Cause of Wealth

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The cause of wealth creation has been debated for long time. Why some nations are so rich, while people in poor nations is dying for hunger? From education, productivity, to institutional difference, many reasons were discussed, but no compelling theory has emerged yet. This is partially because different types of wealthy countries exist today and in history, and it has been hard to find something in common, which could be good candidate as the cause of wealth. I define wealth as exchange, and consider that the difference of wealth is the difference in total amount of exchange in societies. The virtue of exchange is that it increases the utility of labor, which lift the income, and the utility of consumption, which lift the well-being. A better exchange mechanism maximizes the utility of their work and consumption. Specifically, exchange creates more pecialization, increases the size of economy and productivity, among other benefits. From the beginning of civilization till today, exchange played major role to differentiate the rich from the poor. This article analyzes the cost and benefit of exchange, and how it was developed in history.
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