Karl Marx’s Capital was a classic example of an intellectually masterful elaboration of a fundamental misconception—in this case, the notion that “labor,” the physical handling of the materials and instruments of production, is the real source of wealth. Obviously, if this were true, countries with much labor and little technology or entrepreneurship would be more prosperous than countries with the reverse, when in fact it is blatantly obvious that the direct opposite is the case.

The capacity to grasp and manipulate complex ideas is enough to define intellect but not enough to encompass intelligence, which involves combining intellect with judgment and care in selecting relevant explanatory factors and in establishing empirical tests of any theory that emerges. Intelligence minus judgment equals intellect. Wisdom is the rarest quality of all—the ability to combine intellect, knowledge, experience, and judgment in a way to produce a coherent understanding.

Wisdom requires self-discipline and an understanding of the realities of the world, including the limitations of one’s own experience and of reason itself. The opposite of intellect is dullness or slowness, but the opposite of wisdom is foolishness, which is far more dangerous.

At the core of the notion of an intellectual is the dealer in ideas, as such—not the personal application of ideas

Around a more or less solid core of producers of ideas there is a penumbra of those whose role is the use and dissemination of those ideas. These latter individuals would include those teachers, journalists, social activists, political aides, judges’ clerks, and others who base their beliefs or actions on the ideas of intellectuals. Journalists in their roles as editorial writers or columnists are both consumers of the ideas of intellectuals and producers of ideas of their own, and so may be considered intellectuals in such roles, since originality is not essential to the definition of an intellectual, so long as the end product is ideas. But journalists in their roles as reporters are supposed to be reporting facts and, in so far as these facts are filtered and slanted in accordance with the prevailing notions among intellectuals, these reporters are part of the penumbra surrounding intellectuals. They are part of the intelligentsia, which includes but is not limited to the intellectuals.

The great problem—and the great social danger—with purely internal criteria is that they can easily become sealed off from feedback from the external world of reality and remain circular in their methods of validation. What new idea will seem plausible depends on what one already believes. When the only external validation for the individual is what other individuals believe, everything depends on who those other individuals are.

As Eric Hoffer put it: One of the surprising privileges of intellectuals is that they are free to be scandalously asinine without harming their reputation. The intellectuals who idolized Stalin while he was purging millions and stifling the least stirring of freedom have not been discredited. They are still holding forth on every topic under the sun and are listened to with deference. Sartre returned in 1939 from Germany, where he studied philosophy, and told the world that there was little to choose between Hitler’s Germany and France. Yet Sartre went on to become an intellectual pope revered by the educated in every land.

Intellectuals, in the restricted sense which largely conforms to general usage, are ultimately unaccountable to the external world. The prevalence and presumed desirability of this are confirmed by such things as academic tenure and expansive concepts of “academic freedom” and academic “selfgovernance.” In the media, expansive notions of freedom of speech and of the press play similar roles. In short, unaccountability to the external world is not simply a happenstance but a principle.

constraints which apply to people in most other fields do not apply even approximately equally to intellectuals. It would be surprising if this did not lead to different behavior. Among those differences are the ways they see the world and the way they see themselves in relation to their fellow human beings and the societies in which they live.

Variations in income can be viewed empirically, on the one hand, or in terms of moral judgments, on the other. Most of the contemporary intelligentsia do both. But, in order to assess the validity of the conclusions they reach, it is advisable to assess the empirical issues and the moral issues separately, rather than attempt to go back and forth between the two, with any expectation of rational coherence.

Only by focussing on the income brackets, instead of the actual people moving between those brackets, have the intelligentsia been able to verbally create a “problem” for which a “solution” is necessary. They have created a powerful vision of “classes” with “disparities” and “inequities” in income, caused by “barriers” created by “society.” But the routine rise of millions of people out of the lowest quintile over time makes a mockery of the “barriers” assumed by many, if not most, of the intelligentsia.

Far from using their intellectual skills to clarify the distinction between statistical categories and flesh-and-blood human beings, the intelligentsia have instead used their verbal virtuosity to equate the changing numerical relationship between statistical categories over time with a changing relationship between flesh-and-blood human beings (“the rich” and “the poor”) over time, even though data that follow individual income-earners over time tell a diametrically opposite story from that of data which follow the statistical categories which people are moving into and out of over time.

The difference between statistical categories and actual people affects moral, as well as empirical, issues. However concerned we might be about the economic fate of flesh-and-blood human beings, that is very different from being alarmed or outraged about the fate of statistical categories.

There was a time when such rhetoric might have made some sense in the United States, and there are other countries where it may still make sense today. But most of those Americans now living below the official poverty line have possessions once considered part of a middle class standard of living, just a generation or so ago. As of 2001, three-quarters of Americans with incomes below the official poverty level had air-conditioning (which only one-third of Americans had in 1971), 97 percent had color television (which fewer than half of Americans had in 1971), 73 percent owned a microwave oven (which fewer than one percent of Americans had in 1971) and 98 percent of “the poor” had either a videocassette recorder or a DVD player (which no one had in 1971). In addition, 72 percent of “the poor” owned a motor vehicle.

Intellectuals’ discussions of the fact that “the poor pay more” are often indignant indictments and condemnations of those who charge higher prices to people who can least afford to pay them. The causes of those high prices are implicitly assumed to originate with those who charge them, and in particular to be due to malign dispositions such as “greed,” “racism” and the like. Seldom is the possibility even mentioned, much less investigated, that whoever or whatever conveys high prices may not be the same as whoever or whatever causes those prices to be higher than in other neighborhoods. Confusing conveyance with causation is at the heart of many intellectuals’ discussions of “social problems.” In many very different contexts, prices often convey an underlying reality without being the cause of that reality.

The most fundamental fact of economics, without which there would be no economics, is that what everybody wants always adds up to more than there is. If this were not true, then we would be living in a Garden of Eden, where everything is available in unlimited abundance, instead of in an economy with limited resources and unlimited desires. Because of this inherent scarcity—regardless of whether a particular economic system is one of capitalism, socialism, feudalism, or whatever—an economy not only organizes production and the distribution of the resulting output, it must by its very nature also have ways to prevent people from completely satisfying their desires. That is, it must convey the inherent scarcity, without which there would be no real point to economics, even though the particular economy does not cause that scarcity.

an uncontrolled economy was not one of chaos but of order, emerging from systemic interactions among the people competing with, and accommodating to, one another.