Wealth is Created by Action Based on Rational Thought

One little bit of high-tech wealth brought to you by a lot of human thought.

One little bit of high-tech wealth brought to you by a lot of human thought.

Wealth consists of the life-promoting goods and services that people have access to. Wealth, (beyond fruit) does not grow on trees. Luxury homes do not spring up from the earth by themselves. Seasoned pork roasts do not fall from the sky. Wealth must be created by human activity.

But what kind of human activity generates wealth? Is it desiring? Does simply wanting a new car make it appear? Despite what most Keynesians will tell you, I’m afraid that it will not. (1) People have to act to create wealth. But what kind of action? If you flail your arms about mindlessly, will that create wealth? Obviously not. What is needed is action based on rational thought: That is, taking stock of one’s surroundings and the actual needs of oneself and/or others, then figuring out how to use one’s surroundings to create what is needed for the promotion of such human life, (i.e. wealth.)

To provide food, people need to think about how to plant and harvest, how to hunt, how to maintain livestock, how to store crop yields without spoilage, how to keep and prepare meat safely, etc. If no one thinks at all, everyone starves. But is all that’s required to reach today’s level of wealth, minimal, routine, low-level thought? Continue reading

Wealth is Not Money — Monetary Wages vs. Real Wages


Not wealth.

There are many confusions that many people hold about economics today. One fairly common one that I’d like to address is the confusion of wealth with money.

Wealth consists of the actual goods and services that are available to a person. Food, medicine, clothing, houses, televisions, computers, jewelry, the services of a doctor–all of this is wealth.

Money, on the other hand, is the medium of exchange used to indirectly barter wealth. Unlike wealth, having money does you no good by yourself on an island. If the money supply in an economy is doubled, this does not increase the amount of wealth in that economy. What increases wealth in an economy is the production of material goods and the offering of valuable services.

The confusion between money and wealth tends to arise because, on an individual level with a given money supply, the way one gets access to more wealth is to get more money. But the way money translates into wealth is not a simple “more nominal money equals more wealth,” but “having a greater percentage of the money in the economy entitles one to a greater percentage of the wealth in that economy that one doesn’t already own.” Money is a claim to the wealth produced by others, (who are willing to sell) relative to the total money supply and the total wealth.

Money--Wealth Ratio

When people create wealth by producing valuable goods from raw materials or using skills to offer services, then trade these for money, they give value to the money in circulation. If they are able to produce wealth (of a type that’s needed/desired) faster than it’s consumed, they increase the value of the money in circulation. Since there are more goods and services chasing the same amount of money (assuming no more money is printed/created) the prices of the goods and services decrease. Continue reading

The Formal Refutation of Determinism and The Validation of Free Will (Libertarian Volition)


Determinism is the doctrine that all events, including human choices, are the necessary results of prior events, and that no human decision could have been different than it was.

Objectivism holds that determinism, specifically with respect to human conceptual consciousness, is self-refuting, because it makes conceptual knowledge of any kind impossible. Since this includes the premise of determinism itself, such determinism is incoherent. This self-refutation of determinism extends not only to so-called “hard determinism,” but to compatibilism, as well. In fact, it extends to any theory that does not recognize a fundamental choice made by the individual that determines conceptual beliefs.

(The only way to self-consistently hold determinism is to hold that conceptual beliefs are completely infallible, and that there is no such thing as a false belief. And then there would be no need to argue for determinism or even to assert it: everyone would agree on every issue with which they had experience.)

Thus, a libertarian theory of free will is the only type that is tenable. The rest of this post will explain how and why this is so. First, for intuitive simplicity, I will make use of a very apt analogy for human minds, beliefs, and truth. Then I will present a formal reductio ad absurdum of physical-mental determinism in both an unabbreviated and an abbreviated form. Then I will briefly describe the Objectivist theory of free will (volition) and its consistency with the Objectivist view of causality and the laws of physics. Continue reading