The conventional way of measuring wealth is all to do with material possessions ... how much stuff we own, and the size of our financial holdings.

Such a measure misses almost everything that is of truly great importance. It misses everything to do with my value as a person, and the value of my family and friends.

Such a measure ignores the value of my connection with community and the shared value of the commons of the place.

Such a measure also ignores the huge value of the resources of the planet that are shared with everyone else on the planet ... a huge wealth yet finite and easily capable of getting wasted by the profligate socio-economic system we think is the norm.

Source of wealth ... material wealth, that is!

All wealth has its origins in the distant past, and the greatest wealth of all is the fact of life itself.

Another great wealth is our access to solar energy, without which nothing we know would exist.

Some of the resources we have today are the result of solar energy and natural life that has created the fossil fuels we are consuming to support our modern wasteful world.

Other mineral resources originated with the formation of our planet, and are a finite resource that cannot be replaced.

Land is another source of wealth ... not so much because it can be bought and saold for money, but because it is a vital part of a sustainable world.

Water and air are resources of huge value ... without these resources life cannot exist.

The money wealth associated with ownership of material property and money all has its origin in these real wealth elements. Some people own more than others

Substantial wealth versus perceived wealth

It used to be said that the UK was a nation of shopkeepers ... a sort of back handed compliment meaning that everything could be found somewhere in the shops in Britain.

In fact, it was manufacturing and trade that made the nation's wealth ... and a very aggressive spirit of enterprise and willingness to make investments. Much of Britain's wealth was generated from end to end value chains that added up to deliver profit ... and a growing pool of capital to invest. The value chains were global, even though, compared to today, the technologies of transport and communications were primitive.

The industrial revolution also created wealth in United States ... in some ways bigger than in Europe ... but the country was still relatively small. Certainly bigger than say, the UK, but not bigger than the British Empire. The pound sterling was a much bigger international influence than the US dollar.

Modern macro-economic measures do not differentiate adequately between the GDP at the manufacturing level and GDP at the pre- and post manufacturing stages. With the prevailing system of metrics the sneaker contributes more to the global economy while it is sitting on a ship, or on trucks or in warehouses and retail stock-rooms than during the manufacturing process. This is patently absurd.

Where does wealth come from?

Modern economics does not seem to address this key question. My impression is that economists who have a platform for their views on organizations like for example Bloomberg News think that wealth can be enhanced when a Central Bank like the Federal Reserve 'expands its balance sheet' and does 'quantitative easing'.

If we go back to basics I argue that all wealth has its origin in the 'big bang' that started the universe. Our wealth started off as minerals that make up our planet, and has increased over billions of years through a process involving solar energy and nature's life. Bottom line, we are wealthy because of the amazing multi billion year history of our planet, and the miracle of nature and life.

Without human consumption, solar energy and natural resources will add 'wealth' to our world for a very long time.

With human consumption the 'wealth' of the world declines … the faster the consumption the faster the decline. In the prevailing Adam Smith style money profit laissez faire market economy, the conventional wisdom is that wealth is about having more and more no matter how much of the 'wealth' of the planet is 'consumed'.

This is ridiculous.

If people were smart … or perhaps if our leaders were smart, we would be running the world in a very different way.

We need money 'to make the world go round' … but money is not a measure of either wealth or economic performance.

Using an automobile analogy … money is the lubricant, but it is gas (petrol) that provides the energy and it is a speedometer that tells us how fast the automobile is going.

Adam Smith in the 'Wealth of Nations' concluded that the market and the invisible hand resulted in an optimum use of resources and optimum benefit for society. Adam Smith, it seems to me, was in awe that the market miraculously balanced supply and demand, and goods got produced and needs got satisfied, without any controlling overlord!

I argue that we should accept that the resources we have are finite, and that we should be figuring out how best to get a decent quality of life from this finite sources or wealth … not only for the next couple of generations, but for ever.

In modern times it is common for 'free market' supporters to cite Adam Smith and his invisible hand as the foundation of the modern economic system. But in this, these people, often with high level responsible jobs or high profile media platforms, are just fundamentally wrong.

Modern economics is now a massive construct of money and financial investment vehicles that have little or no connection to the real market that Adam Smith observed.

The system can be described as a huge 'bubble maker' that can be 'gamed' to produce money wealth for some at the expense of everyone else … a classic zero sum game.

While the monetary economy goes from bubble to bust, the underlying real economy is trending more steadily. Everyone talks about the monetary economy, but except for the investor and executive community, it is really inceonsequential.

As I write this, I am in my 70s. When I 'completed' my academic studies more than 50 years ago, the total of knowledge was way less than what exists today. It has been said that the total of knowledge doubles every ten years, and on this basis there is more than 32 times the knowledge today than when I was young. This is probably a low estimate … and maybe the total of knowledge is 100 times more than 50 years ago.

Applied knowledge … or technology … has progress even faster. As I understand it, the famous Moore's Law postulates that every 18 months power doubles and cost halves. So in areas of technology where Moore's Law applies, we have a cost/power improvement that is multi-million fold better.

I think this is awesome.

Sometime in the last fifty years the capacity to produce everything that we need for a decent quality of life for everyone became possible.

This should change everything … but almost nothing has changed. Why?

The answer is, of course, that the money profit laissez faire capitalist market system being used draws its inspiration from Adam Smith's ideas based on a shortage economy of the 1700s, This model optimizes to maximize money profit for 'me', ignoring everything else. This model cannot work to allocate resources in ways that optimize quality of life … and, bluntly put … the this model has outlived its usefulness.