A visit with a neocapitalist prophet

February 4, 1981

George Gilder once considered it chic to live in ghettos. Now he celebrates the merchant prince. "I believe that capitalism is ultimately founded in a moral order, and that the idea that capitalism is a predatory, amoral activity is false," he says, sliding deeper into the clutches of a slippery leather couch.

Gilder is the flaming pen of supply-side economics, the poet laureate of the Republicans pouring into Washington with budget-cutting fire in their eyes.

His new book, "Wealth and Poverty," fills the windows of 18th Street bookstores a block from the White House. David Stockman, Office of Management and Budget chief, bought 30 copies and passed them out like Welcome Wagon gifts to incoming administration aides.

Above all, "Wealth and Poverty" is an attempt to explain the intellectual underpinnings of capitalism.

"The most important event in the recent history of ideas is the demise of the socialist dream," the book begins. "The second most important event . . . is the failure of capitalism to win a corresponding triumph."

Breathless from lack of sleep and a punishing shuttle flight from New York, Gilder wrings his hands and explains his belief that capitalism is a moral force.

"The fundamental impulse of the capitalist is not to take, but rather to give. The investor, under capitalism, must be willing to give without an assurance of a return, and that willingness, I think, derives from a moral source -- particularly because the success of his investment depends on his responsiveness to the needs of others."

Gilder places great stock in the flexibility of capitalism. He believes that a rigidly planned central economy is a blundering machine, leading inevitably to the sort of financial crises now appearing in Poland.

"The key difference between an investment in a capitalist system and a socialist system," he says in the interview, "is that in a capitalist system the returns are not predetermined."

It is uncertainty, this adventurous risk, that lies at the center of Gilder's conception of capitalism. "Socialism presumes that we already know most of what we need to know to accomplish our national goals," his book says. "Capitalism is based on the idea that we live in a world of unfathomable complexity, ignorance, and peril, and that we cannot possibly prevail over our difficulties without constant efforts of initiative, sympathy, discovery, and love."

Gilder has stopped wringing his hands. In the sartorial clutter of Washington, he looks like a refugee from Beacon Street: His button-down collar rolls with that just-so bulge seldom seen south of Boston Common.

He lives, in fact, in the Berkshires of western Massachusetts and spends much of his time on airplanes between Washington and New York, where he is program director for the Center for Economic Policy Studies.

He was once one of Nelson Rockefeller's bright young men, a political speech writer and member of the liberal Republican Ripon Society. Now he is thick with such politicians as Jack Kemp and a leading force in the "counterintelligentsia, " a flying wedge of conservative scholars that staff think tanks like the American Enterprise Institute, aiming to batter down the gates of the old fortress of the liberal "Great Society."

"The fact is, there are no guarantees in life," Gilder says. "We live in a perilous world and to the extent that the government attempts to shield all its population from risk, the whole system faces the greatest risk of all, which is to remain stagnant."

Gilder's view is that money alone is not the root of all poverty. He spent two years interviewing some of the poorest people in America for a nonfiction novel called "Visible Man," and concluded that lack of prospects was as damaging as lack of cash. And in a welfare state, he says, eventually the dole becomes better than the job.

"This is particularly insidious in the American system, because the benefits essentially go to the wife and children. The man's role in the family becomes dispensable. The wife no longer wants to have him around so much, he doesn't want to stay around so much, and he finds his gratifications in the street."

Gilder admits that capitalism, like any other system, will have its faults and devious practitioners. He allows that he prefers the works of Evelyn Waugh to CB radios and Winnebago campers, but says, "I'm delighted to have a system that enables me to buy any of them."

In a capitalistic society, Gilder says the role of government is to enact laws that prevent destructive and predatory activity.

"The fact that today the government is almost entirely incapable of punishing or preventing the most extreme and violent crime, while it regulates people's economic exchanges to an ever-increasing extent, is just perverse," he says.