WHERE DO WE GO
FROM HERE?
PRAIRIE CENTRE
Policy Institute
Commentary - January 20, 2003
The “Fixed Quantity of Wealth” Fallacy
The word fallacy means falsehood. A fallacy is something that is
believed by many yet, despite this
common assent, is untrue. There are
many fallacies in the world, but the
one which has perhaps had the most
significant impact on government
economic policy, and indeed on our
lives, is the myth that the amount of
wealth available to citizens, or to a
country, is fixed.
At the core of this fixed quantity
of wealth argument is the mistaken
assumption that wealth cannot be
created – only rearranged. People
who believe this look at the world
and think they see rich people getting their hands on more and more
wealth. Because they either don’t
believe or fail to understand that
wealth can be created, they falsely
conclude that if somebody has more
money than the average, this means
somebody else who “should” have
some money isn’t going to get it. After all, if there’s only a fixed amount
of wealth available, every dollar a
rich person has is one less dollar
available for everybody else.
Karl Marx, the father of socialism, claimed capitalists were becoming wealthy by stealing from
workers. He propagated the fixed
quantity of wealth fallacy, and
greeted every tremor of economic
difficulty in the latter half of the
nineteenth century as the beginning
of the end of capitalism. By the beginning of the twentieth century,
such rhetoric had already become
hard to believe because the poor
people of the rich countries, in defiance of what Marx had stated, were
becoming less poor.
The Russian revolution then put
the disciples of Marx in command of
Russia and launched what would
eventually become the Soviet empire.
As the twentieth century moved
along, the question which increasingly demanded answers was “if the
doctrine of Marx is true, why are the
poor who live in the rich countries
getting less poor?” Marx was dead
by this time, so the leader of the Russian Revolution, Lenin, supplied the
next lie: “The people in the rich
countries were getting richer because rich countries were stealing
wealth from poor countries.” This
lie was not only believed by Russian
socialists, it’s still preached by some
people right here in Canada.
For about as long as the world’s
poorest countries remained poor,
this revised version of the lie retained some plausibility. By the second half of the twentieth century,
however, a few of the formerly poor-
est countries in the world, most notably
Hong
Kong,
Taiwan,
Singapore and South Korea, were
getting rich. Were these increasingly wealthy countries – which
came to be known as the Asian Tigers – getting rich by assembling radios
and
other
electronic
components as everyone believed,
or, in reality, were they secretly looting other parts of the world?
Hardly.
There have always been men and
women who saw through the fixed
quantity of wealth fallacy. But the
complete collapse of the credibility
of this myth has coincided with the
collapse of socialism itself and most
of the regimes founded upon and
justified by it. By the early 1990’s, it
was apparent that all of humanity
was capable of producing wealth –
even the world’s poor countries. Although there are still some who cling
to the myth – like the tin pot dictators of Cuba and North Korea and a
few North American union leaders
and social activists – even the
so-called “democratic socialists” of
the world are beginning to speak of,
and think about, wealth creation.
Excerpted from, “Prairie Agricultural Digest –
Wealth Creation” published by the Prairie Centre.
“Where Do We Go From Here?” is a feature
service of the Prairie Centre.
Previous
commentaries can be viewed on the Prairie
Centre’s website at: www.prairiecentre.com.
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