The Immateriality of Wealth
History is kind enough to provide us with concrete examples of past civilizations that produced enormous amounts of new wealth, and in doing so raised the standard of living for common citizens substantially. Jay Richards, writing at The American, has identified ten common principles shared by every successful society that help to alleviate poverty. Strikingly, only one of these principles describes a material good. The rest are all intangible, immaterial, and spiritual.
The Top Ten Ways to Alleviate Poverty
1) Establish and maintain the rule of law.
2) Focus the jurisdiction of government primarily on maintaining the rule of law, and limit its jurisdiction over the economy and the institutions of civil society.
3) Implement a formal property system with consistent and accessible means for securing a clear title to property one owns.
4) Encourage economic freedom.
5) Encourage stable families and other important private institutions which mediate between the individual and the state.
6) Encourage belief in the truth that the universe is purposeful and makes sense.
7) Encourage the right cultural mores.
8) Instill a proper understanding of the nature of wealth creation and poverty.
9) Focus on cultivating your comparative advantage rather than protecting what used to be your comparative advantage.
10) Work hard.
Richards analyzes each one of these traits and explains how they transform a society from impoverished to prosperous.
From its founding and throughout much of its history, American society was defined by many of these traits. Unfortunately, we have a growing tendency to abandon these principles that have brought us success, and are now increasingly characterized by moral relativism, a victim mentality, and state dependence.
The United States is following the example of the Roman Empire and plotting its own demise by straying from the proven path of success. If we are truly seeking to alleviate poverty it is the role of all people, religious or not, to spread these ten ideas of long-term wealth creation.
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Jul '10
Re: The Immateriality of Wealth
Nice post, Joshua.
My wife grew up in the Soviet Union. When she came here, I was trying to explain to her why it will be many, many years - if ever - before Russian will have the liberty and prosperity the United States enjoys.
Coincidentally, almost everything in your list is pretty much what I told her.
Jul '10
Re: The Immateriality of Wealth
You can't eliminate poverty.
Jun '10
Re: The Immateriality of Wealth
He also wrote "Money, Greed, and God: Why Capitalism Is the Solution and Not the Problem."
One of the things he points out there is, how the nature of money changed over the centuries. In ancient times, borrowing money was like borrowing a tent. There was nothing you could do with that tent, in the course of a few months, to turn one tent into five tents. So, charging interest was seen as oppressive. But, when people started practicing genuine capitalism, the one gold piece you borrowed could be turned into five gold pieces. And at that point, to borrow without paying any interest is more like stealing. Someone is going to put that money to work, investing in spice importing for example, and in fairness, it should be the owner (of the money) that benefits from the "work" the money does.
Dec '10
Re: The Immateriality of Wealth
Looks kind of like a set of rules to establish a level playing field for the pursuit of happiness.
Dec '10
Re: The Immateriality of Wealth
etoiledunord: He also wrote "Money, Greed, and God: Why Capitalism Is the Solution and Not the Problem."
One of the things he points out there is, how the nature of money changed over the centuries. In ancient times, borrowing money was like borrowing a tent. There was nothing you could do with that tent, in the course of a few months, to turn one tent into five tents. So, charging interest was seen as oppressive. But, when people started practicing genuine capitalism, the one gold piece you borrowed could be turned into five gold pieces. And at that point, to borrow without paying any interest is more like stealing. Someone is going to put that money to work, investing in spice importing for example, and in fairness, it should be the owner (of the money) that benefits from the "work" the money does. · Feb 1 at 7:29pm
Matthew 25:14-30 says you are wrong. That is unless you believe there was capitalism in time of Jesus.
Jun '10
Re: The Immateriality of Wealth
Foxman
etoiledunord: He also wrote "Money, Greed, and God: Why Capitalism Is the Solution and Not the Problem."
One of the things he points out there is, how the nature of money changed over the centuries. In ancient times, borrowing money was like borrowing a tent. There was nothing you could do with that tent, in the course of a few months, to turn one tent into five tents. So, charging interest was seen as oppressive. But, when people started practicing genuine capitalism, the one gold piece you borrowed could be turned into five gold pieces......
Matthew 25:14-30 says you are wrong. That is unless you believe there was capitalism in time of Jesus. · Feb 1 at 7:58pm
There's not much an individual can do in basic agriculture "in the course of a few months" to gain a windfall. The point is, it eventually became possible to earn a windfall, quickly. That came with the ability to invest in large bold enterprises, like importing spices from halfway around the world.
Re: The Immateriality of Wealth
Joshua, I wish there was a "like" button for this post. A "really really like" button would be even better.
May '10
Re: The Immateriality of Wealth
Foxman
Matthew 25:14-30 says you are wrong. That is unless you believe there was capitalism in time of Jesus.
From what I know, the parable does not indicate whether the contractual agreements between the master and the servants were mutua or deposita. According to Jesus Huerta de Soto,
"Mutuum (also from Latin) refers to the contract by which one person—the lender—entrusts to another—the borrower or mutuary—a certain quantity of fungible goods, and the borrower is obliged, at the end of a specified term, to return an equal quantity of goods of the same type and quality (tantundem in Latin)."
By contrast, de Soto writes "[T]he contract of deposit (depositum in Latin) is a contract made in good faith by which one person—the depositor—entrusts to another—the depositary—a movable good for that person to guard, protect, and return at any moment the depositor should ask for it."
If the agreements were mutua, then the master was just in his rebuke. But, if the agreements were deposita, then the master should instead have reprimanded those two servants who invested their talents because doing so violated the contractual conditions.
Edited on Feb 1, 2011 at 8:43pmRe: The Immateriality of Wealth
What? Are you sure you've cleared this with the White House. I fail to see universal health insurance or stimulus on this list...
May '10
Re: The Immateriality of Wealth
etoiledunord
Foxman
etoiledunord:
Matthew 25:14-30 says you are wrong. That is unless you believe there was capitalism in time of Jesus.
There's not much an individual can do in basic agriculture "in the course of a few months" to gain a windfall. The point is, it eventually became possible to earn a windfall, quickly. That came with the ability to invest in large bold enterprises, like importing spices from halfway around the world.
I don't doubt etoiledunord. The cultural tolerance of loan contracts hasn't always persisted.
Jan '11
Re: The Immateriality of Wealth
Material wealth only comes when people buy what you're selling, either as products or as labor. But the market is dynamic. When you're successful, competitors either improve on your product or underprice you. No price remains stable. Prices move, constantly, up and down. The moment you set a price, you provoke its destruction.
Economists can discuss the mechanics far better, but that's not what interests me here. What interests me is the epistemology of it. Our economic system is a daily collision of the population's needs with The Unknown.
And what does experience tell us? The only winning strategy with The Unknown is "prudent risk."
Look at those 10 items. They're all about predictability (except #4, which encourages risk). People don't take risks in chaos. Risk is not recklessness. It requires sufficient predictability. You don't take risks when you can't keep your property, or when contracts are unenforced, or when there's no connection between risk and reward. Individuals act only when they believe their actions lead to profit. If tyrants or taxes take your profit, you don't act.
It's not stability. It's predictability.
Oct '10
Re: The Immateriality of Wealth
"Strikingly, only one of these principles describes a material good. The rest are all intangible, immaterial, and spiritual. "
You have identified an important principle, and most of the thread above exposes why true prosperity is so elusive. Despite your post, the conversation has almost immediately degenerated into a demonstration of the overriding material desire which has become the focus of our culture.
Perhaps we all would do well to reread the article before responding.
Nov '10
Re: The Immateriality of Wealth
"What we call the Third World is more or less how most of mankind has always lived, in part because, normally, the prince is very much in business. It is we Americans, along with some Europeans, who have strayed from normalcy into prosperity and who may be returning to normalcy."
--Angelo Codevilla, The Character of Nations: How Politics Makes and Breaks Prosperity, Family, and Civility, p. 115.
Edited on Feb 2, 2011 at 6:28amMay '10
Re: The Immateriality of Wealth
Great post, Josh. This is relevant to a question I recently raised regarding the importance of Liberty vs. Democracy. Almost all these conditions serve to support and increase individual liberty. None of them references the voting franchise or even the particular form of government under which these conditions are found. They are about establishing a level playing field with predictable rules, and strengthening private institutions.
This begs the question of whether liberty is compatible with, for example, autocracy. Autocrats tend to rig the game sooner or later, because the incentives to do so are too strong to resist. So some form of government that incorporates competing and even mutually hostile centers of power, along with a mechanism for regular and peaceful transfers of control, is probably necessary to ensure the continuation of liberty. Does that mechanism need to be a vote of all the citizens? Does it need to be a vote at all, as opposed to, say, the flip of a coin or the outcome of a Poker game? I'm not sure.
Jan '11
Re: The Immateriality of Wealth
With respect, I disagree.
The conversation is about the connection between culture and wealth. How does culture promote wealth? Material wealth is more easily measured, but the same rule applies to the intellectual, artistic, or spiritual life. In my terminology, a thriving culture encourages individuals to take risks. Prudent risk-taking is healthy, and the sign of a wealthy culture.
Consider Jesus' parable of the talents (Matthew 25:14-30). The master gave money to three servants. Two invested (took a risk) and were praised. One refused to take a risk, and got his butt tossed. Now if Jesus could describe the kingdom of God (the ultimate culture) with a parable about investing, I don't feel so bad about doing the same.
Nov '10
Re: The Immateriality of Wealth
Politics, not culture, is what's determinative of wealth. Man is a political animal. To say culture is what's determinative is virtually meaningless. Culture is epiphenomenal to the political. Read Codevilla, "The Character of Nations."
KC Mulville
With respect, I disagree.
The conversation is about the connection between culture and wealth. How does culture promote wealth? Material wealth is more easily measured, but the same rule applies to the intellectual, artistic, or spiritual life. In my terminology, a thriving culture encourages individuals to take risks. Prudent risk-taking is healthy, and the sign of a wealthy culture.
Consider Jesus' parable of the talents (Matthew 25:14-30). The master gave money to three servants. Two invested (took a risk) and were praised. One refused to take a risk, and got his butt tossed. Now if Jesus could describe the kingdom of God (the ultimate culture) with a parable about investing, I don't feel so bad about doing the same. · Feb 2 at 8:19am