The natural state of human existence is abject poverty. That’s the starting point–naked, hungry, and homeless.

Any effort towards survival is the most basic form of wealth creation.

Labor is a key element in creating any wealth. Even cupping your hands together to draw water from a stream is labor. And it is required to survive. That is a rudimentary form of wealth trickling down your throat.

But wealth also requires property. In order to drink that life-sustaining water, you must hold exclusive rights over that water, at that moment.

Your labor turned a previously unclaimed natural resource into your property. And that raised your standard of living… from dehydrating to death, to being quenched.

In a complex economy, you don’t have to do all the labor yourself. You don’t even have to own all the property that you use to create wealth.

But the same basic laws apply:

We cannot survive without labor and property (even if you call them something different).

Let’s use another primitive example to help us understand how more complex economies develop.