The concept of wealth creation, and even that of wealth itself, is often the subject of great misunderstanding. The uncritical identification of economic activity and wealth creation is one of the most frequent errors in this regard. For this reason, it is important to clarify exactly what we mean when we say that a certain activity “creates wealth”. The Affiliate marketing course can be of the best use there.
Strict definition of wealth creation
In a strict sense, the true creation of wealth is not contained in the jobs, or in the benefits, or in the capitalist dividends that this particular activity generates.
The wealth created, as a subject object of creation, is contained and represented in the good or service created.
- The real wealth that a car factory produces are cars, the true wealth that a telecommunications company produces is the service it provides, and the true wealth that a blacksmith creates are the iron tools that it makes.
- If the creation of new wealth is limited to the goods and products created, would a factory that produced cars, even if it did not give business profits, simply because it was producing goods, would it be creating wealth? Unfortunately not.
- It would not be creating wealth, but destroying it.
- And this is so, because the car that is produced is as rich as the steel, the energy, or the time and human effort that are used in its manufacture.
Human activities that create wealth
In order to know if a human activity is creating wealth, we have to understand that the final product or service obtained (wealth B) must have more value than the set of elements that were consumed in its creation (wealth A).
In the case of the sword made by the blacksmith, it must have more value than the sum of the coal, iron, time and other inputs used.
A process that meets these requirements will create wealth, and a process in which the sum of the values of the initial factors consumed is greater than the value of the final product, will destroy wealth. And in case the process destroys wealth, it will do so irreversibly.
The sword cannot be turned back into coal and iron, the time invested by the blacksmith cannot be recovered again.
In reality, there is only one valid indicator in that sense: business profit
Business profit tells us if the production process has a positive or negative net value in terms of wealth creation, since it will tell us if society values the newly created wealth more than that consumed in its manufacturing process.
It is the market, when it is free, which, by establishing the relative value of all goods, those used and those obtained, has the last word as to whether this process has been a creator or destroyer of wealth for society. Money, understood as a good accepted and recognized by all, is nothing more than a means that facilitates such exchanges, but its mere exchange does not generate wealth “per se”.