What Creates Wealth?

Perhaps we should first ask “What is Wealth?” Your answer, and mine, would probably be “money” and generally speaking it’s a fair answer. But money is only a token system which we use to represent wealth. It isn’t actually wealth in itself. 

Diagram of the Feudal System showing the king at the top following bay Barons, Knights and Peasants, with arrows denoting grants and responsibilities.

In the Feudal System, wealth was land - and since the king owned it all, everyone else only had wealth by his permission (and in return for services).

Everyone alive today has grown up in a world where wealth is measured in money; and we use money to buy products and services. So we’ve come to think of the great manufacturing and mining industries as the creators of wealth.

But what if this isn’t the case?

In 1980, a book entitled ‘The Mighty Micro’ was published. The author, Christopher Riche Evans, had spotted something that most of us are still unaware of. He realised that this received wisdom is wrong and the consequences are profound.

The cover of the book "The Mighty Micro"

In summary, he said:-

  • For centuries, people had believed land equalled wealth. Growing enough food was the main aim.

  • Since the Industrial Revolution we've believed that industry creates wealth. Products, represented in monetary terms, equals wealth.

  • The reality is that Information equals wealth.

Photo of a North Sea Oil drilling platform

It was a profoundly new idea and the author illustrated it by pointing out that North Sea Oil had been under the sea for millions of years - it was knowing how to get it out that created the wealth that flowed from it.

The book was the culmination of a television series broadcast in the 1970s and amazingly, you can still see it on YouTube. Here’s episode 1:-

The consequences of Christopher Evans' insight are enormous:

  • In the Agricultural era, land equalled weath.
    Growing food was the great “employer” (it occupied the masses).
    Education was reserved for those in power.

  • In the Industrial era, products equalled wealth.
    Manufacturing industry has been the great employer.
    Education for all became necessary to provide a literate workforce.

  • In the Information era, information equals wealth.
    Clearly, things will be different - but we don’t know quite how.
    Education will have a new role - but we don’t know quite what it is.

As the 21st Century gathers pace, we can see that Christopher Riche Evans was on to something. The knowledge industries have become the heavy industries of the new world. Google and Facebook are worth more than General Motors, and Tony Blair’s mantra “Education, Education, Education” was the starting pistol for Education becoming one of the top priorities of governments in every developed country.

It is certainly beginning to appear that information - in the form of data - does equal wealth. And it is now the raw material of Global organisations as this box shows:-

Data is the internet’s main industry. Some might call it the internet’s only industry. The true forebears of Google and Facebook are not the media companies they increasingly threaten but actually mining and drilling behemoths such as BP, Shell and Koch. Like them, they are primarily in the business of extraction. We, the users, are the coalface, the goldmine, the well. Into us they dig, and out of us they pull data. And this, in turn, is bought by people who want to sell us everything else.

- Hugo Rifkind, writing in The Times, 8th August 2018

In this new world, in which data is the generator of wealth and we are the raw material, it seems clear that Education will need to be different from the way it is at present. 

Governments have been working on this for the past few decades, and they have meddled with education repeatedly. But the they’ve been looking at Education through traditional eyes, rather than trying to rethink it for the new world in which we now live.

The next page will look more closely at these issues.

Next: Education

© Brian Smith 2015