The purpose of life is essentially to create and experience more life, and to enable the true expression of life. Wealth creation in its fullest and broadest meaning; fosters this expression. ~ Keelan Cunningham
Wealth has many meanings and everyone sees wealth differently in their lives. The word wealth comes from Old English word ‘weal’, which means; well-being, prosperity, or happiness. Generally, economists define wealth as ‘anything of value’ which captures both the subjective nature of the idea of wealth and the idea that it is not a fixed or static concept.
The concept of wealth, or its increase, is of significance in all areas of economics, and yet the meaning of wealth is context-dependent and there is no universally agreed upon definition. Adam Smith saw wealth creation as the combination of; materials, labor, land, and technology in such a way as to capture a profit.
The theories of David Ricardo, John Locke, John Stuart Mill, in the 18th century and 19th century built on these views of wealth that we now call classical economics. Marxian economics distinguishes between ‘material wealth’ and ‘human wealth’, defining ‘human wealth’ as ‘wealth in human relations’; land and labor were the source of all ‘material wealth’.
Concepts of wealth also vary across time. Modern labor-saving inventions and the development of the sciences have enabled the poorest sectors of today’s society to enjoy a standard of living equivalent if not superior to the wealthy of the not-too-distant past. This comparative wealth across time is also applicable to the future; given this trend of human advancement, it is likely that the standard of living that the wealthiest enjoy today will be considered impoverished by future generations.
The Credit Suisse Global Wealth Report is the only study that analyses the wealth of the world’s entire adult population: 4.5 billion people and they estimate the world’s wealth at US$231 Trillion (US$231 x1012) at mid-2011. According to the Report; despite the financial crisis starting in 2007, global household wealth increased by US$117 Trillion between 2000 and 2011, with the share of emerging markets trending strongly upwards.
They estimate that ‘total household wealth’ will likely rise by 50% in the next five years from US$231 Trillion in 2011 to US$345 Trillion in 2016, equivalent to 8.4% growth per year. ‘Net worth per adult’ worldwide is expected to reach US$70,700 in the year 2016, an increase of almost 40% over 2011.
China will replace Japan as the second-wealthiest country in the world, with ‘total household wealth’ of US$39 Trillion in 2016, compared to US$31 Trillion for Japan. The U.S. is expected to maintain its supremacy in the wealth ranking, with a ‘projected total household wealth’ of US$82 Trillion. Well behind in fourth and fifth places are France and Germany with US$20.1 Trillion and US$19.6 Trillion, respectively.
Over the next five years, there will likely be big improvement in the position of emerging economies: Wealth in both China and Africa as a whole is projected to rise by over 90%, but India and Brazil are forecast to do even better, with personal wealth more than doubling by 2016. The case of India is particularly striking.
With total wealth of US$4.1 Trillion in 2011, India’s household wealth is comparable to the U.S. in 1916. During the next five years, India is projected to gain as much wealth as the U.S. achieved over the course of 30 years, beginning in 1916. This is due to an increase in wealth per adult accompanied by a rise in the adult population.
The case of Brazil is also noteworthy: With household wealth expected to reach US$9.2 Trillion by 2016; a level comparable to the U.S. in 1948, the rise in wealth in the next five years should correspond to the gain in the U.S. over the 23-year period from 1925 to 1948. ‘Total household wealth’ in China is currently US$20.1 Trillion, equivalent to that recorded for the U.S. in 1968.
If recent trends continue China could reach the wealth level that the U.S. achieved in 1990; a jump of ’22 U.S. years’ in just five years, by 2016. About 90% of global wealth is distributed in North America, Europe, and ‘rich Asia-Pacific’ countries (not including India), and 1% of adults are estimated to hold 40% of world wealth, a number which falls to 32% when adjusted for ‘purchasing power parity’ (PPP).
In the article “Can You Really Create Wealth?” by Kelvin Parker: To have wealth, you must possess something of value. Different people value different things, so while one person may find wealth with money, another may base wealth on good health, and so on. Wealth is not a zero-sum game. There is not a limited amount of wealth in the world that must change hands from one person to another. One person’s wealth creation does not conversely result in another person’s loss of wealth.
Your wealth creation is limited only by your willingness to imagine, innovate and accomplish. There is no finite or predetermined allotment of it, and we call it ‘creating’ wealth or ‘making’ money. Wealth creation can take many forms, and there are opportunities for wealth creation everywhere. In reality, you create value by fulfilling a need, desire, or solving a problem… it satisfies a void. Wealth, like beauty, is in the eye of the beholder. To create wealth you determine what others deem valuable, and create a way to give it to them.
In the article “Creating Wealth” by Jim Pinto writes: There are only three sources of wealth; natural resources, labor, and knowledge. Natural resources (oil, minerals and the like) are tied to geography. However, the largest transfer of wealth in human history occurred within this half-century, and it comes from the countries that generate wealth through productive knowledge, innovation, and enterprise.
Service industries and government jobs do not increase wealth; they just circulate money. Manufacturing creates wealth by taking goods of lower value, adding knowledge and labor, and creating higher value. Mining and farming create wealth for the same reasons. Labor is a commodity; the value of which keeps increasing with education and training. Knowledge and innovation are the key ingredients for productivity and wealth generation.
Through inexpensive, universal communications, knowledge-based work is migrating worldwide to the highest-quality, lowest-cost providers. Productivity has become a fierce, head-to-head competition between regions and nations for the single reason that it is the source of wealth; and the key to improvements in living standards. Those who can produce cheaper, faster, better… are better positioned to create more wealth.
In the article “Who Creates the Wealth in Society?” by Uwe E. Reinhardt writes: The wealth of modern societies is dictated not so much by the natural resources at their disposal, but by their human capital; the knowledge and skill of human beings and their ability to learn and apply new knowledge on their own. Conscientious parents, especially mothers, rank as the major wealth creators in modern societies…
Next come educators, especially the visionary and dedicated elementary and high school teachers who succeed in getting their students interested in learning and motivated to amass human capital. However, none of the forgoing is to say that being highly educated and skilled is either a necessary or a sufficient condition for contributing value and wealth to society…
In fact, anyone who works for pay or volunteer creates wealth. What about government? A common mantra in the U. S. is that ‘government does not create wealth, people do’. In some sense, of course, the mantra is true. Government is just an inert set of legal contracts, as is any business. Thus one should really say: ‘Government and business do not create wealth… the people working in them do’. A nation’s wealth is truly a joint creation in which individuals, families, business, and government all play crucial parts. However, finding just the right mix of effort and regulation that will maximize society’s well-being is a tricky and never-ending quest…
In the article “How Wealth is Created” by Dustin writes: The more goods we create, the wealthier we are as a nation. If wealth is important to you then it should be your goal to maximize wealth creation and minimize wealth destruction. Fortunately, it’s not really that hard. History shows us that 90% of the job is done for you by the ‘invisible hand’. Adam Smith described the necessary components of wealth creation as: ‘materials, labor, land, and technology in such a way as to capture a profit’.
Economists later called these things the ‘factors of production’, and not much has been added to this composition. It’s still; land (natural resources), labor, capital (materials and technology), and most important it’s the entrepreneur who brings it all together. So that’s how wealth is created; an entrepreneur gets access to capital, buys the materials he needs, hires people to do the work, and then they start making stuff…
In terms of history, capitalism has been the most efficient way to create wealth. I don’t think capitalism is perfect or infallible, but in terms of wealth creation, there is yet to be found a better system.
In the story of ‘King Midas’, he asked ‘the gods’ that everything he touched should turn into gold. The gods granted his wish. His joy soon turned to horror, however, when during a sumptuous feast, every piece of food he touched – turned into gold. Is gold wealth? Certainly it’s the best store of value mankind has ever found.
In the book ‘Does It Matter? Essays on Man’s Relation to Materiality’ by Alan Watts observes; for a shipwreck survivor and alone on an island, gold is worthless. He needs real wealth; food, shelter, clothing, and human companionship. Food and shelter is the original definition of wealth. In fact, wealth, creating wealth, maintaining wealth, and developing oneself so that you can create wealth, is the human mission in life…
This is about developing skills and knowledge that you need to be able to thrive in today’s world. Ironically, many people have an education and are taught about many different subjects; but very few actually have an education about wealth, about the things that so many strive to achieve. Wealth is not the same thing as money. Money is a comparatively recent invention, and a kind of shorthand: money is a way of moving wealth, and in practice they are usually interchangeable.
The best wealth creators are not generally extreme or unusual; they are in fact, average in many ways. Wealth creation is much more about lifestyle, than it is about just making money. Whether you’re herding goats in the Himalayas, working in a sweet shop on some street corner, or trading stocks on Wall Street; there’s no getting away from the subject.
Wealth creation is everywhere. People may have different ways of describing it; but essentially they are describing the same thing in accordance with their specific circumstances. Wealth creation is at the heart of the very purpose of life…
Wealth is the ability to fully experience life. ~Henry David Thoreau