One of Sandwichman’s good questions prompted my revisiting an earlier writing of mine on wealth (circa 2000?). Extensively revised to the extent that it is hardly recognizable; here is, a, second, best effort.
Herein, the terms wealth and capital are thought of as being interchangeable.
For thousands of years, humans lived off the bounty of nature. Some societies still do, but, today, and for centuries now, most societies have lived off that bounty much abetted by their own endeavors, and the endeavors of others.
A society’s wealth includes all of its resources. Those resources include the individual and collective knowledge, skills, creativity, talents, and energy, of the society’s members; i.e., all aspects of its innovative and productive capacity. Those resources also include the society’s repositories of knowledge, such as: universities, libraries, museums, laboratories, government agencies, cultural centers, commercial entities, and the management of all. These resources also include a society’s infrastructure such as: housing, education facilities, transportation facilities, utilities, production facilities, medical facilities, entertainment facilities, government facilities, commercial facilities, and the management of all. The natural resources: the land, atmosphere, and environment within a society’s domain are, and most importantly so, among a society’s resources. The well-being of a society’s people is, in and of itself, a societal resource.
It is difficult to speak to a society’s wealth without introducing the concept of worth. A society’s wealth has worth. A society’s money has worth in the sense that it represents, is backed by, the society’s wealth, and being so, can itself thus be considered a resource. Bearing in mind, always, that if a society’s wealth is diminished, so is the worth/value of its money. Money can be seen as a metric of worth; and also, of course, as a metric of wealth. Conversely, a society’s wealth determines the worth of its money.
Produced consumable goods in use, produced but not yet in use, or goods in the process of being produced, are a part of a society’s wealth; are themselves a resource. The worth/value of such consumable goods may diminish over time; diminishing their contribution to the society’s wealth.
The wealth of a society is increased when there is a net improvement, an increase, in its resources. When one of its resources, say for example, some of its trees, are used to build houses, the completed houses must be worth more than that of the material resources and work inputted in the construction for there to be a net increase in a society’s wealth. Manufacturing, where work and other resources are combined in order to convert or improve on a resource is a common way societies increase wealth, e.g., metal ore to steel, steel to cars, refrigerators, etc. are common examples of resource improvement, conversion. In re the consumption of non-renewable resources such as fossil fuels for such manufacture; for there to be a net gain in wealth, the contribution of their consumption to production of wealth must be worth more than the cost of their replacement, of any processing required, and the consequences of their usage. In re the consumption of recyclables such as ores, their first cycle contribution would need to exceed their cost of production, and their second to exceed the cost of recycling, for theirs to be a positive net contribution.
The whole of the environment is a resource. Any degradation of the environment decreases wealth. For the consumption of a given resource to increase a society’s wealth, the contribution of its consumption must be greater than all the resources that went into its went into its production, plus any damage to the environment (a negative) from its production and, or, consumption. For example: Gasoline from crude oil from ANWR used to propel a large SUV to and from recreation sites decreases wealth to the tune of its replacement costs and the damage done to the environment; while this same gasoline used for the twenty mile commute by a Prius driver working in a biotech firm would cause less of a decrease in a society’s wealth. Better if this resource were used to develop alternative, or renewable, energy sources. It is better to leave resources unused than to waste them, than to consume them in a manner that does damage to the environment. Likewise, designed obsolescence products waste resources, decrease a society’s wealth. Some resources require protection, upkeep, …; a society’s wealth can be diminished by the aging, deterioration, and obsolescence of its produced resources. A missed opportunity cost might properly be assessed a society with unused assets if the society’s population lives below an acceptable standard.
A society’s military is a resource to the extent that it provides a useful service to the society.