Social Implications of Wealth Creation
At the base of almost every ethical system in the world is the idea that the pursuit and worship of unrighteous mammon is unfulfilling, and there is much truth to this. While idolizing material wealth is likely to be a path to spiritual and moral poverty, it is important to remember some of the reasons why people get rich in a market economy as well as some of the implications of their efforts.
1. You get wealthy by producing value. Generally, there are two roads to wealth. You can make something and trade it to people who want it, or you can use force to take things that don’t belong to you. For most of history, the most socially acceptable–or easiest–way to get rich was simply to take things from other people; indeed, in ancient China and at the height of the Roman Empire, “commerce” was looked down upon. If you made all your money as a government administrator, through military conquest, or by extracting tribute, you were admired. Suffice it to say, though, that simply “taking stuff” doesn’t actually produce anything. Over the last five hundred years or so, the legal institutions that encourage trade and commerce have developed. The histories of the European economies in which modern market economies developed is by no means spotless: soeme of the crimes committed by colonial powers in Africa and Latin America rank among history’s greatest attrocities. One thing, however, that the process of global integration and the spread of the market economy did was spread the means to prosperity all over the world. The planet can today support far more peopel than it could formerly, and the potential exists for everyone to be rich.
2. Other people get rich if you get rich by producing, and they can get rich if you save. Your restraint produces capital and new technology for others, who can use the funds you don’t consume to produce new goods and new technologies. Moreover, if you are a successful entrepreneur your ideas and innovations geneate benefits for everyone–ironically, the bulk of the benefit is likely to accrue to people other than you.
3. “Giving Something Back” might be misleading. Bill Gates became the richest man in the world by producing an operating system and software package that made us all much, much, much more productive. The great irony, as some (including leading development expert William Easterly) have pointed out, is that Gates’s attempts to save the world through his charitable endeavors may prove to be a drop in the international bucket when compared to the contributions to human well-being that he has made through Microsoft. Should we scorn Gates, then? Absolutely not–it’s his money to dispose of as he wishes. However, if we really want to help those around us, we would all do well to take a good, hard look at what we do well and think about whether this is a more productive use of our time and resources than some of our charitable endeavors.
Perhaps unexpectedly, it is unnecessary to mean to do well for others in order to actually do well for others, and one of the lessons of economics is that the unintended consequences of well-intentioned actions and endeavors might actually produce more harm than good. Production makes us better off, and even allegedly “selfish” endeavors might do more for the world than our charitable activities.
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