Thread by @RelearningEcon

What is wealth? Different schools of economics give very different answers.

A thread.
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Classical economics (Smith, Ricardo):

Wealth = produced surplus.

It comes from labor applied to nature, creating output beyond subsistence.

The central issue is distribution: who gets profits, wages, and rents?
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Neoclassical economics:

Wealth = utility embodied in goods & services.

Focus shifts from production to exchange.

Here, wealth is whatever satisfies preferences, measured in prices.
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Marginal Productivity Theory:

Each factor earns what it "contributes."
Labor → wages, capital → returns, land → rent.

It presents wealth distribution as fair, but ignores power, institutions, and inequality.
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Austrian economics (Menger, Böhm-Bawerk, Hayek):

Wealth = subjective value.

Rooted in time preference, capital structure, and individual choice.

Markets reveal value through prices, but abstract away from power and institutions.
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Keynesian economics:

Wealth isn't stockpiles, it depends on effective demand.

Idle resources aren’t wealth.

Wealth exists when demand activates production and employment.
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Post-Keynesian economics:

Wealth = financial claims shaped by money and credit.

Banks create assets and liabilities.

Net wealth arises when government deficits add safe financial assets to the private sector.
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Marxist economics:

Wealth = surplus value extracted from labor.

Financial wealth often represents "fictitious capital" resting on real exploitation.

Wealth is inseparable from class power and control over production.
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Monetary & financial perspective:

Wealth = claims on others.

Stocks, bonds, real estate are distributional, one person's asset is another’s liability.

True at both household and global balance-sheet levels.
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Ecological economics:

Wealth = natural + human systems capacity.

GDP can rise while soils, water, and climate collapse.

Real wealth = sustainability of the system that supports life.
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National accounts vs households:

For households, wealth = net worth.

For the nation, gov deficits = private surpluses.

But ecological wealth may shrink even as financial wealth rises.
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So when you hear "wealth creation," ask:
–Are we talking utility?
–Surplus production?
–Financial claims?
–Ecological capacity?

The answer depends on the school — and each serves its own politics.
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Wealth isn't just numbers in accounts.

It's resources, power, and sustainability.

Textbook definitions hide this. Critical schools make it visible.
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