Musings on the nature of wealth

The way we live dictates what we think are problems, and what we think are problems determines what we'd like to address and get out of the way first. In this context, there has definitely been a transition from preserving growth in the long-term living standards of the future generations to preserving the earth as it is. That's because the way we look at long-term living standards has changed.

The biggest risk we now face, consequently, is a definition of growth that is critically temporal. In between nature and man, there's the machine (resource-processing → processed product). How we grow and how much we grow is how well-oiled the machine is and what it's built to do, and our dependence on it is utterly unavoidable. Therefore, it is important to keep the machine running because if it breaks down, it will be man and nature once again.

And man-and-nature wouldn't be so bad if not for countries like India. In India, globalization is halfhearted, and capitalism fights a battle every day against a socialist old-order that refuses to fade. Man-and-nature cannot be allowed to happen in India because efforts to sustain an improvement on our long-term living standards are inadequate and, in fact, need to be stepped up. Only then do we stand a chance of competing in a future where wealth will be more valuable.

And wealth will be more valuable because of two reasons.

1. It will purchase relatively more valuable portions of the consumption pie than it does today.


2. It will provide us with the leverage to outlast conflicts because larger shares of the pie will have to come at the cost of someone else's.

Like The Economist argued in an article that appeared on December 18 last year:

Insuring against catastrophe means trying to boost future wealth, and that means that if you're going to borrow, it's important to channel that borrowing into investment. The good thing current consumers get as compensation is the ability to burn away cheap fossil fuels. If disaster prevention is the key, by contrast, then consumers can borrow now for the purpose of consumption, but they must compensate the future by facing strict limits on carbon emissions.

And strict limits on carbon emissions in the future means expenditure.

This brings us to the evaluation of how our wealth is created. Wealth is born in the presence of demand, and demand exists because commodities exist. Demands control the price of commodities, but the price must also be controlled by decisions made by the manufacturer. When dependence on industry outstrips dependence on nature, wealth creation will outstrip wealth itself.