This very quickly gets to be a very uncomfortable question ... because very little wealth is actually created. If I am becoming "wealthy" most of that wealth is merely being moved from some other owner of this wealth to me ... in most wealth transactions, the wealth creation turns out to be zero-sum at best, and in many transactions the wealth gain by one party is offset by wealth losses that are substantially larger by the other parties.
Trying to make sense of the huge profits being recorded by some of the high profile financial center institutions ... Goldman Sachs, J.P.Morgan Chase, Morgan Stanley et al ... and it becomes fairly clear that their business model is little more substantial than the science of the great alchemists of an earlier age. All of their "trading" profit is offset by someone else having a trading loss. What is somewhat scary is that we are aware of the scale of the profits because they are concentrated, but we are less clear about where the offsetting losses are located.
Eventually losses come to light. The sub-prime fiasco eventually came to be seen as a zero-sum situation, but it took time. The hyper profits of the mainstream banking community during the housing boom and easy mortgages eventually were offset by losses when silly appraised values and silly creditworthiness assessment turned into the reality of the sub-prime crisis. Nobody did their job, but in the end many people pocketed wealth while a very much large group of people lost wealth.
In Iceland, the foolishness of the Iceland bankers and their banking partners in places like London and New York has resulted in the people of Iceland ... every person in Iceland that is ... losing wealth while a few bankers gained wealth. The banking community still does not seem to "get it" that the economic model they are using is fatally flawed, and while they are recording profits and being very satisfied at their performance, the underlying economy around them has been gutted.
It is not yet clear whether sovereign debt in general will turn into a new bubble and financial crisis ... but it is entirely possible. Walter Wriston, a former CEO if Citibank regarded sovereign debt as a great asset class because the earnings were good and the borrowers "could not go bankrupt"! His law was correct ... but his reality was not!
What we now call wealth and have on the record in money terms has all come from somewhere. Much of it has come from exploiting natural resources in some profitable way. The system of accounting that we use records the costs incurred to extract value from the resource, and then takes into account the revenues earned and computes profit and equates that to a wealth increment. The diminution in the natural resource by its exploitation is not taken into account. This stupidity is the norm ... and, of course, has been the norm throughout the industrial era. It made the industrial era seem very profitable ... and made the wealth creation look good ... but the reality is very different.
Obviously mining and petroleum companies are looking a lot more profitable than they really are if the resource consumption was accounted for in the profit calculation. But there are many parts of the global economy where the costs exclude the damage being done to the broader society or the commons. Community Analytics (CA) is starting to address this so that there may be a better understanding of what needs to be done to improve quality of life and have this sustainable.
What emerges from CA value analysis is that quality of life is not only about material consumption, it is much more about material investment and the enjoyment of being more than merely the enjoyment of consuming. While value is subjective and therefore difficult to treat simply ... it is important. It is not easy to quantify value ... but it can be done in a meaningful way. CA is in the process of doing this and will share this quite soon.
For the moment, the question is "where does wealth come from?" ... and the answer is that much of what is thought of as growing wealth is offset by others who have lost wealth ... but that there are opportunities for real wealth creation when a smart society improves its real performance. Science and technology ... knowledge and know how ... may be used so that there can be improvement in the quality of life with less use of available resources, and in fact society may evolve so that resources increase while quality of life improves. This is not phony wealth derived from the maths of monetary economy ... but something that is very tangible and measured using a construct like CA value!
The business media ... Forbes, Fortune, Wall Street Journal, Business Week, Financial Times, Economist, Bloomberg and all the rest ... do not seem to want to challenge the way the metrics of modern society have failed. The professional accounting bodies and the mainstream of academic economists seem to be going with the flow. People like Professor Muhammad Yunus and a growing number of concerned people are asking good questions about the system of money profit measurement and "what happened?". In time CA might give these people the answer.