Economics I – Spring 2008
Review – The Economics of Happiness”
“The Economics of Happiness – Building Genuine Wealth”, by Mark Anielski, provides a solid exploration of the subject of basing an economy true well-being of the people that comprise the economic system.
The core of the book, chapters 5 through 8 develop a model for genuine wealth built on five capitals, and demonstrate how to apply that model to assess and implement the model at the personal, business, and community levels. The five capitals which integrate to form genuine wealth collectively contribute to the good life and form the basis for economic well being. They are :
• Human capital – The sum of our individual minds, bodies spirits, souls, dreams, visions, knowledge, skills, competencies, capabilities, and other human attributes.
• Social capital – The strength of our relationships with each other
• Natural capital – Free gifts from nature: natural resources, land, ecosystem services.
• Built capital – all things that have been made or manufactured with both human and natural capital
• Financial capital – money or anything denominated in monetary terms including cash, savings and investments, including debt mortgages and loans.
The foundation of Genuine Wealth is well-being, and a large measure of well-being is happiness. Anielski proceeds to build a new model of capital and accounting that would undergird an economic system that supports well-being, that supports creates flourishing people living in thriving communities. Grounded in a historical perspective, and drawing on the work of Maslow, Manfred Max-Neef, Herman Daly and Josh Farly, Anielski separates out wants and needs, means and ends, into the ultimate end – well-being – and the intermediate ends and means necessary to get achieve this end. In doing so he sidesteps one of the main conceptual traps of capitalism – the immediate assumption that happiness is equivalent to monetary wealth.
While the concept of well-being is broad, it is not vague. There are human universals, values that have appeared over and over again across cultures, religions, and philosophies, tenants that are being confirmed by research on in the fields of cognition, neurology, and evolutionary psychology. For example: “That true wealth represents all things that make life worthwhile, not simply monetary or material possessions.” Anielski does a good job of summarizing and pointing towards these, but as the focus of the book is on the five capitals, this was not developed in exquisite depth.
This is a return to an economics grounded in moral, in spiritual – in short, human – values. And grounding economics in such values, Anielski exposes one of the central lies of capitalism – that it is somehow value free, or neutral . Capitalism is based on a set of basic beliefs that are assumed, and, as such, is not secular at all, but rather a particular religion that enshrines, for example, the right of capital over the rights of people. Granted that these values have become protected by law, and so have become embedded in our culture – this does not render them any less of a set of religious beliefs.
So, if we are not to use the define right of capital as a compass to guide our economy, if we refuse capitalism’s central leap of faith mentioned above, from well-being to material wealth, what compass are we to use to point us in the direction of human values? Anielski chooses a simple metric: What makes us happy?
The genuine wealth model is a process, a practical tool that can be used to “account for the conditions of life that both contribute or detract from our well-being and state of happiness. As a process, rather than a fixed set of accounts, the model can fit local conditions and cultures, and can scale. In this way, it is reminiscent of Christopher Alexander’s “A Pattern Language”, in that it provides a generative method, fit to the unique local landscape of values, skills and capacities, rather than a “one size fits all” set of fixed prescriptions. Working through the process results in a set of metrics that supports assessments of the current level of wealth. This assessment of assets and liabilities, serves as both the starting point for, and a means by which to gauge progress.
Some simple questions serve as the starting point for the assessment: “How’s life?” What are our heart’s desires? Are we happy with where we are at? These questions are essentially the same for a community assessment as for an individual, just phrased a little differently to get at the collective, rather than individual, answer.
Some would say that these are “subjective” measures, and therefore cannot possibly be valid. But, we must be careful here. There are two ways in which we can mean subjective. The first is in terms of an idiosyncratic judgment, one that is based on whim, or fancy. Here, we are perhaps right to be suspect of this as a reliable means by which to assess a truth. But we also call a statement subjective based solely upon the fact that it necessarily contains an observer, an internal “I” – and how else can happiness be assessed and reported – who’s presence does not negate the fundamental truth of what is being reported .
Stepping back from the philosophical perspective, valuable as it may be, Anielski reminds us that the economic system is to be put in the service of human values, not the other way around – and how better to assess human values that to ask actual human beings?
Anielski writes for a broad audience, and spends three chapters demonstrating how the Genuine Wealth Assessment can be used for individuals, for communities and nations, and for businesses and organizations. He uses, and builds on, economics, but the writing is clear and accessible.
Both the model of genuine wealth and the assessment tools that Anielski develops to build a set of accounts used based on this model seem solid, and well grounded in current economic research. The method is necessarily laborious. It is not a simple process to conduct an assessment of what is truly important at a community level, and then develop a set of values based metrics.
While appropriate – after all, we are trying to overcome the use of technical efficiency as a ill fitting yardstick for measuring human processes – it causes me to ask the same question I had after reading “Capitalism 3.0”. I wonder where the political will to implement such a solution can be found. Though not necessarily a criticism of the analysis or methodology in either case, I find this to be an oft-missing piece. The forces within capitalism that concentrate power are strong, and those that enjoy the benefits of the concentrated power will most likely not give it up willingly.
The book ends with a description of the current monetary system, and the relationship between money and happiness. This chapter could easily be a book in itself, and, as such, merits its own analysis and review. Suffice to say that I found the description of debt based money profound, and the description of how a banking system could work without the ruinous influence of usury refreshing.
I found the picture of an economy based human values, an economic system developed to support and be inhabited by real, whole, human beings, rather than by the stunted cripple homo economics of neo-classic economics to be encouraging. The five capitals represent the incorporation of the human, the sacred, into economics. This is buttressed by the liberating realization that money not something divine and therefore unchangeable, but rather can be created and shaped to serve our needs.
This was in large part due to Anielski’s courage in bringing spiritual values into the conversation without embarrassment or apology. This is essential if we are to develop an economic system that serves us, rather than the other way around. We have to get over our squeamishness about discussing matters spiritual if we are to get anywhere at all with creating a sustainable economy.