We must carefully note that wealth thus defined is NOT the same thing as well-being. The mixing up of these two separate things--well-being and economic wealth--has given rise to half the errors in economic science. People confuse the word “wealth” with the idea of well-being. They say: “Surely a man is better off with plenty of water than with little, and therefore conditions under which he can get plenty of water for nothing are conditions under which he has _more wealth_ than when he has to pay for it. He has more _wealth_ when he gets the water free than he has when he has to pay for it.” It is not so. Economic wealth is a separate thing from well-being. Economic wealth may well be increasing though the general well-being of the people is going down. It may increase though the general well-being of the people around it is stationary. The Science of Economics does not deal with true happiness nor even with well-being in material things. It deals with a strictly limited field of what is called “Economic Wealth,” and if it goes outside its own boundaries it goes wrong. Making people as happy as possible is much more than Economics can pretend to. Economics cannot even tell you how to make people well-to-do in material things. But it can tell you how exchangeable Wealth is produced and what happens to it; and as it can tell you this, it is a useful servant. That is the second difficult point at the very beginning of our study. _Economic Wealth consists in_ EXCHANGEABLE _values, and nothing else_. We must be as clear on this second point as we have made ourselves upon the first, or we shall not make any progress in Economics. They are both of them unfamiliar ideas, and one has to go over them many times before one really grasps them. But they are absolutely essential to this science. Let us sum up this first, elementary, part of our subject, and put it in the shortest terms we can find--what are called “Formulæ,” which means short and exact definitions, such as can be learnt by heart and retained permanently. We write down, then, two Formulæ: 1. =Wealth is made up, not of things, but of economic values attaching to things.= 2. =Wealth, for the purposes of economic study, means ONLY exchange values: that is, values against which other values will be given in exchange.= II THE THREE THINGS NECESSARY TO THE PRODUCTION OF WEALTH--LAND, LABOUR AND CAPITAL You will notice that all about you living beings are occupied in changing the things around them from a condition where they are _less_ to a condition where they are _more_ useful to themselves. Man is a living being, and he is doing this kind of thing all the time. If he were not he could not live.