The secret to making money

17:00, Aug 25 2011

Who creates wealth?

Last month we learned that the "wealth creators" of this country have done remarkably well, in spite of the global economic situation. We were told in the National Business Review's annual rich list that this is cause for celebration, given the wealth of the 151 richest individuals "has climbed a pleasing $7 billion from last year to sit at $45.2 billion, the highest ever".

We also learned that over the last year incomes for most fell in real terms, and that 17 per cent of primary school children sometimes or always miss breakfast.

How best to understand that these things are possible at the same time? For some, there is nothing that can be done. We must simply live with this situation. Indeed, those concerned about these increasingly unequal distributions of wealth, income, power and privilege have been dismissed as "tall poppy bashers" or as being motivated by "envy".

Central to such dismissal is the idea that whoever has wealth has created it by and for themselves. This sounds like meritocracy, that is, the idea that whoever puts in an effort merits reward. But this is meritocracy on its head. It assumes that just because someone is rewarded, they deserve that reward. This false meritocracy need not look at what anyone actually does. It reads reality backwards, imagining that those who have wealth are by definition the ones who have created it.

This ideology exhibits a remarkable forgetfulness of history. It forgets, for instance, that the European aristocracies were overthrown because the wealth they claimed as their own was shown to be the result of arbitrary privilege. It is also blind to the present, failing to see that when people are constantly told to shop but do not have the means to do so, they will at times reject conventional understandings about property and ownership.


Above all, it fails to recognise that the allocation of wealth is a matter of judgment, a collective decision about what kind of society people want to live in.

Wealth is not created out of nothing. Wealth is not produced merely by the ideas or actions of isolated individuals. We produce things of value through our action on the material world and through the application of science and technology and the skill of social cooperation to that action. And as anyone who works knows, we work with others and for others in order to produce things of value.

The idea that the "wealth creators" are primarily a small and increasingly distant elite denies the collective nature of productive endeavours. It assumes or implies that the elites are the only ones who really have the determination to actually get anything of value done.

Working people, those who labour for their income, sense that there is something odd about the idea that so much money can be "created" as if out of nothing, whether through investment or through trading on the markets. Indeed, there seems to be a growing awareness that there is something fundamentally strange about the idea that the activities of a small elite can involve wealth creation, while the activities by the overwhelming majority are somehow less, or indeed totally, unproductive. The idea that wealth creation is the preserve of a small elite disguises the productivity of all of those who put effort into producing useful things and services.

In one sense, the average New Zealander has been getting stuck in. We have been stacking supermarket shelves, cleaning toilets, teaching children and caring for the sick and the elderly for long enough. We have stood by with remarkable generosity, even though we know that just a part of the $7 billion increase of wealth claimed this year by 151 individuals could have rebuilt Christchurch, run trains across Auckland, fed every primary school child and brought training to underprivileged rural areas throughout the country. Such things might have created a country that was not only wealthier but better to live in.

History teaches us that it is always possible that the real creators of wealth might decide they have had enough of the arrogance of elites who look down on them, dismiss them as envious and deny them their due role as wealth creators. And then it will be time to really get stuck in.

Dr Campbell Jones is Senior Lecturer in the Department of Sociology, University of Auckland.

The Dominion Post