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WHERE DOES WEALTH COME FROM?

There is a fundamental feature of the Free Trade case that is poorly understood. This is tied up with the origin of wealth. Where does it come from? You can of course dig gold or silver or even coal out of the earth if you have enough slave-like labour. Or you can bountiful grow crops if the soil is rich. But hold on. However much you produce it is not “wealth” unless and until you can convert it in to cash or other items through trade.

Looked at in this way all “wealth” comes not from labour or capital, as Marx would have us believe, but from trade. Here lies a problem. Not everyone considers they are into trade. They do not recognise that they “trade” their time for a job, and then “trade” their earnings for groceries. For many people trade is seen as something for the few, too risky or even distasteful for the majority. Also the fact that trade is not a zero sum game, but one where the gain is on both sides, is hard to grasp. Yes, there are bad bargains. And sadly the legal system holds that it is not the role of the courts to save people from having made a bad bargain. Also commercial common sense is not evenly dispersed throughout the populace and there are limits to how far the state can go in imposing “fairness” or even honesty on transactions. Yet trade has for centuries been proved to be the only way to achieve enduring prosperity without inflicting burdens on others.

However, as Adam Smith reminded us, there is more to life than the “invisible hand” of self-advantage. His philosophy took account of the need for behaviour to be regulated by “sentiments” such as justice, prudence, benevolence and above all self-control (self-command). These are virtues that he believed to be superior to reason and implanted in mankind by a benevolent force. How else could one explain why such moral concepts are universally accepted he asked?



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