Wealth from the old English word “weal”, which means “well-being” or “welfare”. The term was originally an adjective to describe the possession of such qualities.
“Wealth” mean an abundance of items of economic value, or the state of controlling or possessing such items, and encompasses money, real estate and personal property. In many countries wealth is also measured by reference to access to essential services such as health care, or the possession of crops and livestock. An individual who is wealthy, affluent, or rich is someone who has accumulated substantial wealth relative to others in their society or reference group. In economics, wealth refers to the value of assets owned minus the value of liabilities owed at a point in time.
‘Wealth’ refers to some accumulation of resources, whether abundant or not. ‘Richness’ refers to an abundance of such resources. A wealthy (or rich) individual, community, or nation thus has more resources than a poor one. Richness can also refer at least basic needs being met with abundance widely shared. The opposite of wealth is destitution. The opposite of richness is poverty.
The concept of wealth is relative and not only varies between societies, but will often vary between different sections or regions in the same society. For example, a personal net worth of US $1,000,000 in most parts of the United States Midwest would certainly place a person among the wealthiest citizens, yet the same net wealth would be considered quite modest on New York City’s Upper East Side . However, such amounts would constitute extraordinary wealth in impoverished developing countries.
Some of the wealthiest countries in the world are the United States, the United Kingdom, the Republic of Ireland, Norway, Japan, Kuwait, United Arab Emirates (especially Dubai), South Korea, Germany, The Netherlands, Belgium, France, Israel, Taiwan, Australia, Canada, Finland, Greece, Spain, Portugal, Sweden, Italy, New Zealand, Iceland, Monaco, Liechenstein, Luxembourg and Switzerland, the larger of which are in the G8. All of the above countries, except United Arab Emirates and Kuwait, are considered developed countries.
Wealth and poverty
An entire lack of any kind of wealth may constitute poverty, although the opposite of poverty may be sufficiency (in terms of food, shelter, education and healthcare) rather than the abundance implied by wealth.
The eradication of extreme poverty is one of the major Millennium Development Goals which all member states of the United Nations seek to achieve by 2016.
Anthropological views of wealth
Anthropology characterizes societies, in part, based on a society’s concept of wealth, and the institutional structures and power used to protect this wealth. They can be viewed as an evolutionary progression. Many young adolescents have become wealthy from the inheritance of their families.
Wealth as the accumulation of non-necessities
Humans back to and including the Cro-Magnons seem to have had clearly defined rulers and status hierarchies. Digs in Russia have revealed elaborate funeral clothing on a pair of children buried there over 35,000 years ago. This indicates a considerable accumulation of wealth by some individuals or families. The high artisan skill also suggest the capacity to direct specialized labor to tasks that are not of any obvious utility to the group’s survival.
Wealth as control of arable land
Irrigation and urbanization, especially in ancient Sumer and later Egypt, are thought to have triggered a shift that unified the ideas of wealth and control of land and agriculture.Protection of infrastructural capital built up over generations became critical: city walls, irrigation systems, sewage systems, aqueducts, buildings, all impossible to replace within a single generation, and thus a matter of social survival to maintain. The social capital of entire societies was often defined in terms of its relation to infrastructural capital (e.g. castles or forts or an allied monastery, cathedral or temple), and natural capital, (i.e. the land that supplied locally grown food).
The capitalist notion of wealth
Industrialization emphasized the role of technology. Many jobs were automated. Machines replaced some workers while other workers became more specialized. Labour specialization became critical to economic success. However, physical capital, as it came to be known, consisting of both the natural capital (raw materials from nature) and the infrastructural capital (facilitating technology), became the focus of the analysis of wealth. 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). The theories built on these views of wealth that we now call classical economics and Marxian economics . Marx distinguishes between material wealth and human wealth, defining human wealth as “wealth in human relations”; land and labour were the source of all material wealth.
Other concepts of wealth
The concept of Man as an aggregate did not exist before the 18th century. The shift from the analysis of an individual’s wealth to the concept of an aggregation of all men is implied in the concepts of political economy and then economics. Wealth was seen as an objective fact of living as a human being in a society.
Not a zero-sum game
Regardless of whether one defines wealth as the sum total of all currency, or a broader measure which includes money, securities, and property, the supply of wealth, while limited, is not fixed. Thus, there is room for people to gain wealth without taking from others, and wealth is not a zero-sum game in the long term. Many things can affect the creation and destruction of wealth including size of the work force, production efficiency, available resource endowments, inventions, innovations, and availability of capital.
However, at any given point in time, there is a limited amount of wealth which exists. That is to say, it is fixed in the short term. People who study short term issues see wealth as a zero sum game and concentrate on the distribution of wealth, whereas people who study long term issues see wealth as a non-zero sum game and concentrate on wealth creation. Other people put equal emphasis on both the creation and the distribution of wealth. It has been theorized, that society becomes increasingly non-zero-sum as it becomes more complex, specialized, and interdependent.
Wealth as time
Wealth is nothing more than a measurement of time. It is how long you can continue to live your lifestyle without any adjustments when you cease working. For instance if you have a burn rate of $2,000 a month in bills and expenses and $4,000 in the bank and you have no other forms of income, then you have a wealth measurement of 2 months. If however you are simply able to increase other forms of income, those which are not the result of trading time for money, to a point where they exceed your monthly burn rate, then you will effectively reach infinite wealth.
Sustainable wealth as a measure of well-being
Sustainable wealth is defined as meeting the individual’s personal, social and environmental needs without compromising the ability of future generations to meet their own needs. This definition of sustainable wealth comes from the marriage of sustainability and wealth defined as a measure of well-being.
Wealth redefined individualistically
Carrying the “wealth rule” concept , wealth could then be defined as the resources necessary to sustain a person’s specific “Standard of Individual Living” (SOIL). It could be argued that if a person has resources more than necessary to sustain them in life they would be called rich. A person can determine their “Standard of Individual Living” by looking at what they spend today.
Wealth in Buddhism
According to the Buddha, giving leads to being reborn in happy states and material wealth. Alternatively, lack of giving leads to unhappy states and poverty. The exquisite paradox in Buddhism is that the more we give – and the more we give without seeking something in return – the more wealthy we will become .
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 knowledge, skill, labor and equipment.
* Better production methods also create additional wealth by allowing faster creation of wealth.
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 distribution of wealth
Capitalism asserts that all wealth is earned, not distributed. It can only be distributed after it is forcibly seized from the earners (usually in the form of tax). Wealth acquired this way is then distributed.
Different societies have different opinions about wealth distribution and about 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 modern societies, the tradition of philanthropy exists. Large donations from funds created by wealthy individuals are highly visible, although small contributions by many people also offer a wide variety of support within a society.
Furthermore, in today’s societies, much wealth distribution and redistribution is the result of government policies and programs. Government policies like of the tax system can redistribute wealth to the poor or the rich respectively. Government programs like “disaster relief” transfer wealth to people that have suffered loss due to a natural disaster. Social security transfers wealth from the young to the old. Fighting a war transfers wealth to certain sectors of society. Public education transfers wealth to families with children in public schools. Public road construction transfers wealth from people that do not use the roads to those people that do .
Like all human activities, wealth redistribution cannot achieve 100% efficiency.
Proponents of the supply-side theory of “trickle-down” economics claim that it is a form of time-deferred philanthropy. The theory is that newly created wealth eventually “trickles down” to all strata of society. The argument goes that although wealth is created primarily by the wealthy, they will tend to reinvest their wealth, and this process will create even more wealth. As the economy grows, it is said that more and more people will share in the newly created wealth. A similar argument can be made in the case of Keynesian economics. According to this theory, government redistributions and expenditures have a multiplier effect that stimulates the economy and creates wealth. Supply-siders claim that wealth is created primarily by investment (supply), whereas Keynesians claim that wealth is driven by expenditure (demand). Today most economists agree that growth can be stimulated by either the supply or demand side, and some of them argue that these are really two sides of the same coin, in the sense that you seldom get one without the other. Nevertheless, the dispute between supply-side and Keynesian economics is of continuing interest.
Stresses within social distribution systems 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, of their own free will, at least a small part of their wealth to the poor, then the poor are much more likely to rebel against the rich.
Wealth in the form of land
Many indigenous cultures reject the notion of land wealth.Land ownership justified according to John Locke. He claimed that because we admix our labour with the land, we thereby deserve the right to control the use of the land and benefit from the product of that land, subject to the Lockean proviso of “at least where there is enough, and as good left in common for others.” Additionally, in our post agricultural society this argument has many critics, since people did not create land, they have no right of property over it. Still, many older ideas have resurfaced in the modern notions of ecological stewardship, bioregionalism, natural capital, and ecological economics.