Web of Wealth

I'm glad to see that you have made a clear distinction between just having a lot of cash and having "real" wealth in one's life. I believe that in most current societies, too often, a person's value is judged upon their "stash of cash". Horror stories of the very rich and famous living lives that resemble train wrecks, illustrates that a wealth of cash is not the only variable to a state of well being.

So, John. If wealth is to do with power and pecking order, how would it be created or destroyed? I can understand that a bunch of idiots might lose the plot but that would just transfer their wealth to someone else.
How do we describe what happens in a society which lifts itself up by its own bootstraps, or is that a myth?

Apparently, today, 9th June, is National Liftshare day. Car sharing, as a social enterprise, seems to me like a pretty good shot at wealth creation.
(I got this informaation from a letter in yesterday's Guardian. It mentions three websites: Digihitch, Hitchwicki and Liftshare.com.)

I kind of agree with Trevor here. But only kind of because I come at it from a different slant. That slant came to me like this:
My son sent me an extract from a book that a friend of his - a professor at a German university - is writing on monitoring trust in projects. Knowing how I feel about this topic, my son thought I'd (a) like to see it and (b) like to comment on it.
It was while I was commenting on it that the slant came to me. The bit of the book I saw was light on a definition of trust. And trust, if it's not defined, becomes amorphous and totally open to interpretation and monitoring, however that happens, becomes impossible. (Lack of a definition's not necessarily a bad thing but professors are supposed to be rigorous and the rest of the extract was entirely in keeping with the academic-authoritative approach to stuff. And, incidentally, I get spooked by authority figures and generally spend my time avoiding them. Aidan - gurus are inevitably authoritative - is the only authority figure I'm entirely comfortable with.)
So, my response to my son began with Aidan's and my definition of trust which runs:
* to trust is to rely on someone (or something) to take care of our interests
* trust allows us to extend our awareness to things that person can see that we cannot
* the choice of trust in either party is not subject to preconditions
* any event in a relationship can be used to enhance or diminish trust depending on the choices the parties make

This last point is where the slant comes from. John Ruskin reckoned Wealth is Life (or it might have been Life is Wealth, I can never remember). I agree with Ruskin but reckon Trust is Wealth because, in my relationship with life (the world, the universe...whatever) I can always make the choice to enhance, rather than diminish, trust. Ergo, I am a wealthy man.

A guru writes above and another guru - John Ruskin (1819 - 1900) - writes (thought I'd better check his quote after mangling the great man's words) in his book Unto This Last:

There is no wealth but Life. Life, including all its powers of love, of joy, of admiration. That country is richest which nourishes the greatest number of noble and happy human beings; that man is richest who, having perfected the functions of his own life, to the utmost, has also the widest helpful influence, both personal, and by means of his possessions, over the lives of others.

Dear John & Aidan,

Stimulating stuff!

In many respects we are all absurdly wealthy. Even royalty a hundred years ago could expect their wives to die in childbirth, and a number of their kids to die before reaching adulthood. My grandparents, living in the Old Kent Road in London, lived a life more like that of the slums of Calcutta today than like the life I lead (but the climate was a lot worse, too!).

The weird thing is that we so rapidly become accustomed to the astonishing luxuries that surround us, take them for granted, and demand more.

The hygiene factors count for a lot, but they rapidly become invisible to us, until we go somewhere where they are absent. Their invisibility means that they can easily get dismantled, because people can't see how important they are. The fad for "deregulation" is a perfect example of how dangerous this is.

Aidan's point about the total lack of distinction in economics between wealth creation and wealth diversion or concentration is a very important point.

If you listen to the current debate about how to improve the regulation of the global economy, you will struggle to find any mention of this distinction. I have heard nobody point out that the City of London doesn't create wealth at all.

Everyone just assumes that, since it concentrates a lot of money in a confined space, and the government can get tax revenue from it, that must mean it created the wealth in the first place. This assumption is just plain nonsensical, but nobody ever challenges it.

The commentators all blather on about how important it is not to stop "financial innovation", since it creates so much wealth. But all it really does is create the appearance of wealth and a mechanism for diverting it into certain pockets.

Wealth gets created by people doing real work, not by manipulating numbers in spreadsheets!

My turn to be puzzled by this exchange. John seems to be saying firstly that wealth is wealth and part of the point is you are not going to know how people came by it. secondly he seesm to be saying that he is not restricted by the wealth of others in the view he chooses to take on it, whether he is impressed or ever so unimpressed.
But this black box approach takes the Web of Wealth no further, we need to see inside the box to know how wealth creation is affected by the assumptions we make. Trevor's assertion that the City does not make any wealth takes a narrow slice out of a bigger system: it is also true that the City could not do what it does without an underlying "real economy". You have to have something to bet on, though people have never run out of things for that purpose.
So in our society, people use wealth to make more money by using it to impress people as part of what they do. Even if I spend my days shoeing horses I may need to impress people with how successful a blacksmith I am. This is one of the many ways that wealth is used, has always been used, and we can tell very easily that it tends to concentrate wealth in fewer and fewer hands.
Suppose, as students of local economies tell us, that a surplus is created by an economy (more than we started with) and that its rate of creation increases with the velocity of circulation of money. Velocity of circulation is some sort of opposite to concentration in the hands of the few, so there is some sort of opposition between weath as power and wealth as resources.
So for now, if we care about resources, do we not need to know where money is piling up so that it can be persuaded back into circulation? This is an element of transparency and in alternative money systems around the world, the money authority has to do just this to make it work.

Hiding one's wealth under a bushel, it seems to me, is not possible. This is true however that wealth is obtained. And in a small step from one little biblical allusion to another: as with the wise, so with the wealthy - by their deeds shall we know them.
The difference between a millionaire and a pauper is not a million pounds, it's that they act differently. Apart from that I reckon there's no iron law of wealth since, as I've shown above, I'm a pretty wealthy man without being either a millionaire or a pauper.
The Woolsack, on which lolls - or lolled until recent reforms - the all-powerful Lord Chancellor of England, symbolises both the source and the nature of this country's wealth. A few million sheep, a few thousand shepherds, a few centuries and a few enterprising inventions and, hey presto, wealth was created and the world was changed forever. And rule Britannia!
Today, sic transit gloria, the Woolsack might just as well be replaced by a heap of toxic credit derivatives. We (the country, that is, not you and me) still act as we did when our wealth was a reality. We arm ourselves with the weapons of the wealthy. We invade faraway countries. We demand our seat at the top table. We crave prestige. We mourn the loss of empire and influence.
Inside the country there are people who see things differently and act differently. They do things that simply enable them to do the things they want to do. They are creating wealth. By their deeds shall we know them.

It's a good piece, John.

My take on it is that, instead of just lamenting the idiocy of measuring wealth by measuring money, we need to design new monetary systems that actually do measure what we really care about.

People have been indulging in similar laments for over two thousand years, and the fixation on money has only become worse, particularly in the last 500 years in the West.

The monetary systems we use today were designed to enable nation states to finance the fighting of wars against each other. They are not suitable for our modern age, and we now have the technical means to design monetary systems that could work for all of us, instead of simply benefiting a handful of people who know how to manipulate the system to benefit themselves.

Pious statements on the subject do not change anything, except that they make people feel self-righteous and superior to those grubby people who love money so much!

Several issues are raised in this blog, each of which should perhaps be a discussion item in the forum post. But let's start with Trevor's claim that the City produces no wealth, it just moves money around and deducts some of it to pay obscene bonuses.
I think this is a bit like saying that fair trade generates no wealth because it is just an exchange of equal values. But trade does create wealth because of the different comparative advantage of the partners. In the extreme case the place with iron mines trades iron for the place that can grow sugar cane, so both have access to new materials at prices that would be impossible without the trade.
In the case of the City, banking, insurance, loans, annuities etc are all services that people are prepared to pay for, and that are very difficult and costly in effort to provide for oneself. We don't want to have to keep stores of gold at home and hire guards to protect them. So creating these services does count as creating wealth. You could possibly add the City's role in directing investments to the productive areas with the best returns although I am more sceptical about this in view of the casino-like nature of the markets in recent years.
I am also sure that the City creams off more than its fair share of the values passing through. It has been able to do this largely by making its operations appear very much more complex than they really are and so fooling people about what is going on. It is unfortunate that the present government, having nationalised several major banks earlier in the year, seems completely unwilling to use this power to make them behave in a more socially responsible way. This is even more true in the USA.

We can all agree that money isn't (necessarily) wealth but just consider a billion pounds:
If you took a thousand people and took a million pounds from each one you'd have a billion pounds.
If you took a million people and took a thousand pounds from each one you'd have a billion pounds.
If you took a billion people and took a pound from each one you'd have a billion pounds.
A billion quid set out like that is pretty hard to get your head round I reckon. But consider now that 'the banks' are preparing to award themselves 'bonuses' in excess of fifty of these billions. Consider too that bonuses are just a percentage of some bigger pot and the connections between pounds, people and wealth defy definition in any rational sense.
I mean, how many pounds are there in the world? And how many people? And how much longer is there?

In the establishment's myopic conventional wisdom Banks nevertheless continue to be dubbed engines of 'wealth creation' .
Can't see it myself unless military prowess is a major facet of wealth.
I found this reading Tom Engelhardt the other day: the nonpartisan Congressional Budget Office has released its latest "budget outlook" indicating that the Iraq and Afghan Wars had already cost the American taxpayer more than $1 trillion in Congressionally-approved dollars, with no end in sight.
Bailing out our banks cost us that much. Remember those million people from whom I metaphorically took a thousand pounds to make a billion? Well, you only have to do that a million times and you've got a trillion. Easy, isn't it?
How macho can wealth get?

Money is not only the goal, money is the measure. We have nothing else to gauge value by. How do you know you amount to anything? How do you know society prizes you? Money. The banker's creed and now the politician's: money is worth, worth is money, that is all ye know on earth and all ye need to know.

From: One by One, the So-Called Pillars of our Civilisation Tumble Shamefully by Howard Jacobson at http://www.commondreams.org/view/2010/03/27-6
A refreshingly fine read