This is the first in a series of edited extracts from Why Things Are
Going To Get Worse And Why We Should Be Glad by Michael Roscoe.
Where does wealth really come from?
I explain in the book how material wealth – i.e, the
stuff we might normally think of as wealth, such as property and money
(rather than ‘intangible wealth’, such as human potential and general
wellbeing) must have its origins in the natural wealth of the earth.
We add value to the earth’s natural resources through our labour, and
this combination of resources and industry is the source of all our
material wealth – of everything we have.
what this means for future generations as we use up, often wastefully,
more and more of the earth’s limited resources. I show how over 60 per cent of
all current wealth in the world has come from oil and gas, and examine
the implications of this conclusion. (I can’t really claim it as fact,
as it isn’t possible to prove beyond doubt, but I demonstrate why it
must be so. Even in this age of widely and instantly available
information, we don’t really know how much wealth there is in this
world, or where it all originated.)
What gives money its value?
Money originally took the form of a commodity such as
gold or silver (or grain, in the earliest cases), and as such it had a
recognized market value. After the introduction of bank notes and coins
that lacked intrinsic value (ie, weren’t worth their weight in gold),
money became representative of a value rather than actually holding
that value itself. This ‘representative money’ acted like a certificate
to show that a certain amount of gold or silver was stored at the
central bank, or treasury, in the way that a note for one pound
sterling could be exchanged for one troy pound of sterling silver. In
effect it was a promise by the government, or the bank on the
government’s behalf, to hand over that amount of bullion. By the
19th century, most of the world’s currencies had become
‘representative’ by being linked to the gold standard, and remained so
until the 1970s, after which time money became nothing more than a
There’s no particular reason why the value of money should be linked to gold, but there is a very good reason why the quantity of money in circulation should be determined by genuine economic activity; the real wealth of industry. If money doesn’t represent real wealth, what gives it value? What is there to back up that government promise? Nothing.
And this is the situation that we find ourselves in now – I demonstrate in my book how around one third of all money in circulation globally is not backed up by real industrial wealth. In other words, at least one third of government guarantees are worthless because they are based on debt rather than genuine wealth.
Michael Roscoe is the author of Why Things Are Going To Get Worse And Why We Should Be Glad, published by New Internationalist.