Non financial wealth
- The 21st century view is that many definitions of wealth can exist and continue to co-exist. Some people talk about measuring the more general concept of Measuring well-being. This is a difficult process but many believe it possible - human development theory being devoted to this. Although these alternative measures of wealth exist, they tend to be overshadowed by, and influenced by, the dominant money supply and banking system. For more on the modern notions of wealth and their interaction see the article on political economy.
The Creation of Wealth
- Wealth is created through several means.
- Natural resources can be harvested and sold to those who want them.
- Material can be changed into something more valuable through proper application of labor and equipment.
- Better methods also create wealth by allowing faster creation of wealth.
- Ideas create wealth by allowing it to be created faster or with new methods.
- For example, consider our early ancestors. Building a house from trees created something of greater value for the builder. Hunting and firewood created food and fed a growing family. Agriculture converted labor into more food and resources. Continuing use of resources and effort has allowed many descendants to own much more than that first house.
- This is still true today. It is more obvious to those working with physical material than to a service worker or knowledge worker. A cubicle worker may not be aware in how many ways their work is creating something which is of more value to their employer than the amount that employer paid to produce it. This profit creates wealth for the owners of the organization. The process also provides income for employees, and suppliers, and it makes the continued existence of the organization possible.
The Limits to Wealth Creation
- There is a debate in the economics literature, usually referred to as the limits to growth debate in which the ecological impact of growth and wealth creation is considered. Many of the wealth creating activities mentioned above (cutting down trees, hunting, farming) have an impact on the environment around us. Sometimes the impact is positive (for example, hunting when herd populations are high) and sometimes the impact is negative (for example, hunting when herd populations are low).
- Most researchers feel that sustained environmental impacts can have an effect on the whole ecosystem. They claim that the accumulated impacts on the ecosystem put a theoretical limit on the amount of wealth that can be created. They draw on archeology to cite examples of cultures that they claim have disappeared because they grew beyond the ability of their ecosystems to support them.
- Others are more optimistic. They claim that although localized environmental impacts may occur, large scale ecological effects are either minor (in terms of magnitude) or non-existent. They sometimes claim that if these global scale ecological effects exist, human ingenuity will always find ways of adapting to them. To them, there is no limit to the amount of growth or wealth that this planet will sustain.
- Restricting the limits to the surface of Earth also restricts potential growth and the effects upon this planet.
The Distribution of wealth
- Societies have different opinions about wealth distribution and of the obligations related to wealth, but from the era of the tribal society to the modern era, there have been means of moderating the acquisition and use of wealth.
- In extremely ecologically rich areas such as those inhabited by the Haida in the Cascadia Pacific East Rim ecoregion, traditions like potlatch kept wealth relatively evenly distributed, requiring leaders to buy continued status and respect with giveaways of wealth to the poorer members of society. Such traditions make what are today often seen as government responsibilities into matters of personal honour.
- In modern societies, the tradition of philanthropy exists. Large donations from funds created by wealthy individuals are highly visible, although small contributions by many people offer a wide variety of support within a society. The existence of organizations which survive on donations indicate that a society has some level of philanthropy.
- In today’s societies much wealth distribution and redistribution is the result of government policies and programs. Government policies like the progressivity or regressivity of the tax system redistribute wealth to the poor or the rich respectively. Government programs like “disaster relief” transfer wealth to people that have suffered a loss due to natural disaster. Social security transfers wealth from the young to the old. Engaging in a war transfers wealth to certain sectors of society. Public education transfers wealth to families with children in these schools. Public road construction transfers wealth from people that do not use the roads to those people that do (and to those that build the roads). Some people resent having to contribute to some of these programs and disparagingly label them social engineering. The mere existence of government, transfers wealth from people in the private sector to people in the public sector. Contrawise, the existence of a private sector transfers wealth from people in the public sector to people in the private sector
- This phenomenon can be understood within a broad theory of political economy, where tradeoffs between means of protection, persuasion and production, and valuations of different styles of capital, are described. Simply put, if the rich do not at least once in a while give away, on their own free will, at least a small part of their richness to the poor, the poor would be much more likely to rebel against the rich.
- The concepts of owning land and accumulating wealth in the form of land, were and are difficult to characterize in Enlightenment terms, bearing more resemblance to modern ideas of bioregionalism or ecological stewardship or natural capital. Ecological economics continues these traditions.