The word wealth is derived from the old English word weal, which means wellbeing. It denoted something that increased the wellbeing of one or more people. Unfortunately over the centuries the word has come to have a quite different meaning in the general public perception, namely valuable possessions or property. The term has shifted in meaning from the actual wellbeing derived from something to the thing itself, which is (in theory at least) the agent of that wellbeing. In the process the whole idea of wellbeing has been lost. Something is perceived as wealth if it can be exchanged for other items of value or for money. Even money itself in sufficient quantities, is perceived as wealth.
The reason that this shift is unfortunate is that there is no longer a common term for what wealth used to mean, whereas the new meaning already had several words that covered it quite adequately such as treasure or riches. Wellbeing itself does not quite cover it, as it refers to the result of the creation of wealth, so it does not serve to signify the wealth (in its original meaning) itself. It has been observed that a culture can only express (and therefore encompass) ideas that it has words for. The very fact that I have to use whole sentences to explain the original meaning of wealth indicates that it is not a concept we think about much. Yet if we are to have any hope of understanding where we went wrong in the building of our social structures, and certainly if we are to hope to devise new and better ones, it is a concept that we must give a central place to in our thinking.
For these reasons I would like to define here exactly what I mean whenever I use the word wealth. Wealth is created when someone performs an action that results in the increase in wellbeing of one or more people in such a way that the total increase in wellbeing is greater than the total decrease in wellbeing caused to other people (or indeed to the same people). In understanding this definition, it may be useful to think of wealth as if it were spelled wellth, and imagine an opposite concept called illth. Every human action of any significance produces some wellth and some illth. As my Nanny would have said, it is an ill wind that blows nobody any good. Obviously wellth and illth are very hard to quantify, especially given the inevitability of unintended (and unforeseeable) consequences, but nothing in life is certain; all we can do is guide our actions by estimating probabilities.
The amount of wealth resulting from any action is the total aggregated wellth produced (adding up all the people who benefit from it and the degree to which they benefit) minus the total aggregated illth produced by that action. Now we are faced with the issue of a scale of measurement. If we were dealing with physical size we would be measuring in inches and feet, or meters or some such. Weight is measured in pounds and kilos. The unit of measurement we use for wealth (in my restricted meaning) is the dollar, or the euro, or the yen. The measuring system for wealth is money. In an ideal system the monetary value of something would reflect the total potential wellth it represents.
Clearly in our present system this is not the case. Many actions covered by my definition of wealth are not monetarily rewarded. To take one glaring omission, childcare by stay-at-home mothers yields enormous increases in wellbeing both for the children involved and for society at large in obvious ways that I need not elaborate here. Yet this activity is not monetarily rewarded. Therefore this contribution is not considered wealth generation.
On the other hand the current understanding of what constitutes wealth creation includes many activities that I would put on the other side of the scale. An example of this is the arms business. It would be very hard to argue that a bomb or a tank represents wellth. Indeed such weapons are the very embodiment of illth. Their sole purpose is the destruction of people and property. No doubt some would argue that the possession of powerful weapons serves a deterrent purpose against the potential violence of others. This argument would perhaps have more power if it were not made by a country that in many cases sold to those others the weapons we now wish to deter them from using. Even if we grant some force to this point of view, it is dwarfed by the immense harm that is caused to the world, especially to the poor of the world, by the global arms trade. Perhaps the greates social challenge facing us on a global scale is to cotinue the immense decrease in the amount of violence in the world (exhaustively documented by Steven Pinker in his book “The Better Angels of our Nature”) to the point where war is considered to be on a similar moral level as slavery is today. We may never completely eliminate it but we can reach a general agreement that it is evil and should be eliminated.
It is clear from these examples, which although among the largest of their kind are far from being unique, that there is something very wrong with the metrics we use to judge our degree of success and failure as a society. The GNP is often touted as a barometer of our economic health, but this only describes the total monetary value of all production that is monetarily rewarded. It both leaves out a great deal of value that is added but not paid for, and also includes paid for activities that cause far more harm than good.