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Bylund reviews Gilder’s ‘Information Theory of Capitalism’

October 22, 2013 in Economics

By Mises Updates

Writing in Barron’s, Associated Scholar Per Bylund reviews George Gilder’s The Information Theory of Capitalism and How It Is Revolutionizing Our World.

Parts of Knowledge and Power are well argued. Gilder’s treatment of John Maynard Keynes and his disciple Paul Krugman is quite accurate, although it may seem intemperate and blunt. Considering Krugman’s unsubstantiated rants on the New York Times blog, one might even say that he earned it. However, a lot of the book’s arguments are strikingly hollow or simply old lore in new packaging. Dressing up economics in the language of information theory doesn’t make an argument for abandoning economic theory. It only raises the question of what value the relabeling brings.

The author’s supply-side economics, which entails emphasis on production rather than consumption, is presented as something very different from existing economics or “demand side” theories. But in order to accept Gilder’s claim, we must forget both historical and contemporary theories.

The author struggles to show why Knowledge and Power is not simply a watered-down version of insights from the Austrian school of economics associated with Ludwig von Mises and Nobel laureate F.A. Hayek. Mises’ and Hayek’s disciples ironically include Gilder himself, as well as economist Thomas Sowell, whose lengthy treatise Knowledge and Decisions cites Hayek’s 1945 essay “The Use of Knowledge in Society” as inspiration.

Read the whole thing (scroll down to third review).

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