What is wealth?

The question is well-put. In short, it's an issue of redefining what we mean by wealth. Historically, the accumulation of financial capital, built capital (homes, cars), natural capital (land, water rights), and some element of social capital (although one could still be 'wealthy' and more or less alone in the old culture) defined wealth in the Industrial Age.

In the Information Age, knowledge and related forms of information were added to the mix, but it was largely still about accumulation of things.

It seems that a big part of the 'Great Transition' in which we now find ourselves (hope it's OK to shorthand that for everyone here, and stipulate to "something's happening here, what it ain't exactly clear") is a redefinition of wealth and value.

The biggest shift is the WE > ME meme, which pervades this community, but is still a minority position in the US, although less so in Europe. We can see this in the demonisation of recent Wall St. bonuses, and even the election of Obama.

As I get to know my local community of social entrepreneurs better, I have the same discussion over and over again, and it centers on questions of "how do I contribute to the collective and still feed, shelter and clothe my family?," or "how do I drop my single-bottom-line clients in favor of triple-bottom-line-only projects?"

To answer your question, Jessica, I think the whole truth is a both/and proposition. Using Hegel's dialectic process, I think many people are facing the anti-thesis (non-profit or for-profit, depending on their starting thesis) and new synthesis (sustainable enterprise) simultaneously. This means that we're solving for multiple variables, and many of us are operating on at least a couple tiers of awareness; it's the real-life version of 3-D chess.

More and more, personal wealth and community wealth are tied more closely together. People with a broad historical context will say that we're returning to an older set of norms which dominated before the financial / industrial age reset the 'greed is good' meme as baseline, at least in the western society. I think it's more complex than that, and that the redefinition of wealth within a community is that the basic needs are met for everyone. With the brittle nature of the national and global systems (financial, food, insurance), more of those needs are going to have to be met on a local and regional basis, which will drive values towards more inter-dependence, and away from the de-personalization that comes with a globalized monetary systems.

Looking forward to seeing where this discussion goes, and to meeting you all in SF at SoCap. Regards,

Great summary, Greg!

I hear these two questions often, too: As I get to know my local community of social entrepreneurs better, I have the same discussion over and over again, and it centers on questions of "how do I contribute to the collective and still feed, shelter and clothe my family?," or "how do I drop my single-bottom-line clients in favor of triple-bottom-line-only projects?"

Do you think those are entry points to the conceptualization of synthesis?

Love this conversation theme. What I feel we are looking for is a new assumption to base the systems of our society. The last generations revolved around the notion that increasing wealth was the key to improving life and that production was the means of wealth creation.

Production based wealth creation has bumped us up against the limits of our ecosystem and the resulting distributions of wealth emerging from these systems are increasingly intolerable and destabilizing.

But this is not a question of how do we shift from production based wealth creation to some other sort of wealth creation, but a fundamental reconception of what wealth means.

Interestingly this isn't very hard for people or for communities - it's only hard for institutions because it's challenging the very premise they're based on. People invariably come to a purpose related to quality of life - based on the basics of life in communities.

Redefining wealth, I think, is actually happening all around us. The more that happens outside of institutions, the more this automatic instinct of what's important to us can take hold and is reinforced. The opportunity though is being more intentional about it and considering how systems are recreated based on that redefinition.

We're remixing society and that remix is based on people in communities - and inherently connected to a more human definition of what's important. What that looks like will be interesting to see.

I might posit that your first word, "Quality" is key. Funny thing quality. It isn't easily plugged into a cell on a spreadsheet. It is usually subjective, or at least holistic. I will be very interested to see if groups can make decisions that factor in "Quality".

If wealth means anything, it should be the case that having greater wealth means having more opportunities or choices available than having less wealth. I don't mean having ten different brands of soap in the market, but more meaningful choices, such as opportunities for education, civic participation, health care, recreation. Opportunities to purchase land or tools, produce goods, and bring them to market.

When we create a new option or opportunity for someone else, we generate wealth. To me, that's why innovation plays such an important part in the betterment of society and why we need better ways of seeing, understanding, and supporting innovation in social services.

Unfortunately, there's a disconnect between financial "wealth" which is measured in dollars and "social" or "total" wealth which would be better measured in opportunity. In our current economic system, financial wealth is a zero-sum game where I gain a dollar only at your loss. Bank accounts and balance sheets fail to measure the value of us working together to create a school or clinic where none existed.

As a simple example, consider the woman with $100 and a sick child in a remote village without access to clean water, health care, or education. Is she really more wealthy than a man with $10 and a child in a town with good water, a clinic with trained professionals, and a school staffed by teachers that care?

Ultimately the wealth a society rests not upon the market capitalization of the corporations listed on their stock exchange as it depends on the breadth of meaningful options available to the society's members. Taking this to heart means revisiting policies meant to foster "efficient" markets and refocusing them on creating "effective" markets that generate meaningful choices and opportunities.

Jessica: thanks for posing this important, even existential, question. I agree with Greg's assertion that "when we create a new option or opportunity for someone else, we generate wealth". And I would add that social capital can also be a wealth generator. In the following piece I suggest the combination of social and financial capital through mechanisms like a "Social Credit Card" can potentially offer a more holistic and natural expression of our wealth. I believe we can incentivize people to change their definition of wealth, and even to benefit from it financially, by re-valuing social capital.

A Better Way Out of Debt, Christian Science Monitor, July 16 2009
http://www.csmonitor.com/2009/0716/p09s02-coop.html

Would love to hear more thoughts on this proposition, particularly as it relates to your central question of "What is wealth?"

Thank you for such thoughtful and articulate responses!

Do others have similar models in mind? (There's a lot of traffic but little posting)? Questions or connundrums?

Do others have thoughts about how they make decisions in trade-offs using a sophisticated and complex framework of wealth?

I read a book a couple of years back that completely reworked my personal ideas about what constitutes wealth. "The Economics of Happiness" is by Canadian Economist Mark Anielski. He defines and illustrates five categories of wealth, only one of which is financial.

Since then, I have given talks to churches and civic organizations about "New Paradigm Economics" that considers all five of these classes of wealth: Personal Capital, Social Capital, Natural Capital, Built Capital and Financial Capital. In my opinion, happiness, both personal and societal, requires a balance of all the categories.

Wealth has almost nothing to do with money or possessions. In fact I believe it is safe to say that true wealth is almost perfectly opposite from the misleading drivel we are all exposed to in broadcast media these days. Seems their constant prodding for us to "keep up with the Jones" only propels us further in the wrong direction.

Think of how many people you may have met who have many material blessing but are - at their core - fundamentally unhappy people. I believe most of them might think that increased happiness or joyfulness (quite different) would offer a higher level of wealth.

My work takes me to disasters and humanitarian crisis zones all over the world, most often in developing countries. I have always found it interesting that some of the happiest and wisest people I have ever met live in little grass huts in deplorable poverty. This is not to say that there is something about poverty that is good or that I think everyone should live in grass huts (I know I don't want to). However there is something interesting to learn from these people.

Most of these people live in areas where death and suffering is an ever present daily reality. Likewise the simple things in life, like food, water, shelter and family, are of the utmost concern. As such these people respect and appreciate the gift that "IS" today. For none of us know with any certainty how many tomorrows we will have.

Ok, so now to finally get to my point. True wealth is not what car, what jewelry or the square footage of our home or in what neighborhood it is located. true wealth is the things no money can buy. It is loved ones. It is friends that are there for you. It is helping others in their time of need. It is going to sleep at night knowing you have done what is right and having a clear conscience.

Do you think we make decisions based on what makes us and our community wealthy? That depends entirely on what you see as wealth. The best way to increase the wealth of your community is to share your wealth with them. Not necessarily money, but also love, concern, empathy and human engagement. Sometimes that can be in the form of money, more often it can be just in the form of showing you care.

How do I see this changing in the future? The depends a lot on how much we mindlessly accept the misleading images shared in our media, how much we continue to buy into the misleading concept of "political correctness" and how much we focus on ourselves instead of others.

Here's wishing you GREAT “TRUE” WEALTH!

Randy Roberson

Links:
http://www.telehelp.org

This topic reminded me of two chance interactions on my travels, one on a plane and one in a taxi, both in Africa (Uganda and South Africa), which reaffirm some of the insights shared already. Paraphrased:

"I know people in rural Uganda who live well below the 'poverty line' [regarded as about $1/day] who would be insulted if described as 'poor'. They have status in their communities and support their extended families by exchanging cattle, fruit, vegetables, etc.".

"I run a brick factory [in northern South Africa]. The community members [and employees] include people from Zimbabwe, Malawi, South Africa, Mozambique, .... Within the community are people with a variety of skills. Some can grow vegetables, some can make stone carvings, some can build houses [rondavels], etc. ...".
Although some of the activities generate money, the community functions on a basis of people exchanging services and food.

A third interaction is one I observed on TV. Jerry John Rawlings was touring Africa and somewhere along the line encountered a community of bushmen [Khoisan] living off the land. They did not have any of the modern conveniences and luxuries familiar in the "developed" world. For example, an elderly woman could not see very well (a condition easily corrected with glasses) and their way of life was pretty tough (hunter-gatherers in an arid region) but seemed almost radiantly happy. "That's because they don't know any better" said Rawlings after considering how much we could do for them through education and technology transfer.

Life is tough in these communities but at no time in these (brief) conversations was there any mention of being "wealthy" or "poor" (in terms of material things and comfort).

In the "developed" or "first" world, "wealth" has come to mean the opposite of "poverty", the latter as something to be eradicated or alleviated, with success being considered as > 1 $/day (purchasing-power parity).

(Earlier) definitions of wealth include reference to terms such as "... welfare; prosperity; good; well-being; happiness; joy. ..." and generalities such as "A great amount; an abundance or plenty ..." and in reference to other quantities - "She brings a wealth of knowledge to the project."
http://en.wiktionary.org/wiki/wealth
i.e. emphasising social well-being and abundance.

With such a diverse range of communities across the world, understanding wealth and poverty requires an holistic view. So far, the best perspectives I have found (to combine) include:

* The "sustainable development" perspective (simultaneous consideration of environmental, economic and social factors), and
* The "development as freedom" perspective (sensu Amartya Sen).

"Wealth" (well-being - financial and social) cannot be sustainable unless the environment can support the physical demands of the communities.
The communities referred to above (in Uganda and South Africa) are fully aware of this as they are almost "living off the land" and are eminently aware of the connections (environment, social, economic).

Sen's view concerns removal of sources of "unfreedom" (lack of nutrition, water, health, education, equality, ...).

There is room for improvement in quality of life. Let's hope this happens in a manner which does not cause these communities to lose touch with those connections (as did the "developed" world leading to the current prominent crises - climate, food, water, social conflict, ...).

"Wealth" (well-being) is dependent on environmental abundance and equitable sharing of resources derived from it.

Very important discussion. We have been working a lot to try to answer this question.
I would like to share an experience we've had last year with some americans, english and south african business leaders here in brazil.
We invited them to discuss what is Wealth Generation in the 21st century in a very different way. Link is attached. On our experience we need to unlearn a lot and try to answer two important questions: What is enough? We need more or better?
http://www.youtube.com/watch?v=Q2JXUaIj2ZA
Regards,
Reinaldo Pamponet

For those who were looking for the full text of Shiller's interview, the link was broken. This is a new link: http://bit.ly/qbi43

Robert Shiller is right "we have to make our own future...so inequality doesn't get worse"(maximizing social as well as financial returns makes so much sense.) He's right about human behavior and "animal spirits" - it's bad enough we share 97% DNA with a gorilla, but it's down right insulting we share as much with a banana - so much so, "wealth creation can be as inconsistent as human behavior" itself.

I just wanted to add some things to the mix, abundance is the natural state of the universe, and wealth is this abundance in all areas, and a right like Robin says, in opportunity, health, education and justice etc, not just in financial engineering. In the immortal words of William Blake wealth is "to see the world in a grain of sand and heaven in a wild flower, to hold infinity in the palm of your hand and eternity in an hour." Doesn't pay the bills I know, but an expanded sense of what wealth is, can only increase the nature of abundance, bringing with it happiness and joy that's lasting, unlike monetary (spend and) debt with monetary gain. Wealth can also be access to knowledge, especially now, with humanity entering into the information age.

Hi Jessica, some thoughts on wealth -with decisions about trade-offs.

Wealth is a mindset, so to create the synthesis -where the concept of wealth is defined as achieving leverage- (as opposed to the pile-up acquisition of assets for private use and social status) by using profit-maximization for broader social impact, its not only helpful to governments with their own fiscal pressures, but also to private individuals who have the option and opportunity to see new ways of participating with "fresh eyes." Wealth as a measurement of effectiveness, (while allocating capital and assuming risk) requires hybrid and multi-sector approaches to create a truer definition of what wealth and value can really be not just to individuals but to the whole of society.

I agree with the others, and what Michael and Greg were talking about, with a need for a "new assumption to base the systems of society," to replace the old, unsustainable systems on our planet, that are "intolerable and destabilizing" which is inherently where the half-truths and disconnections lie. To address Greg's point about the "Great Transition" which is what people are experiencing as the shift - without sounding too out-there, a date has been set: Dec 2012, when the sun will align with the center of the Milky Way galaxy, (ending the 13th cycle of 13 000 year cycles, in the Mayan calendar) beginning a new cycles of cycles - giving humanity a fresh start in the evolution of consciousness. With a shift in thinking about wealth and what wealth creation means, I agree with Michael, it's the institutions that are going to suffer with this planetary shift ( not people or communities) and of course being institutions, they will resist the shift. The fact that trillions of dollars in wealth creation were wiped out last year, goes a long way in the conversation towards redefining what wealth is.

I think a solution to the challenge, lies with the challenge itself, of finding ways to feel wealthy while having less stuff, and more meaning -to find new ways of simultaneously creating great wealth and great societies.

  

There's an oral tradition that originally Jefferson wrote down "Life Liberty and the Pursuit of Possessions." Jefferson was quoting John Locke. Washington on the other hand said, don't use possessions in there, change it to happiness. Well what does happiness mean?

John Locke's full quote is:
"no one ought to harm another in his life, health, liberty, or possessions."

I believe John was telling us that wealth is having these four things. Notice that he separates Life and Health. The depravation of life and health are of course distinct. So it would be the difference between violence and famine.

The resounded notion here is that wealth is what delivers freedom. People came to America because of the opportunity, not because they would have lots of money upon arriving. Just the opportunity was worthy of the title wealth. When we speak about a "poor" nation, we often mean a nation where the people lack one of John Locke's four things and lack the ability to change that.

There are people here in America who are starving, but they, in most cases, have the ability to change that. Their ability to change that could be considered wealth.

On the other end, when you look at the amazingly rich you notice a difference between those who earned it themselves, and those who inherited it. I believe the term is "trust fund babies." If you remove the need to earn opportunities, then wealth becomes meaningless. This is how many of the "trust fund baby" crowd act, at least in their youth. Now a select few of them decide to become something great in their own right, and get back into the mode of earning their opportunity. These are the ones who seem to break the cycle, and often end up even wealthier than their parents.

So basically, John Locke points out how essential it is for everyone to have access to certain things. Places where access is restricted are generally call poor. People who have seemingly limitless access to those things are called "super wealthy." The rest of us are placed somewhere in the middle. Hence, wealth can be considered the level of access or the opportunity or the availability to those things. The "things" are often changing, so today it's an iPhone, and tomorrow it's a high school diploma. The things may change, but the access defines the wealth.

Wow. Very intriguing idea. It seems to me that you stepped it back to an even more seminal level, from "having the resources (money, time, health, trust, friendships...) to pursue your goals" to "being able to amass the resources to pursue your goals."

I wonder if there isn't that assumption about money, that it ALONE enables access. But of course that's not true.

When we try to understand a nebulous thing such as "wealth" - meaning different things to different people in different locations - we'd need to understand that the first thing that would strike our minds is what is uppermost on our minds (built-up capital if we're used to being landlords, used to considering 'land as capital,' used to managing large tracts of land for livestock development, plantations of various kinds, for mining the earth and so on and so forth;

Kindly allow me to start again -

When we try to understand a nebulous thing such as "wealth" - meaning different things to different people in different locations - we'd need to understand that the first thing that would strike our minds is what is uppermost on our minds (land-as-capital if we're used to being landlords, used to considering 'land as capital,' used to managing large tracts of land for livestock development, plantations of various kinds, for mining the earth and so on and so forth; 'natural capital'- let's imagine a jewellery artisan. There's only one way they could capitalize on their 'natural capital' - by making use of their highly-developed skills, in the contemporary world these artisans co-exist with the skilled software programmer, hardware engineer, hacker who "exist" by virtue of their well developed skills; 'social capital' - there have always been people who have responded with alacrity to "needs" felt at a societal level - these were the ones who built charities, places of workship and accompanying networks, hospitals, took initiative to industrialize a region, started wars, indirectly started revolutions and movements and hospices and started gigantic insurance organizations...)

Actually, there is no chicken-or-egg problem here: what each of us excels in has become our personal capital to capitalize on. What I mean by this is that "what I see is what I get!" Let me explain: when I'm aware of the fact that I'm extremely good with the written word, then if I'm not careful I'd do everything in my power to market my special skills to the whole world. What I'm saying is I'd write just to show the world I can write and "incidentally" make a ton of money. In effect, I would try to 'keep up with the Joneses,' all the time, or during my waking moments. So, the question to ask here is "What am I actually doing here?" Am I doing work just to feed my folks at home or am I doing work to "satisfy something 'innate' within me?"

The answer is clear, if only we let our minds see what it is we're up against! Each one of us is up against ourselves, in a manner of speaking! It's ingrained in our culture. So what can be different? If 'evidence' is what is needed, then let's go on a virtual tour of the world's biggest cities and watch what's out there the moment we step out of the plane: no issues there! If I had money and valid travel papers I could zip in and zip out of any country I chose to visit.

Thus, if we do see the professions each of us is good at (and so want to continue in them) as valuable (whichever kind of capital a profession addresses), then automatically we follow the paradigm of "keeping up with the Joneses." And, the moment we do that we delve deeper into our own social capital and soon enough we begin to feel the pinch.

Let me recapitulate: people are good at something or the other and so develop that particular skill or trade until the time the capital runs dry! So, who is to blame? In a sense we are to blame!

A question may arise in the reader. How do we know when the capital we're capitalizing on runs dry? We'd just need to be aware of current affairs in the world. For example, not long ago, Sir Fred Goodwin of RBS gave himself a humongous pension of 13 billion pounds. What started out as huge compensations often degenerates into dwindling personal capital. We all know how Raju of Satyam computers in India frittered away his own capital.

So, it's the culture - our own mindset -- that needs change.

Hope that's useful.

Ilangovan (Mr)

Thanks, Ilangovan! It's great to see you here.

You're welcome, Jessica.

This is one forum I'm really happy to be on. Let me explain: Was just watching the Shiller interview and at one point he points out that theoretical economists "omitted the inconstancy of human behaviour, they never figured out what drives the economy... how in the world did they get the idea that housing prices will never go down..." and similar self-fulfilling prophecies!
While I understand that most human behaviour has its roots in irrationality and regulation is what would help capitalism at this point, Shiller in the interview states the impossible: he implies that more and effective regulation per se is the only antidote to "irrational exuberance" (e.g., the dot com bubble of 2000, the sub-prime crisis of 2007, massive layoffs leading to millions of people losing their jobs, and so on). In fact on the subject of real-estate speculation, Shiller argues that people needed to be helped to allow themselves to adjust their risk. In effect, what Shiller is arguing for is that policy would become so effective that people on policy-watch would be able to intervene when something similar happens! He seems to believe in countering people's irrational behaviour with effective regulation.

If that isn't surprising what is? Allow me to explain. When the going is good -- kindly think back to the pre-dot.com bubble days and we'd all be able to remember a rosy future and so virtual companies' valuations skyrocketed and what went up had to come down! The same thing appears to have happened with real-estate!

So, when the going is good, how would Dr. Shiller's economic interventional model actually work, I wonder?

What Dr. Shiller and his colleague seems to have forgotten, such models would seem to be products of hindsight. As I pointed out in my previous posting, the only thing that could stop / prevent a person from "putting all their eggs in one basket" which is essentially what happened during the dot com burst and the sub-prime problem, would be their self.

Irrational behaviour at the traffic lights (e.g., the tendency to jump the red light) can be gauged and to an extent regulated. But, regulating irrational moves (which first need to be identified in the population) needs rapid identification so that they can be nipped in the bud. Now that is an essence of human behaviour itself and Shiller is talking about regulating such a tendency!

What Shiller is actually talking about is to take steps to regulate the "human survival instinct." As one poster pointed out, some Eastern societies may be able to make do without money per se, but Western nations would die if they didn't make money.

In the hope I have continued with the discussion,

Regards,

Ilangovan

The basic economic principle is that exchange creates wealth. In other words, the more we exchange with one another, the more wealth that is created (this works for money, relationships, health, intellectual gain, etc). Therefore, to be wealthy, we must be willing to exchange or produce more than we receive or consume. Inasmuch as we are always striving to do this, our wealth increases.

Unfortunately, many equate wealth with only financial means. Although I do believe the principles are the same, I have met many rich people who are broke in other areas of their lives. Consequently, many lose their financial resources because other areas have deteriorated, such as their health.

Being wealthy does not require to have financial resources before you can provide any real value to the world (Read more at http://www.killingsacredcows.com/[…]/ and or listen at http://www.fireyourfinancialadviser.com/blog/?p=97). More often than not, the financial resources come AFTER the value has been produced. Money does, however, increase one's propensity to provide more value more quickly. True wealth comes by continually progressing in ALL areas of life (http://www.5tracksofwealth.com).

I've really enjoyed the points that everyone has made thus far, and find myself nodding in agreement with virtually everything. This leads me to two questions: 1) How do all of these points relate to one another? 2) What do them mean in the real world?

First, I agree that the broader global society largely determines wealth in economic terms. But, that doesn't mean that these other forms of wealth -- justice, autonomy, opportunity, well-being, etc -- aren't also appreciated as fundamental societal needs. The problem, as I see it, is that "wealth" and these fundamental societal needs have become separate entities in our fast-moving global marketplace. It is rare, even in developing nations, to find communities where producers have direct, personal relationships with the consumers of their products. In a marketplace where we cannot directly see how our transactions affect those fundamental societal needs, it's easy to see why we become so fixated on money and the goods being traded as the actual "wealth".

The other issue that it seems has not been directly addressed in previous posts is what this really means in the real world. The students in my gap year program begin and end their 8 month experience discussing the question: What is development? Go ahead, try this with family or friends over dinner. Read Jeffrey Sachs, William Easterly, Amartya Sen, Dambisa Moyo and see if you can define it. "Development" is a term that is ubiquitous in the international and domestic NGO community, yet few can agree on what it means. The dominant paradigm (though it's more of a sphere encompassing a general set of believes more than it is a consensus) revolves around the creation of wealth as the primary means of "developing" a community. Supposedly, wealth will bring opportunity, health, education, justice, etc. But, one of the many questions we must ask ourselves is whether this is actually how it happens. From my experiences in developing communities, it seems to go the other way; opportunity, health, education, and justice seem to create wealth.

I don't claim to know the answer to any of it, but we seem to be onto the right questions on this blog! Thanks, Jessica!

Robin Pendoley
www.thinkingbeyondborders.org

What a great read this thread has been! I wanted to jump in and comment because I think we are looking at things from our (the western world's) perspective. I agree with many comments above but the fundamental problem I see is that we are completely dependent on money. If we don't have money, we die. Hence, our need to measure our wealth in light of monetary terms. If you venture into the third world you will find many communities that don't have much money. The key difference is that they actually don't need much money. They are wealthy because they can drink the fresh water from the streams (while we reach for our bottled water) and they grow their own food (organic of course) and weave their own clothes. This is not the entire picture of course but money plays a very small part in their lives. If they need food, they either grow it or take a piece of fruit from the jungle. if they need a home they can build it with the wood. They don't die without money, we do. I think they are quite wealthy in that respect.

What do you think "wealth" is? Do you think we make decisions based on what makes us and our community wealthy? How do you see this changing in the future.

Our prevailing economic culture is divided. It expects producers to become more socially responsible, as though producers are the drivers of market change and wealth generation.
Producers are not. The market is. In competitive markets, it is not the producer that drives change, it is the market. This is because wealth generation is determined by the value for which payment is made. And this value resides not in among the producers, but among prospects and customers, namely, the market.

Value is the engine of our productivity. Value is made up of emotionally charged conceptual objects in our psyches. These emotionally-charged conceptual objects are our aspirations or desires, or our fears or aversions. Value always has propulsive force. We are each already being propelled in unique trajectories, by the specifics of what we each value, either toward getting it, in the case of positive values such as our aspirations or desires, or toward avoiding it, in the case of negative values such as fears or aversions.
 
It is precisely because we are all already willing to invest our own time, effort or resources to get it, that value has propulsive power. Value drives our preferences, choices, decisions and actions, such as purchases. In effect, we all live in a dynamic, if invisible, maelstrom of all our combined propulsive trajectories, together operating as a turbulent vortex, or the Valueflux.

The Valueflux is entirely invisible and intangible, because it is made up entirely of invisible ideas in people’s psyche’s, fused with the equally invisible emotional charges of either attraction or repulsion toward getting or avoiding the imagined prospect. Even as we appear to operate in a static three dimensional world of buildings, rooms, conference rooms, tables, chairs, etc, this static reality is overlaid with the four-dimensional maelstrom of individual and group trajectories, together making up the Valueflux, with Wealth being nothing other than what is exchanged within the Valueflux for value fulfilled.

As value is an imagined aspiration, desire, expectation , anticipation, or the avoidance of an imagined fear or aversion, it is not really production of the organizations that generates wealth in the system, but the value perceptions in the psyches of prospects and customers. It is this value that drives preference, preference that drives purchase, purchase that generates revenues, closing the mutually reinforceable feedback loop between customers and producers.

The more precisely producers make their products to approximate the value perception among prospects and customers, the more likely these products are to be recognized, preferred and purchased. And the more precisely producers map the extent to which the customer’s value expectations were actually fulfilled by the product/service experience, the more accurately they can refine the product to reinforce the wealth-generating feedback loop.

This means that the coming changes will depend upon the evolution of the Valueflux, i.e., the changing perceptions and values of the market of prospects and customers. The more importance that prospects and customers give to the social responsibility performance of the producers of the products they purchase, the more vigorously the producers will compete among themselves to be able to meet the market’s growing re-prioritization of value.

By recognizing that markets drive wealth generation by defining value, we can make the social behaviors of producers, as they pursue their only goal, to generate more wealth, by being preferred and purchased toward the fulfillment of perceived value that contains ever more criteria for socially responsible behavior on the part of the producers.

It is not reasonable to expect organizations that are fiduciarily responsible for maxmizing the stock value of their shareholders, to behave socially responsibily as an second objective.

Rather, let's enable the producers to fulfill their primary and only objective, that of maximizing shareholder value, by being compelled to be socially responsible in order to fulfill their first and only objective.

It's true value as the engine of productivity, is a conceptual object- not fixed, subject to change, and as a "valueflux"- is driven by markets. I agree if we weren't so reliant on money as a means of exchange for goods and services, there'd be a better chance of putting in place the social credit card and other forms of social capital that Paul was talking about. A question would be, what would it take to re-value social capital inside the imbalances of the current system?

A system, that lacks a shared meaning of value. If the Wall St wizards, who designed the highly complex financial instruments that make money out of money while measuring profit, designed an instrument that added a profit for every social contract made -like the direct contributions volunteers make to an economy - the world would be a much richer place. When profits are used for conspicuous consumption, more and more imbalances are created -the more profits on one side, the more poverty on the other. With social capital, the value in payment of time, effort and resources are such, people would change social behaviors, being compelled to be socially responsible (with the reciprocal value of social returns) like a form of alchemy, profit seen, as a means to an end, and a way of driving social change.

If social investors with change capital, were to set up social capital and social contract networks, (with institutions on board to build the social capital) it could not only balance imbalances in the system, but also provide the metrics, in the creation of the resulting social cohesion, for righting systemic injustices and solving societal problems now, that's value fulfilled
 
go social capital!

If we talk less and do more, then that which we have will accomplish more. Maybe a simplicity but I do think we can get ourselves tied up in knots.

Being human, the strong have always had the choice to be benevolent towards the weak. Wealth is another form of strength and good people throughout the ages have always been willing to consider those less fortunate. Some have been more effective than others. In the right hands, a little wealth has accomplished much.

Anyone who is able to participate in this discussion is wealthy ... relative to 90% of the world's population. And not just the money ... the ability to read and type, good eyesight or the means to afford glasses, dexterity, ideas, thoughts, vision.

What are you doing with your wealth? What am I doing with mine?

These are all great ideas! Thank you all for participating. I blogged small excerpts at http://www.margolin-consulting.com/[…]/socialedge-forum-on-wealth.html

If you feel up to it and think it may be illuminating, feel free to also consider the converse (as some posts already have): What is poverty? Is it absence of wealth -- an antonym, or opposite end of a scale? Is it something different from an absence of wealth so that someone could be both poor and wealthy simultaneously?

Maybe more a matrix of resources and soul.

1. Poor (resources) and Wealthy (soul) but then influence may be limited by lack of resources
2. Wealthy (resources) and poor (soul) in which case you're likely to be miserable
3. Poor (resources) and poor (soul) which is the most miserable and ineffective of all

Best of all a well-balanced, growing and expanding life that is;
4. Wealthy (resources) and wealthy (soul) in which case you're most likely to be both happy and effective adn leave a worthy legacy.

As they say, "It tough at the top ... but it's worse at the bottom!"

I am self made Social Entrepreneur crafting on developing a proprietary social model to integrate Investment Banking, Education, E-commerce, Real Estate and Philanthropy through practical application, values and beliefs.

With strong belief:
Wealth is when small efforts produce big socioeconomic results which we can share. Poverty is when big efforts produce small socioeconomic results with nothing to share."

Practical Example:
I am in process of developing a socially motivated venture www.cornellgates.com which is started with social capital of $ 5 million from www.ibcre.com a private Hybrid equity group. At this stage I acquired license to apply Social entrepreneurship practice from www.seconsortium.com adopting values of www.sasifoundation.org.

The project is entrepreneurially driven with an objective to turn it into a multi billion dollar profitable entity that will have positive impact on the society at large.

I welcome comments and contact to explain my social gameplan and the challenges I am facing to implement these with our resources.

Firoz Shroff firoz@ibcre.com
www.firozshroff.com

I have been following along with the discussion and find it quite intriguing and have a few thoughts of my own. It appears that we have many definitions of what wealth is. I agree that wealth is much more than money. It is important not to confuse wealth with happiness in this discussion as the lack of wealth by no means limits one’s happiness.

Furthermore, I believe that we in the United States have lived with prosperity for quite some time and have taken it for granted to a degree. Let me explain, due to the current economic crisis many are reevaluating what is of value is to them. What we don’t realize is that it is a luxury to do so. For the rest of the world, it is a constant daily struggle just to put food on the table, keep kids in school, support one’s family, etc. without having the ability to create change because democratic channels as we know do not exist in much of the world.

This may also be somewhat due to the point that we have grown up in prosperity, but many posts have alluded to the point that the economy is a zero-sum game. Inequality has increased but this is due to the fact that some have grown and others have not. Across the world, incomes have been rising both in absolute terms and in real terms. Some countries have seen incomes decrease but not even close enough to consider that they offset increases in the rest of the world.

Questioning our current economic system is great, but we must understand our own economic path and what has got us here. Ravi did well in describing the function of business and the drivers of it. Business is designed to create value and in doing so provide a better overall lifestyle through the freedoms and choices that it brings us.

The direction that we need to head is towards finding ways to monetize our societal desires. Capitalism has the incredible ability to mobilize resources to bring great positive change through business. Our efforts should be looking towards innovative ways to harness our desires to help the poor (or whatever they may be). As a graduate student, international development through social business design is an area that I am actively pursuing.

Wealth is when small efforts produce big socioeconomic results which we can share. Poverty is when big efforts produce small socioeconomic results with nothing to share."

Example www.cornellgates.com started with social capital of $ 5 million from www.ibcre.com applying the business philosophy of www.seconsortium.com as social motivated venture but very entrepreneurially driven project with an objective to turn it into a multi billion dollar profitable entity that will benefit and have positive impact on the society at large. I welcome comments and contact to explain my social gameplan.

Firoz Shroff
www.firozshroff.com

Example www.cornellgates.com project motivated venture but very entrepreneurially driven project with an objective to turn it into a multi billion dollar profitable entity that will benefit and have positive impact on the society at large. Started with social capital of $ 5 million from www.ibcre.com applying the business philosophy of www.seconsortium.com and social attributes from www.sasifoundation.org

I welcome comments and contact to explain my social gameplan.

Firoz Shroff
www.firozshroff.com

While the accumulation of sand, may appear on the surface to be of value, it is the passing through the hour glass vortex which defines its benefit.

Thanks for the great comments on the theme of multiple forms of capital and an integrated bottom line as key to measuring wealth. Directly extending from this, is how do social enterprises which are trying to bring social and financial "wealth" to society measure their impact? Imagine the possibilities if social enterprises were able to use an integrated bottom line both as an internal metric (for quality standards) and external metric (for investors to see the social return of their investment).

Educate! (www.experienceeducate.org) is creating a new model of education in Uganda based on the ability of the next generation to drive the sustainable development of their communities. We have developed a method to measure SROI with the help of organizations like REDF and Endeavor, and are now applying the method to 415 Educate! students across Uganda. For an example, here we measure the SROI of a community organization called COBURWAS (www.coburwas.org) several Educate! students started which compares Educate!'s investment in these students to the value they in turn have created for their community, a refugee camp in western Uganda: http://www.experienceeducat[…]0Report%20-%208-3-2009.pdf.

I would love to get your thoughts and feedback, and thank you for the great conversation!

I have followed a winding road to arrive here.
1. I had to Google 'Social Entrepreneur' because I had no idea what it meant.
2. I have spent the past 48 hours (-6) trying to write (not my strength) a post about mis-applied free-market practices, so indignantly defended, as the red herring in the healthcare insurance reform debate here:
http://www.obamabidenusa.org/[…]/
It comes down to the essence and measure of 'value'.
3. I have also been writing to Blue Dogs and my own Senator Feinstein about the stagnation of ideas at private research universities (related to one of your topics) as one result of our lack of access to affordable reliable healthcare coverage. Aging tenured faculty are not cycling out of the system as they normally would, the ripple effects are tremendous & are the only action that is dynamic at USC. 6 of 12 tenured profs in my small dept are dead wood. No new hires, no ambitious students attracted, enrollments drop, entrance standards drop, endowments dry up, local businesses close and so on.

While #3 may be another matter, I am only here because of my work for the Obama campaign, which is an ongoing case of serial monogamy to the cause. I found my volunteer work to be singularly rewarding & any other practice has a difficult standard to achieve.

On the other hand, my 'business entrepreneurial' practice creating large scale artworks/experiences in public places evaporated in 2007 after a 14 year run.

I have always thought that true wealth is when you call your time your own. That was when I was not 'subsidized' by my husband's university salary.

I'm not sure I fit in here but I the intellectual exchange and genuine questioning is a pleasure to read. I had been thinking about the scorn/envy syndrome riled up among friends or competitors/colleagues who are 'to the manor born'.

I arrived here and you are all way ahead and eloquent in your comments and references. Thank you for a nice surprise.

I agree with all the comments made so far ...

For me it has been a long winding road swiming against the current for 30-years. I have always fought against the "Wealth" as defined by western society, which I define as WEALTH = DEBT. (Not why we in a reccession?)

Wealth as far as I am concerned is an integration of various processes in which "Monetary vapour ware" is but one of them ...

Wealth for me is an hollistic way of being ME.

But then reality sets in ... bills to pay, food to buy, etc ... because we are not that self indepenedent as we would love to be. We have become so "market" driven that we have to a large extent negated our own survival outside of those "market" structures which is based on the falacy that nothing is finite.

Will my great-great-great grandchildren have an earth to be born into? And how will it look like then?

Laurinda Seabra
South Africa (at the moment)

Thank you Jessica and all of you for your input.

I was chatting with my future father in law the other night. He has worked hard all is life and has always invested his money wisely without expecting huge returns but to rather let the compound interests do the job.

What I found interesting was his view about the social impact investing has on society.
He was not referring to investing in socially conscious companies or hedge funds, but rather on the fact that the sole action of investing into ANY company will indirectly create jobs and wealth for society as a whole.

I would like to know what fellow social edge members think of his view. Is it too
simplistic, or is it a plain fact that can be proved using economics theory?
So what’s your view?

Hi Vincent, your future father in law's theory of relativity, makes sense in the current recession, where employment matters most to people (as far as short-term social impact goes) when the spin-offs work for individuals, and society generally.