“Elements of Social Credit”
Chapter IV

Tutor: Dr. Tudor Jones. 1946 Revision

John Ruskin, in the preface to "Unto this Last ", wrote that the real gist of these papers, their central meaning and aim, is to give, as I believe for the first time in plain English, . . . a logical definition of WEALTH: such definition being absolutely needed for a basis of Economical Science," He went on to quote J. S. Mill, who, after saying that writers on political economy professed to teach or to investigate the nature of wealth, gave his opinion that "everyone has a notion, sufficiently correct for common purposes, of what is meant by wealth", and further protected himself by asserting that it was no part of the design of his treatise (Principles of Political Economy) to aim at "metaphysical nicety of definition ". Ruskin's comment is that "metaphysical nicety, we assuredly do not need; but physical nicety and logical accuracy, with respect to a physical subject, we as assuredly do." Such a need for "physical nicety and logical accuracy" was met in Ruskin's opinion by the statement that "there is no Wealth but Life. Life, including all its powers of love, joy and admiration."

This is doubtless an admirable definition to those who know the work in which the words appear, but open to some misunderstanding by others. Ruskin scarcely meant to assert that wealth and life were interchangeable terms, e.g., in the statement that a man in danger of his wealth escaped from captivity among Cossacks, leaving all that remained of his life among them. Ruskin went on to say that "that country is richest which nourishes the greatest number of noble and happy human beings."

It does not matter much here whether the riches lie in the number, the nobility or the happiness. The people of a country can hardly be numerous, as well as noble and happy, without something to nourish their numbers, nobility and happiness upon. And so Ruskin understood it: and bringing the matter thus down to various kinds of nourishment it is at once brought down from the abstract to the concrete.
All the needs of man are in respect of the exercise of his powers, and in respect of the exercise of each power he has probably many needs. He is properly nourished in Ruskin's sense (and his own) when these needs are supplied at will.

Wealth is, strictly speaking, not the source from which the needs are supplied but the supplying of the needs. In other words, a nation's wealth is what its citizens consume. An individual's wealth is what he consumes. Apart from wealth a community or an individual may have assets, but these are not wealth. No nourishment results from the meat in the pantry; but only from the consumption of the meat in the pantry. Endless confusion results from the admission of wider definitions of wealth, which may all be avoided by observing the precise function performed by each item in its turn which our definition excludes.
Clearly between the meat in the pantry and the nourishment of life various stages intervene, e.g., preparing, cooking, bringing it to the table, carving and serving. And so other stages preceded these; retail delivery, dressing, butchering, killing. In the retail shop the was "consumable"; but on the farm, not consumable yet.
The phrase "production of wealth" properly covers all these stages which prepare for the receipt of wealth by the individual.

Indistinguishable in respect of technique- i.e., in respect of the associations yielding the increment - is the production of goods which themselves are not consumable: the fittings of the butcher's shop, his instruments, and so on. These wear out and have to be replaced; they never reach the consumer. On the other hand, the wealth he consumes would not be forthcoming were it not for them. It is true that collectively the community consumes them in the sense they are used up in its service; but this consideration must not tempt us from our definition which has this merit, that it concentrates attention upon the production of the result intended, which is the nourishment, not the means of possible nourishment. At various stages short of the actual fruition of the production system wealth (as defined) there are goods (and, it may be added, services, which differ from goods only in respect of the function of the individual which they increase or maintain, e.g., the organised communication to the individual of some part or other of his cultural inheritance is effected by supplying him with goods which result from this inheritance - at in part - but also by instruction, which is a service). Commonly such goods are designated.
(1) Capital goods .
(2) Intermediate products.
In common language, then, the descent or ancestry of wealth may be summed up in the sequence :-
Men to make things,
Things to make things with,
Things half-made,
Things made,
Things consumed (wealth).
The place of men themselves in this sequence is noteworthy. They may be enumerated under this heading of things to make things with, as instruments of their own for wealth production, i.e., as capital.

Further, not only as items of capital but as things self-consumed for exercise of some power (action) they may be regarded as being; tat different stages of their individual lives, half-made, or made; and all the time as being in process of consuming themselves. In other words they appear at every stage of wealth production and are themselves wealth. It is curious that economic orthodoxy, which tends to restrict the meaning of wealth to cover everything but the wealth actually appreciated by man, nevertheless accords man a place among the things to make things with and sets a "value" upon him as though he were "worth" something, to make things for nothing.

The relative importance to individuals of various forms of wealth differs from individual to individual within wide limits, without affecting the necessity of some forms of wealth to all people, e.g., a sufficiency of food, air, water, sunlight, clothing, is necessary to all individuals at all ages, while such things as tennis racquets and the printed- scores of orchestral music may occupy relatively very different positions, if any, in different individuals' lists of wealth items arranged in order of their importance.

Indeed, such a list, if it could ever be compiled for even a single individual would never be strictly applicable to his life at any given moment and would tend to change from hour to hour. This fact, which very little examination of the subject is needed to verify, is itself a demonstration of the soundness of our rule that wealth only discloses itself in consumption, for consumable goods capable of being converted by consumption into wealth at one moment of the life of an individual are quite incapable of realising any wealth at another.
In other words, all questions of value are incapable of settlement because there is no possibility of fixing a standard of value and all that we can say of anything is that at a particular moment it was presumably valued by an individual consumer because he consumed it.

Notions of utility, likewise, arise from confusion concerning the nature of wealth. The usefulness of wealth lies in the fact of its being wealth and how useful it is can no more be assessed than how valuable it is.
On the other hand the usefulness of a tool (simple or complicated) or of an intermediate product can be measured by ascertaining its effect in making consumable goods available.
The abstractions, value and utility, have been a source of great hindrance to the advancement of knowledge of the efficiency of society but it should be noticed that appropriate standards of measurement are not rendered less appropriate because we detect the inappropriateness of a standard which has failed to serve us. Because value is indefinable it does not follow that people have no power to produce a result in association which is satisfactory to them. Probably that power will be increased if they eliminate from their discussion of it a useless, ideal conception.

Many people in the community seem to associate matter more prominently with, that particular form of it which we call mud than with any other, and the same people show sometimes a strong inclination to disregard the fact that wealth which they are willing to interpret in the broadest terms has usually a lowly origin. Thus the greatest poetry is usually printed on ordinary paper with ordinary ink and cannot become wealth but through the medium of the printed book.

Similarly the greatest music cannot become wealth but through the medium of a large variety of material instruments made of steel, brass, silver, copper, wood, gut, horse-hair, ivory, etc. Stone, linen, oils, paints and varnishes are items in the medium for conveying wealth through the visual sense, and spiritual wealth is characteristically associated with special and elaborate buildings, mural and other decorations, and other things of a material kind. It will be observed that the wealth made available through such media is relatively intangible, and that the vehicles are either relatively permanent, like some of the instruments of production, or are transient, like the sound music, if the sound be regarded as a source of wealth. Such considerations, however, only drive us back to the consideration that the availability of wealth is dependent upon the establishment of kinds of association we have considered in previous lectures.

Examined minutely every instance of wealth (which observe is essentially individual in its nature) is traceable to a number of antecedent associations; the cultural heritage, industry and process, mental association, mass association, the agreement associations, material associations, all yielding their characteristic increments (some of which decrements). Throughout, each effective element in association has been effective in its own way.

The peculiar associations between the seed and the soil, the growing plant and sunlight have resulted in a redistribution of energy (the total energy of the universe is not believed to be susceptible of increase or decrease). Man makes arrangements for this natural event to occur at times and places advantageously to himself. The capacity for work released by providing the conditions in which energy may be released from stores, and, by the use of mechanical associations inherent in the properties of motion, this capacity is directed into useful channels.

The knowledge of how things can be done embodies a conservative force which results in their continuing to be done as it is known they can be done and the result is constantly accelerating power to do things. There is no other ingredient in wealth-production.

We have not mentioned money, which superstition places among the items of wealth. It is neither wealth (it is never consumed) nor is it capable of producing Wealth. Apply the experimental method to it and see. All the associations which lead to the production of wealth can be established independently of money. We could, of course, agree not to provide for the occurrence of any natural associations unless, let us say, all pavements were painted pink, and so, by agreement, we might allow any other arbitrary rule to intervene between us and the reaping of the natural increments of association which are advantageous to us. If we did we should not call the process one of wealth-production.

In a modem community the tools assume great prominence, i.e., capital is prominent. Thus Ruskin said:
"Capital signifies 'head, or source, or root material ' - it is material by which some derivative or secondary good is produced. It is only capital proper (caput vivum, not caput mortuum) when it is thus producing something different from itself. It is a root, which does not enter into vital function till it produces something else than a root: namely fruit. That fruit will in time again produce roots: and so all living capital issues in reproduction of capital; but capital which produces nothing but capital is only root producing root; bulb issuing in bulb, never in tulip; seed issuing in seed, never in bread; The Political Economy of Europe has hitherto devoted itself wholly to the multiplication, or (less even) the aggregation of bulbs. It never saw nor conceived such a thing as a tulip."

Clearly, a society that knows no difference between an apple in a barrel and an apple in its mouth, between the soil from which the apple-tree grew and the human being enriched by eating an apple, can hardly distinguish the bulb and the flower.
But to say that we must distinguish between capital and wealth is not to say that capital is unimportant. Capital is, however, relatively easy of definition if we stick to the doing part of life in society and avoid the purely recording part.

All the associations which enter into wealth production - man's inherited knowledge of how to do things, the increase he is able to effect in this knowledge, the natural and mechanical associations he establishes, the stores of energy available to him, plant and equipment, transportation systems – all these are capital. Many items involve work and the use of materials. Plant wears out, becomes obsolete, and must be renewed.
Note two points: that a disproportionate amount of energy may be expended on capital which, after it is produced, may remain largely unused, and that the obsolescence of capital is not something that directly affects its power to produce wealth.