This is part of a series that reflects on the implications of what societies choose to equate with wealth.
You do not have to go far away or back in time to find evidence of people treating consumption as wealth. Indeed, the American “trader” does not come to mind so much as the American “consumer,” and we keep track of a standard of living indicator to measure consumption as if it is wealth. We are reminded that trade is really our standard for wealth by the stock market indicators that bombard us constantly, while we are informed about our standard of living only occasionally. Economists might argue further that we do not consume much except by trade.
However, you do not have to trade to consume much. All you need to do is exploit, to consume things that others produce without trade or compensation. We still do this to this day but in much subtler forms than once was common. As a model for examining consumption is wealth let us leave our global economy and instead focus on the age of empire.
Had David Ricardo theorized during the Han Dynasty he might have written about the economics of military advantages, rather than comparative advantages. Had Herbert Spencer lived in Sparta then the economic implications of survival of the fittest would have centered on city states, rather than corporations. Had Milton Friedman worn a toga then his award-winning contribution to economics would be about the empirical maximization of tribute, rather than profits. The corollaries to our Supreme Court would be protecting rulers as both individuals and wards of the state, rather than corporations.
I am glad economists do not formalize consumption is wealth. With consumption set as the environmental condition driving our behaviors economic scholars would emphasize might or bargaining strength, rather than contracts, to obtain that which we wish to consume. We would not be as inclined to hoard, but would seek to be indulged, looking upon those that we exploit as inferior human beings. This should strike a nerve, because we still exhibit some of these traits as the chief consumer in our global economy, as did our European predecessors staking out their empires.
I might be tempted to accept “trade is wealth” as a vast improvement over “consumption is wealth” except for two patterns worth introducing at this point in the series. As we have gone from the age of empire to the age of the global economy wealth disparity has increased. A “rising tide” has not lifted all boats despite the frequency and apparent fervor of this claim made by laissez faire economists. The “wealth” involved in subsistence living remains fairly constant, while the “haves” expand not only what they can consume, but what they can hoard. Indeed, widespread famine has infested the current age of “trade is wealth” more than any other age.
I suggest another pattern has occurred related to increasing global wealth disparity and famine. Trade strategies such as comparative advantages still exploit, they just use trade rather than force as the method of exploitation. Yet when you exploit a people by force there is likely to be more personal contact than with the greater anonymity of global trade. Setting trade is wealth as the environmental condition for economics not only means more wealth disparity through hoarding, it means we care less about the consequences, or can safely rationalize them from our armchairs with pithy phrases like “a rising tide lifts all boats.”
Please do not misconstrue what I’m about to say next. The average southern plantation owner probably felt more responsibility and concern for his slaves than the average multination corporation feels for child laborers in Southeast Asia or famine victims in Africa. In a similar vein I suspect the Roman Senate felt more responsibility for the conquered lands paying her tribute. No, I am not advocating a return to an environmental condition where consumption is wealth favors slave owners and conquering empires. There are other alternatives still for basing wealth that deserve further attention.
Tags: Free Market Merit
