How is wealth created? Isn't society just a bunch of really rich corporations paying wages to its peon employees...

How is wealth created? Isn't society just a bunch of really rich corporations paying wages to its peon employees? How did the original wealth and economy get up and running?

How do you create wealth?

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en.wikipedia.org/wiki/Factors_of_production
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have something people want/need

it wasnt until the invention of fiat money before that there was a finite amount of money in the measured in specie and you could only move it around from place to place

Oh this is a neat thread.

The concept of 'wealth' is something that is created itself. First you have to name a commodity that everyone exchanges against all other commodities. Something everyone agrees to have to exchange against something else. Then it is the collective amount of UTILITY that people DERIVE from that amount of the commodity they hold. That is what wealth is defined as.

Now how is wealth GENERATED. That's the question. Wealth is generated through the application of industry, as long as income is above consumption, a country is said to be generating wealth. However, the excess of income over consumption has to be larger than the amount required for depreciation and sudden loss in order to be reinvested and have capital accumulate. So there is a level of progression which generates wealth, but depreciates the machinery, and a level of progression which gives you excess over the maintenance.

Hopefully this helped clear things up a bit: clearly wealth is a definite sum, while progression has different levels/forms.

Service based economies have the advantage of a much lower upkeep than productive ones, but they suffer the advantage of their monetary unit being severely depreciated, due to them having an inherently importing-dependent relation with all other countries.

>how do you create wealth

EXERT LABOR

Why don't service economies just move away from debt based currency? Or at least try to keep inflation as close to 0% as possible?

Debt based currency is needed to move the industries.

The world running purely on savings will get nowhere.

Banks create new money by lending

>Debt based currency is needed to move the industries
But America didn't have debt based currency until 1913.

>Isn't society just a bunch of really rich corporations paying wages to its peon employees?
Uh, no. The majority of businesses are small businesses. Wealth is created by providing value to society. Wealth is not zero sum. Someone else having more wealth doesn't mean I must have less. Economic management is all about "growing the pie" so to speak. By increasing the size of the pie everyone gets a bigger slice.

Wealth is just a means to acquire useful things

To create wealth, you must either create useful things or create a means to get useful things

currency was backed by state violence
that's how it took off
people are too disorganized and selfish to adopt standards any other way

>zero sum
Brainlet here what does this mean? I've looked it up before but it still doesn't make sense. What does it mean when someone says something isnt zero sum

zero sum means you take shit from others rather than creating something valuable

but why is that called "zero sum" and not "finite resources"

resources beyond what you need for basic survival
as technology made resource collection and processing more efficent there was more and more wealth

because it's different but related to scarcity
if resources are scarce or nobody is actually inventing anything valuable, you will see more zero sum wealth.

Labor theory of value. Read Adam Smith or something. He wrote the book on it.

Subjective theory of value is about how capitalist economies actually work, not how wealth is generated. Subjective theory of value says that prices don't set themselves at equilibrium prices of highly competitive market economies. It says the value of something is based on the buying/earning power of those that want the commodity. So whenever buying/earning power deviates from labor inputs due to monopolies and rent seeking and such, the market value of things change because you're no longer trading equivalent fungible labor.

Well it isn't new money, they just keep money active, it is other people's savings. That money would be doing nothing otherwise.

The fun part is the faster money circulates the more things that get done in the economy. However when you follow the trail of debt.. Oh boy or gets messy.

Debt based currency gives your economy a competitive advantage. Work today for a wage tomorrow.

Basically, imagine your boss says you work now for a month, then after selling the stuff you make, he'll give you a paycheck after. He can hire as many people as he thinks he can sell product.

Imagine instead hiring you was like buying something at a store. You would have to pay for something before you get it. He would have to pay you your wages before you worked. Then he could only afford to hire the people he could actually afford out of pocket and hire fewer workers.

If you can invest today with debt money for an investment that will offer high returns tomorrow, you can to take on as much debt as you can to maximize returns, since you will be able to pay off the debt with the returns. You don't want to be limited to what you have on hand today.

>Adam Smith
>Labour theory of value
user..

Zero sum means that any change in the system needs to sum to zero. So if I gain +10 wealth it means someone needs to lose -10 for a total change of 0. Zero sum. Wealth doesn't actually work like that though because if my house is suddenly considered to be worth twice as much as it is now my wealth essentially doubles but nobody loses anything because of that. Likewise if I create a business and the stock value shoots up I could become a paper millionaire overnight but again, nobody loses anything because of that. Wealth can be created from nothing, it all depends on how people value the things you own.

>LTV
I agree reading Adam Smith is important to understand the history of thought and some of the important ideas he had, but LTV is not the answer to OP's question.

Land (Hunting grounds)
+
Capital (Spear)
+
Labour (Hunting)
+
Entrepeneurship (Hunger)
=
Hunted Deer (aka PRODUCT / WEALTH)

That's how it all started.

In the modern era? Banks create wealth from nothing and give out loans to everyone which just increases Inflation and drives the whole nation into even more debt. Repeat this process until the system cannot sustain itself anymore and crashes.

What the fuck even is this post.

No, user, the first two things that entered into equation in the hunter-gatherer society was capital and labor, that's it, nothing more. Get the fuck outta here with your 'land' and 'entrepreneurship'. What the fuck. hahhahhha

en.wikipedia.org/wiki/Factors_of_production

But we don't live in a hunter-gatherer society, which was what you proposed.

People only use the hunter-gatherer society to illustrate the interaction of effort and money. That's it. You used it to explain the factors of production.

Congratulations, you're not right in the head!

It's a Congolese Trout Fishing Forum user, why are you so butthurt about being proven wrong?

Because you didn't. I know what the factors of production are.

Apparently you don't.

Wow, look, some jackass who hasn't read Adam Smith but thinks he knows about Adam Smith

Take the LTV pill.

“Zero sum” means everything adds up to zero. So some people have more or gain more, some people have less or lose some. Not zero sum means people can gain without others losing, or that everyone can gain.

Isn't that just pareto efficiency?

No, I do. And all the factors of production literally do NOT enter into a good at the hunter - gatherer stage.

In fact, land doesn't even really have to enter into a good's value at all, but the institution of rent due to overpopulation in dense areas kind of mandated that. So rent is actually a late development as far as capitalism goes, anyway. And if you're a Georgist that '''''factor of production''''' shouldn't even exist or be monetized.

wealth is created by labor

>wealth is created by labor

hm