Chapter 8 Chapter 2 Wealth

The first section is the special use of the term goods.material goods.personal belongings.External goods and internal goods.Negotiable and non-negotiable goods.free goods.exchangeable goods. All wealth consists of things that men want; that is, things that directly or indirectly satisfy human desires.But not everything that people want can be counted as wealth.For example, the affection of friends is an important factor in happiness, but it is not counted as wealth except in special usages in poetry.So let's start by categorizing what people want, and then consider which of these should count as what constitutes wealth.

Since there is want of a short general term for all that is desired, that is, that which satisfies human desires, let us use the term goods for it. The thing or goods that people want to get, there are material goods, or personal and immaterial goods.Material goods include useful tangible things and all rights to keep or use them, or to benefit from them, or to acquire them in the future.They thus include the material gifts of nature, such as land and water, air, and climate; agricultural, mineral, fishery, and industrial products; buildings, machinery, and tools; collateral and other bonds; shares in public and private corporations , various monopoly rights, patent rights and copyrights; and traffic rights and other usage rights.Finally, the opportunity to travel, to visit beautiful landscapes and museums, and so on, are manifestations of objectively existing material conveniences, although the ability to appreciate landscapes and works of art is an intrinsic and personal good.

Man's immaterial goods fall into two categories.One is composed of his own characteristics and activities and capacities for enjoyment. For example, a person's ability to manage business, special skills, or enjoyment from reading or music, all belong to this category.All of these are within the human body, so they are called internal goods.The second class is called extrinsic goods, because they are constituted by favorable relations between him and others.For example, the various services and obligations that the ruling classes in the past often demanded from serfs and other subordinates belonged to this category.These, however, have now perished, and the principal examples of such relations in favor of the owner are now the prestige and business relations of merchants and freelancers.

Second, goods can be divided into transferable and non-transferable.Goods belonging to the latter category are a person's character and capacity for activity and enjoyment (that is, his inner goods), and that part of his business relationship that is not transferable on his personal credit, that is, his A part of the valuable prestige of a man belongs to this class; and the interests of climate, sunshine, and air, and his civil rights and rights and opportunities of using public property belong to this class. Goods that are not for private use and that are provided by nature without human effort are called free goods.Land in its original state is a gift of nature.But in a fixed place, it is not free goods from a personal point of view.In some forests of Brazil timber is still a free commodity.The fish of the sea are generally a free commodity: but some sea-fishing grounds are so closely guarded for the exclusive use of the people of a particular country that they may be classed as national property.Cultivated oyster farms are not free goods in any sense; and natural oyster farms, if not appropriated for private use, are absolutely free goods;

Even private property, from the point of view of the state, is still free goods.But since the state has granted their ownership to private individuals, they are not free goods from the private point of view; nor is the private right to fish in the river.But the wheat grown on free land, and the fish caught from free fisheries, are not free goods, for they are labored. Section 2 A person's wealth is composed of those parts of his external goods that can be measured in money. We can now come to the question of what kinds of a man's goods may be counted as part of his wealth.Opinion is divided on this question, but, comparing the various theories, the following answer seems clearly appropriate:

When we speak of a man's wealth without any explanatory phrase in the context, we are referring to the two goods he has. Goods of the first kind are those material goods to which he has a private property right (by law or custom), because they are transferable and exchangeable.We will also recall that these goods include not only tangible things like land and houses, furniture and machinery, and other tangible things that can be privately owned, but also stocks in public corporations, bonds, collateral, and other things that he can claim from others. Contracts for money or goods are included.On the other hand, his debts to others can be seen as negative wealth;

It must be deducted from his total property before knowing his true net worth. Services and other goods that come and go are not part of the amount of wealth. The second kind of goods are those immaterial goods that belong to him, exist outside him, and serve directly as a means of enabling him to acquire material goods. Such goods thus do not include all his own personal qualities and talents, not even those which enable him to earn a living, for they are inner goods.Such goods also do not include his personal friendships, provided that such friendships have no immediate commercial value.But it includes his business and professional connections, his business organization, and - if such a thing still exists -

His slave ownership, his servitude, and so on. The use of the term wealth in this way corresponds to the usage of everyday life; at the same time it includes those goods - and only those - which obviously fall within the sphere of economics (as explained in Part I); so this A good may be called an economic good.For it includes all objectively existing things which (i) belong to a certain person, and not equally to his neighbour, and are therefore obviously his; (ii) are directly measurable in money. —— This measure represents the effort and sacrifice that went into producing these things on the one hand, and the desires they satisfy on the other.

Section III. However, there are times when it is better to use the term wealth so broadly as to include all personal wealth. We may, of course, take a broader view of wealth for some purposes; we must, however, have recourse to special terms of interpretation in order to avoid confusion.The skill of a carpenter, for example, is a direct means by which he can satisfy the material desires of others, and thus indirectly his own, like the tools in his tool-basket; Convenience, perhaps, as part of wealth in a broader sense.Following the line of Adam Smith, and of the majority of Continental economists,2 we may say that individual wealth includes all energy, talents, and habits which contribute directly to the attainment of industrial efficiency; we All kinds of business connections and associations, which have previously been counted as part of wealth in the narrow sense, may also be included in the category of personal wealth.The talent of industry is regarded as another reason for the economy, since the value of this talent can usually be measured in some indirect way.

The question whether it is worth calling such talents wealth is merely a question of convenience, though much has been said about it as if it were a matter of principle. It is of course confusing that we should use the term "wealth" alone to include a person's talents.The word "wealth" alone should always refer to external wealth only.But sometimes the phrase "material and personal wealth" seems to be used without much harm, and with some good. Section 4 Individual dues of common goods But still we must consider the material goods which a man has in common with his neighbour; and being so in common, it need not be mentioned when comparing his wealth with that of his neighbour; though for some purposes, especially They may be important for comparing economic conditions at distant places or between distant epochs.

These communal goods consist of the benefits which a person acquires at a certain time in his place and in being a member of a certain state or society; they include civil and military security, use of public property and facilities of all kinds, Rights and opportunities such as roads, gas lights, etc., as well as the protection of the law and the right to free education.City dwellers and country dwellers have many free advantages which no other town or country man can obtain, or obtain at great expense.Other things being equal, the place where a person lives has better climate, roads, water, and saniter sewers; and better newspapers, books, and places of entertainment and education, in the broadest sense of wealth In other words, he enjoys more real wealth than others.Houses, food, and clothing are scarce when the weather is cold, and may be plentiful when it is warm; on the other hand, although a hot climate reduces the material needs of people, although it makes people rich with a little supply of material wealth, but weakened their energies to acquire wealth. Many of these things are common goods, that is, not privately owned.This leads us to study wealth from a social point of view as opposed to an individual point of view. Section 5. Wealth of Nations.wealth of the world.The legal basis for ownership of wealth. So let's examine those elements of a nation's wealth that are often overlooked when we estimate the wealth of individuals that make up that nation's wealth.The most obvious form of this wealth is material property of all kinds, roads and canals, buildings and parks, gas works and water works; It was built with public borrowing, so when calculating this wealth, the huge "negative" wealth of large debts must be deducted. But the Thames adds to the wealth of England more than all her canals, and even more than all her railways.Although the Thames is a gift of nature (except for its improved navigation), and the canals are man-made, for many purposes we should count the Thames as part of the wealth of England. German economists have tended to stress the immaterial factors of national wealth; and it is right to do so in some matters concerning national wealth, but not in all matters.It is true that scientific knowledge, wherever it is found, soon becomes the property of the whole civilized world, and may be considered the wealth of the world, not just of one nation.This is true of mechanical inventions and many other improvements in the methods of production; so is music.However, the literary works that have lost their beauty due to improper translation can be regarded in a special sense as the wealth of those countries written in their own languages.A free and orderly organization of the state may, for some purposes, be regarded as an important factor of national wealth. However, the wealth of the country includes the property of individuals and the common property of the people.In estimating the sum of the individual fortunes of the nationals, we may save some trouble by omitting all the debts and other obligations which the nationals of a country owe to one another.For example, as long as the national debt of Great Britain and the bonds of the British railways are held by the nationals at home, we can adopt a simple method and only count the railways themselves as part of the national wealth, and not count the railways and government bonds.However, we still have to subtract the bonds issued by the British government or British private individuals, etc., which are held by foreigners, and we must also add foreign bonds, etc. The wealth of the world differs from the wealth of nations much as the wealth of nations differs from the wealth of individuals.In calculating the wealth of the world, it is very convenient that the debts between the people of one country and the people of other countries can be omitted from the two sides of the income and expenditure.Secondly, just as rivers are an important factor in the wealth of nations, so the oceans are among the world's most valuable possessions.The concept of world wealth is indeed nothing more than the concept of national wealth extended to the entire globe. Individual and national ownership of wealth is based on national and international laws, or at least on custom with the force of law.The study of economic conditions at any time and place, therefore, requires a study of laws and customs; and economics owes much to those scholars who undertake such studies.But the scope of economics is already wide; and the historical and legal grounds of the concept of property are vast subjects best dealt with in separate books. Section 6 Value.Temporarily use prices to represent general purchasing power. The concept of value is closely related to the concept of wealth, and we can say a little bit about value here.Adam Smith said: "The word value has two different meanings. Sometimes it means the utility of a particular thing, and sometimes it means the ability to buy other things obtained by possession of this thing." However, experience has shows that it is inappropriate to use the word value in the former sense. The value of a thing, its exchange value, expressed in terms of another thing at any place and time, is the quantity of a second thing available at that time and place, which can be exchanged for the first .The term value is therefore relative, expressing a relationship between two things at a certain place and time. Civilized nations generally employ gold or silver, or both, for their money. Instead of lead, tin, lumber, corn, and other things expressing their value to one another, we first express their value in money, and call the value of each thing thus expressed a price.If we know that a ton of lead is at any place and time at fifteen pounds, and a ton of tin is at ninety pounds, and we say that their prices at that time and place are fifteen and ninety pounds respectively, we also know At that time, the value of one ton of tin in that place, expressed in lead, was equal to six tons of lead. The price of everything rises and falls at all times and everywhere; and with every change in such things there is a change in the purchasing power of money.If the purchasing power of money rises for some things and falls equally for things of equal importance, its general purchasing power (or its power to buy things in general) remains the same.This sentence contains some difficulties, which we must study later.At the same time, however, we can take this sentence in its ordinary sense, which is quite clear; in this book we may remain indifferent to possible changes in the general purchasing power of money.The price of anything may thus be taken as a proxy for its exchange value in comparison with goods in general, or, in other words, for its general purchasing power. But if inventions greatly increase man's power over nature, then for some purposes the real value of money is better measured in labor than in commerce.However, this difficulty will not greatly affect our work in this book, which is no more than a study of the "foundations" of economics.