In this post we’ll unpack all you need to know about wealth, defining exactly what it is, how it relates to innovation, why it’s a positive sum game and more.
What Is Wealth?
We can use biology as a model for understanding exactly what wealth is.
The same way the body stores surplus biological energy as fat for future use, humans store surplus economic energy as money for future use.
Therefore, wealth is defined by excess. Thus, the key to creating it is ultimately to produce more than you consume.
Innovation
Innovation is necessary for wealth creation because it increases productivity.
Through new technologies and methods, innovation increases efficiency which allows businesses to generate more output with less input.
This surplus production allows for the creation of new markets, products and services, driving economic growth and ultimately leading to increased prosperity.
It’s Is Positive Sum
Wealth creation is a positive-sum game because it increases the pool of recourses for everyone.
One intrinsic characteristic of a business is that it creates more value than before it existed. In other words, it creates products and services that increase the total pool of resources.
“Specialise as a producer so you can diversify as a consumer.“
Summary (TL;DR)
The same way the body stores surplus biological energy as fat for future use, humans store surplus economic energy as money for future use.
Therefore, at its most fundamental, it is defined by excess. Thus, the key to creating it is ultimately to produce more than you consume.
Innovation is essential for wealth creation because it increases productivity, allowing businesses to generate more output with less input., ultimately leading to greater prosperity.
