Money & Wealth

The theory of money & wealth

Many seek wealth. Whether it’s for personal gain, or to help others, including family. Either way, it’s what drives the global economy.

Wealth is a driving force of human nature, and it’s the reason for the fall of communism and the success of capitalism after the Second World War.

Scottish Philosopher Adam Smith was one of the first to understand this drive. He published his most-famous work, An Inquiry into the Nature and Causes of the Wealth of Nations, in 1776. It revolutionised the thinking behind internal and global trade.

The first edition of the book sold out in six months, mainly to an enthusiastic political class.

And it formed the backbone for the modern field of economics, even today.

The central theory is based on the notion that people, when left to their own devices, create efficient means of trade.

It’s not some central authority that dictates the outcome.

This is sometimes referred to as ‘the invisible hand’ of the marketplace.

But here is the crucial finding.

Various independent parties working unhindered in their own self-interest, in an environment of competition, will result in a better outcome for all participants.

The threat of money & wealth

Over the past six decades, the world has moved steadily towards Smith’s ideal.

While China and the US have had their own trade tiffs and introduced protectionist barriers against each other, that doesn’t pertain to the rest of the world.

If anything, trade agreements have grown and protectionist barriers have reduced.

The Western world is richer than it has ever been. A demonstration of the truth behind the wealth building power of the free markets, that benefit not just the few, but the many.

But the world is on the edge of forgetting these inherent truths.

Political instability is rife, created by a sense of unequal wealth distribution in some quarters. Populist politicians are on the rise, capitalising on this feeling.

US President Donald Trump has imposed tariffs on trade. Elsewhere, China’s state-heavy economy is dangerously inefficient.

There has never been a more are dangerous time for the theories of wealth. Theories that have propelled the world forward since 1945 are in grave danger.

Individual investors must take note and proceed carefully.

To keep up to date with this evolving topic, you can return to this page. Here you’ll find all of our articles on the individual pursuit of wealth, and the economic theories behind it.

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Markets & Money