Roy Davidson  says that the term "wealth" remains undefined. The  
implication is that not much, if any, progress has been made in this realm. 
 
I have recently become interested in this subject and I wonder whether  
he is looking at the issue from the best vantage point. The question to  
be asked is why a definition of wealth is important. The usual reason  
has something to do with comparing one economy or society with another  
economy or society (or with the same one at a different time). But this  
is not the only question that a definition of wealth may help one  
answer. A concept of wealth can also help one evaluate arguments for or  
against government policies -- in particular, policies in favor of or  
against market intervention. 
 
It seems to me that the main consequence of the marginal utility  
revolution was that it provided a utilitarian basis for evaluating  
arguments favoring various government policies. It did this by defining  
wealth in terms of consumer utility. Economists wanted a way to judge  
the claims of special interests. The spokespersons for those interests  
claimed that this or that government policy is good (or bad) because it  
is in (or not in) the "public interest." The models built by the  
marginal utility theorists provided frameworks to evaluate such claims  
by defining the public interest as the interests of consumers in a  
market economy.  This later became the foundation for modern  
cost-benefit analysis, stemming largely from the work of A.C. Pigou.  
There are, of course, very big problems in trying to implement  
cost-benefit analysis. There have also been major abuses of cost-benefit  
analysis. However, the concept of wealth developed by the marginal  
utility theorists is nevertheless useful, I would maintain. 
 
Consider an example of a market intervention -- the U.S. anti-dumping  
law which has recently been ruled to be against the WTO trading rules.  
No reasonable intellectual today -- and surely no good economist --  
would argue that the anti-dumping law increases the wealth of the U.S.  
because in increases the benefits to U.S. steel companies and U.S. steel  
workers. They would point out that the increase in rents to people in  
the steel industry are offset by the decrease in rents to people on  
other industries. In the meantime consumers are harmed. Anyone who has  
learned cost-benefit analysis would recognize that such an argument is  
incomplete. 
 
True, costs and benefits, like wealth, cannot be measured. But that is  
not the point. The point is that arguments referring to how the "public  
interest" is served or how the peoples' wealth will be raised by some  
policy cannot be regarded as sound unless they employ the cost benefit  
framework of the type based on the work of the marginal utility  
theorists. We cannot define wealth precisely but we can tell what is  
necessary to make a sound utilitarian argument that wealth is higher or  
lower due to some government policy relating to market intervention.  
 From this point of view, I would argue that there has been progress in  
the development of the concept of wealth in economics, even though the  
concept has not been, and probably never will be, defined well or clearly. 
 
Pat Gunning