Definition of wealth relies upon on the context in which it is used thus, giving more than one explanation. Wealth is the abundance of possessions accumulated to the benefit of the frequent good. Such properties must be valuable assets for them to be considered as wealth. The UN defines wealth as pecuniary measure comprising of physical assets, natural and human assets. The tangible property are made up of buildings, infrastructure, and machinery while natural asset consists of electricity resources, forest, mineral, and land. Moreover, human assets include education stage of the population and the skills.
Wealth is an output of society and land. The production is what satisfy human favor and utility. Therefore, in the most straightforward term, wealth is an abundance of items that possesses economic value. A wealthy or prosperous individual is one with more possessions than others in the society that he lives in or his reference group. Economically, wealth is net worth referring to the total value of assets subtract the absolute amount of liabilities at a given time (Smith Adam). This categorizes wealth into, personal property, such as houses or vehicles, money saved over the years, and the capital wealth invested in assets like real estate, businesses stocks, and bonds, All these explanations elevates wealth into an especially important part of social stratification. Wealth tends to give safety and protection against uncertainty and unforeseeable degeneration in one’s living standard in instances such as job loss or any other emergency. Wealth can be converted into anything individual desires; home ownership, a college education, or even business ownership.
Wealth has also been defined as the gathering of valuable commodities that are scarce or limited in supply but vital in satisfying human desires. Lack or scarcity is the basis of wealth, therefore when the desired product is readily available in the society, the owner of the product is said not to be wealthy, but in the case where the same commodity is scarce, the owner will have the potential for wealth (Smith Adam). An individual or country with abundant resources is said to be rich. The antonym of wealth is poverty, and an individual or nation with less or no accumulated funds is underprivileged.
Wealth’s concept depends on time. Today’s saving methods and advancement of science have helped elevate standards of living in our modern society. The comparative wealth across time variation is applicable even in the future, and with the improvement seen in living standards, there is a possibility that the future generation will consider impoverished those who are the wealthiest today (Knight Jack and Melissa Schwartzberg). Industrialization accentuated technology, and many jobs were mechanized. Specialization became the order of the day while other workers got replaced by machines. Specialization of labor became a factor in the success of the economy. But the analysis of wealth, however, depended on physical capital, entailing both the natural capital and the infrastructural capital. The Marxian economist categorized wealth into human wealth and material wealth, human wealth being wealth in human relation while material wealth is covering labor and land.
In commonly applied accounting term, wealth is defined as the value of all assets owned by a net of all liabilities owed in a given time. In other words, it is the net worth of household, individual or even a nation. Net debts are owed to other parties and can also be referred to as the production capacity of a country or society. Wealth is stock variable measured in a date and specific time. Income is derived from wealth and is a flow variable.
The concept of wealth regarding social class refers to the value of possessions an individual or a family owns such as cars, housing, jewelry and other properties. Assets such as bonds and stock can be exchanged for cash and contribute to wealth. People from different classes are restricted by the amount of wealth they have such that hobbies like world travel or automobile collection can only be sustained by those with much wealth (Knight Jack and Melissa Schwartzberg). The perception of various classes regarding wealth is the fundamental factor that creates the rift among them.
Wealth is measured by different means with the most common being money. The extent to which individuals are will to offer their labor determine the value of a material or product used as the basis for the monetary system. Also, the degree of universal acceptance of the content or product used in measuring wealth is a factor that is considered. If the society is not willing to embrace money in exchange of its products, then cash is valueless and cannot be used to measure the amount of wealth in the community (Knight, Jack, and Melissa Schwartzberg). Measurable wealth does not include human and social capital as they are considered intangible wealth. Also, environmental assets are neither quantifiable wealth because of their difficulty in variation.
Wealth, therefore, is the value of all assets of monetary worth that individuals, country, company or community possesses. It is calculated by determining the total market value of all tangible and intangible assets then subtracting all the liabilities. Wealth is merely the accumulation of resources. People, countries and various organizations are said to be wealthy when they are in possession of many valuable goods or asset.
Knight, Jack, and Melissa Schwartzberg. Wealth. New York, NYU Press, 2017.
Smith, Adam. The Wealth of Nations. Lanham: Dancing Unicorn Books, 2017. Internet resource.