The Wealth of Man by Peter Jay
Government Control of Economic Systems Is a March to Economic Oblivion
NOVEMBER 01, 2001 by DAVID LITTMANN
Public Affairs · 2000 · 400 pages · $30.00
Reviewed by David L. Littmann
Peter Jay’s The Wealth of Man is an attempt to trace the key episodes in man’s economic course, from the time of the hunter-gatherer to our day. He presents his narrative as a waltz: One energetic step forward, one defensive step sideways, and then a retreat in an effort to regroup for the next forward motion.
Considering the author’s credentials, this should be a slam-dunk. Educated at Oxford, Jay has a long and distinguished career as a journalist and historian. He served six years in the British Treasury before becoming the economics editor of the Times of London. The story is, as Jay himself avers, written by a layman for laymen, pretending no academic refinements. This is all well and good and makes for easy enough reading. The tradeoff is that the book is constrained in its depth and scholarly analysis. Still, the author presses home many important points for readers who don’t understand the process of wealth creation.
Jay’s “waltz” motif is clever and germane, especially considering the virulent twentieth-century strain of the politics of envy and income redistribution. He contends that man’s innovative genius guides him toward higher living standards, and goes to great lengths to recount the discoveries, tools, and new production techniques employed through the ages to lift up the productivity of labor and create saving and surplus. Jay includes myriad valuable references to pivotal innovations, their timing, and application in the betterment of human living. He spans industries from manufacturing and transportation (steel making, stirrups, lateen sails, and the compass) to finance (joint-stock companies, paper currency, bills of exchange, and double-entry bookkeeping). Liberty and conditions favorable to invention are the catalysts to this wealth-accumulation process. So far, so good.
In the second stage of this recurring cycle of economic evolution, predators emerge. Eyeing the wealth created by farming communities, aggressive and mobile tribes of hunters pillage and occasionally destroy early civilizations. Later, Vikings, Vandals, Goths, Huns, and Mongols invade and dismantle the wealth of existing empires, such as Greece, Rome, China, Persia, and India. Still later, within the societies that successfully built wealth and fortunes, disgruntled groups and individuals who feel alienated or left behind revolt or capture the reins of government in order to redistribute land, income, and other resources. This second step of the waltz is associated with the “Dark Ages.” At that point, according to Jay, the citizens of the society must arrange a compromise, an accommodation with circumstances in order to proceed. This is step three.
What is the nature of this third step? How does society adapt to the predation that threatens or has already destroyed accumulated wealth? Herein lies the key to defining a nation’s future. This is also, unfortunately, a low point in the author’s analysis.
Jay correctly identifies those who fall behind economically—those who are poor or jealous—as advocates of wealth absorption or theft. He notes the pivotal role of government in developing programs to reconcile the redistributive agenda and the larger long-term global imperative of maintaining a friendly economic environment for wealth creators. Jay’s mistake here is myopia. In modern, prosperous, full-employment America there is a shrinking proportion of the population that can be called poor, ignored, or economically abandoned.
Ironically, the plunderers of wealth are seen everywhere: Those who are wealthy but nonetheless envious of others; the fearful but wealthy seniors; guilt-ridden inheritors of wealth; those who intentionally seek to remove the ladder of opportunity from those coming after them; those who have made their fortunes but now seek government intervention to protect themselves from competitors; trial lawyers whose enormous contingency awards help elect advocates of still greater wealth and power transfers.
Rather than complete the analysis by probing the genre and motives of economic predators, however, Jay proceeds to compile his own list of capitalism’s “practical shortcomings: inequality, instability, and monopolistic exploitation.” He also considers market systems “environmentally-challenged.”
With those conventional (and misguided) bows to interventionism, Jay turns his book from a solid analysis of man’s economic struggle into a bowlful of mush.
In a sense, the book is confused. Jay does help us understand the key ingredients generating the first step in the waltz—an economic system that maximizes the four “I’s” (information, incentives, investment, and innovation). The competitive market economy is the fullest flowering of such a system in mankind’s history. But alas, he seems to cast his lot with those who believe that we need an amorphous “mixed” system, with government in charge of syncopation, as the necessary ingredient to keep the wealth of man trending upward. Viewing the economic damage wrought by governments over the last century, some readers might argue that such a musical direction, rather than a waltz of wealth, is a march to economic oblivion.