Friday, November 20, 2009

What Is Wealth?

It is becoming increasingly clear to more people that money has become detached from any intrinsic value. It's no longer based on gold or silver, cattle or salt or beads. It isn't even something that you can put into your pocket anymore. It's simply numbers in a computer.

And yet the world economy depends on these artificial numbers. If the computer screen shows you have enough, you can buy a private jet to fly to France for dinner. You can own seven houses, and pay for workers to maintain them while you're not there.

Food flows across the planet, steel is made and turned into cars, oil is pumped and burned, clothing in sewn in one place and worn in another, plastic gewgaws galore are passed around and sold.

But without the correct numbers, you're thrown out on the street, reduced to foraging through dumpsters for dinner, and begging from strangers for your beer.

Some urge a return to the gold standard, but this didn't work out so well for our ancestors. (Unless your ancestors were bankers, of course.)

The ingenuity of humans has led us to a place where we can all live in well fed comfort. And yet, only 2 billion of us do. Two billion live in utter starving misery with the rest in between. And now, more and more of us are sliding into poverty everyday. Why? Why is is that the lack of money, which has become more and more ephemeral, still has the power to destroy lives?

As Franklin Delano Roosevelt pointed out in 1933;

And yet our distress comes from no failure of substance. We are stricken by no plague of locusts. Compared with the perils which our forefathers conquered because they believed and were not afraid, we have still much to be thankful for. Nature still offers her bounty and human efforts have multiplied it. Plenty is at our doorstep, but a generous use of it languishes in the very sight of the supply. Primarily this is because the rulers of the exchange of mankind's goods have failed, through their own stubbornness and their own incompetence, have admitted their failure, and abdicated. Practices of the unscrupulous money changers stand indicted in the court of public opinion, rejected by the hearts and minds of men.

True they have tried, but their efforts have been cast in the pattern of an outworn tradition. Faced by failure of credit they have proposed only the lending of more money. Stripped of the lure of profit by which to induce our people to follow their false leadership, they have resorted to exhortations, pleading tearfully for restored confidence. They only know the rules of a generation of self-seekers. They have no vision, and when there is no vision the people perish.

Yes, the money changers have fled from their high seats in the temple of our civilization. We may now restore that temple to the ancient truths. The measure of the restoration lies in the extent to which we apply social values more noble than mere monetary profit.

Happiness lies not in the mere possession of money; it lies in the joy of achievement, in the thrill of creative effort. The joy and the moral stimulation of work no longer must be forgotten in the mad chase of evanescent profits. These dark days, my friends, will be worth all they cost us if they teach us that our true destiny is not to be ministered unto but to minister to ourselves and to our fellow men.

These are fine words, but FDR didn't really live up to them. The money for the New Deal was borrowed from the Federal Reserve and social values were not universally applied.

But we don't even get lip service today. Our money changers were not driven from the temple, their tearful exhortations were heeded, and trillions provided for their continuance and profit. Their vision of bonus checks became reality, while the people perish.

At least FDR put people to work doing useful things, like building bridges and parks, planting trees, interviewing former slaves, painting murals, writing plays, and other things that would never be considered today.

We have three wars going on, with young people spread out on 700 bases around the world, millions in prison, and still the unemployment rises.

Wealth used to be recognized as the product of labor. Adam Smith pointed out that things that are of value don't cost anything unless there is human labor involved.

The value of any commodity, ... to the person who possesses it, and who means not to use or consume it himself, but to exchange it for other commodities, is equal to the quantity of labour which it enables him to purchase or command. Labour, therefore, is the real measure of the exchangeable value of all commodities (Wealth of Nations Book 1, chapter V;

Interestingly, Adam Smith and others recognized the value of that which has no price, like water, air and common land.

The word VALUE, it is to be observed, has two different meanings, and sometimes expresses the utility of some particular object, and sometimes the power of purchasing other goods which the possession of that object conveys. The one may be called 'value in use ;' the other, 'value in exchange.' The things which have the greatest value in use have frequently little or no value in exchange; and on the contrary, those which have the greatest value in exchange have frequently little or no value in use. Nothing is more useful than water: but it will purchase scarce any thing; scarce any thing can be had in exchange for it. A diamond, on the contrary, has scarce any value in use; but a very great quantity of other goods may frequently be had in exchange for it. (Wealth of Nations Book 1, chapter IV)

(Of course, now Betchel and Nestle have managed to turn water into a profit making commodity, another sign of how far we've fallen from common sense.)

Marx pointed out that nature is as important as human labor in providing wealth.

"Labor is not the source of all wealth. Nature is just as much a source of use values (and it is surely of such that material wealth consists!) as labor which is itself only the manifestation of a force of nature, human labor power."

America, which started the 19th century with immense forests and fertile plains, plentiful water and bountiful wildlife, ended the 20th with remnants of all those things. Forests stripped, waters dammed and polluted, a massive dead zone in the Gulf of Mexico, mass extinctions of some species and near extinctions of others, poisoned air and atmosphere pumped full of carbon dioxide and rising. Our natural wealth has been strip mined!

Our human resources are mostly underused or misused, by contrast. As I pointed out earlier, millions are in the military, trying to take resources from people in other lands. Millions are locked up with millions employed in getting them and keeping them in prison. Millions work in the FIRE industries, spending their days leeching wealth from the very few left who actually produce anything of value. Millions are unemployed.

We must revalue our wealth. Each person's labor time should be equal to anyone else's, and other species must have equal worth to ours.

That sounds to radical to 21st century Americans, convinced as they are that some are WAY more equal than others, and that other species can be eliminated if profitable. If you don't go to college, you don't deserve to make a decent living, in the new American thinking. And the longer you go, the more money you may make.

There is no reason to value some labor so much more than others.

After our hurricane, I was so glad to see the tree workers, and the electrical workers, and the roofers. They moved the trees, turned on our electricity and repaired the roofs. They did productive work.

But when they fell off a roof and broke their legs, or cut themselves with a chainsaw, they were glad that I was there to help reset their bones, or sew up their wounds. The doctors, nurses, techs and others are also doing productive work. But why should the labor of sewing skin be worth so much more than that of sewing cloth? Why should resetting a bone be worth so much more than clearing a road? The skill of splinting is no more exacting than that of reconnecting a high voltage wire.

And, of course, those who do very little productive work, make the most. CEOs and the financial leeches making the million dollar bonuses, have helped no one.

And at the very top, where Paris Hilton lives, there is no productive work done. Those who own and do no labor, make much more wealth than those who are productive members of society.

Since we are capable of producing enough for all, we should do so. And all should contribute to the production, unless unable.

Everyone's time is valuable and all productive labor should be measured in time.

If we pay people to go to college and learn to be doctors, lawyers or engineers, they won't feel that they are owed more for the rest of their lives for the time they put in as young adults. That way, people can choose professions to which they have a calling, and not for the prospect of making more money than others.

The only way to make more than other people should be by putting in more hours than other people. Those that wish to do that are welcome to it. Personally, I'll put in enough time to pay the rent and buy food. Kind of like I do now.


Anonymous said...
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Anonymous said...

I always get a charge out of how the right wing points out that FDR's programs didn't pull the country out of depression, it was World War 2. Duh, full employment could have come about for something good too - and it was the government programs for the veterans that created an educated middle class. Before the GI bill, most people just had an eighth grade education.

David G said...

It's an interesting, stimulating article, Wagelaborer!

What is wealth? Most people will never know.

How can we try to bring about more income equality? By applying strict, graduated (the poor pay little or no tax - the rich pay say 80 cents in the dollar) taxation laws and stopping all tax evasion schemes.

And bring in 70% inheritance taxes on all families that are worth more than say five million dollars.

That might help to start things going!

Anonymous said...
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Mike B) said...

If all the people who make a living by selling their skills to employers were to stop working, no wealth would be produced. Labour theory of value anyone?

Of course, there is the wealth already existing in nature.

wagelaborer said...

Does anyone know how to delete comments?

apparently I got spammed.

Mike B) said...

To delete comments, you have to be logged into your account. Next to the date of the posted comment, located at the end of the comment, you'll fine what looks to be a garbage or trash can. Click on that to delete unwanted 'contributions'.