What Is Real Wealth?

Authored by Charles Hugh Smith via OfTwoMinds blog,

As for acquiring capital - the most important types of capital don't require much money.

What is real wealth? Money, right? Currency, gold, quatloos, you name it. Money is real wealth because you can use it to buy whatever you want.

I would argue money in any form is only the means to acquire real wealth, which is the agency, opportunity and time to pursue your life's work.

The conventional view that wealth is money and leisure has it all wrong. Let's imagine the owner of a vault of conventional treasure: jewels, gold coins, etc.

If the "wealth" stays in the vault, what's the point of owning this "wealth"? The secret satisfaction of being "wealthy"?

If "wealth" is only an internal state, then let's measure friendship and being needed/wanted as the metrics of "wealth." You see the point; if "wealth" is merely an internal state of satisfaction, then a vault full of "money" is a poor metric.

What money buys that is real wealth is freedom and control of one's life. This control over one's life is called agency. Agency is defined as "the capacity of an actor to act in a given environment." This may not seem like a profound concept, but another way to describe agency is that agency is the opposite of powerlessness.

People with agency define themselves and their identity; they shape the world they inhabit rather than passively await whatever circumstances deliver up.

In the real world, people with agency move on when things no longer work for them in a particular situation. Agency is not just the opposite of feeling powerless; it's also the opposite of victimhood, i.e. the state of being in which others are held responsible for all of one's travails and difficulties.

Agency and responsibility are two sides of the same coin: each manifests the other.

Opportunity is a form of wealth--and so is the wherewithal to take opportunities that arise. Though there is a random element to opportunity--i.e. getting lucky--the wherewithal to take the opportunity is not a matter of luck. It requires a specific appetite for risk, perseverance, the ability to discern how best to use the opportunity, and access to the capital required to exploit the opportunity.

Capital is a type of wealth that isn't limited to "money": Character traits are capital, social networks are capital, experience is capital, knowledge is capital. All of these forms of capital are often more important than "money" capital.

As for "money" buying leisure--leisure in abundance is a disaster for the vast majority of people. Humans are designed to be needed by others, to be part of something greater than themselves, and to gain dignity and pride by doing useful work--whether they are paid "money" for this work or not.

This is why so many of those with the "money" to have endless leisure are miserable. Their lives are an endless treadmill of frivolous consumerism, neurotic pettiness, hypochondria, expressing their infinity of heartaches to counselors, and saddest of all, medications in abundance to relieve the ennui and the dead weight of their purposeless existence.

"Money" is only useful if it is a means to acquire real wealth, which is the agency, opportunity and time to pursue your life's work. There are many people who can spend $600,000 a year on various things (i.e. their "lifestyle") who don't feel "wealthy"--and if they don't have agency and time for work that's meaningful to them, they aren't wealthy: they're as impoverished as the person earning a fraction of their income.

Real wealth doesn't actually require a vast horde of "money." It requires some money, but how much depends on the cost of agency, opportunity and time. For those with few needs and the right priorities, the cost of agency, opportunity and time needn't be all that high.

As for acquiring capital--the most important types of capital don't require much money; determination, self-discipline, organization, a voracious appetite for knowledge and work, an insatiable curiosity, a generous heart, a knack for friendship, the purposeful pursuit of goals-- these are the tools to acquiring real wealth: agency, opportunity and time to fulfill one's life work.

I explain how to amass the most empowering forms of capital in my book Get a Job, Build a Real Career and Defy a Bewildering Economy.

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JimmyJones Fizzy Head Tue, 09/19/2017 - 12:00 Permalink

The author is 100% spot on.  If more people were taught this the world would change but I suppose that would kill the current power structure so it will never be presented to the public school attendees.  Entertainment is purposely made in abundance so that you never take the time to grow your mental capital, your knowledge of creation (making things yourself, fixing things yourself, independence).  Being able to create makes you valuable to others.  Reading non-fiction (useful knowledge IMO) enhances your ability to create via absorbing others experiences then building on them.  If you value using electricity shouldn't you at least have a basic understanding of how its generated?  How to store it? How to build the thing that stores it?  If you like using electronic devices, shouldn't you at least have a basic understanding of how one part works with another or maybe go crazy and know how to read a schematic?  The time you take watching mindless drivel (entertainment TV) is a negitive on your capital.  You could of created a garden bed (capital good) that you could be planting vegtables in or growing weed (a cash crop), that is capital positive.  Instead of sitting, you are creating and sharpening your skills through gaining experince.Put your hands in the dirt, humans aren't supposed to be trapped in cubicles all day only to sit in front of another screen after they go home.  It will make you feel way better.

In reply to by Fizzy Head

massbytes Tue, 09/19/2017 - 10:30 Permalink

It is a commercial for a book, true.  But the points made in the article really hit home with me as I have just retired and still second guessing, a bit, about leaving my old job.  This helps, because I feel like what I do is for me and my family not someone else's family.

nmewn massbytes Tue, 09/19/2017 - 10:46 Permalink

He's right to a certain extent, money provides the means for a happy life. There's a lot of "wealthy" people that obsess over their money and always try to get more until they develop a neurosis over it & become miserable.  Of course I'd like to see if I could handle being wealthy...lol.

In reply to by massbytes

OverTheHedge CHX13 Tue, 09/19/2017 - 12:40 Permalink

As someone who is living the dream, I still think that this is a little bit of "If I can't have it, I don't need it. So there!". I gave up the big income and the expensive toys many many years ago, to have a life instead. I am, therefore, poor in cash, but rich in life, if you want to be poetic. I'm still poor in cash, no matter how fancy you get with denial and reinterpreting reality.The thing is, I tried the other kind of lifestyle, and I didn't like it, so now I embrace my poverty with relish, and have nothing but contempt for people with money. However, this contempt may well mask jealousy and insecurity. If it mattered, I would get some therapy, but I just got some new piglets, which is way more fun. Oh, and my idea of poverty, and real poverty, is not the same thing. I'm just deluding myself that I am poor. I can throw a rock from my houses and if I didn't own so much land, I could probably hit a real poor person. D'you see? 

In reply to by CHX13

2banana Paul Kersey Tue, 09/19/2017 - 10:51 Permalink

One of the most misquoted verses of the Bible. The full verse: “It is easier for a camel to go through the eye of a needle than for someone who is rich to enter the kingdom of God.”  The disciples were even more amazed, and said to each other, “Who then can be saved?”  Jesus looked at them and said, “With man this is impossible, but not with God; all things are possible with God.” -- Mark 10:25 The rich, poor, tall, short, fat, thin, etc. have NO chance to get to Heaven.  At least not by their own endeavors.  Not by living “good” or being “good” or driving a Prius or recycling plastic bags…etc. Somehow this verse has been perverted into bashing the “rich” while missing the real meaning of what Jesus was talking about. 

In reply to by Paul Kersey

2banana Paul Kersey Tue, 09/19/2017 - 11:30 Permalink

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"How many divisions does the Pope of Rome have?" -- Joseph Stalin   “Joseph is dead, his body rots in the ground and his empire is dust”-- God

In reply to by Paul Kersey

stiler 2banana Tue, 09/19/2017 - 13:37 Permalink

.... because the Kingdom of God is a FREE GIFT to sinners and who wants a free gift? Most want to earn it and thus it is unpopular. But if you want to earn salvation you'll be trying forever in Hell which is forever downward. True wealth is walking in the light of Jesus on streets of gold in a city with foundations of precious stones and living for the first thousand years on a renewed earth. All because at a point in time you believed in His death and resurrection. https://www.youtube.com/watch?v=YQvjNNZ5juM

In reply to by 2banana

Naruhodo 2banana Tue, 09/19/2017 - 13:47 Permalink

The reliability of Book of Mark in the Bible is likely no different from listening the words of modern day Mark Sucker giving advise to sheeps.Everything that was written by God in the book is by man claiming to know God better. We believe these tales as if our ancestors claimed to have met God personally but we can't in modern times. Do you know God? Does anyone anyway? I'm not asking anyone who took psycho drugs who claimed to have hallucinanated to come forward.None of the living us knows God personally. Does God micro manages every humankind? If he did, then why when Adam and Eve were the only 2 walking creations on earth he didn't stopped Eve from touching the fruit of sin for our own good? Doesn't make sense and it renders all religious likes glorified story tellers, right?

In reply to by 2banana

stiler Naruhodo Tue, 09/19/2017 - 13:56 Permalink

Wrong. The first disciples knew God, whom "our hands handled" and who was taken from our sight and received into a cloud (among 500 witnesses), who promised to take us to His Father's house in the same way. These were not cleverly devised fables, "when we told you about the coming of our Lord Jesus Christ in power, but we were eyewitnesses of his majesty." II Peter 1:16

In reply to by Naruhodo

Naruhodo stiler Tue, 09/19/2017 - 14:28 Permalink

You seem to talk as though you were with them back then.Have you did time travel? Else I assume everything you claim is hearsay?My ancestors can claim to be God themselves or they spoke on behalf of God, what is the point of believing when God wants you to believe him through tales handed down from the passed but he couldn't come to speak to humans directly in modern day?

In reply to by stiler

khnum Tue, 09/19/2017 - 10:38 Permalink

Without health there is no wealth you can have it all if you work 14 hours a day for 50 years but you probably wont be able to take a flight of stairs without panting and getting red faced.You have to set your how much is enough level at a point that allows mental,physical and spiritual development as well as asset accumulation or you've missed the point of being human.