The Creation of Wealth

De Tocqueville finished his famous book “Democracy in America” in 1840 the year that the first postage stamp was issued. Capitalism was in its adolescence and the jury was still out on whether as a system capitalism would produce wide ranging socioeconomic benefits or would just serve to enrich the few. De Tocqueville has a section where he talks about inheritances (volume 1, chapter 3) and it’s clear that economics was thought of in those days as a zero sum game in which any gain to one party had the effect of reducing another. Stamps then were part of an enormous revolution of wealth brought about by technology and capitalism that not only has continually raised living standards and enriched the world but has changed the very nature of the social contract. We no longer see economic activity as a process that to benefit one party necessarily impoverishes another. An agricultural based economy, with finite land and crop yields, had only a set amount of wealth, which could be fought over but not augmented. Capitalism increases wealth and allows numerous parties to benefit from every transaction. It was commerce, which was facilitated by postage stamps, that was a major cause of this change. The Great Recession has raised fears about our long-term growth, but most of us see our problems as temporary and that before too long we will begin again our climb to better living standards for all. That attitude alone is one of the greatest changes of the last two hundred years.