Eric Baldwin is an electrical engineering senior and Mustang Daily libertarian columnist.
I am a long-time advocate of wealth (admittedly more in theory than in practice), and I am not alone. Everyone wants wealth, whether or not they admit it in so many words. For all our interest in the subject, we seem to have missed some fundamental facts, resulting in waste and misery that doesn’t need to exist.
We tend to think of wealth in terms of such things as stocks, real estate, gold, data and companies — and these are all valid forms — but wealth, at its most abstract, is the capacity to satisfy human needs and desires. Wealth is the ability to command solutions.
Wealth doesn’t exist apart from the demand for it; it is the demand that causes it to be wealth. An ancient shipload of gold at the bottom of the sea isn’t wealth if no-one wants it, or if it is unable to be recovered. A truckload of iPads is not wealth for a refugee camp without electricity and food (unless they can resell them to get what they want).
The physical objects are essential tools in the life-cycle of wealth, but they are certainly not wealth itself. Everyone has different desires that change priority over time. Thus, the value of an object is different to different people.
Desires can be physical (food, shelter), emotional, intellectual (books, art) or social (family, government). Wealth is therefore created to meet those desires. Most of the desires are on one level or another unbounded: no-one has (or will) ever complain about a book being too well-written, a meal being too satisfying or a society being too just. We live in a physical universe and so wealth is conveyed by physical means, but wealth is not proportionate to its physicality.
It has been recently said endless (economic) growth is impossible, immoral and unsustainable — that growth comes at the expense of the things that are really valuable. But this isn’t a condemnation of increasing wealth, this is a condemnation of the value system used to determine wealth.
Is there a practical or moral upper limit beyond which enlightenment, knowledge, joy and justice become poisons? If these things cause harm, it is due not to their essential nature but to their imperfect implementation.
Wealth is created when lower-quality solutions are turned into higher-quality solutions.
One method of doing so is by the informed manipulation of materials. A chunk of obsidian may be useful for smashing open nuts, but when chipped into a sharp blade it can cut fruit open more efficiently.
Another method is to trade solutions with other wealth creators for mutual advantage. If I am better at forming pottery than I am at duck hunting, and you are better at hunting than pottery, we can trade some of our solutions to produce both a net and an individual increase in wealth. We’re each better off than before the trade.
The idea of ownership and property rights is fundamental to wealth. If wealth is a solution to a problem, the question of whose problem gets resolved must be determined, either by consensus or by force. All people seek to maximize their own satisfaction (deriving pleasure from helping others certainly qualifies), so those who have the power to decide how wealth is disposed of will expend it on themselves.
Property rights indicates an exclusive right to utilize some aspect of wealth according to the owner’s wishes, whatever the preferences of others might be. Only when ownership is agreed upon can people make use of wealth — for themselves or for trade — without accusations of theft. The complex forms of wealth we enjoy today largely rely on long-term planning.
Creating such wealth requires ownership of the capital used to produce it; without the stability of property rights wealth creators cannot plan. A peaceful and consensual world relies on a broad and stable agreement, supported by law, about who owns what wealth.
Laws mandate and forbid human behavior. When laws prevent and punish violations of property rights (from deception to theft to murder), they protect the production and utilization of wealth. But because all consensual trades take place when both parties anticipate a profit, laws and policies that prohibit voluntary behavior tend to preclude the production of wealth.
Perhaps particular forms of wealth are evil and ought to be prohibited (like methamphetamines), but to do so raises the question, “What property rights does the group have over the individual?” There is a vast difference between saying something ought not to exist and claiming to have the authority to prevent it.
The proliferation of laws and lawyers has a damaging effect on property rights. Every new law presents a new opportunity for clever people to force changes in others’ behavior. When laws become so vast and complex that legal rulings can be “purchased” through shrewd effort, people lose confidence in their ownership of current wealth and their capacity to make definite plans for the future. Certainty is a very important ingredient in wealth, as the futures’ markets attest.
In the end, wealth and its defense are essential elements of human dignity — because the needs satisfied by wealth are proper and admirable, and since the act of creation is central to our nature as humans.