I’ve got a (quick) economics question for folks here. Am I right that the factors of production, being time, labour, capital, and land, are also the means to produce, and therefore the means of production? Does that make sense?
Also, while I’m at it, what is wealth? I researched this a little bit on the Mises wiki, but I’m confused. Is wealth only defined in tangible commodities? Is wealth, therefore, only produced in the production of tangible commodies? By Austrian economic definitions, do services produce wealth, e.g., if I go to the barber shop and get a haircut? Of course, I understand that both are goods, i.e., means of satisfying peoples’ ends. Tangible commodities and intangible personal service are also both services, in that both service peoples’ ends. But my question about wealth still stands. The Mises wiki made it sound like wealth could only be material?
That’s one way of looking at it. It really depends on which definition of “means” you’re using. If you want to get technical, one could argue that one does not have the means to produce anything until he has all the necessary factors for the product in question.
Notice the last video in the link section describes wealth as “the ability to consume, (and thereby satisfy your greatest desires).” That’s basically the crux of it. When you say a person is “wealthy” what it means at the base is that the person has the ability to satisfy a large number of his wants. This is why people can say things like “a man who has real friends is the wealthiest of all” and such. If your desires are more socially oriented, money may not mean very much to you. This is why they say “money can’t buy happiness”…because money can only buy resources. But if resources are not what you desire, and they cannot be used to satisfy your wants, then you cannot be said to be wealthy just because you have money (at least, not in terms of your own value scale).
I don’t know if an Austrian has ever really come up with a definition of wealth, but in a normal situation wealth is defined as the total monetary value that would be attained if all assets were sold off at this very moment. I remember Mises talking about something similar in a section of human action, but I can’t for the life of me remember exactly where it was or what he was talking about, whether he was talking about wealth, appraisement, or debt.
I’ve read in textbooks that the total wealth of the US is $65 Trillion.
Is giving such an estimate completely pointless? Because actually liquidating all of that property requires a market, and as soon as all of that property goes to market, you’ll see large supply changes (not to even mention the demand, which would actually be non-sensical, as you are forcing everyone to sell…)
In a couple of ways, yes. This is where all the blowhards who say things like “money is nothing unless you have your health!” and “money can’t buy happiness!” actually have a point. You can’t necessarily quantify a lot of the desires in the world. And as cliche as it is, there are things money can’t buy.
And you’re right about the valuation in terms of actually needing a market. It’s the same argument made for the net worth of billionaires like Buffett and Gates. The vast majority of their net worth comes from the market value of their shares of ownership in the their companies. But obviously if they tried to dump all those shares and “cash out”, they wouldn’t get anything anywhere near the billions they are said to be worth.
So in a practical sense, yes, you couldn’t get that return, but I would have to assume the total is arrived by taking the estimated market value of each resource individually and then just adding up all those dollar amounts.
But of course this is pointless for kind of the same reason, as all you’re doing is measuring things in terms of just another commodity. I suppose in an abstract it’s useful as a kind of yardstick to help people get a better grasp on just how much money large sums of money actually are. It’s kind of like breaking them down in terms of things we’re more used to dealing with. Usually, the way this is done is through time. Like, “How much is a Billion dollars?”…
Say you were locked in a ginormous mall, and you could only leave after you spent all the money…but you had to buy individual items. If you were really good, and found a way to spend $200 every minute, you’d get out in just under 10 years.
People have no idea how much a billion really is, but an anecdote like that at least helps a bit. Another way you may have heard of is the physical comparison.
So in that sense, it might be useful, but in an economic sense, it really has no real-world use.