The essence of the fixed quantity of wealth fallacy is the claim that wealth cannot be created, only rearranged. Suppose you believe that. What follows?

You look at the world, and you see rich people getting their hands on more and more wealth. They can’t have added to the sum total of wealth, because wealth isn’t like that. Wealth can’t be added to. Therefore these rich people must have stolen their wealth from others. The only question is: from whom?

Karl Marx supplied the first great answer to this question. The rich capitalists were getting richer by stealing from their workers, who were thus inevitably getting poorer. (And eventually the workers, in a despairing fury, would rise up and destroy the capitalists.) Marx greeted every tremor of economic difficulty in the latter half of the nineteenth century as the beginning of the end for capitalism, and he fiddled the numbers to try to prove that despite all appearances the workers were getting ever poorer, and that they would accordingly oblige with a revolution.

By the beginning of the twentieth century the Marxist melodrama had become impossible to believe in any more. The poor people of the rich countries were, in defiance of Marx, getting steadily less poor.

There was a Revolution, which meant that “Marxism”, as interpreted by the successors of the now deceased Marx himself, carried more weight than ever in the world. But this Revolution had disobeyed Marx by happening in one of the poorer countries, Russia, not in the richest ones. What was going on?
Why were the poor in the rich countries getting less instead of more poor, and hence less inclined to revolution?

The leader of the Russian Revolution, Lenin, supplied the next great answer. The people of the rich countries were all getting richer because the rich countries were stealing wealth from the poor countries, from the “Third World”. (And eventually, the Third World would rise up in a despairing fury …)

For as long as the world’s poorest countries all had the good manners to remain poor, this revised, Marxist-Leninist scenario retained its plausibility. But by the second half of the twentieth century, a few of the formerly poorest countries — most notably Hong Kong, Taiwan, Singapore and South Korea — were also starting to get rich. Were these Asian Tigers — apparently getting rich by assembling such things as cheap radios — in reality secretly looting the most distressed parts of sub-Saharan Africa, and was this the explanation of the wealth of the Asian Tigers and of the disastrousness of sub-Saharan Africa? Hardly. Click here to read the article in its entirety.