Adam Smith saw wealth creation as “the combination of materials, labour, land and technology in such a way as to capture a profit (excess above the cost of production).” This idea hinges on “profit,” which, of course, depends on market pricing. [see Profit]

Persuading people to pay more for a widget than it costs to make and market supposedly results in the “creation of wealth.” At first glance it seems to result simply in the redistribution of money so that more of it is in the hands of the widget manufacturer. It does cause money to circulate in a way that involves wages, and circulation is as vital to an economy as it is to the human body, [ see Circulation] but the only accumulation of wealth is the profit skimmed off this flowing stream. The owners of the widget company become wealthier when the demand for widgets became large enough for economies of scale to kick in. A warehouse full of widgets has value only so long as the demand persists. The owners of the company are, of course, “job creators” since they have to hire more employees as their marketing efforts produced greater and greater demand for widgets. Creating jobs sounds more philanthropic than creating (personal) wealth, but the real question is the relationship between greater employment and greater “wealth” or between the rate at which money circulates in an economy and some measure of the health or wealth of the economy. 

The notion of wealth creation has its roots in agriculture where human labor cooperates with nature to produce goods (food). It is much easier to view an abundance of food as wealth, even if most of the “creation” is handled by nature. This seems especially true when the seeds for next year’s crop can be gleaned from this year’s crop. Cultivation technique may increase the “yield” of a plot of land, so there is some validity to the idea that humans create wealth through their labor and ingenuity. 

A craftsman who makes a piece of furniture out of raw materials has obviously created something. Whether the piece of furniture has value beyond its usefulness in the craftsman’s own home is a bit more complicated, and the craftsman can only be said to have “created wealth” if there is a market where the furniture can be sold for more than it cost to make. Part of its “cost” of course is the craftsman’s labor and expertise and if the style of his furniture is regarded as outmoded, he may not have created any “wealth.” 

A merchant who travels to acquire goods that are not available in his own community so that he can sell them at home for a profit is being rewarded for his efforts. His community has new goods that it values, but is he creating wealth in any way other than accumulating money for himself? Surely if any real wealth was created, it was done abroad where the goods were produced. [see Foreign Trade]

One definition of wealth is the abundance of valuable resources or valuable material possessions. A nation’s wealth should not be viewed in the same way as an individual’s wealth. A nation’s wealth includes not only goods that it has produced but untapped natural resources, such as oil, minerals or timber. Timber can be viewed as an agricultural product since it is theoretically possible to manage forests in a sustainable way so that they continue to produce a certain amount of usable timber for centuries. With oil and minerals, though, it seems as though there is a fixed amount of the resource available. New technology may make it more easily accessible, but if a nation’s wealth depends on exploitation of its natural resources, the “creation” of wealth would appear to be mostly a zero sum game depleting resources as they are transformed into “products.”

There is an interesting alternative analysis of wealth which attempts to incorporate fully ecological realities into calculations of social or economic value. Every economic good can be analyzed in terms of energy – either the energy used in its creation or the potential it has for releasing energy for human use. [see Odum]

Surely the key to wealth as a social phenomenon is the ability of human labor to produce more than is required for survival. There are intriguing descriptions of surviving hunter-gatherer cultures which convey the impression that their members have much more leisure time and seem much more content than most members of “advanced” cultures, and apparenltly the emergence of the drive to produce ever increasing surpluses is still a bit of a mystery for anthropology. Nonetheless it obviously happened, and we appear to be stuck with it.

The question then becomes, if a community or society is capable of generating a surplus of goods, what are the options available to it for determining what to do with the surplus and how is an option chosen. To some extent a culture can be defined by how it disposes of its surplus productivity, and anthropology is full of eye-opening alternatives. Ours has settled into a mixed bag combining a “public sector” and a “private sector” and allowing a relatively small number of individuals to control vast amounts of wealth.

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