WEALTH AND MONEY PART 2: PRODUCTIVE CAPABILITY VERSUS MEDIUM OF EXCHANGE
WEALTH AND MONEY
PART 2: PRODUCTIVE CAPABILITY VERSUS MEDIUM OF EXCHANGE
One cannot eat money. It cannot be used as clothing. A house or chair cannot be built out of money. One cannot ride to work in a dollar bill or use it to mow the lawn. This is because food and clothing, a furnished house, a car, and a lawnmower are wealth. Money is the claim to wealth, a medium of exchange accepted as valid by a society. It has no value in and of itself. In fact, the overwhelming majority of “money” doesn’t exist. It is simply an entry on a computer screen or in a ledger representing credit or debt. But the manipulation of money exerts great power over the availability of wealth and who has “legal” claim to ownership.
As discussed in Part 1 of this series, Nobel laureate Frederick Soddy and architect/visionary Buckminster Fuller were deeply rooted in science and physical reality. They understood the difference between wealth and money. Witnessing the enormous productive capability that mysteriously became available during time of war, both men were fully aware that production of wealth was almost limitless and subject only to the current state of scientific/technical knowhow. In his 1926 writings in Wealth, Virtual Wealth and Debt, Soddy concludes:
“There is no longer any valid physical justification for the continuance of poverty. The phenomenon of unemployment and destitution at one and the same time today is solely due to ignorance of the nature of wealth and the principles of economics.”
Scarcity in peacetime was the result of faulty economic thinking and manipulation of the money supply by the financial power structure. Nations were said to be in debt. They had spent too much money waging war and now there was no money left. People needed to “sacrifice.” The productive capability available during the war was forced into idleness. In Soddy’s words:
“The popular notion that because a nation has in the past generation produced it is unable to do so in the next, that God and usury provide so much and no more, and if we consume much one year we must make up for it in the future, is the inversion of the truth. It contains just enough of the truth as it applies to individuals – that wealth is a real quantity, incapable of spontaneous generation and multiplication – to be plausible; but in national terms it is as fallacious as abstaining from drinking from a river because last year was hot and everyone drank so much.”
Being scientist/technologists, Fuller and Soddy felt the need to define wealth, to quantify it in an equation. They knew the components of wealth were physical resources – matter and energy – and the level of knowledge available to most effectively employ these resources. Simplistically stated:
WEALTH = (MATTER + ENERGY) X HUMAN KNOWLEDGE
Energy stored in fossil fuels – Earth’s energy savings account – is unavailable after the fuels are burned. But both Fuller and Soddy understood that expanding human knowledge would eventually make it possible for humanity to operate on Earth’s energy income using solar, wind, tidal, biofuels etc. (but for lack of political will and resistance of the fossil fuel industry, we have reached this potential in 2015). Additionally, the First Law of Thermodynamics says the total amount of matter and energy in the universe is constant and can be neither created nor destroyed, only interchanged. Since knowledge can only grow, wealth can only grow.
It is critical to understand that wealth is governed by the laws of physics and is incorruptible, whereas money is governed by the laws of man and is infinitely corruptible. It is also important to note that wealth can be applied productively, enhancing the human condition, or counterproductively, harming the human condition. An example of counterproductive is weaponry. War is ultimately about who can claim ownership of the artificially limited productive wealth. Wealth wasted counterproductively waging war further reduces available productive wealth. The result is a downward spiral. War begets war. Prosperity begets prosperity. And so we have wealth and money.
Part 3 will discuss: “Physics versus Money”