We already stated the difficulty here.
Rebbe Nachman zatzal in Sichot Haran 51, beneath the existentialism etc., seems to contradict basic economics, as explained by Murray Rothbard. To quote: גם היכן הוא כל המעות שעושין מימות עולם כי מעולם עושין תמיד מעות והיכן הוא כל המעות רק באמת אינו כלום לגמרי. He’s using hyperbole. Not that money has vanished, but rather that the money supply hasn’t grown as one might expect over time. In fact, wealth does grow, but it doesn’t look only like a gold mine.
Both Rothbard and Rebbe Nachman are making empirical, economic claims about the nature of money — not allegories or metaphors. They are in the same arena, but Rothbard makes a lot of sense: Money supply is economically neutral (or nearly so, if the coins themselves are made of precious metals). So long as prices can adjust, any total quantity will suffice. What matters is real goods, capital, and production, not the nominal stock of currency.
We now get:
- Capital formation: All those mills, factories, infrastructure, tools, and productive equipment built over centuries
- Knowledge accumulation: Inventions, techniques, and scientific discoveries that permanently increase productive capacity
- Population growth: The wealth has been “diluted” across vastly more people, but each person today lives better than royalty of past eras
- Division of labor: Specialization has made everyone more productive than subsistence farmers could ever be
Each generation uses accumulated resources to carve out leisure time for innovation, which leads to better tools, which enable more production, thus supporting more people worldwide at increasingly higher living standards.
Even in pre-industrial times, productive investment was unevenly turning “money” into real capital that improved living standards for all:
- Massive capital formation: Roads, bridges, mills, ships, agricultural improvements, buildings
- Population growth: More people living better than their ancestors
- Technological advancement: Better farming techniques, early industrial machinery, improved metallurgy
- Expanding trade networks: Growing commerce between regions and nations
- Knowledge accumulation: Scientific discoveries, better medicine, navigation improvements
Even 18th-century farmers lived better than medieval peasants precisely because previous generations had invested rather than hoarded.
Indeed, he himself observes this, Sichot Haran 307:
לענין מה שדרך העולם לומר בכל שנה ובכל עת שעכשו אינם עתים טובות ובשנים הקודמים היה טוב יותר וכו’. כידוע שיחות כאלו בין רב העולם, דברנו עמו מזה הרבה. ורב השיחה היה שספרו לפניו הרבה שבימים הראשונים הטובים היה הכל בזול גדול הרבה יותר משל עכשו. כי לא היה אז נגידים ועשירים גדולים כמו עכשו. ומה שמוציא עכשו בעל הבית פשוט ואפלו מקבל חשוב הוא יותר מההוצאות של הנגידים, שבשנים הקודמים כידוע ומפורסם כל זה. ענה ואמר: הלא אדרבא, השם יתברך מנהיג עתה העולם יפה יותר מקדם!
ואמר בזה הלשון: אדרבא דער אייבערשטער פירט היינט שעניר דיא וועלט.