a high-entropy newsworthy message.
“The 130,000 metric tons of gold that has been mined in all of human history constitutes the supreme low-entropy carrier for the upside surprises of capitalism. Without guidance from gold, currency markets are subject to political high entropy. They resemble a communications system without a predictable carrier that enables the information to be distinguished from the noise in the line.
“…Without a baseline of gold, entrepreneurship in the world economy degenerates into the manipulation of currencies for the interests of profiteers and government insiders. This is a pathology of capitalism ….” (p. 122)
Gilder offers the gold standard as, for technical reasons, crucial to a civilized prosperity. Those who oppose the restoration of the classical gold standard must begin to realize that caviling “antique!” no longer represents, in serious debate, a credible refutation of its proponents.
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