The concepts of past, present, and future wealth help to take seemingly complex and confusing issues and bring them into clear, understandable images.

A FORWARD TO THE THEORY OF WEALTH AND TIME

- a concept to make economics understandable -

Democracy requires the participation of its citizens to function properly. Without a clear understanding of the causes and effects of the actions of man and his environment on the economic structure, our destiny will be captive to chance - not necessarily fortune with the possibility of putting at risk both democracy and free enterprise.

I have created a clear, concise way to look at economics with a concept that has crept into the cracks of modern thought: wealth. Wealth provides a more complete divinity than the religion of money that invokes our supplication at the present. There's more to life than money, an old saying goes. Since life is reflected by an economy, there must be more to economics than money, too. Most importantly, economic problems have only social solutions, not economic ones. Economics arises from the interaction of people.

The ideas presented here are the basics for understanding the economic phenomena directly affecting our lives. Whether it's inflation, high interest rates, recession or other economic cycles, the basics laid down in this paper will provide a structure, a visualization for an understanding satisfactory to your needs, emotional and intellectual. The Theory of Wealth and Time is a universal and broad concept I'm sure you will find interesting and useful, not only on a national basis, but, moreover, on your own personal level.

Richard Pearlman

THE THEORY OF WEALTH AND TIME

by Richard Pearlman

September, 1982 - original - Very little changed as presented here in 2007

The most important aspect of THE THEORY OF WEALTH AND TIME, presented below, is to help you perceive the balance needed for a smooth running, long lasting and secure economy. The concepts of past, present, and future wealth help to take seemingly complex and confusing issues and bring them into clear, understandable images.

This theory provides the definitions and illustrations, the tools to understand and comprehend the economic happenings that directly and uncompromisingly affect our lives.

Past wealth, present wealth, and future wealth are concepts through which we observe the actions wealth takes as time goes on and people interact with one another. It allows us to know what and where our wealth is and what is happening to it.

First, we define wealth: Wealth describes how wealthy we are: All the resources and services that may be directed, controlled, made use of, or benefited by individuals, groups, or societies. Some parts of wealth are tangible, easily seen and counted such as money; other parts are only felt: intangibles such as community spirit, good leadership, available opportunity, beautiful country sides, human resources.

Past Wealth is earned and saved wealth, either stored or invested; when invested, it becomes part of future wealth, which also includes natural resources not yet utilized; present wealth represents the wealth that can be consumed, or if not consumed, transferred to either past or future wealth.

EXAMPLES

Past Wealth: savings accounts and checking accounts, gold and other valuables stored in safe deposit boxes, stock in blue chip companies, and piles of firewood ready for burning.

Present Wealth: the fire burning in your fireplace, cash, house, car, clothes and all you are using and wearing out; rivers and air we are polluting, forests we are cutting down; and indeed everything anybody is in the process of consuming or producing for immediate use.

Future Wealth: has two parts -- resources yet untapped such as clean undammed rivers, unused farmland, untapped human resources, and land to build homes on. The second is investment, the process of taking past wealth and placing it in areas felt to produce a greater wealth for later consumption: creating expanding businesses, developing new technology, the space program, education, growing better crops, planting trees, cleaning up rivers.

The basic relationship between the three wealths is easily illustrated below. Each wealth may be left where it is, or transferred to one of the other wealths through one of the many mechanisms society provides for this purpose.

Present wealth, the only wealth where consumption occurs, is important enough to analyze further. Present wealth is best understood by dividing it into six parts, illustrating how different segments of our economy, as well as consumption of past and future wealth, are related to present wealth.

Natural resources - the wealth the earth provides: good harbors, water, arable land, river systems, wilderness lands.

Total present wealth changes constantly - the rate of change being completely dependent on the actions of the past, the whims of nature, and expectations of the future.
 

• Natural resources - the wealth the earth provides: good harbors, water, arable land, river systems, wilderness lands.

• Manufacturing wealth - the expansion of mineral wealth through technology.

• Consumable future wealth - investment that can be cashed in; mineral and other resources that are consumed: trees ready for cutting, rivers and air not yet polluted, oil ready for pumping out of the ground.

• Consumable past wealth - past wealth easily convertible into present wealth such as savings and checking accounts, money markets, goods immediately saleable.

• Cash velocity - Money changing hands, whether for goods or services. Wages, doctor bills, purchases and other things cash takes care of.

• Human resources - a nurse, the library, a lawyer from whom you ask advice, quality and availability of leaders of value, the skill of a machinist, the philosophies that keep humans striving for a better life.

Present wealth, in addition to having six parts, also is divided into two types: the tangible and intangible. The sum of these two types is exactly the same as the sum of the six parts - it's just a different perspective.
Past and future wealth may be viewed in the same way: part tangible, part intangible. The relative importance of each type is a judgment made by each society, and becomes a component part in the fabric of the culture.

The more industrialized and technologized our world becomes the larger and greater is the transfer between past, present, and future wealths, and the greater the possibility of abuse. Today, as in the past, many of the cycles of boom and bust, growth and recession, are related to the ability to draw wealth from the past and future into the present. When past and future wealth become scarce, serious problems arise from the resulting decline in present wealth - one reason why the understanding of wealth is of vital importance, what it is and what it does.

Whether for comprehending the balance between past, present, and future wealth, or tangible and intangible wealth, THE THEORY OF WEALTH AND TIME provides a concept and the means to help in the understanding, planning and creation of successful solutions to the economic and social problems faced by every society in the search for a better life, a more secure and satisfying standard of living.