In 2017 alone, Bitcoin created massive value for early investors in it – billions of dollars. This made me think – did Bitcoin really create that much value for society? Where does this wealth come from? Can wealth be created?
Or is wealth a zero sum game? My gut says it is.
I leaned on my trusted friend, the internet, and found some good arguments for why wealth is not a zero sum game, that wealth grows – but I found this leaned on two basic premises, that wealth is perceived, not material, and can only be acquired by humans.
Let’s talk about perception first.
One argument for wealth creation goes like this. I have two eggs and you have two apples. We’re likely to trade because I value one apple (which I don’t have any of) more than one egg (which I have two of), and vice versa. Argument goes that wealth is created through this trade on both ends.
Another argument goes like this. If I paint a beautiful painting, you’re likely to pay more for it than if I were to simply sell you the paint and canvas. Thus, I must be creating wealth through my skills.
In both cases, there is no increase in material wealth. In the first case, we start with and are left with two apples and two eggs. In the second case, we start with and are left with paint and a canvas. That being said, there’s no question that perceived wealth does increase.
Now let’s talk about wealth only being acquired by humans.
One argument for wealth creation goes like this. If I walk into a park and find a beautiful rock, pick it up, and take it home, I’ve created wealth. While if you look at me alone, or human society as a whole, I’ve indeed created wealth, but the idea that I’ve actually created wealth assumes that the park cannot possess any.
Another argument is a little more complicated, but goes like this. I’m a farmer, and I start using pesticides that increases the yield of my crop by 20%. This increases wealth as I’m able to feed more people with the same amount of work. I’m not going to pretend I can quantify the value of life to an individual insect, the value of the insect to a frog, or the total effect of pesticide creation on who knows what, but simply stating that I’m creating wealth through increased yield by using pesticides doesn’t sit well with me.
My argument is that if you look at wealth as material, not perceived, and if wealth is not just acquired by humans but can be acquired but all entities, then wealth may very well be a zero sum game. Wealth, like mass, can neither be created nor destroyed – simply altered in form.
The reality though, is that wealth is perceived. The value of an object, physical or digital, is the value we as society place on it.
Perhaps, though, when we use words like wealth, we might consider it as something not only acquired by humans, but by all entities in the universe and the universe itself. This might encourage us to recycle more, eat organic food, and value (or at least consider) sustainable activities not often associated with wealth creation.