Carrol Cox wrote:
I don't think estimates of "total wealth" tell one much. What counts for your purposes is the flow of material goods and services available at any given moment. Or perhaps the productive capacity if everyone were employed, but I doubt anyone could make even a wild estimate of that.
I'm not sure I understand your points, but estimating the value of (global) aggregate wealth or what Marx called (global) "social capital" shouldn't be a challenge to make us feel nihilistic. Next I'll make a "wild estimate" of the value of world's capital. Well-informed people could correct it or refine it further.
Today, with access to markets, accumulated wealth is capital in some phase of the canonical cycle (M-C... P... C'-M'). Sure there's some wealth already at the brink of being consumed, but neglect that. So, for our purpose, global wealth = global capital.
Using Doug's figures, last year, global capital generated a *gross* income of USD 7,867.94 per capita. Since global population is, say, 6.3 billion, then we're talking about a gross income of 50 trillion USD, plus or minus change. That and a few other pieces of information (under some roughly plausible assumptions) should suffice to make an estimate. We're just trying to price an (aggregate) asset.
How much of this gross income would be required for the "simple reproduction" of the economy? In other words, how much is it *net* global income, income that we could dissipate without jeopardizing the ability of global capital to generate the same net income every future year? Deduct depreciation and also the fraction of consumption that just replenishes the labor force at its current skill level. So, there's no labor force growth, no accumulation of "human capital," and no addition to the capital stock.
Assume there's no uncertainty or sustainability issues, so we're certain that global capital will re-generate the same net income forever. Hence, risk = 0. In other words, we are assuming "perfect foresight," "rational expectations," whatever. (Risk would lower the estimate a bit. But note that, after a few years, sustainability doesn't really matter, because we're going to discount net income and what comes in the far future will be worth little in terms of present value. So I'm making these assumptions to simplify matters only. For instance, if we know or suspect that the world will end by 2050, the calculation would only get more complicated, but the result would not be that different.)
I cannot make an educated guess about net global income, so I'll just say it's 30 trillion USD. Global capital can be now treated as an annuity, which is very convenient because its present value formula is net income flow/r. To calculate the present value, we discount net income using its opportunity cost. And what would that be? The value of the next best alternative to dissipating the net global income back into the universe. Say, what we people are actually doing right now, using current net income to expand future income. How? By adding to current consumption (to expand the labor force and to expand its skill) and by adding to the stock of global capital.
Say, the labor force will grow at 4% per year in the future and per-capita income at 1%. Then, the next best alternative is expanding global net income at a rate of 5% per year. This growth rate is assumed constant (since there's no risk, no volatility). So that's the global discount rate we should use to price our annuity. Thus, the discounted present value of global capital is:
K = 30 trillion USD/0.05 = 600 trillion USD
That's close to 100 thousand USD per person. Very roughly.
Julio
_________________________________________________________________ De todo para la Mujer Latina http://latino.msn.com/mujer/
