I'm putting this here simply because it's a newbish question. What is real wealth? I've been taking econ classes for about a year now, I've been reading whatever I can get my hands on, and I've seen this term tossed around. However, I am still having trouble grasping just what "real wealth" means. My understanding is that real wealth is those things which have appreciating value or which are useable as factors of production. For example, my car or house (if I owned a house) are not representative of "real wealth" both deteriorate in value. However, because I can use it to write (create a good, in this case - hopefully - entertaining short stories) my computer is real wealth. Similarly, my bow, tools, and such are also real wealth because I can use them to produce goods and services - hunting, woodworking, handyman work, et cetera. In the way of things of appreciating value, assuming falling price levels due to increasing production (more goods and services on the market) things like gold and silver would also be real wealth. Am I about right on this? Or do I need to go back and reread some things I've missed?
CShirk:my car or house (if I owned a house) are not representative of "real wealth"
Why don't you just hand them over to me then?
Real wealth is anything you demand.
The difference between libertarianism and socialism is that libertarians will tolerate the existence of a socialist community, but socialists can't tolerate a libertarian community.
My understanding is that real wealth is the things that remove your perceived uneasiness directly - a house for shelter, a stove to cook on, food to cook and eat. Your bow, either to hunt with for food or pleasure, or to use with your fiddle for personal satisfaction or work. Real wealth is things - not non-specific claims for things.
The distinction is between real wealth and money. You can not eat a Federal Reserve Note (FRN), at least if you do it doesn't provide much nutrition and for goodness sake don't eat the ones because you don't know where they have been. All you can do with a FRN is trade it to someone else in exchange for a real good to remove your uneasiness (pizza if you are hungry, a ride to work, etc.) But what if someone prints up 2,000,000,000,000 new FRN, or even more sneakily clicks a few keys on their Federal Reserve computer and enters a few billion more FRN's as reserves in the member banks? Your non-specific titles to capital (FRNs) just lost a huge chunk of their value in removing your uneasiness. Paper money is not real wealth.
Now how you treat commodities may be different. Gold has intrinsic use for adornment and a few industrial uses, but its monetary function is as a medium of exchange. But gold is scarce, so you can't just print up 2 trillion more of it. You have to mine, refine, etc. So I would say that gold is closer to real wealth than fiat money, but I don't believe that in a monetary function gold counts as "real wealth". But that is slicing the point pretty thin.
One hundred trillion Zimbabwe dollar note
Menger has a chapter on it in his Principles of Economics. It's the sum of all economic goods in one's possession, with an economic good being a scarce good that satisfies some want or other (and the power of which to do so I am aware of), and over which I possess control..
To darkness I condemn you...
My pick on that is that:
"(Real) Wealth is to have the means to achieve your goals at the time you want to".
In the begining there was nothing, and it exploded.
Terry Pratchett (on the big bang theory)
It's stuff that does stuff for you.
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nhaag: "(Real) Wealth is to have the means to achieve your goals at the time you want to".
I think that is a great succinct way to put it
I guess I need to batten down the hatches and bury my nose back in Menger's book for a while. I think I get the idea, though...wealth is anything that serves my needs. Thanks everyone.
you might exclude from your definition non-scarce goods, even if they serve your needs
?
Where there is no property there is no justice; a proposition as certain as any demonstration in Euclid
Fools! not to see that what they madly desire would be a calamity to them as no hands but their own could bring
If we talk about economy than yes, because economy is about aquiring scarce goods. Yet, in an universal way even an abundant item can add to your wealth, i.e. the means at hand to achieve your goals.
cheers
Stranger: It's stuff that does stuff for you.
I think this is a good way to put it, but I'll expand. In the abstract, wealth consists of the ability to derive a greater amount of value from a lesser amount of labor relative to one's natural state (i.e., subsisting by muscle power and intellect alone). In physical terms, this means having a car instead of legs, clothing instead of bare skin, a gun instead of your fists. Or even a horse, some furs, and a sharp stick.
However, I would qualify this by saying that one can only be wealthy if one owns the material goods from which they derive their value. A chattel slave cannot be said to be wealthy, even though the master lets him live in the house and sleep in a soft bed. Similarly, many "rich people" are not truly wealthy because they owe more to other people than they own themselves. A big house is not the wealth of the inhabitant if it is owned by the bank; rather, it is the bank's wealth.
So I would say further that physical wealth can be measured as the monetary value of a person's goods minus their debt. In which case, most people in the West are not wealthy at all - they simply live in an environment of wealth.
Pro Christo et Libertate integre!
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