The Wealthy Society

Wealth is a term that everyone knows, but the definition of which can be slippery. Is wealth the amount of money you have? One could hypothetically have mansions full of material possessions but very little liquid cash. I doubt anyone would claim that this billionaire minus the billions is not wealthy. We often say that wealth is simply the amount of possessions one has or could have. This definition is satisfactory for speaking of simply material possessions, but it does not give us a true picture of what a wealthy individual looks like. Let’s say a successful billionaire businessman finds himself shipwrecked on a deserted island. He still owns his possessions and money in his home country, just not the access to them. Is he still wealthy? Let’s say that he manages to return back home and comes back into his money and possessions. He would be considered wealthy then, but the only thing that changed was his location, not his ownership.

An alternate example: Let us say that several years ago, Mr Jones’ wealthy uncle passed away (maybe the billionaire didn’t get off the island!). In his uncle’s will, he willed to Mr Jones his entire estate and all his money. However, Mr Jones was not there for the reading of the will, and was never informed of this. He legally has ownership of the money and estate, but has no idea that this is the case. Is Mr Jones wealthy?

There is a vital piece missing. Wealth must always be defined in terms of action and subjectivity. To be wealthy, one must be able to satisfy many different ends. Wealth generally just refers to the material means to attain these ends. The ends chosen are, of course, completely subjective and dependent on the individual. To solve the problem of the billionaire on the island, we would say that he is not wealthy, as he is now very limited in the material means he has to achieve his desired ends. One could object that he still has ownership of the wealth in his home country, but since he is not able to use any of these means, i.e. they are not actionable, it does him no good. It is the same situation for Mr Jones. He is unaware of his new-found wealth, and thus, it is not actionable for him.

This is all well and good for individuals, but what about when applied to an entire society? How do we measure how wealthy a society is as a whole? Extrapolating from the individual sense of the word, we can say that the wealth of a society is also subjective. It is dependent on how well the material means that exist can fulfill the wants and ends of the members of this society. An important point must be emphasized here. Material possessions in and of themselves are not what makes individuals, and in this case of many individuals in a society, wealthy. One could have many different materials means, but if they are useless for attaining your ends, they are of no use. For example, if one discovers a treasure map written in an alien language, the translation of which is unknown to anyone, then that means, although it could potentially help attain someone’s ends, are effectively useless for you.

The subjectivity of wealth and its application to a society as a whole has important implications for economics. The question economists should ask about wealth is, “Do people find the goods and services in markets valuable?” If the question was instead, “What is the quantity of goods and services available on markets?”, wealth is no longer the object of examination, but rather, it is now a study on the general productivity of the economy. Productivity only creates wealth in so far as it produces those things which are considered valuable.

This begs the question: how exactly do we determine what people find valuable? How do we know what to produce? How do we use and economize our resources to bring about the greatest amount of wealth? This is the “Problem of Production”. How one chooses to answer this question is paramount, as it essentially reveals one’s view of economics, and usually government and ethics as well. However, not all economic systems can answer this question. An economic system of laissez-faire and free markets has a ready answer for the Economic Question, but a system of government control over the means of production does not.

What is the answer laissez-faire provides? It doesn’t give one answer, but allows everyone to answer it themselves. On free markets, people can choose to buy and purchase whatever they want (provided there is someone selling it, of course). Whatever individuals find most valuable to themselves, they are free to buy. One could object that individuals do not truly act on their desires and values, but the critic is left to answer what exactly is driving the individuals to act if not their desires and values! Why even act at all if the action is not propelled or aiming at anything? If individuals buy on markets according to their desires and preferences, then the question is solved. People will decide for themselves what should be produced. Businessmen that individuals value the goods and services of the most will receive the highest profits, and those that individuals do not value will tend to go out of business.

Government control over the means of production, the traditional definition of Socialism, gives a government the job of producing the goods and services in the economy. Businessmen and entrepreneurs in the usual sense of the word no longer exist. All that exist are “managers” over businesses, and they get their orders from the government. More importantly, this also means that consumers under socialism have no say in what is produced (aside from riots or protests, which socialist regimes usually do not tolerate). Consumers do not choose from among many different products they like best, indicating to businessmen which products and services they desire. They must take whatever is given to them. The government planners can obviously do a better or worse job at providing goods and services that people would like (supplying large amounts of bread would likely be more satisfactory than large amounts of lampshades), but could government planners do a better job of deciding what people need than the people themselves?

Government control over an economy gives us no answer to the problem of production. This is because its “solution” completely ignores the most important component of the question, namely, individuals. It is individuals who value things, and thus, it is individuals who appraise how valuable things are. The values of a society are really just the values of many different individuals. Thus, the Problem of Production is a question of many different individual values. A socialist “solution” ignores all of this. Individuals and their values are discarded in favor of the ideas and values of the government planners. They very well could try to produce goods and services that people want, but again, could they do a better job than the people themselves? Individual values define how wealthy a society is or is not. A “solution” of socialism ignores them, and ignores the real question of wealth and production in the process.

Wealth is a concept that must always be understood, both in individual and societal terms, as a subjective and changing notion. If one wants to allow wealth to accumulate and society to flourish, socialism must be avoided. Only laissez-faire points the way forward to a wealthier and more prosperous society. Repression of individuals and their values leads only to gradual impoverishment and a regression of society. Wealth is not, nor ever is, permanent. It can be destroyed, as well as built up. However, these paths to destruction and accumulation are clear.

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