Source of Wealth

A nation's wealth is measured by the wealth of its people, not of the government.

In the seventeenth century, Ambassador Jean Baptiste Colbert (1619-1683) of France observed which economic practices brought in more gold for the king. He then described to King Louis XIV an economic system which we call Mercantilism. It was designed so the country would import more gold than it exported, and export more goods than it imported. The profit would go to the king. You can see it is impossible for every country to import more gold then it exports; somebody has to lose in that deal, and it is usually the weaker countries that lose. Mercantilism became official, and was adopted quickly among strong nations.

Mercantilism is based on the belief that wealth is the ownership of limited resources. Therefore the richer one person is, the poorer someone else is. It demands a person or policy be clever, crafty, and strong in order to survive. It is designed to enrich the king, the strongest of all, who has enough money to hire clever and crafty men.

The framers of mercantilism did what seemed right and proper at the time. It seemed there were two great truths in that day: wealth comes from gold and the sun revolves about the earth. The leaders merely dealt with "the way things are." Furthermore, the king owned the country, therefore the economic system should and must be controlled by the king and benefit the king. There was nothing evil in the intent with which mercantilism was designed. Colbert simply used the wisdom of the day to benefit the country he loved. But as it turns out, anything that benefits one person by impoverishing another is evil whether the participants realize it or not.

Like the belief that the sun revolves around the earth, things did not always work the way Mercantilism predicted it would and should.

In the eighteenth century, Adam Smith (1723-1790), an Oxford professor, wondered, "Why are some nations more prosperous than others? What is it they do differently?" Why was a country that was so rich in land, people and natural resources, like Russia, so desperately poor. On the other hand, why was a small country almost devoid of natural resources, like Great Brittain, the richest and most powerful nation in the world? Why this paradox? What was so different between the two?

With that in mind, Adam Smith embarked on the journey to discover the laws of wealth, which came to be known as capitalism. He found that a country was wealthy in proportion to its adherence to these laws. It was similiar to the work of a seventeenth century scientist, Isaac Newton, who discovered the laws of gravity. And now, with the knowledge and application of those laws, man can fall or fly. In the same way, with the knowledge and application of these laws of wealth, capitalism, man can live in wealth... and teach others also.

Once, the common belief was that a government became rich by taking wealth away from its citizens and neighbors. Thereby its citizens lived in poverty and its neighbors in fear. Now we know that the true wealth of a nation comes when the government supports its people's commerce. The citizens get wealthy not by taking money away from other people but by earning it through free enterprise – capitalism.

Two economics are primarily used in the world today: Capitalism and a form of Mercantilism. Mercantilism is designed to enrich the government by taking wealth away from others. Capitalism is designed to enrich the citizens by engaging in free enterprise. Mercantilism is the one referred to by the sneering comment, "The rich get richer and the poor get poorer." Yet the people in their ignorance think it refers to capitalism, and they attach capitalism. Why? They think it because they were told that by people who uses Mercantilism as their economic system and they to defeat capitalism.