Wealth

Christopher J Berry. New Dictionary of the History of Ideas. Editor: Maryanne Cline Horowitz. Volume 6, Charles Scribner’s Sons, 2005.

Wealth has been viewed as a blessing and as a curse; as a prerequisite of virtue and an embodiment of vice; as an expression of merit and of fault. This nonexhaustive list illustrates that not only is the history of wealth a history of contention, it is also intimately bound up with moral evaluations. These differing evaluations themselves indicate a range of divergent cultural judgments. “Wealth,” however, is not simply an item of moral discourse. It has a central place in political and economic vocabularies. While there is, perhaps, a core linkage with the notion of “resources,” that itself is an elastic category, referring to “goods” both tangible and immaterial (such as clean air, a healthy environment, and general quality of life). Wealth with all its cultural and ethical connotations is applied descriptively to an individual (the “rich man”), to a group or class of individuals (“the wealthy”), and to a country or, as in the title of Adam Smith’s famous book, to nations.

With this range of reference it is unsurprising that most of the established “great thinkers” in what is unreflectively labeled the “Western tradition,” from Aristotle to St. Thomas Aquinas to Jean-Jacques Rousseau to Karl Marx to Thorstein Veblen, have had something to say on the topic. But the issues and debates are neither exclusively Western nor intellectual. Most of the great religions include in their teaching some reference to wealth, though not without manifesting the idea’s contentiousness. In addition, wealth plays a ubiquitous role in social and cultural life from grave goods to potlatch ceremonies. An attempt will be made in this entry to represent this range of concern, though its major focus will be on the place of wealth in Western intellectual debates.

The entry is organized along two axes—thematic and chronological. Thematically, the discussion is organized in terms of two basic associations—wealth and virtue, and wealth and power. Each theme is explored in rough chronological order—charting the history of wealth’s interactions with virtue and with power. Throughout these explorations three questions will implicitly recur: What is wealth? that is, what is supposed, in different times, with respect to virtue and power, to constitute it; Who has it? that is, what is supposed similarly about its distribution; and, closely related, Why or on what grounds does X rather than Y have that item of wealth? that is, what is supposed to justify or legitimate the distribution.

Wealth and Virtue

Historically the association between wealth and virtue has been viewed both positively and negatively. These will be examined in turn.

Positive

Aristotle (384-322 B.C.E.) identifies “liberality” as a virtue that is the mean between prodigality and illiberality. The context is money or wealth. The liberal man (the gender is not incidental) will “give with a fine end in view, and in the right way; because he will give to the right people, and the right amounts, and at the right time” (Aristotle [1976] p. 143:1120a25). When acting liberally, it is the disposition that matters, not the sum or sort of resources. Though giving is more virtuous than receiving, nonetheless, the “liberal” will accept wealth under similar constraints. The most important source of wealth is the ownership of property, especially landed property. This ownership is associated with other estimable traits such as responsibility, prudence, and steadfastness. By exercising these virtues, wealth qua landed property is sustained so that, accordingly, there are resources available with which to act liberally. Importantly, wealth thus understood imposes obligations; it does not reflect an acquisitive mentality and it is not valued for its own sake.

Although worked up theoretically by Aristotle, this link between wealth and obligation and the stress on the use made of wealth is pervasive. The early Christian theologian St. Clement of Alexandria (c. 150-between 211 and 215) does not subscribe to the asceticism prescribed by many of the church fathers but, nonetheless, instructs that wealth is to be used for charitable purposes and not retained possessively. This is echoed in the Koran, and, somewhat similarly, in Hindu teaching wealth (artha) needs to be cultivated but by virtuous means so that the wherewithal is possessed that goodness may be exercised. This is an attribute of many cultures. The form this often takes is of hospitality. The Israelites in the Old Testament are enjoined to give succor to the improvident, while for Kalahari bushmen, and many others, wealth exists to be shared. In these latter examples it is less that wealth calls forth individual virtue than it manifests a cultural norm of reciprocity. In both cases, however, wealth is justified as a means to further good ends.

This understanding of the importance of wealth, and its justification, has endured beyond its presence in Aristotelian theory and cultural practice. Only if one is wealthy can generosity or charity—whether by the Good Samaritan or by millionaires—be exercised and only if a society is wealthy can it support extensive welfare programs. In a just society, according to John Rawls (1921-2002), the wealth enjoyed by the more fortunate, as a consequence of arbitrarily distributed natural talents, could be viewed as a “collective asset” to be used, once freedom has been accorded priority, to further the interests of the worse-off (p. 179). However, supporting welfare need not mean collective provision. F. A. Hayek (1899-1992) justified retaining wealth within families as an expression of freedom, which includes making responsible welfare decisions. This was also an essential means to prevent the concentration of wealth in the hands of the state.

Hayek is here making a consequentialist case for inheritance. This pays little attention to the source of wealth, but a positive case for wealth is that its possession is the deserved outcome of the virtue of industry or hard work. The Protestant ethic, as articulated by Max Weber (1864-1920) in his Die protestantische Ethik und der Geist des Kapitalismus (1920; Protestant Ethic and the Spirit of Capitalism), psychologically compelled the “elect” (those chosen for salvation by God) to seek proof of their election. This took the form of diligence and industriousness, which led to success in worldly activity, but since waste was also proscribed, and frugality prescribed, it meant that wealth was accumulated. In a historically important argument, John Locke (1632-1704) developed a version of this. He argued that God enjoined everyone to be industrious and that through mixing their labor (as he termed it) to natural resources they were entitled to the fruits of that labor as their private property. Provided they did not accrue wastefully all the resources to themselves, the inequality of holdings derived from greater industry was justified. Nonetheless, true to his own Nonconformist (Calvinist) background, Locke also held that if people lived providently without the desire for luxuries then wealth would be increased even more. Locke here broaches the negative link between wealth and virtue.

Negative

While Aristotle does link wealth with virtue positively, his more sustained and influential argument (in the Politics) is that the former can lead to a corruption of the latter. Wealth and its maintenance is properly an attribute of household management (of economics, oikonomikē), its purpose being to give the male head of the household the freedom to act virtuously—not only via liberality but also via participation in the affairs of the community (the polis), an activity that is natural since man is by nature a political animal. Wealth is limited to this instrumental function. However, it is liable to transgress those limits. Some exchange is permissible, when it serves to meet the naturally limited consumption needs of the household, but once it is undertaken for its own sake, and not as a means to an end of consumption, then it becomes moneymaking (chrēmatistikē). This activity can be engaged upon without limit. There is a natural limit, for example, to how much food can be consumed but not to how much money is possessed. A transgression of the proper purpose or end of activity represents a corruption, a perversion of virtue.

This moral critique of wealth has been enormously influential. One particularly potent occurrence was its linkage with the fall of the Roman republic. Originally austerely virtuous, the republic became corrupted once riches were imported from abroad (“Asia”). This wealth-induced corruption in the form of avarice and luxury was condemned by Stoic moralists such as Seneca (4 B.C.E.?-65 C.E.) or Epictetus (c. 55-c. 135 C.E.) and was illustrated through the normatively loaded narrative of historians of Rome like Sallust (86-35 or 34 B.C.E.) and Livy (59 B.C.E.-17 C.E.). The latter, for example, opened his History of Rome by contrasting Rome’s virtuous beginnings with the ruin that the influx of wealth or riches (divitiae) had wrought. The undermining of Roman virtues by the spread of wealth and luxury also became the object of satirical poets like Horace (65-8 B.C.E.) and Juvenal (c. 55 or 60-in or after 127 C.E.). Due to the importance that a “classical education” had in the pedagogy of Europe from the Renaissance onward, the “fall of Rome,” and the role of wealth therein, became a clichéd commonplace.

This culturally received wisdom was abetted by the appropriation, for their own end of demonstrating the transience and superficiality of worldly goods, by Christians. The early Christians, such as Saints Ambrose (339-397), Augustine of Hippo (354-430), and John Chrysostom (c. 347-407), took up this moral critique of wealth. It was an important source of their advocacy of asceticism but it built also upon Paul’s (who was himself influenced by the Stoics) pronouncement in his Epistle to Timothy that the love of money was the root of all evil. The message was reiterated by Thomas Aquinas (1225-1274) and by other Christian philosophers upon the rediscovery of Aristotle’s works. It received a significant boost in the republican tradition that was reenergized by Niccolò Machiavelli (1469-1527), though here the “political” rather than the moral dimension (see below) is dominant. Much the same can be said of Jean-Jacques Rousseau (1712-1778), perhaps the last great exemplar of this tradition.

This critique was responsible for significant ripostes. David Hume (1711-1776)—followed by his fellow Scot, Adam Smith (1723-1790)—turned the tables. Hume, in his essay Of Luxury (1752), linked virtue with wealth, and not with ascetic poverty, and identified this linkage as the definitive characteristic of ages of refinement or commerce. He stressed both the intrinsic benefit of the pleasure that accrued from being able to enjoy goods that gratified the senses and the great instrumental benefits that came from the industry that was undertaken to obtain the wealth that permitted such goods to be enjoyed. The commercialism that Hume and others defended has not been without critics. In the twentieth century it expressed itself in the critique of consumerism. In an effective rerun of Aristotle, the acquisition of goods, the accumulation of wealth, or what C. B. Macpherson (1911-1987) labeled the legitimization of possessive individualism, has been subject to condemnation. A culture committed to consumerism is judged deleterious to the individual who, lacking a proper instrumental perspective, is at the mercy of the fads of fashion and the interests of those who benefit from the manufacture of demand. It is also bad for society because it embodies a mis-direction of resources away from societally advantageous investment and entrenches the gap between wealthy and poor economies. The celebration of consumption and the desire to emulate the supposed spending power of the rich also led, in the latter decades of the twentieth century, to the development of “Green” thought, which argues that this entire emphasis on gratification is practically disastrous for the environment and symptomatic of a hubristic arrogance toward Nature. E. F. Schumacher (1911-1977), for example, advocated, in his popular essay Small Is Beautiful (1973), what he termed Buddhist economics as a way to halt this degradation.

Wealth and Power

In all stratified societies (which includes virtually all societies for which records exist) the hierarchy is significantly determined by differential access to, and possession of, wealth. To be wealthy enables one to exercise economic and political power. This exercise is frequently related to the question of virtue. Hence the resources at the disposal of Aristotle’s “liberal man” stemmed from what was under his control. Sociologically this man was the head of the household whose position rested upon his command of his wife and slaves as they created the “leisure” time for him to pursue intrinsically worthwhile ends. True wealth for Aristotle consisted in a store of goods that were sufficient for life and useful for the good life. This wealth had to be secure and it was best obtained through land ownership in marked contrast to the insecure foundation of commerce and money.

This secure source of wealth sustained political independence. This association between landed wealth and political activity has been one of the most historically enduring linkages. The crux of the corruption of Rome was held to be the replacement of a commitment to the public good, which was sustained by relative equality and independence, by a devotion to private satisfaction, which followed from the emergence of the rich, who used their wealth to advance their own personal ambition. Machiavelli drew an evocative picture of this pattern as it appeared in Renaissance Italy. He depicted the gentry (gentiluomini) as “a pest” because they use their wealth to hire others to work for them. Crucially these hired hands, being dependent on their masters for their livelihood, could be used to support their selfish ambitions. The only way to end this corrupting dependency is to (re)establish equality through fostering a sense of civic virtue. To further this objective, Machiavelli advocated, drawing on Roman precedents, an Agrarian law that precluded the accumulation of large estates. Other republicans took a similar line. James Harrington (1611-1677) went into minute detail in his imagined constitutional republic of Oceana (1656). In Rousseau’s legitimate polity there should be a level of equality such that no one is wealthy enough to be able to create dependents and no one poor enough to become dependent on others. With the economic structure in this way forestalling the emergence of dependency—creating differential wealth, there is more chance, he believed, that acting for the common good (or willing “the general will”), rather than out of private self-interest, will occur.

In Rousseau’s republican vision political power was possessed by equal citizens, but that meant it was restricted to those who were independent. On that criterion Aristotle excluded from citizenship slaves, manual laborers, and women (also excluded by Rousseau) and, when it came to the franchise, the exclusion of the latter two categories lasted into the twentieth century. It was a received commonplace that the privilege of political citizenship (the right to vote for a representative as well as to be a representative) required sufficient wealth to ensure economic independence. It followed that those economically dependent were without a direct political voice. In the eighteenth century Edmund Burke (1729-1797) defended the restricted franchise on the grounds that only those individuals with a direct stake in the country could be entrusted with its well-being. Thanks to their economic status they were able to exhibit the crucial political virtues of “constancy, gravity, magnanimity, fortitude, fidelity and firmness” (p. 427). Burke explicitly called these masculine virtues, but their possession meant that the interests of women, as well as the bulk of the disenfranchised population, would be properly looked after. Certainly the schemes for greater equality that were fomented by the Revolution in France would be disastrous. Much of the political history of the nineteenth century concerned the continual redefinitions of what constituted economic independence (and later how women were to be accommodated).

This history, and the surrounding debates, not only saw the increasing articulation of a modern idea of democracy but also the growth of socialism. Of course, the effect of the possession of wealth on sustaining dependency was not a uniquely Western phenomenon. The jajmani caste system in southern India (especially) operated in such a way that the lowest caste, in exchange for the lease of land owned by members of the high caste, had to provide the latter with labor service and a portion of their crop output. The fact that the caste system was integral to the belief systems of Hindus did not make it immune to criticism. Some of these criticisms were internal (as by Dayananda Sarasvati [1824-1883] or Mahatma Gandhi [1869-1948]), but the challenges to such inequality that the Western ideas of democracy and socialism articulated were also influential.

The Socialist Critique

The most powerful Western voice was Karl Marx (1818-1883). Marx saw the key to history in the association between wealth and power. The source of wealth for Marx lay in ownership of what he called the forces of production. These had developed over time from slaves (human labor) to land to capital. Those who owned the forces—slave owners, landlords, capitalists, or bourgeoisie—were able because of that control to rule over nonowners—slaves, serfs, the proletariat. Ownership appears to be legal title, but law for Marx is part of society’s “superstructure,” which is determined by the economic base. Political power, which is used to enforce legal title, also upholds the interests of the dominant economic power; in a celebrated phrase, “the executive of the modern State is but a committee for managing the common affairs of the whole bourgeoisie” (Marx and Engels, p. 475). These interests are for Marx obviously opposed to the interests of those without economic power, and history reveals a struggle between the class of the owners of wealth and the class of nonowners.

Marx devoted most attention to the contemporary struggle within capitalism. His major work, Das Kapital (1867; Capital), identified the particular form that wealth took under that mode of production. The rationale of capitalism was accumulation. For Marx, the only source for this was the “surplus value” extracted from the worker in the process of production. The exchange-value received in the form of wages by the worker for “his” labor-power is less than the exchange-value received by the capitalist for the commodity made by that power. This exploitative extraction was disguised because the level of wages appeared to be the consequence of a free contract between employer and employee. While Marx saw the initial source of the wealth in the blatant form of expropriation, forcing the landless into factories, the capitalists’ ongoing accumulation of wealth was derived from this exploitation inherent to the system. However, he argued this was an unsustainable and self-defeating process that resulted in the immiserization of the workers whose labor-power was the source of accumulation. That misery, he predicted, would generate a proletarian revolution and the ushering in of a communist society. Here (though Marx was not very forthcoming) there would be equality and sufficient wealth to be shared since production would be geared to meeting needs, not accumulation.

Although Marx’s predicted revolutionary trajectory did not transpire, revolutions did occur in his name. These inspired a vast literature both in lands like Russia (in the form of Leninism) and China (Maoism), where these revolutions were sited, as well as in the West, where Marx’s ideas were the dominant source of criticism of capitalism. Increasingly these critiques paid less attention to Marx’s economic analysis and more to his early philosophical writings, with their focus on alienation. While the issue of wealth correspondingly lost some of its salience, the association between the economic and the political was resilient. The universalizing power of capitalism, which Marx did predict, seems to have been reinforced since 1989 and the fall of the Soviet Union. One prominent expression of this has been debate on the meaning and morality of “globalization.” The focus has been on the relative impotence of national governments when confronted by worldwide markets and the power of the institutions of global finance like the World Bank and the International Monetary Fund. The least powerful are the least wealthy (the most indebted), effectively the non-Western world.

Mercantilism and Its Critique

Marx was not original in seeing historically a development between wealth and economic-political power. Adam Smith had argued that societies (though not universally and unexceptionally) went through four stages—hunting/herding, herding, farming, and commercial. In each case there was a system of subordination, which, although based on personal qualities in the first stage, in the next two rested on control of the dominant means of wealth, that is, of herds and land. He was explicit that government was instituted to protect the propertied (the owner of the herds and of the land) against those without property. The fourth commercial stage saw a difference because the impartial rule of law was established to provide a formal equality. In his Wealth of Nations (1776) he analyzes the basis of wealth in the modern world. Part of his task was to assault the then dominant understanding of the linkage between wealth and economic-political power.

According to this prevalent view (usually labeled “mercantilism”), as expressed by Thomas Mun (1571-1641), the way to increase wealth is “to sell more to strangers yearly than wee consume of theirs in value” (p. 125). Mun distinguished between natural wealth, essentially minerals and direct agricultural products, and artificial wealth, which was the manufacture of materials (clothing rather than wool or flax). He thought more profit (exports) could be earned from the latter source. To achieve this it was necessary—and this is central to the mercantilist view—to maintain a favorable balance of trade. This maintenance needed to be managed or regulated and, as such, had to be an item of policy, the ultimate objective of which was the promotion of the wealth, and thence of the power and security, of the state. Indeed, the very idea of the “state” as an impersonal entity emerged at this time.

Whether mercantilism ever constituted a coherent theoretical position, as opposed to practical responses, has been contested, but Smith gave it an identity. Smith judged the mercantilist method of acquiring and maintaining wealth/power as theoretically misconceived. For Smith the real wealth of a nation lay in the annual produce of the land and labor of the society. The way to increase this wealth is through what he called the system of natural liberty. This entailed removing the panoply of regulations and restrictions characteristic of mercantilism, such as those on employment, like guildsponsored apprenticeships; on the mobility of property, like entails; on consumption, like sumptuary laws; and on trade, like tariffs. Without these obstacles, a free economy would produce a growth in wealth that would benefit the entire population (the “trickle-down” effect).

Smith, although he has become by far the most famous, was not alone in reevaluating the meaning of wealth. One significant dimension had always been population. The wealthier a country, the more people it could sustain, and that in turn would provide both economic and political-cum-military clout. In the Aristotelian tradition, one of the attacks made on commerce was that it enfeebled nations because its citizens were too busily engaged in their private tasks of money-making to devote themselves to their civic responsibilities, which included fighting. For Machiavelli and his intellectual heirs, a citizen militia was the appropriate martial institution, and professional standing armies were not only a threat to civic liberty but also less effective as fighting machines. Smith rejected this. He countered that the wealthier a country was, the more resources were at its disposal to provide sophisticated weaponry and to train soldiers effectively. It was one consequence of this that population by the nineteenth century ceased to have the same value as a marker of national strength; indeed the worries were rather that industrialization was producing too many people to be provided for adequately.

Status

The link between wealth and power can also be expressed indirectly. Thorstein Veblen (1857-1929) in his Theory of the Leisure Class (1899) articulated this through his notion of conspicuous consumption. He argued that to enjoy esteem it was not sufficient merely to be wealthy, others had to be made aware of that fact (it had to be conspicuous). In its purest form, consuming conspicuously is consumption of the totally useless, but (less perfectly) it is the consumption of “high maintenance” goods like white clothes in a dirty industrial environment. While there were predecessors (including Adam Smith), Veblen’s analysis was free of the moralizing that often appeared in economists. The leading contemporary economist of Veblen’s time, Alfred Marshall (1842-1924) in his Principles of Economics (1890), declared the desire for wealth as a means of display to be unwholesome. Marshall was here following his most distinguished predecessor, John Stuart Mill (1806-1873), who had declared that the subject of political economy itself was wealth, which he defined (after a critique of the mercantilist version) as “all useful or agreeable things that possess exchangeable value” (p. 15). However, he proceeded to maintain that the English needed instruction in the use of wealth and how to appreciate those objects of desire that wealth cannot purchase. Mill here implied a distinction between the pursuit of wealth (the art of “getting on” as he put it) and the worthwhileness of what is being pursued (the art of living).

This implicit distinction is made explicit and its moralism exposed by Veblen. He distinctively drew attention to the divergence between the drive to accumulate wealth, as a symbol of reward for industry, and the desire, once it has been accumulated, to look upon its possession as intrinsically worthy. Since social status is attributed to the possession of wealth, the imperative is to exhibit leisure (the nonproductive consumption of time) and dissociate thereby the actual possession of the wealth from the effort expended to attain it. Later economists have developed his ideas in their analysis of consumption in the form of the “demonstration effect” and what they call nonfunctional demand. A “Veblen effect” has been identified where, in an exact reversal of the assumed practice of the rational consumer, the demand increases when the price rises. Only the “truly” wealthy can afford to flout that rationality.

Of course, at another level there is a rationality at work—namely that of demonstrating one’s wealth and impressing others by its possession. Under that guise this indirect linkage between wealth and power is a recurrent feature. One of its most striking manifestations is the practice of “potlatch.” The status system of the tribes of northwest America is maintained by display, as exhibited in the hosting of great feasts. In the Nootka tribe the chief is presented with the first catch of the salmon traps, the first pickings of ripe fruit, and so on, but having received these, he then holds a feast where the gifts are communally consumed. This pattern is also characteristic of the so-called big man systems of the Pacific. Among the Kaoka of Guadalcanal, reputation is enhanced not by accumulating wealth but by giving it away. The more one can bestow upon others, the greater one’s social standing. Hence every significant event such as a birth or wedding is celebrated by a feast, and the more feasts, and the more lavish the fare, that can be “afforded,” the greater the prestige. The social leaders (the holders of political power) in all such systems are those whose wealth is manifest by being able to give away most.

The Dangers of Wealth

That the possession of wealth conveys political power has long been a source of suspicion. For both Plato (428-348 or 347B.C.E.), in The Republic, and Aristotle an oligarchic constitution was associated with rule by the wealthy “few.” In both cases this was a negative association. The wealthy used their economic power to rule politically in their own interest, as opposed to the interests of all. In the idea of a “cycle of constitutions” propounded by Polybius (c. 200-118 B.C.E.), in his Histories [of Rome] (and reiterated many times over during the succeeding centuries), oligarchy represented a corrupt falling away from good rule by the few (aristocracy) but that was itself displaced in reaction to its self-serving rule by the initially virtuous rule of the many (what became called democracy).

Contemporary (liberal) democracies all have practices and policies that in some way aim to forestall any pernicious effects that might follow from concentration of wealth in a few hands. Some of these are direct. The buying of votes is universally made illegal but frequently, in addition, there are restrictions on the use of money in political campaigns. Other prescriptions are indirect, for example, wealth taxes, and other redistributive fiscal mechanisms. One of the intentions behind such policies is to enhance the possibility of the equality of opportunity. If jobs are “open to the talents,” if individuals are provided with the educational resources (in particular) to enable them to compete, then the differing amount of wealth subsequently earned is justified. However, for that differential to pass down to the next generation undiluted is, it is argued, to undermine that equality. It remains, however, one of the longest running disputes in modern political philosophy the extent to which policies designed to neutralize the inequalities associated with wealth infringe upon the value of liberty and autonomy. A libertarian thinker like Robert Nozick (1938-2002), in his Anarchy, State, and Utopia (1974), argues that attempts to impose a preferred distribution of assets illicitly infringe on the rights of individuals. More egalitarian writers, like Michael Walzer (b. 1937) in his Spheres of Justice (1983) or, from very different premises, Jürgen Habermas (b. 1929) in a range of writings, seek to keep the political or civic sphere free of the baneful effects of the economic power and reach of wealth.

Conclusion

Wealth continues to be a subject of debate. Its distribution and effects on social and public policy and welfare are a matter of both practical and academic concern. Its generation and allocation is a central topic in economics; its justification similarly is a major issue in moral and political philosophy. These current disputes without much distortion carry with them the weight of millennia of speculation and in so doing demonstrate that the history of the idea of wealth encapsulates a wealth of ideas.