Wealth is defined as one that has 'Value in Exchange' and 'Value in use'. Accountants, in financial statements show items like goodwill, loss and depreciation that may/maynot have 'Value in exchange'. Who is right? Mathematics has an answer. Can we add 2a and 3a? Yes. Can we subtract 2a from 7a? Yes. Can one add or subtract 2a to/from 7b? No. Can we add 2meters and 3meters? Yes. Can we subtract 3grams from 5grams? Yes. Can we add or subtract 3 grams from 8seconds? No. Only wealth can be added or subtracted to/from wealth. This is in other words Law of Conservation of Wealth. As items like loss, depreciation and goodwill are added/subtracted to/from other forms of wealth these are forms of wealth. When one says that crop worth $4million is lost, he is expressing loass in units of money and money is a form of wealth. If loss is not a form of wealth, why is it expressed in units of wealth? What is the unit of non-wealth? Therefore, the words 'Value in Exchange' have no relevance.
|Date of creation:||17 Mar 2005|
|Date of revision:|
|Note:||Type of Document - doc; pages: 8. Law of Conservation and Law of Equilibrium are two laws that apply to matter, energy and wealth alike. Economics is a material science.|
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