What really is wealth?
What really is wealth?
It is the unique output of a dynamic and crazy process we call "wild globalization"
The following is a guest essay for The Globoscope , who heads up the project Wild Globalization. We bring you this essay because of its extreme timeliness in light of the collapse of Silicon Valley Bank. Gary is a wealth advisor with a background in both economics and the humanities.
“…with capitalism we are dealing with an evolutionary process….[It] not only never is but never can be stationary...this evolutionary character is not merely due to the fact that economic life goes on in a social and natural environment which changes and by its change alters the data of economic action…Nor is [it] due to a quasi-automatic increase in population and capital or to the vagaries of monetary systems…The fundamental impulse that sets and keeps the capitalist engine in motion comes from the new consumers’ goods, the new methods of production or transportation, the new markets, the new forms of industrial organization that capitalist enterprise creates.
…[capitalism] incessantly revolutionizes…there always is either revolution or absorption of the results of revolution…incessantly destroying the old one, incessantly creating a new one. This process of Creative Destruction is the essential fact about capitalism.
…the problem that is usually being visualized is how capitalism administers existing structures, whereas the relevant problem is how it creates and destroys them.” -Joseph Schumpeter
Let’s start from scratch. And ask, “What is wealth? How is it created…or deterred, even destroyed? What are the social orders that give rise to, or destroy, wealth? How can wealth serve, or detract from, the common good – which is to say, how can we act ethically and responsibly, and yet creatively, with our wealth?
And in the unspoken background we’re asking, “What is civilization?” What forces or energies drive civilization’s wealth…how does civilization incessantly create (or not) “new” wealth, and then often tear down “old” wealth? What is the nature of civilization’s wealth in the 21st Century?
Wealth’s lifeworld is a wilderness, even if seemingly every nook and corner has been examined or explained in quantitative formulas, equations, and theories.
That’s because, at the street level, wealth is wild. When the load of wealth is mined or grown from the earth’s bounty, or manufactured on endless assembly lines, or hauled by hand and truck to demand markets, or magically “sold” by entrepreneurs to consumers, all the while at risk of success or collapse, it’s a wild set of factors that bid its value and make or break its success.
“Wild” does not mean “out of control.” The wild creates “orders.” It’s Schumpeter’s “gale of creative destruction” of new inventions, products, production methods, and entrepreneurial magic. Friedrich Hayek adds that wealth is created from the emergence of spontaneous economic order.
As Arnold King and Nick Schutz put it, “an economy emerges from the decentralized actions of individuals and small businesses as well as the organized planning of large corporations and government. In Friedrich Hayek’s term, the economy is a spontaneous order.” Wild wealth is always at risk of disruption and destruction by the new dreams and conjurings and gadgets of the human imagination.
So, our thesis: “Crisis…and promise… is the natural condition of wealth.” And you likely hold in your hand the icon of 21st century wealth, the iPhone or Android, that is, the “smartphone.”
How could the iPhone be a crisis? Well, it’s the most pivotal technical AND social product of our age. And the wildest. It’s a window into virtually all human knowledge, to the library of nearly all books, music, movies, and most crazily, it can communicate to the entire population of humanity who may be holding one in their hand.
The iPhone is a technical miracle that has transformed everything, overnight, in less than a generation. Its primary inventor, Apple, is now the global stock market’s largest (wealthiest) company by capitalization.
But is it that simple? It’s also morphed human experience, probably what it means to even be human. Our kids, really everyone, is mesmerized by it. Its GPS may mean we are never lost geographically, but so many of us are now emotionally lost in it and with it. Can we still just be with or hold a meaningful conversation with the human being next to us? Yes, it’s a window to human culture, history, and media, yet do our children now have casual access to the most vile and violent extremes of the human condition? It’s a 21st century tech marvel…but, excuse us, it’s manufacture is, transparently, a moral abomination, that takes civilization back to the horrors of the 19th century. The cobalt for the iPhone’s lithium-ion batteries likely comes from Africa’s Congo: As Terry Gross stresses, “smartphones, computers and electric vehicles may be emblems of the modern world, but… their rechargeable batteries are frequently powered by cobalt mined by workers laboring in slave-like conditions in the Democratic Republic of Congo.”
Wealth continues to yield both crisis and promise.
Consider the 20th century. It dawned with the “promise” of world prosperity - new technologies (electricity, telephones, automobiles), egalitarianism, the prospect of a burgeoning global economy – yet it collapsed into the Great Depression, global genocide, environmental devastation, and 70 million souls lost in the great wars and another 50 million in the 1918 flu pandemic.
Yet the century's second half, in spite of nuclear and Cold War threats, brought "rising tides” of wealth over poverty, more foodstuff abundance than ever, even more amazing technologies, and, in its final decades, it witnessed Asia’s re-opening and the renewed prospects of "global convergence."
But has 21st Century civilization gotten dicey and dangerous, again? Wars (Afghanistan, Yemen, now Ukraine), “Great Financial Crises” (hyper-inflation, historic public debt, bank failures), energy chaos, global pandemics, and, unbeknownst to most observers, over one million human souls flooding into urban centers every week, and the rise of global human trafficking, where modern “wealth” captures as many as 350 million children in its labor mills. Economists Geoffrey West and Robert Neuwirth routinely drives this point home in their work.
Wealth not only lives in crisis. Crisis is its natural condition.
And yet, wealth promises. It produces. It delivers…more “stuff,” more people, in fact, more life:
From 1950 to 2020 average U.S. income per worker rose from $15,183 to $62,941 or +315%; in the U.K from $11,772 to $43,906 or +278%; the population-weighted average global income per person rose from $4,158 to $16,904 or +307%.
From 1960-2017 average global life expectancy rose from 52.6 years 72.4 years; In the U.S. from 70 years to 78 years; China, from 44 to 76 years; India from 41 to 69 years; sub-Saharan Africa from 40 to 61 years.
Between 1990 and 2018, global infant mortality rate fell from 64/1000 to 28/1000, a 55% drop. In sub-Saharan Africa, from 107/1000 to 53/1000, a 51% drop. In China, from 84/1000 in 1969 to 8/1000 in 2018, or 91%.
From 1961 to 2017, the average global food supply per person per day rose from 2,115 calories in 1961 to 2,917 calories in 2017 or +38%; in China from 1,415 to 3,197 calories or +126%; in India from 2,010 to 2,517 calories or +25%.
The more subtle observation here is that wealth is complex, it’s complicated. It’s at once life-giving, as Tupy and Pooley observe in Superabundance, yet dangerously and ubiquitously dark and immoral, as Siddhartha Kara and Louise Shelley meticulously report. It’s hard to get a clear view of it because it flourishes and punishes in the same thrust. Its tricks and techs, and especially it’s market demand (e.g., iPhone) move ahead of our cultural capacities, or moral motivations, to adapt and govern. And our own hyper-natural human talents and weaknesses, our voracious appetites, live in the heart of wealth’s creations so we risk being easily misguided and corrupted, by its power.
And, we contend here, wealth is not just, or even, about “capital.” Marx’s Kapital, along with Adam Smith’s The Wealth of Nations¸ each bookends the early conversation about the nature and origins of modern wealth.
Rather, wealth is generated from a hyper-complex set of inter-variable factors, what physicists might call a “quantum entanglement.” These factors, which live in the clear light of day, resist governance or even precise measure: resource scarcity/abundance, radical creative-destructive innovation >> under/over-production >> excess value (capital), rapacious entrepreneurial market demand.
These factors are in constant Schumpeterian revolution, they are the engine of civilizational wealth. And their complexity is why even Marx concluded that modernity’s exploding industrial economy revealed that the “the whole mystery of the forms of value lies hidden…and its analysis is our fundamental difficulty.”
Today, literally half of the 21st century global economy is, as Robert Neuwirth observes:
the l’economie de la débrouillardise…or, sweetened for street use, ‘Systeme D.’ This essentially translates as the ingenuity economy, the economy of improvisation and self-reliance, the do-it-yourself, or DIY, economy…It used to be that System D was small – a handful of market women selling a handful of shriveled carrots to earn a handful of pennies. It was the economy of desperation. But as trade has expanded and globalized, System D has scaled up too. Today, System D is the economy of aspiration. It is where the jobs are. In 2009, the Organisation for Economic Co-operation and Development (OECD)…concluded that half the workers of the world – close to 1.8 billion people – were working in System D: off the books, in jobs that were neither registered nor regulated, getting paid in cash, and, most often, avoiding income taxes.
Again, both Neuwirth and West remind that a million souls move into urbanizing System D every week.
Deploying Schumpeter’s paradigm, System D is, under the noses of the global economy’s formal institutions, if not destroying those institutions, it is pressuring federal governments to extreme behaviors, bending and morphing their power, surely defying and sneaking around and under them. System D includes the Congo’s artisanal mines that provide as much as 70% or more of lithium-ion battery cobalt, as well as the drug and human trafficking cartels of North America.
An examination of 21st century wealth reveals a hyper-natural complexity of emerging human orders. Its “value” is under, as Schumpeter suggests, incessant and hyper-natural human revolution.
At the Wild Globalization project we are tracking five drivers of civilization’s wealth and value:
¨Ecology: Climate, energy, the lifeworld of Earth’s lifeforms.
¨Sex/Demographics/Culture: Human life, population flows (e.g., 1 million/week to cities), formal-informal culture.
¨Technology: Human’s radical and “hyper-natural” innovations.
¨Economy: Resources >> Innovation >> Production/Over-Production/Excess Value >> Markets
¨Governance: Big, Too Big, Small governance; success, failure, corruption and errancy.
The thesis of wild globalization is as follows: “civilization's lifeworld, and its wealth, emerges from a "black box" of highly energetic, variable, overlapping, unstable, emergent, bundled, hidden, immeasurable "forces/energies" – ecology, sex-demographics-culture, tech, economy, governance. We may estimate or guess what goes into the box, and we can observe, try to measure and respond to what comes out, but what happens inside that gives rise to spontaneously evolving and now hyper-globalizing orders evades complete understanding or rational governance. It's...WILD!”
The condition of wealth is crisis (and promise). The 21st century is its latest version.