The Economics of Happiness
I read this recently for a class at BGI.
Book Review: The Economics of Happiness: Building Genuine Wealth
By Mark Anielski
In The Economics of Happiness: Building Genuine Wealth, Mark Anielski develops a compelling vision for attaining Genuine Wealth, the factors that bring true value and meaning to individuals, communities, and enterprises. Anielski is an economist who has devoted his career to understanding what really makes people happy; how we might measure true happiness; and how society needs to change in order to bring such happiness about.
His intent in writing the book is compassionate. The Economics of Happiness is about helping people to understand why their lives feel crazy and unfulfilling despite material success, and then empowering people to pursue the things that will bring them genuine happiness. It is infused with real-world examples of individuals, communities, and companies that have succeeded in basing their existence on a strong foundation of Genuine Wealth: an abundant and balanced supply of human, social, natural, built, and financial capital. Although Anielski is sharply critical of the current debt- and interest-based monetary system, and acknowledges that large-scale reform is a daunting prospect, the overall message of the book is hopeful. Small groups of people can break away from the larger system, and their actions will have a cumulative effect.
Three key messages that emerge from The Economics of Happiness are:
Anielski begins the book with powerful evidence backing what many people already sense intuitively: People in the wealthy nations of North America and Europe are not really much happier now than several decades ago. Despite phenomenal economic growth and technological advances, people are hungering for more community cohesion, more free time with family, a cleaner environment, and a stronger sense of security. Anielski gathered data in a series of studies over several years to measure many parameters that people identified as important to their happiness. By analyzing these parameters back in time, he discovered that objective measures of overall well-being—such as Genuine Progress Indicators (GPI), as they were called in an Alberta study—have actually been declining over the past 35-40 years, despite a rising GDP.
Clearly we are measuring the wrong thing if the “progress” graph points upward, but people are not actually enjoying better lives!
Anielski’s solution has been to develop a new framework called Genuine Wealth. It is based on five types of capital: Human (education, skills, our collective dreams and mental/physical talents); social (the strength of our relationships); natural (gifts of nature like trees, land, and water, as well as ecosystem services like the nitrogen cycle); built (physical infrastructure made by humans); and financial (money, including forms of debt). He created this model out of the works of many others, including Maslow’s hierarchy of needs and Max-Neef’s matrix of needs.
Individuals, communities, nations, businesses, and other organizations can conduct a Genuine Wealth Assessment (GWA) to determine their current stock of Genuine Wealth and work together to devise a plan for sustaining or increasing it. This involves agreeing upon the parameters that are most important to the group and honestly assessing the current state. Then people can engage in visioning their own future. Although Anielski does not state this explicitly, it can be noted that simply doing such an exercise will tend to increase the group’s stock of social capital!
Anielski provides several specific examples of how to conduct a GWA at the individual, community, and company level. He also describes many companies—such as Interface Flooring and Upstream 21—that are venturing beyond the default economic model of endless financial growth at the expense of human, social, and environmental capital. This middle part of the book brings a strong sense of empowerment and hope.
However, Anielski then steps back to include an even broader view, and this reveals a less rosy picture. At its deepest roots, our monetary system is unsustainable and is on course to collapse unless action is taken. Truly achieving Genuine Wealth is still possible, but will be more painful than simply applying a triple bottom line to existing businesses.
The problem lies in the concentration of monetary power in the hands of private banks, which use that power to create money in the form of debt, and then charge interest on the loans (usury). Although money creates enormous stress in people’s lives, few have a solid understanding of money: What it is, how it is created, and how it is best used. Money has no intrinsic value; it is valuable because we all agree that it is. We increasingly use money as a store of value rather than a medium of exchange. There is no tangible backing behind money—banks create and destroy money with the stroke of a pen (or key on a computer), in the form of debt. Because that debt bears interest, more money is then needed to service the debt. At the rate we are accumulating debt, it can literally never be repaid, even harnessing all the production power and resources of the world. Not realizing this, we struggle to achieve endless economic growth, in the process stripping the Earth of natural capital and creating much unhappiness in people.
There is no simple way to get off the treadmill we have placed ourselves on. Our entire commerce system is based upon fiat currency, interest, and private banks. Anielski describes the JAK bank in Sweden as a path-breaking, interest-free, community bank. He envisions more such cooperative banks emerging, and is currently working toward their establishment in Canada. The tone remains hopeful, but with a strong dose of realism: This is a long-term project.
Luckily, we don’t have to wait for the entire world economy to be reformed before we can find happiness. The ingredients of Genuine Wealth include a just financial system, but also include so many other things, from spiritual practice, to a breath of fresh mountain air, to a community BBQ. Getting on with the development of these aspects of our lives places us securely on the path to true happiness, no matter how long the whole path is.
On a personal note, The Economics of Happiness provided insight and breadth in an area I hadn’t understood before. The final section on the world money system (and how truly ephemeral monetary value is) was eye-opening for me. In my studies of economics, I found microeconomics relatively straightforward, but macroeconomics truly mysterious. I could never comprehend the basis of the whole interconnected system. Now I know why—such a basis doesn’t really exist! My background is in physics, which has actually proven to be a hindrance in understanding money. Physics is about measurable objects in a world where mass-energy is strictly conserved. In contrast, money is a social agreement and can be created and destroyed at will. I still don’t claim to understand money, but at least now I know why!
After reading this book, I sent email to Mark Anielski (who taught economics at BGI to the first and third cohorts). He replied immediately with some very interesting questions, challenging me to assess my own genuine wealth and economic footprint. I think this will be a fruitful dialogue.
Book Review: The Economics of Happiness: Building Genuine Wealth
By Mark Anielski
In The Economics of Happiness: Building Genuine Wealth, Mark Anielski develops a compelling vision for attaining Genuine Wealth, the factors that bring true value and meaning to individuals, communities, and enterprises. Anielski is an economist who has devoted his career to understanding what really makes people happy; how we might measure true happiness; and how society needs to change in order to bring such happiness about.
His intent in writing the book is compassionate. The Economics of Happiness is about helping people to understand why their lives feel crazy and unfulfilling despite material success, and then empowering people to pursue the things that will bring them genuine happiness. It is infused with real-world examples of individuals, communities, and companies that have succeeded in basing their existence on a strong foundation of Genuine Wealth: an abundant and balanced supply of human, social, natural, built, and financial capital. Although Anielski is sharply critical of the current debt- and interest-based monetary system, and acknowledges that large-scale reform is a daunting prospect, the overall message of the book is hopeful. Small groups of people can break away from the larger system, and their actions will have a cumulative effect.
Three key messages that emerge from The Economics of Happiness are:
- Gross Domestic Product (GDP) makes no sense as a measure of wealth. Quality of life in many developed nations has actually been declining since the early 1970s.
- Genuine Wealth consists of five key areas: human, social, natural, built, and financial capital. The Genuine Wealth framework provides a robust, widely usable model and contains sufficient flexibility to be tailored by each community.
- Our current monetary system—in which money is created by fiat in the form of interest-bearing debt—is a root cause of many ills in the world, from human unhappiness to environmental degradation.
Anielski begins the book with powerful evidence backing what many people already sense intuitively: People in the wealthy nations of North America and Europe are not really much happier now than several decades ago. Despite phenomenal economic growth and technological advances, people are hungering for more community cohesion, more free time with family, a cleaner environment, and a stronger sense of security. Anielski gathered data in a series of studies over several years to measure many parameters that people identified as important to their happiness. By analyzing these parameters back in time, he discovered that objective measures of overall well-being—such as Genuine Progress Indicators (GPI), as they were called in an Alberta study—have actually been declining over the past 35-40 years, despite a rising GDP.
Clearly we are measuring the wrong thing if the “progress” graph points upward, but people are not actually enjoying better lives!
Anielski’s solution has been to develop a new framework called Genuine Wealth. It is based on five types of capital: Human (education, skills, our collective dreams and mental/physical talents); social (the strength of our relationships); natural (gifts of nature like trees, land, and water, as well as ecosystem services like the nitrogen cycle); built (physical infrastructure made by humans); and financial (money, including forms of debt). He created this model out of the works of many others, including Maslow’s hierarchy of needs and Max-Neef’s matrix of needs.
Individuals, communities, nations, businesses, and other organizations can conduct a Genuine Wealth Assessment (GWA) to determine their current stock of Genuine Wealth and work together to devise a plan for sustaining or increasing it. This involves agreeing upon the parameters that are most important to the group and honestly assessing the current state. Then people can engage in visioning their own future. Although Anielski does not state this explicitly, it can be noted that simply doing such an exercise will tend to increase the group’s stock of social capital!
Anielski provides several specific examples of how to conduct a GWA at the individual, community, and company level. He also describes many companies—such as Interface Flooring and Upstream 21—that are venturing beyond the default economic model of endless financial growth at the expense of human, social, and environmental capital. This middle part of the book brings a strong sense of empowerment and hope.
However, Anielski then steps back to include an even broader view, and this reveals a less rosy picture. At its deepest roots, our monetary system is unsustainable and is on course to collapse unless action is taken. Truly achieving Genuine Wealth is still possible, but will be more painful than simply applying a triple bottom line to existing businesses.
The problem lies in the concentration of monetary power in the hands of private banks, which use that power to create money in the form of debt, and then charge interest on the loans (usury). Although money creates enormous stress in people’s lives, few have a solid understanding of money: What it is, how it is created, and how it is best used. Money has no intrinsic value; it is valuable because we all agree that it is. We increasingly use money as a store of value rather than a medium of exchange. There is no tangible backing behind money—banks create and destroy money with the stroke of a pen (or key on a computer), in the form of debt. Because that debt bears interest, more money is then needed to service the debt. At the rate we are accumulating debt, it can literally never be repaid, even harnessing all the production power and resources of the world. Not realizing this, we struggle to achieve endless economic growth, in the process stripping the Earth of natural capital and creating much unhappiness in people.
There is no simple way to get off the treadmill we have placed ourselves on. Our entire commerce system is based upon fiat currency, interest, and private banks. Anielski describes the JAK bank in Sweden as a path-breaking, interest-free, community bank. He envisions more such cooperative banks emerging, and is currently working toward their establishment in Canada. The tone remains hopeful, but with a strong dose of realism: This is a long-term project.
Luckily, we don’t have to wait for the entire world economy to be reformed before we can find happiness. The ingredients of Genuine Wealth include a just financial system, but also include so many other things, from spiritual practice, to a breath of fresh mountain air, to a community BBQ. Getting on with the development of these aspects of our lives places us securely on the path to true happiness, no matter how long the whole path is.
On a personal note, The Economics of Happiness provided insight and breadth in an area I hadn’t understood before. The final section on the world money system (and how truly ephemeral monetary value is) was eye-opening for me. In my studies of economics, I found microeconomics relatively straightforward, but macroeconomics truly mysterious. I could never comprehend the basis of the whole interconnected system. Now I know why—such a basis doesn’t really exist! My background is in physics, which has actually proven to be a hindrance in understanding money. Physics is about measurable objects in a world where mass-energy is strictly conserved. In contrast, money is a social agreement and can be created and destroyed at will. I still don’t claim to understand money, but at least now I know why!
After reading this book, I sent email to Mark Anielski (who taught economics at BGI to the first and third cohorts). He replied immediately with some very interesting questions, challenging me to assess my own genuine wealth and economic footprint. I think this will be a fruitful dialogue.
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