The philosophy of wealth creation

[☭proletarian☭]

Wealth increases as production and efficiency in production increase. Creating things that people want or need creates wealth, and doing so in a cheap and efficient manner frees up capital and other resources to be put towards other goods which also increases wealth.

It's not the production that increases wealth, but the value assigned to the product by the consumer. I can manufacturer exploding pieces of shit all day, but if noone wants them, I've most likely lost wealth by wasting resources that had value.

 

[Kevin_Kennedy]

Wealth increases as production and efficiency in production increase. Creating things that people want or need creates wealth, and doing so in a cheap and efficient manner frees up capital and other resources to be put towards other goods which also increases wealth.

It's not the production that increases wealth, but the value assigned to the product by the consumer. I can manufacturer exploding pieces of shit all day, but if noone wants them, I've most likely lost wealth by wasting resources that had value.

You are correct, that's why I mentioned specifically "Creating things that people want or need creates wealth."

 

[namaan]

The law of conservation of wealth, as it were, would state that the total amount of wealth worldwide (an isolated system) remains constant over time. A consequence of this law is that wealth cannot be created nor destroyed. The only thing that can happen to wealth in a closed system is that it can change form…and ownership.

Continuing from my last post on the integration of econodynamics and thermodynamics, I'll go to the root of the issue and try a more directed response to the OP. From the above quote, I can only gather that the point of this argument is to ultimately provide a theoretical framework for legitimizing economic systems that have built in mechanisms for wealth redistribution (socialism for example).

On this note, we should consider that while wealth can technically (in human-time terms) grow to whatever extent allowed by the expression of human creativity and ingenuity, pragmatically speaking, at any given point in time there is a very finite measure of wealth. And when we measure, while the backwards countries of the world would surely benefit by implementing economic policies that allow for a more free expression of the human factor towards wealth creation, this doesn't change the reality that wealth is indeed concentrated in the hands of the few.

So I guess the point is that zero-sum game applies on two scales with differing circumstances: 1) on a geologic time scale as mentioned in my previous post 2) on an instantaneous measure of human wealth. Obviously, at any give instant, if a portion of available human wealth were to be transferred to a different group, then the zero-sum principle would apply directly.

Before this ends up sounding like a much ado 'bout nothing, I believe this is where supporters of other non-capitalist economic systems come in to 1) put the blame of this wealth concentration on capitalism 2) suggest systemic alternatives they believe counters this problem. I personally do blame capitalism for wealth concentration, but I'm no socialist or otherwise.

Anyway, I think the poster could have been more clear about this himself, but I think at its heart the question is a moral one, not an economic or perhaps even philosophical one.

 

[Dante]

You quoted the paragraph, not me. I can only surmise Perde is referring to the money supply as being anologous to wealth accumulation because no other measure of wealth (like assets for example) come even close to fitting into that theory.

Mistake number one. Do not ever assue mani or Magus have a theory that is well thought out, or have a theory you could stand on.

If it is a definition of wealth you are looking for the most accepted one I'm aware of is based on one's net assets, that is essentially the value of everything they have.
__________________
It's time for another Ronny in the White House.

Magus purposefully ignores definitions of key phrases.

 

[Diuretic]

A friend and former co-worker of mine periodically sends me thread starting material (I confess, he comes up with the good stuff, not me. ). He is actually the person that got me into messageboards in the first place, but now he only likes to lurk and help out with a thread topic now and again. Until now, he has always requested that I take credit for whatever he sends me, and since it's usually pretty good, I do. But this time he's asked me to credit him. I didn't ask why, but I'm happy to oblige.

Note to mods: If this violates the rules in any way at all, I have no compunction whatsoever with going on record to state that Magus Perde is just a pseudonym I sometimes write under.

The Philosophy of Wealth Creation
by Magus Perde

It is my philosophical understanding that wealth cannot be created. I contend that wealth adheres to a law similar to the law of conservation of energy:

The law of conservation of energy is an empirical law of physics. It states that the total amount of energy in an isolated system remains constant over time. A consequence of this law is that energy cannot be created nor destroyed. The only thing that can happen to energy in a closed system is that it can change form, for instance chemical energy can become thermal energy.

The law of conservation of wealth, as it were, would state that the total amount of wealth worldwide (an isolated system) remains constant over time. A consequence of this law is that wealth cannot be created nor destroyed. The only thing that can happen to wealth in a closed system is that it can change form…and ownership.

A perfect example is Saudi Arabia. Their wealth was not created by oil. They used an abundant and valuable natural resource to extract wealth from the rest of the world. Add to this the fact that the term wealth was once synonymous with welfare and the point becomes all the more salient.

Once one acknowledges and accepts this, a thing I believe to be an obvious truth, one then begins to understand the true nature of human competition.

Happy New Year,

Magus Perde

Oil was just useless sludge until humans found uses for it. Early humans probably ignored it because you can't eat or drink it and you can't wear it to keep warm. So it was worth zilch. A thing only has value when it has usefulness to humans and can be commodified. Buggered if I know where I'm going with this but I'll continue reading the thread.

 

[Diuretic]

Compelling rebuttal indeed.

As a Physicist, I can certainly relate to the (Incorrect) Physics analogy that Prego is trying to use, but of course it's wrong. To even suggest that it's a zero-sum game is hilarious! This has been done year after year and has always been proven to be false. Has he not read "The Wealth of Nations" or done a simple google search to study this simple concept? There is so much available online, you'd have to be living under a rock not to see this. Okay, so you want a rebuttal? There are so many, where to start? Again, do a google search. Here's one that popped up:

Coyote Blog » Blog Archive » Wealth Creation and the Zero-Sum Fallacy

There are hundreds of thousands more. Have fun!

I tried to add a rep, but was rebuffed.

I always think of an ex-weightlifter coming back to the sport as being "rebuffed". But that's because the language has been mutilated.

 

[Diuretic]

Sometimes a thread is capable of great erudition. I think this is one of them. I may have to unsubscribe.

 

[namaan]

Sometimes a thread is capable of great erudition. I think this is one of them. I may have to unsubscribe.

interesting lol

 

[Valerie]

FTR - Gold is more than just some bling bling trinket.




Uses & Applications > Utilise Gold. Scientific, industrial and medical applications, products ,suppliers from the World Gold Council

Barclays Capital

 

[Valerie]

FTR - Gold is more than just some bling bling trinket.




Uses & Applications > Utilise Gold. Scientific, industrial and medical applications, products ,suppliers from the World Gold Council

Barclays Capital

Gold is valued because of it's natural properties.

Dig some out of the ground and SEE how much "wealth" you will have created for yourself.

Properties
Understand more about the unique chemical and physical properties of gold that enable it to be utilised in a diverse range of practical applications

Gold, (symbol Au) has an atomic number of 79 i.e. each gold atom has 79 protons in its nucleus. The atomic mass of the gold atom is 196.967 and the atomic radius is 0.1442nm.

Interestingly this is smaller than would be predicted by theory.

The arrangement of outer electrons around the gold nucleus is related to gold's characteristic yellow colour. The colour of a metal is based on transitions of electrons between energy bands. The conditions for the intense absorption of light at the wavelengths necessary to produce the typical gold colour are fulfilled by a transition from the d band to unoccupied positions in the conduction band. Gold’s attractive warm colour has led to its widespread use in decoration

Whilst the number of protons in a gold nucleus is fixed at 79, the number of neutrons can vary from one atom to another giving a number of isotopes of gold. However, there is only one stable non-radioactive isotope accounting for all naturally found gold.

The crystal structure for metallic gold is face centred cubic FCC (see right) This crystal structure contributes to gold's very high ductility since FCC lattices are particularly suitable for allowing the movement of dislocations in the lattice. Such dislocation movement is essential for achieving high ductility.

The density of gold (19.3 gcm-3) depends on both its atomic mass and the crystal structure. This makes gold rather heavy compared to some other common materials. For example, aluminium has a density of 2.7 gcm-3 and even steel's density is only 7.87 gcm-3.

The melting point of pure gold is 1064°C, although when alloyed with other elements such as silver or copper the gold alloy will melt over a range of temperatures. The boiling point of gold, when gold transforms from the liquid to gaseous state, is 2860°C.

The ability of gold to efficiently transfer heat and electricity is bettered only by copper and silver, but unlike these metals gold does not tarnish, making it indispensable in electronics.

The electrical resistivity of gold is 0.022 micro-ohm m at 20 °C. The thermal conductivity is 310 W m-1 K-1at the same temperature. The corrosion resistance of gold is perhaps one it’s most useful properties. Electrode potentials are a useful method for representing the tendency of a metal to corrode. Electrode potentials are measured with reference to hydrogen and an electrochemical series can be prepared for metals as indicated below. Not surprisingly, gold is at the top of the series indicating its high corrosion resistance. In practise, it is corroded only by a mixture of nitric and hydrochloric acid (aqua regia). In everyday use gold does not tarnish.

Properties > Utilise Gold. Scientific, industrial and medical applications, products ,suppliers from the World Gold Council

 

[☭proletarian☭]

Oil was just useless sludge until humans found uses for it. Early humans probably ignored it because you can't eat or drink it and you can't wear it to keep warm. So it was worth zilch. A thing only has value when it has usefulness to humans and can be commodified. Buggered if I know where I'm going with this but I'll continue reading the thread.

I once again invite everyone to Google the subjective theory of value

 

[Neubarth]

The Philosophy of Wealth Creation
by Magus Perde

It is my philosophical understanding that wealth cannot be created. I contend that wealth adheres to a law similar to the law of conservation of energy:

The law of conservation of energy is an empirical law of physics. It states that the total amount of energy in an isolated system remains constant over time. A consequence of this law is that energy cannot be created nor destroyed. The only thing that can happen to energy in a closed system is that it can change form, for instance chemical energy can become thermal energy.

The law of conservation of wealth, as it were, would state that the total amount of wealth worldwide (an isolated system) remains constant over time. A consequence of this law is that wealth cannot be created nor destroyed. The only thing that can happen to wealth in a closed system is that it can change form…and ownership.

A perfect example is Saudi Arabia. Their wealth was not created by oil. They used an abundant and valuable natural resource to extract wealth from the rest of the world. Add to this the fact that the term wealth was once synonymous with welfare and the point becomes all the more salient.

Once one acknowledges and accepts this, a thing I believe to be an obvious truth, one then begins to understand the true nature of human competition.

Happy New Year,

Magus Perde

China mines 300 Tonnes of Gold a year from their own soil. If natural Resources is not a direct source of wealth then this Gold has little or almost no value. I suggest you think again on the oil and the gold and the forests and the grain and the ........................

 

[Paulie]

Mani you've tried to disprove wealth creation before, and you keep failing. Why do you keep trying?

The mere fact that human beings can and will assign increasing value to something, by virtue proves the idea that wealth can be created.

Arguing that anything has been "exploited" really doesn't help your case.

 

[manifold]

I hereby issue an intellectual challenge to everyone that has argued here against MP's premise that wealth cannot be created.

Is there a word similar, but not synonymous with wealth that could replace it in the OP and make the premise correct?

If not, please invent one.

 

[namaan]

Perhaps you're looking for "resource"? Certainly we don't create resources, we dig them up and then turn them into wealth through our own hands and minds.

Than again, as mentioned in previous posts, even deciding what is or isn't a resource is a subjective exercise (take the example of crude oil).

About the only word that would both fit and not cause your premise to crack is "matter". Yes, matter exists in a closed system when considered in a large enough scale. And yes, matter can change form and ownership. But, then...what's your point exactly?

 

[manifold]

Perhaps you're looking for "resource"? Certainly we don't create resources, we dig them up and then turn them into wealth through our own hands and minds.

Than again, as mentioned in previous posts, even deciding what is or isn't a resource is a subjective exercise (take the example of crude oil).

About the only word that would both fit and not cause your premise to crack is "matter". Yes, matter exists in a closed system when considered in a large enough scale. And yes, matter can change form and ownership. But, then...what's your point exactly?

matter isn't similar enough to wealth to satisfy the request.

but I'll rep you for effort.

 

[midcan5]

I hereby issue an intellectual challenge to everyone that has argued here against MP's premise that wealth cannot be created.

OK this time the answer is serious. Unless I don't understand the question, it is obvious the West, aka Europe, America, etc, created an enormous amount of wealth through flexible institutions and political pluralism. It is why Soviet Russia collapsed, and why capitalism with all its faults, succeeded. It is why tribal Africa or Afghanistan still exist in a trader or barter society, where the lack of wealth and its potential are too obviously missing in their infrastructure. It is for this reason, this liberal considered FDR's creating jobs and raising taxes to build a nation, a marvelous creation of wealth and industry. The golden age according to some historians.

If you are seriously interested in the topic check out the book noted below. Look inside.

[ame=http://www.amazon.com/How-West-Grew-Rich-Transformation/dp/0465031099/ref=sr_1_1?ie=UTF8&s=books&qid=1262121293&sr=1-1]Amazon.com: How The West Grew Rich: The Economic Transformation Of The Industrial World (9780465031092): Nathan Rosenberg, L.E. Birdzell Jr.: Books[/ame]

"A persuasively argued brief for the proposition that the West's economic development and comparatively high living standards are attributable mainly to the autonomy ceded the industrial/commercial sector by ecclesiastic as well as political authorities. Rosenberg (a Stanford professor) and Birdzell (an attorney) take the High Middle Ages as their point of departure. In Western Europe, they note, feudalism began yielding to a new order around 1600, about the time the continent's population regained the levels of 1347 - a plague year. Of particular importance in this process (made possible by the chartering of towns where trade could flourish unhindered) was the relaxation of controls on wages and prices, traditionally set by law or custom under a religious standard of justice. By the mid-18th century, an active merchant class was creating a plural society encompassing not only market networks but also the institutions (depository banking, insurance, a legal system) required to exploit the opportunities afforded by the industrial revolution."

 

[Paulie]

I hereby issue an intellectual challenge to everyone that has argued here against MP's premise that wealth cannot be created.

Is there a word similar, but not synonymous with wealth that could replace it in the OP and make the premise correct?

If not, please invent one.

Wealth has too many different definitions for you to be playing these mind games with the subject.

Wealth can also simply mean "abundance", but in economics it typically refers to value. If you have created something of value out of something without value, you have created wealth.

You declare an intellectual challenge and really don't have a premise to go on. The OP makes no sense at all.

What you're contending is that whatever form of wealth someone allegedly creates, has already existed as wealth. I can't possibly agree with that.

My example of continually growing more trees to build more houses, or growing more apple trees for their fruit, is a prime example of wealth creation. The tree that grew is not guaranteed to have existed in the first place. If so, every single apple tree's seeds would all grow new apple trees, and we know that's not the case.

It takes some form of human intervention for wealth to realize itself.

Here's another example, and I'm going to stoop to using 'money'. Someone prints a cute little label on a piece of paper and eventually society begins to collectively accept that paper in exchange for goods or services. That money, if left merely as blank paper, wouldn't have had the value it now has as printed money. For a while, that money is created wealth, until too much of it is printed and the perceived value of it decreases. At that point, it is no longer "created" wealth. It may still be considered a SOURCE of wealth, but each new piece of currency created is not increasing the overall wealth.

Wealth correlates more closely with 'value' than any other word I can think of. If people perceive increased value, wealth increases. And vice versa.

Now how about you break typical form and actually offer something of substance to your own topic instead of your "friend's" opinion and your head games?

 

[namaan]

BTW manifold, I don't like to nag, whether or not you read my posts is your business. But since I spent my time and energy into posting what I suggested gets to the heart of what you intended with your OP and elucidated it from different perspectives, I will be discouraged from making any more posts if you don't take the post seriously; not that this should matter to you, only saying. Anyway, here it is again for reference:

The law of conservation of wealth, as it were, would state that the total amount of wealth worldwide (an isolated system) remains constant over time. A consequence of this law is that wealth cannot be created nor destroyed. The only thing that can happen to wealth in a closed system is that it can change form…and ownership.

Continuing from my last post on the integration of econodynamics and thermodynamics, I'll go to the root of the issue and try a more directed response to the OP. From the above quote, I can only gather that the point of this argument is to ultimately provide a theoretical framework for legitimizing economic systems that have built in mechanisms for wealth redistribution (socialism for example).

On this note, we should consider that while wealth can technically (in human-time terms) grow to whatever extent allowed by the expression of human creativity and ingenuity, pragmatically speaking, at any given point in time there is a very finite measure of wealth. And when we measure, while the backwards countries of the world would surely benefit by implementing economic policies that allow for a more free expression of the human factor towards wealth creation, this doesn't change the reality that wealth is indeed concentrated in the hands of the few.

So I guess the point is that zero-sum game applies on two scales with differing circumstances: 1) on a geologic time scale as mentioned in my previous post 2) on an instantaneous measure of human wealth. Obviously, at any give instant, if a portion of available human wealth were to be transferred to a different group, then the zero-sum principle would apply directly.

Before this ends up sounding like a much ado 'bout nothing, I believe this is where supporters of other non-capitalist economic systems come in to 1) put the blame of this wealth concentration on capitalism 2) suggest systemic alternatives they believe counters this problem. I personally do blame capitalism for wealth concentration, but I'm no socialist or otherwise.

Anyway, I think the poster could have been more clear about this himself, but I think at its heart the question is a moral one, not an economic or perhaps even philosophical one.

 

[manifold]

No worries Paulie, I was certain you wouldn't be up for the challenge anyway.