6 Wealth
There is a great deal of debate and speculation over the very definition of wealth - and this misunderstanding gives rise to a large number of false beliefs about economics.
Simply put: wealth is the possession of things that have utility. That is, they are available to be consumed to satisfy want. We consider a man to be "rich" or "wealthy" if he has at his disposal many things that may satisfy his desires, and "poor" if he has more desires than things to satisfy them.
In particular, wealth considers the excess of things (products or money) over consumption. A man may have his every desire fulfilled, and is not wealthy if he does not accumulate more than he requires. Likewise a man may live in harsh conditions, denying himself pleasure and satisfaction, so that he may accumulate a surplus of money that might be used to satisfy his desires, but which he chooses not to spend. And thus he is deprived and wealthy at the same time.
He also mentions that wealth is often considered comparatively - that a man is wealthy if he has more than his neighbors, regardless of the total of his wealth. So while a tradesman in the company of bankers is a poor man, he is rich in the company of beggars. This seems of little importance, except to expose that the entire notion of wealth is thoroughly tainted by jealousy of others.
The proper goal of economics is to educate us to apply our effort to the satisfaction of our wants. By some ways of thinking, wealth is a product of economic success because we are able to satisfy our wants and have an excess of things. But if our goal is to be as happy as possible, then spending time on unpleasant activities to create a surplus of things we do not need indicates an error has been made: having too much is as bad as having too little, though the problem is felt less poignantly.
He refers to the debate between Ricardo and Say on the nature of wealth: whether it consists of having an abundance of value or an abundance of utility. If we accept Bastiat's definition of wealth, it is utility - because value is created in the consumption of utility (at which point it ceases to exist) whereas wealth is in the amassing of utility for future consumption. But going back to what was said before about the miser who hoards wealth and lives in misery, we might be better advised to pursue value than utility if our aim is to enjoy the greatest satisfaction in life.
As value is created by labor and natural resources, then it follows that the amount of wealth that one has the potential to create is derivative of both. One with great skills and a desire to apply them can make wealth with very little resources, one with many resources may make no wealth if he does not apply his effort, etc. But it becomes "a treacherous shoal" for economists to generalize much beyond that, as it gets into issues better considered by a psychologist (i.e., why a man chooses not to do things that would benefit him).
The problem is that politicians have made "poverty" a problem they mean to solve, without understanding what it is or what might cause it. And in so doing their well-intentioned meddling often causes more poverty than it alleviates.
A disparity in income arises from the division of labor. A person who works in a given profession is compensated not for the amount of effort, but to the degree to which his product is valued. A silver miner and a gold miner perform very much the same physical activities, but the gold miner receives a richer reward because the product of his work is desired more greatly. And because work is specialized and requires training, it is no simple matter to shift to a better paying profession.
He struggles a bit to differentiate from "consumption wealth" (the benefit derived from consuming goods) and "value wealth" (the stockpiling of value that is not consumed). The point seems moot, as he has previously distinguished value from wealth - but apparently this is in response to various theories of wealth that were in debate in the author's time.
He also distinguishes wealth from capital, in that capital involves resources that have been set aside for a given purpose (to be used for production) whereas wealth has no purpose except for the vague notion it may procure something for consumption and an unknown future time. Wealth can be converted into capital and vice-versa, since the distinction is intentions and men may change their minds about what to do with an asset at any given time.
Straying back into politics, he notes that government seems to have a hatred of wealth. While it promises its citizens a better life, it has various mechanisms for confiscating any wealth they accumulate - through taxation or outright appropriation. In some instances it is even seen to take wealth, then to destroy it. In all, it seems that government want people to be only so successful, and those who are more successful than their peers are penalized for their industry. As a policy, this is not the means to success, put puts a society "on the road to suicide"
There's a great deal more deliberation with other economists who make a poor distinction between value, utility, and wealth - all of which seems unnecessary if you accept his distinctions.
The Morality of Wealth
The consideration of wealth from an economic perspective is a very simple matter: when a man consumes less than he has produced, the remainder is wealth. Morally, there is the question of whether wealth is "good" - or whether it is "good" to produce wealth. In all ages, it has been quite a controversial subject.
Economics seeks to avoid such philosophical issues, but takes as its base the necessity of man taking action to provide for his own wants, with the implication that it is proper for him to do so. At the very least, a man must see to his own survival needs if he is to survive. Beyond that, economics acknowledge that men pursue their pleasure - but it does not presume to tell what out to cause him pleasure nor suggest how much pleasure in excess of his survival needs he ought to pursue. It merely observes what men do, and does not suggest what they ought to do.
The moralists seem to have a maxim to condemn man regardless of what he does. If he rests, then they condemn him for his laziness. If he works, then they condemn him for his success. There seems to be no way to please those who wish to dictate the behavior of others. As such, they seem hardly worth listening to.
Me mentions the notion that wealth is "stolen" from nature, which depends upon accepting the premise is something other than nature, and that he has less right than any creature to take from nature as he requires.
It is likewise misguided to consider the wealth a man has produced as being denied to or taken from anyone else. Wealth is produced by a man's actions - if he works to produce something, he shall have it; if his does not, he will not. The man who does not plant his field is not robbed by a neighbor who has done so.
While there is competition over limited natural resources, economics sorts this out by means of price competition. The individual who feels the greatest need of something will pay more for it, and so when one man outbids another, it is because his need is greater. For productive resources, the individual who can make the best use of something is able to pay the highest price for it. To insist that resources be divided equally between those who can use them and those who will waste them is not morality, but foolishness.
A productive man is criticized for his "greed" most often by those who have a desire to take his work product for themselves. Their motivation is not that they feel it is immoral for him to have something, but their own covetousness of his success, and needs no further consideration.
The drawback to wealth, as has been stated, is that it requires a man to spend more time in productive activity than enjoying leisure time. And again, this is his choice: if he values the things he produces more than the time he invests, he gains greater satisfaction for his effort. When he does not, he harms only himself.
In most instances those who declaim against wealth do not consider the implications of what they are suggesting, and he dismisses them as "parrots repeating words that they do not understand."