But that whole line of argumentation is beside the point. The distributions of capitalism make sense, but not because of the virtue or greed of entrepreneurs, nor as inevitable by-products of the invisible hand. The reason capitalism works is that the creators of wealth are granted the right and the burden of reinvesting it. They join the knowledge acquired in building wealth with the power to perpetuate and expand it.
Entrepreneurial knowledge has little to do with certified expertise, advanced degrees, or the learning of establishment schools. The fashionably educated and cultivated spurn the kind of fanatically focused learning commanded by the innovators. Wealth all too often comes from doing what other people consider insufferably boring or unendurably hard.
The treacherous intricacies of software languages or garbage routes, the mechanics of frying and freezing potatoes, the mazes of high-yield bonds and low-collateral companies, the murky lore of petroleum leases or housing deeds or Far Eastern electronics supplies, the multiple scientific disciplines entailed by fracking for natural gas or contriving the ultimate search engine — all are considered tedious and trivial by the established powers.
Most people consider themselves above the gritty and relentless details of life that allow the creation of great wealth. They leave it to the experts. But in general you join the 1 percent of the 1 percent not by leaving it to the experts but by creating new expertise, not by knowing what the experts know but by learning what they think is beneath them.
The competitive pursuit of knowledge is not a dog-eat-dog Darwinian struggle. In capitalism, the winners do not eat the losers but teach them how to win through the spread of information. Far from being a zero-sum game, where the success of some comes at the expense of others, free economies climb spirals of mutual gain and learning. Far from being a system of greed, capitalism depends on a golden rule of enterprise: The good fortune of others is also your own. Applied to both domestic and international trade and commerce, this golden rule is the moral center of the system. Not only does capitalism excel all other systems in the creation of wealth and transcendence of poverty, it also favors and empowers a moral order.
Richard Posner, now an eminent judge, was one of my inspirational sources for the idea that capitalism is inherently favorable to altruism. “The market economy,” he wrote, “fosters empathy and benevolence, yet without destroying individuality,” because for an individual to prosper in a market economy he must understand and appeal to the needs and wants of others. As a result of my seizing the verboten flag of “altruism” from his hands and waving it at the head of the supply-side parade, Ayn Rand devoted much of her last public lecture to a case against my ideas. I hugely admired Rand, who flung her moral defense of capitalism in the face of Soviet terror and socialist intellectual tyranny. But toward Christian altruism she indulged an implacable hostility, stemming in part from her simplistic atheism and in part from her disdain for the leveler babble of sanctimonious clerics.
Most of the world, then as now, was engaged in one of its periodic revulsions against capitalist “greed” and waste. Lester Thurow of MIT was proclaiming a “zero-sum society,” where henceforth any gains for the rich must be extracted from the poor and middle classes. William Sloane Coffin, the formidable Yale chaplain, was inveighing against capitalist orgies of greed and environmental devastation. Howard Zinn and Noam Chomsky were denouncing Western capitalism for displacing American Indians and condemning Israelis for displacing Palestinians (rather than praising the settlers in both countries for reclaiming and redeeming wastelands and hugely enlarging the populations they could support). Edward Said was conducting his Columbia classes (fatefully introducing the works of Frantz Fanon to future president Barack Obama) on Western psychological colonization and hegemonic evisceration of the entire Third World.