Economics Dictionary of ArgumentsHome
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| Wealth: In economics, wealth refers to the total value of all assets owned by an individual, household, or nation, minus liabilities. It includes tangible assets like property and intangible ones like stocks. Wealth reflects accumulated resources that can generate income and provide economic security over time. See also Welfare state, Welfare economics._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
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Adam Smith on Wealth - Dictionary of Arguments
Otteson I 30 Wealth/Adam Smith/Otteson: (…) we need to understand what Smith meant by "wealth." Here too Smith was offering a new account. In the eighteenth century, the reigning economic theory came from a school of economic thought called Mercantilism, which held that wealth consisted in gold or other pieces of metal. >Mercantilism. The more gold a country has, according to Mercantilism, the wealthier it is; the less gold, the less wealthy. Given that theory, countries often implemented trade restrictions. If British citizens bought, say, wine from France, the British would get wine but the French would get gold. Ifwealth consists in gold, however, that would mean that Britain is getting poorer relative to France, which is getting wealthier. Thus Britain might be inclined to place restrictions on trading with other countries: Britain would want its citizens to sell to other countries, but not to buy from them. Because other countries would reason similarly, there would be a mutual contest to implement as many trade restrictions as possible, with the result that overall trade would decrease. Adam SmithVsTradition: Smith argued, by contrast, that wealth does not consist in pieces of metal; it consists rather in the relative ability to satisfy one's needs and desires. "Every man," Smith wrote, "is rich or poor according to the degree in which he can afford to enjoy the necessaries, conveniences, and amusements of human life" (WN(1): 47). Because the "far greater part of them he must derive from the labour of other people," Smith continued, "he must be rich or poor according to the quantity of that labour which he can command, or which he can afford to purchase" (ibid.). (…) Smith claims that we are rich or poor according to whether we have the means to accomplish our ends, whatever they are; true wealth, then, is the relatively higher satisfaction of our ends. SmithVsMercantilism: What the Mercantilist forgets is that when British citizens buy wine from France, they do give up gold, but they get the wine - and that is what they wanted. Thus their situations are improved, according to their own lights, and that means they are relatively wealthier on Smith's definition of wealth. Understanding wealth in this way enabled Smith to explain why people would part With pieces of metal for goods or services: if they were not thereby benefitted, why would they have done so? Since each person always wishes to "better his own condition" (WN(1): 343), the argument of WN is that those policies and public institutions should be adopted that best allow each ofus to do so. In this case, it means Iowering trade barriers and encouraging free and open trade, even between people of different countries. >Division of Labour/Adam Smith, >Geographical factors/Adam Smith. 1. Smith, Adam. (1776) The Wealth of Nations. London: W. Strahan and T. Cadell._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
EconSmith I Adam Smith The Theory of Moral Sentiments London 2010 EconSmithV I Vernon L. Smith Rationality in Economics: Constructivist and Ecological Forms Cambridge 2009 Otteson I James R. Otteson The Essential Adam Smith Vancouver: Fraser Institute. 2018 |
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