How We Create the Wealth of Nations
Chapter 2: M-Wealth and R-Wealth
The sub-title of this book is ‘how we create the wealth of nations’. We are concerned, above all, with how innovation creates wealth for the nation. To understand the arguments in this book, the reader needs to understand the distinction between two concepts of wealth. For the sake of brevity, we shall refer to these as M-wealth and R-wealth. Some of the ideas that follow were developed in a very introductory way in Swann (2009a, Chapter 19), and some readers may find it helpful to read that before embarking on this book. ETYMOLOGY OF WEALTH The reader may be surprised that we start with a brief excursion into etymology. But this is very helpful to understand the distinction we make in this chapter. The modern English word, wealth, derives from the Old English words weal or wela.1 But today, there is a difference between wealth and weal. The older words were most commonly used to describe welfare, well-being, happiness and prosperity, rather than material wealth – although the expression, worldly weal,2 was sometimes used to describe an abundance of riches and possessions. The new word grew out of the Middle English words welth or welthe.3 Originally it was used in both senses: welfare and riches. But gradually, the new word wealth was used to mean the second sense: material wealth, an abundance of possessions, ‘worldly goods’, riches and affluence. The use of the word wealth to describe welfare became less common. Indeed, in literature, some authors revived the word weal to describe welfare, wellbeing, happiness and prosperity. In what follows, M-wealth refers to the modern sense of wealth, while Rwealth refers to the old sense of weal.
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