Wealth Creation Pt2

WEALTH CREATION PT2

How wealth creation came into being.

In part 2 I am developing the ideas from part 1.

11th Century English Agriculture
Agriculture in the 11th Century

A point to keep in mind is that those very first farmers, had no idea they had money. To them it would have been just a surplus product, there is no evidence they would have had any concept of money as we perceive it, merely they would have extra food with which to exchange goods or services.

With no real concept of money, there would be no word for it, nor to start with any ideas of worth.
In historical terms, farming is what predominantly marks out the Neolithic period, yes there are also improved designs to stone tools, but these also occur in the Mesolithic period, and are not in economic terms revolutionary, farming most definitely is.

You only have to look at Australia

Until this first farmer, any drought, or increase in population above what the land could support, led immediately to starvation. You only have to look at Australia, it was occupied for 30,000 years when the British first set up their colony at Botany Bay. Britain had been occupied continuously only since the last Ice age had ended, about 8,000 BC. The Australian Aborigine population was between 250,000 and 400,000, it was Palaeolithic or old stone age, and strictly hunter gatherer. The population in Britain was 14.1 million, and had already past the Agricultural stage and was into the Industrial era.

This highlights the difference, pre farming people starved when the food ran out, whether through a rise in population, or a shortage of food through a natural downturn ii the weather or perhaps even a disease in the staple food of the area in which a community lived.

Stonehenge
Stonehenge

Palaeolithic peoples didn’t even have domesticated animals, like cows, goats, sheep or the like, by the time of the Mesolithic period domestication had started, however, the animals were still dependent, like their human companions, on what the land could provide.

this leads to ownership

Farming changed everything. That it came into being is no real surprise, people lived so close to the land, it is easy for some bright spark to see that there were some areas that had better food supplies than others, the leap of imagination was realising that if one planted the grain, it grew.
The first farmer has found some suitable area of land, cleared the existing plants, and sowed his seed. He has tended his crops, and this leads to ownership, it also leads to wealth creation. After all, he is the one who has done the work. So along comes Ug who asks if he can help, and reap some of the rewards.

This immediately leads to challenging questions, is Ug given a share of the food, does Ug have his own piece of land, if not what is his relationship to the first farmer, is he a worker and paid or a slave and becomes part of the famer’s tools. Remember there is no word for money, no concept of money, and the idea of ownership may well have come into being, before these other concepts have words.

Indeed, it is money in the form of tokens, that dislocates commodity money from fiat currency. Once the idea of abstract value becomes grasped, then there is value of things. Until this point, people, products, services have no value, not because they are valueless, but because there is nothing that acts as an independent token with which to measure the value.

It is the independent token (=Money) being dislocated from actual services or goods, that makes money such a vital measure, so no money, means or equates to, no value.

he can give value to items or services

It is advancing technology that has given items and services value. Once the farmer has surplus product, he can give value to items or services he wishes to acquire.

Whilst the axe head maker was making ‘things’ of value. Those axe heads had no value, until there was the money there, with which to exchange a good or service.

This idea also has great consequences for modern Economies. During the ninth and tenth centuries in England, there was particularly in the reign of Eathelraed the Unready, a draining of fiat currency from England abroad, in the form of what was called the Danegeld. These were extortion payments made to the raiding ‘Vikings’ or ‘Danes’ in an attempt to keep the peace.

But here is a conundrum, while the last payment was so huge it took two years taxes to raise, this left the Vikings super rich. But had it made the people of England have any less value, no. OK they had less money and less disposable wealth, but all the knowledge and ability to create wealth through technology was still in place, so they were only poorer in what they could purchase with cash. If there was no famine, they were still as rich as the years before.

Note to confuse the issue there were a couple of famines, but this only meant the Danes or Vikings choose your own name, stayed away from the coast of England, until they had the spare food, so as to travel, and to raid the English again?

a modest three or four fold increase would bring astounding benefits

In the mean-time let us return to the idea of the first farmer. The result of just clearing an area of land, probably just unwooded land, and digging with perhaps an antler horn, or a sharpened length of wood, to plough a rough furrow, plant and weed the area would increase the crop yield anything between five and ten fold. Even a modest three or four fold increase would bring astounding benefits, however such a low figure is unlikely. Once you have proved that the idea works, the first thing would be to ensure you had enough for the next year plus some, and a natural eye to security would mean, that the maximum amount of land was cultivated, the amount of grain needed to grow from it would be kept.

In other words, the farmer’s own self-interest and that of his family or community would ensure there was excess food to that which was essential.

All the evidence of Mesolithic people in what is now eastern Europe, down turkey Iraq and out towards India, shows that the movement of tribes of hunter gatherers was not extensive, they tended to build a shelter and use it as a base for the surrounding area, only once the resources were used up di the tribe relocate, they would then return or do a circular tour, but all the time having a dwelling place to work from.

This is vital to understanding what happens next. Initially the extra food would be probably saved, a society that is forever on the brink of starvation could be expected to be cautious over how it used a resource.

Now comes the next step, at some point goods were exchanged, for what reason can only be guessed at, and the actual need is not important, it is the transaction that is. Perhaps the farmer needs an axe head, or some useful animal skin or extra spearheads.

thus increasing the amount of land he can farm

Wealth creation stems from both efficiency, the farmer realising, he can get cattle to pull the plough, thus increasing the amount of land he can farm, or technological advance, adding a wheel to the plough or indeed having two wheels on a cart and moving more goods, which is both a technological advance and efficiency gains.

Once you have a farmer, they are going to stop anyone from stealing their goods, this is a concept that is alien to hunter gatherers. Here language intervenes, and the concept of ownership, and with it land ownership, and with that comes the Laws relating to ownership.

With Laws come Lawyers, or at least people who understand the Law, or ensure the Law is enforced, this usually is some kind of rulers, whether head of the family, King, elected representative, or other person in charge. This has just increased the number of jobs.

But just stop a moment, let’s go over to the Economic correspondent of the ‘Neolithic Times’ and ask his opinion of the effect of farming.

Empty shop Closing down
Things are always changing, as jobs are lost more jobs are created.

Neolithic expert on Economics, “well in the future, now farming has arrived you will see hunters going out of business, as their jobs will no longer be needed, that will put the axe head makers and spear makers, out of work. In the future I see a lot of people with no work, and mass redundancies”
And if you think that sounds familiar, next time you see some person banging on about Robots taking our jobs, and making mass unemployment, ask who is paying this idiot. The Luddites, could not foresee you getting a flat tyre and calling out a breakdown company.

The future is bright the future is technologically driven, and wealth creation through efficiency will only increase.

Author: John Ashtone

John Ashtone, aspiring author, on Politics, Economics and History, with a few dashes of humour thrown in for good measure. I currently live in Wakefield, just south of my Home City of Leeds, both are in West Yorkshire, England.

898 thoughts on “Wealth Creation Pt2”

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