How wealth is created

Where is the original origin of wealth? How do people create wealth? Why has the world become richer and richer as time goes by? An annual analysis report predicts that with the development of various sciences and technologies, how to ensure the common progress of the rich and the poor is a problem that requires serious consideration.

What is wealth

What is wealth? More than 200 years ago, the economist Adam Smith pointed out that throughout the course of history, people used various standards to measure wealth: “In early society, cattle were used as a general medium for business; in India, In some coastal areas, the universal medium used by people is a certain kind of shell; Newfoundland is dried cod; Virginia, the United States is tobacco; part of the West Indian colonies in the United States is sugar…”

As Adam Smith stated in his book “The Wealth of Nations”, wealth is not a definite concept. The value of things depends on the willingness of others to pay at a certain point in time.

For people who use money to measure wealth, wealth is a fleeting concept. Most people in developed countries have never seen or touched most of their wealth, and their hard-earned money is only stored in the bank. They can be converted into touchable items by swiping the card, such as cows, cod, nails, or anything they want or have the ability to buy.

How wealth is created

Where is the original origin of wealth? How do people create wealth? Why has the world become richer and richer as time goes by? Eric Beinhawk’s “The Origin of Wealth” provides some new answers.

In the book, Beinhawk points out that economic evolution is different from biological evolution: human planning and adaptability make economic evolution faster and more purposeful than biological evolution.

Beinhoek believes that the economy is “a complex system with adaptive capacity”, and its mode of operation follows the same logic as biological evolution-dynamic, subject, interaction, emergence, and evolution. The market is a very powerful evolutionary mechanism, it is an innovation machine. The three major forces of technological innovation, including business design, physical technology, and social technology, are the absolute force that promotes the growth of social wealth.

The first is the power of commercial design. Facing the exponential growth of economic complexity-the Internet of Things, the digital economy, the information society and the smart future, whether it is a country or an enterprise, in order to succeed in the cruel business competition, it is first necessary to form an evolving business design . We can take the initiative to construct the commercial system of state institutions and enterprises, and commercial cooperation behavior, just like reinventing genes, the designed mechanism will be more perfect and the motivation will be more sufficient. At the same time, a hallmark feature of modern economies is their high level of complexity. Therefore, the complexity of business design can also be increased to achieve wealth growth. Even lower-end products like shirts may be a combination of cotton from West Africa, oil from Indonesia, and a design drawn by an Italian using American computer software. The more diverse the business design, the greater the opportunities for wealth growth and technological innovation.

Secondly, physical technology refers to hard technological innovation, which has the most obvious driving effect on the increase of wealth. “Hard” refers to technical content and breakthroughs in key technologies. For example, breakthroughs in key technologies such as traditional chip design and pharmaceutical research and development, materials research and chemical processes include three “hards”-new materials, new products, and new processes.

Peter Demandis once described the exponential growth of innovative technologies such as artificial intelligence, unlimited computing power, digital manufacturing, nanomaterials, and synthetic biology in “Abundance”. He pointed out that these physical technologies will enable mankind to achieve tremendous achievements in the next 20 years, and these achievements will be far greater than those achieved in the past 200 years. Before long, we will be able to meet the basic needs of all people on the planet, and the era of abundance is within reach.

The third is social technology, that is, the technology of social networks and cooperative communication. Such as the banking system, economic transparency, and integrity.

Many people believe that the main determinants of national wealth are natural resources, government policies, and the level of development of national physical technology. However, research has found that the social and technological status of a country is much more important than the country’s physical technological development. Even countries with few resources and weak government capabilities can achieve quite good results if they have strong and developed social technologies.

Beinhoek said: “Social technology is the way we organize cooperation to gain benefits. Physical technology will evolve with social technology, and the innovation of physical technology will enable the birth of new social technology, just like fossil fuel technology. The emergence of mass production models and the establishment of a sharing economy model by smartphones. Vice versa, social technology will also enable the birth of new physical technologies. For example, if there is no global supply chain, Jobs will not be able to build a smartphone.”

It is worth noting that an annual analysis report predicts that with the development of various sciences and technologies, how to ensure the common progress of the rich and the poor is a problem that requires serious consideration.