5 - Wealth Is a Combination of Private and Public Wealth

Summary

When considering the wealth of a nation, one easily realizes that wealth is a combination of private and public wealth, not only an accumulation of private wealth. The chapter explains the economic distinction of private and public goods, using the formal criteria of non-rivalry and non-exclusability characteristic for public goods and public bads. While the production of private goods depends on public goods and can suffer from public bads, the production of public goods, in turn, depends on the production of private goods contributed by individuals and companies. Wealth conceived as a combination of private and public wealth has far-reaching implications for the necessary institutions and motivations: the roles and limits of markets and collective actors (such as governments and communities) and self-regarding (particularly self-interest) and other-regarding (such as care, solidarity and compassion) motivations.