In order to better explain the meaning of “capital and wealth”, we will look to the United States for these three places: Wall Street, Silicon Valley, and Las Vegas.
Wall Street is the name of a street in the south of Manhattan, not more than a mile long and only 11 meters wide. As the world’s financial center, Wall Street is a dreamers’ paradise, where the devil and the angels dance together in the game of capital and wealth, as well as a hell on earth, where blood and fire have their contests.
Greedy financiers raise capital around the world on Wall Street and invest them in places like Silicon Valley. Located in northern California, Silicon Valley is the earliest research and production of silicon-based semiconductor chips, hence the name “Silicon Valley.” Although other high-tech zones in the world continue to grow, capital finds its best hatching place in Silicon Valley as it is still the pioneer in technology innovation and development. The region’s venture capital investment accounts for one-third of the US total.
Las Vegas means “fertile valley” or ”the place where wealth is brought together.” Originally an oasis in the desert, Las Vegas began to boom when gold and silver was found in Nevada. In 1931 during the Great Depression, the Nevada legislature legalized gambling and Las Vegas gradually became a city of casinos, the world-famous entertainment center.
What’s the meaning of an American dream? The smell of air above the Wall Street, Silicon Valley and Las Vegas may well tell the story.
“The world of people, bustling from morning till night, are for profit, and profit only.” This is the sigh of ancient Chinese. It tells human nature, the desires of the people and the fact that capital is profit-driven. As Marx said: “Capital comes dripping from head to toe, from every pore with blood and dirt.” For most people in this world, the desire to pursue wealth is burned like fire.
The Australian gold rush began just a couple of years after the great California Gold Rush in the US. The discovery brought hope to many, not just Australians, with a chance to head to the mines to find fortune. Gold towns were booming with plenty of business and investment, and infrastructure such as railways began to develop around the country to serve the needs of the swelling population. A lot of gold was exported to London, helping boost the economy.
Human existence at the ancient times was simple and easy. Capital has not come as a companion of sins. For a long period of time in the past, people rose at sunrise and rested at sunset, their production only sufficient to sustain a few days or weeks of life, with little regard to the idea of “capital and wealth”. Before they carefully spent their savings, they relied solely on their own labor to earn income and to replenish it, when their income came entirely from labor. Adam Smith said something like this: If the individual’s wealth is sufficient to maintain his months or years of life, he naturally hopes that a large part of this wealth can earn income. Thus his entire wealth is divided into two parts: the income part and the life-sustaining part, of which the former is used to earn more income, called the capital. ”
We know that time can add value to capital. When the capital becomes wealth, it will go through a process of investment called “value-added”. An ancient Greek historian in his book “Economic Theory” wrote: “wealth is the use of things with value.” What is the most useful value? Most people would think of gold and silver. In ancient China, gold and knife coins used to be the currency for exchange, called Money. Money is the means of trade. The rulers of the past used these currencies to control the wealth of the country, to manage the people, and build their governance. Early European merchants held that wealth was made up of money or gold and silver. Most modern people still believe that “money is wealth.” Karl Marx ‘s interpretation of capital and wealth from the perspective of human nature is vivid: “The merchant is the real capitalist, he puts the largest part of the surplus value into his own pockets.”
A Chinese proverb says: “For the poor to get rich, farmers are no better than craftsmen, craftsmen no better than businessmen.” That is to say, business is a reliable way to get rich. However, in ancient China, seeking business for money was despised. According to Chinese philosophy, virtue is the root; wealth is the result. Wealth, gotten by improper ways, will take its departure by the same.Confucius said:”If the riches can be sought, I shall go for it as well even as a noble man.”
There is another theory in this philosophy: the accumulation of wealth is the way to scatter the people, and letting it be scattered among them is the way to collect the people. To put it simply: if you give money to others, others will follow you around; if you are stingy, even friends will leave you. Fan Li, honored as the God of Wealth, was a model practitioner of this theory. After helping the king to the throne, he retired and took a boat trip down the rivers and lakes. He changed his name for business purpose and set up his base for trade at Tao City where the exchange of goods was very convenient. Because he was very good at business, for three times in nineteen years, he became the richest person in the country. Every time he earned lots of money, he distributed his wealth to poor friends and distant brothers. Later people honored him as the God of Wealth. To a certain extent, he changed the Chinese’s bad views on businessmen.
Few people in the West would despise capital investors. In their view, the contribution of speculators is to make the market price more likely to reflect the economic value of resources, so as to help the best allocation of social resources. Like other ordinary workers, investors are workers who invest in the capital market. Investors invest their money as capital, take the risks,and earn a profit. From an economic point of view, investors are concerned about the rate of return on investment. There is nothing about morality or being morally inferior here. But the common people would hate loan-sharking. In the days of Charlemagne, 100 per cent of interest was considered usurious and would be reprimanded. Modern credit cards often charge an annual interest of twenty percent, which is a kind of usury.
Britain has a popular saying: “If 10% of the profits, capital is used everywhere on the guarantee; 20% of the profits it alive; 50% of the profits, it will take risks; to 100% of the profits, it dare to trample on all human laws; 300% of the profits, it dares to commit any crime, or even run the risk of being hanged.” Capital formation takes this process, first from the surplus of production into savings, then from savings into investment, and finally into machinery and equipment, plant, transport, and infrastructure. This concept comes from the early pioneers of capital formation theory, one of Nax. He also pointed out: “The essence of the capital formation process is to allocate some of the existing resources of the society to increase the capital stock in order to make possible the expansion of future consumable products.” Marx said, “when capital goes into the market, it is lovesick. As long as it is loaned out, or put into the reproduction process, then whether it is asleep, awake, at home, or on the road, interest will grow day and night.”
Growing capital and wealth are the instinctive demands of human development. People in China’s Zhou Dynasty knew these reasons: when farmers do not grow, the food will be lacking; when craftsmen do not work, equipment will be missing; when traders do not do business, the supply chain will be cut off. The Duke Huan of the Kingdom of Qi once asked his minister Guan Zhong: “How to attract the wealth of the world?” Guan Zhong replied: “In the past Emperor Jie of the Xia Dynasty had 30,000 girl musicians and dancers, their songs and music filled the capital streets from morning till night. All these girls wore beautiful clothes. Yi Yin (prime minister of the Shang Dynasty) thus gathered all the unemployed women in the nearby county to produce lots of silk. With this trade, Yi Yin was able to buy all the grains from Emperor Jie and manipulate the flow of goods within the country. This is the smart way to attract the world’ s wealth.”
The science of economics is like seeing a doctor. The doctor writes his prescription based on the illness of the patient. Economics is the science of human welfare, about how to feed the mouths of humans. Human has a long history, economy has a long history too. But this world has been sick for a long time. The American scholar Neil Worth in his “dialogue with God” criticized modern western education: “Your education has led the world to hell.”
We all like the wealth of gold and silver, but Buddhism considers this kind of wealth to be easily destroyed by the five causes of floods, fires, thieves, corrupt officials and wayward children. The Diamond Sutra says, the world is impermanent, all phenomena are emptiness, like dreams and bubbles. The Mahayana View of the World warns, “we shall divide our wealth into three portions: one for daily living, one for the relief of those who are suffering, and one for supporting relatives and friends.”
The Buddha tells a story. Once, the Buddha and his attendant Ananda went begging again. They came near a ditch and the Buddha said: “Be aware! Ananda! Serpent!” Ananda went to have a look, saying: “Yes! A serpent.” Thus they went away. At that time, a father and son who were working in the fields nearby heard the warning and came to see. Instead of a serpent, they saw some gold pieces on the road. “Where is the poisonous snake? Look! It’s gold!” They were so happy that they took the gold home. Wasting no time, they took two pieces of gold and went to a pawnshop for cash. The shop owner, suspicious of their wealth, secretly reported this to the local police. Very soon, some officials came to question the father and son, and confiscate all their gold pieces.
According to the Records of History, in the first year after the Western Han Dynasty was founded, the government issued a decree that merchants were not allowed to wear silk or travel by carriages. Heavier taxes were imposed because the country had suffered an economic crisis due to many years of war. Recovery came fast in less than thirty years when the ordinary people were allowed to cast money and open mines. By the time of Emperor Wudi, the country had become so rich that the government warehouses were all full of grains and there was an accumulation of tens of thousands of coins tied up by ropes that had decayed. Later when the Emperor started a war with the Huns, the state had to spend lots of money on the military, thus the Treasury gradually became empty.
The wheels of history cannot be stopped; depression and recession are inevitable. In seventeenth-century Holland, tulip became a very dangerous flower. In 1637, when a tulip was still growing in the ground, the price had risen by several hundred or even thousands of times. A tulip might be priced at the sum of twenty skilled workers’ income for a month. That was the first time in modern financial history when a speculative bubble eventually shattered.
October 24, 1929, on Wall Street, the shares of 1280 most prestigious corporations of the United States suddenly lost ground and collapsed. By 12 noon, in just a few hours, two bankers and a traitor committed suicide by bankruptcy. Eventually, all the securities lost 50% of their market value, millions of people went bankrupt. Mankind has created wealth, but instantly they can lose everything, as they have become slaves of money.
The economic crisis showed the darkness of human nature. With the sales stagnated, production dropped significantly, enterprises started to close down. Then came the surge in unemployment, cash supply shortages, rising interest rates, and bankruptcy. Agricultural capitalists and large farmers destroyed large quantities of “surplus” products, using wheat and corn as fuel for coal, pouring milk into the Mississippi River and turning the river into a “galaxy.” Money worship has caused a disaster for the nation.
The world is a large stage of puppet plays, and behind the scene are financial tycoons like George Soros. In 1998,he was able to bring down the economies of Thailand, Indonesia, and Malaysia into crisis and caused financial chaos in Japan and the Soviet Union. The United States is his next target, as more and more evidence shows he is forming a shadow government with his financial influence to help the activists, the media, ministers, and election polls.
“Some people have made a fortune, but they’ve got to realize that if they’re gambling again, they may not be as lucky,” said Lee Hausner, a Californian psychologist who serves the super-rich. In 2003, private banking executive Maria Lago Massimo began to study why so many of her wealthy clients had gone bankrupt. She said that countless entrepreneurs, high-tech giants, real estate tycoons, and CEOs were likely to create millions of dollars this year, but would lose everything in the next year.
Many people get rich quickly by way of gambling with their business or assets, whether it is technology start-ups, real estate or gold. When these assets rapidly grow in value, they reap the benefits. When things go wrong, they also lose everything. Debt has become a rocket fuel to help the rich as it can amplify gains, and in recent years, more than any time in the past, the rich have used more debt than ever to maximize their investment income. The risks are also huge as they have positioned themselves to the brink of bankruptcy.
Natural disasters and man-made disasters coexist. The BBC reported that on Sunday morning, September 2, 1666, a fire started in a bakery in London’s Pood Lane. A gust of wind blew through the narrow streets of the huts, and then into the warehouses on the north bank of the Thames. The fire burned the city for four days, including eighty-nine churches, forty-four companies and more than 13,000 houses, four-fifths of the city were engulfed by fire.
In 1938 June, the Japanese army invaded Kaifeng, approaching Zhengzhou. In order to prevent the advancement of the Japanese, Chiang Kai-shek ordered the south bank of the Yellow River to be torn by bombs. According to the Central News Agency: “Surging floods caused 893,303 deaths and affected many millions in 44 counties across Henan, Anhui and Jiangsu provinces.”
According to the Oxfam report in 2015, by 2016, the world’s richest one percent of the population will have more than half of the global wealth; and the world’s richest 10 percent already has eighty-seven percent of the global wealth. Peking University recently issued a report that China’s current income and wealth inequality is growing. At the top of wealth, one percent of households own about one-third of the country’s wealth, while 25 percent of households at the bottom own only about one percent.
By Lianlong, from the book “Viewpoints”