DEFINING WEALTH……
The term ‘wealth’ has several definitions. Almost all the definitions have one thing in common, that is, wealth facilitates ‘well-being’. This article explore some of the definitions of wealth, briefly mentions the element(s) that generates wealth, mentions some personalities of the 21st Century who are wealthy and also talks about a biblical personality who was wealthy.
Adam Smith, in his influential work “The Wealth of Nations”, described wealth as “the annual produce of the land and labour of the society”. This “produce” is that which satisfies the needs and wants of utility of humans. Wealth is also described as an abundance of substances of economic value, or the state of controlling or having such substances, usually in the form of money (or currency), real estate and personal property. Moreover, a person who is considered wealthy, affluent, or rich is one who has accumulated substantial wealth compared to others in a reference group. In economics, wealth is defined as the net worth of a person, household, or nation, that is, “the value of all assets owned net of all liabilities owed at a point in time”. When it comes to national wealth which is measured in national accounts, the net liabilities of a nation are those payable to the rest of the world. Wealth may also be used to refer to the productive capability of a group of people or as a contrast to poverty.
Wealth can be grouped into three main categories: personal property, which includes homes or cars; monetary savings, such as the amassing of past income; and the income generated from income producing assets, such as real estate, stocks, bonds, and businesses. All these descriptions make wealth an especially important part of social stratification. Wealth provides a kind of social safety net of protection against an unforeseen circumstances and can be transformed into home ownership, business ownership, or even education.
Wealth refers to the amassing of resources (net asset value), whether abundant or not. ‘Richness’ refers to an abundance of resources (such as income or flow). The contrast of wealth is destitution. The contrast of richness is poverty.
UBS investor watch 2003 defined wealth as “as the state where one has no constraints in terms of finance regarding what one does”.
Wealth is also defined as “ones state of well-being” and capital is a synonym of wealth. Among capital assets, human capital is an essential element of wealth creation. Human capital is defined as “that which facilitates the creation of personal, social, and economic well-being” and includes the knowledge, skills, competencies, and other attributes of an individual. Thus, an individual, community, or nation is considered wealthy when the individual, community, or nation has more amassed resources (capital) than a poor one. Human capital is critical in generating wealth.
In the 21st Century, the world has celebrated many personalities of wealth. From forbes.com, mention is made of Carlos Slim, Bill Gates, Amancio Ortega and others. An example of a wealthy person recorded in the good book is King Solomon. “Now the weight of gold that Solomon received yearly was 23 metric tons not including the revenues from merchants and traders and from all the Arabian kings and the governors of the land (1 Kings 10:14). The King had a fleet of ships at sea along with the ships of Hiram. Once every three years, it returned carrying gold, silver and ivory, and apes and baboons. King Solomon was greater in riches and wisdom than all the other kings of the earth. (1 Kings 10:22-23). Solomon gained human capital (wisdom) before generating wealth. For further readings, click the links below:
Reference(s):
http://wiki.answers.com/Q/What_is_wealth_in_economics#slide4
http://en.wikipedia.org/wiki/Wealth#Economic_analysis
The Well-being of Nations: The Role of Human and Social Capital. OECD. 2001.
The bible