Blessed are the meek, for they are the wealth creators (part one)

In this two part article we explore the difference between wealth creation and profit. To many people, the words wealth and profit are synonymous, to others they are dirty words and yet more celebrate the progress they bring. So I offer a model which shows their distinct difference and also leads to the conclusion that even nurses, council workers and teachers are wealth creators.

So to start: Any human group, anywhere, anytime, whether hunter gatherers, North Koreans or the British uses its own, invented, social system to provide for people’s needs and wants; things such as food, water, housing, defence, self-esteem and more. This social system is called an economy and whatever type, whether shared, transactional, planned or other, any and every economy provides for its people through the combination of four sets of resources. These are:

1) nature, including land, what’s under it and what grows on top of it.

2) labour, what humans can do as individuals with our hands and brains,

3) manufactured tools and infrastructure, whether arrows, tree houses, tracks, motorways, power stations, computer servers and the grid,

4) and most importantly, socially invented resources and systems like education, healthcare, governance, law, monetary system, division of labour, culture and so much more.

By combining different resources we are able to make and grow things, things which keep us alive, thriving sometimes, and contribute to our well-being. For example, food is grown by combining the natural resources of land, rain, sun and seeds along with human labour and brainpower plus tools for ploughing, harvesting, grinding and cooking. That will be enough to feed a local village, if you combine those resources with roads, carts, market places and we become more productive, cater for more people and that lets us specialise, invent better tools and reduce the effort per ton of grain. Everything made by humans is a combination of these four basic sets of resources within a system, the economic system.

Now to introduce the dirty word, wealth, I will use the word to describe the amount, health and quality of each of these four resource groups, so natural wealth includes a wealth of land, of sun or tidal energy for example. Human wealth includes manpower, quality of health and we say someone has a wealth of knowledge. Infrastructure includes a wealth of transport networks or power generators and social resources include a wealth of knowledge and good quality legal or education system.

Imagine if you will, four enormous columns or silos stretching up to the sky, each holding one of these resource sets or wealths. The natural silo is decreasing fast and the human one growing. It would be handy to be able to value each silo so we can see if their usage is getting out of balance or less healthy. Indeed economists are trying to do just that, in the UK our treasury is developing a model to value trees, parks and the like in terms of pounds sterling. You chop a tree down to develop land and you pay £1,000 to enable restoration of nature somewhere else, or a council invests in building a new play park as it’s calculated to be worth £500,000 in public amenity.