The Washington times., 1933-03-30
Professor of Economics
New York University

New York University
What is wealth.? How can
millions be poor in the midst Of
plenty?
To an individual. wealth is
anything which has economic
vaue; that is, anything which
is wanted, but is scarce"
Must Be SaleabIe
But to have economic value a
thing must either be Saleable, or
be subjected to appraisal on the
basis of its definite income so
that an estimate as to its prob
able value can be made. OF
course, money is wealth, but
only to the extent that it will
buy such things as food, build
ings and automobiles.
Human beings, or their quail
ties, however, can be considered
as wealth only where slavery
exists.
An individual is wealthy" if
he owns much wealth. Here we
see a paradox in the making,
for we have just said that a man
is wealthy when he has an
abundance of things which are
scarce!
Wealthy Have Plenty
Of course, the fact is that
while the wealthy individual has
plenty, others have little. If
everybody had plenty of every
thing, nobody would be wealthy"
And the more everybody had, the
less they would want. Nothing
would have any economic i'm
portance and the idea of wealth
would not be significant.
Indeed, we read of tropical
islands where nature provides
abundantIy for the limited
wants of the natives. Are they
wealthy?
These thoughts suggest the So
called paradox of plenty" and
remind us that in 1882 millions
of people were in need while
huge supplies of commodities
and great productive capacity
existed. What is the explanation?
Become Abundant
The answer is that commodi-
ties which formerly were really
scarce are now abundant and
are therefore low in value; but
their owners will not allow their
abundance to become effective
and refuse to sell them for what
they will bring, thus creating an
artificial scarcity in the midst of
real plenty.
AS larger and larger stocks of
cotton and copper accumulate,
these commodities lose their
scarcity and approach the con-
dition of being free goods" such
as air and water. This fact,
however, is not recognized by the
producers. who think of the past
cost of production. The Govern
ment may even aid them in
withholding the surplus.
Decline in Value
So the cotton and copper de-
cline in value, and the owners
wealth" is reduced. But the
abundant supplies are not made
available to others. Air and
water are abundant and ordi-
narily have no value, although
we could not do without them.
Cotton and copper we could do
without but, despite their abun-
dance, the owners hold them for
higher prices.
Thus they grow poorer and
no one else benefits by the large
supplies. Their individual wealth
is reduced; that of others is not
increased. The wealth of the
nation is smaller.
It is an ancient criticism of the
economic conception of wealth"
that as things become more plen-
tiful so that people can consume
more freely, prices fall and value
wealth decreases, while as things
get scarcer and people can con-
sumo less, prices rise and wealth
increases. Many critics therefore
argue that wealth" should not
be measured by value.
Justification Simple
But the Justification is simple
and clear. AS long as we do not
have enough of thing to satisfy
all vs!ntS, we must econopnize in
its use. We therefore allow buy.
ers to pay what they will in order
to find out who wants the thing
most and to prevent wasteful use
by those who want it least. High
prices tend to stimulate produc-
ton of scarce things and increase
the supply. Low prices tend to di-
rect consumption to things which
are plentiful.
Thus the system of measur-
ing wealth in terms of economic
values seems to be the pest way
to solve the paradox. If we al.
low free DIav to market forces.