I have a dream: to design, build and enhance economies of well-being around the world. It is time for a complete overhaul of our national accounting systems that for over 60 years has measured progress too narrowly according to how much money changes hands as measured by the GDP (gross domestic product). I believe is time to develop economies of well-being based on the known determinants of happiness and by measuring the things that contribute most to the well-being of human beings and nature. This new accounting system that measures the conditions of well-being, be aligned with what we value most about a good life and the wise stewardship of the assets that contribute to a good life. I call this new system Genuine Wealth.
In the absence of complete national balance sheets that track the real wealth of nations, a new accounting system is required that can track the conditions of well-being (the original definition of the word wealth) that contribute most to the physical, mental, emotional and spiritual well-being of millions of human souls.
Economics is failing humanity, in part, because it has lost touch with the original meaning of the word economy, which from the Greek is concerned with the wise management of the household. In a real sense we are all economists. Economics has forgotten that its primary concern must be the conditions of well-being of the household. It is no longer genuine.
Economists have forgotten the meaning of words like wealth, which originally meant, ‘the conditions of well-being’, in the 13th century Old English Moreover, the word value, generally associated with money, comes from the Latin (valorum), which means ‘to be worthy or strong.’ This is an opportunity to rediscover the wisdom of the word competition, which comes from the Latin (competere) meaning ‘to strive together.’ The future economies of wellbeing will be based on genuine competition, reciprocity and shared responsibility.
Robert Kennedy in 1968 said that the GNP, key measure of economic progress, has failed to measure the things that actually make life worthwhile. And Simon Küznets, one of the key architects of the national income accounting system, noted that “national income concepts will have to be either modified or partly abandoned, in favour of more inclusive measures, less dependent on the appraisals of the market system.” And John Maynard Keynes, near the end of his life foreshadowed our situation today noting “The day is not far off when the economic problem will take the back seat where it belongs, and the arena of the heart and the head will be occupied or reoccupied, by our real problems — the problems of life and of human relations, of creation and behavior and religion.”
Joseph Stiglitz has stated clearly that “GDP has failed to capture the factors that make a difference in people’s lives and contribute to their happiness (security, leisure, income distribution and a clean environment.” The Dalai Lama has said that ‘we need an economic system that enables the pursuit of true happiness.’ Bhutan is already pioneering a new well-being accounting system with their Gross National Happiness framework. We need more leaders like Bhutan’s Prime Minister Jigme Yoser Thinley who states unequivocally “In Bhutan personal spiritual fulfillment is not just a spiritual pursuit, it is government policy. My role is to help create conditions that will help our people find happiness.”
I believe it is time for virtuous actions and a new form of genuine capitalism with a heart and wisdom. We need to make bold efforts in the restructuring of the global economic architecture, that makes the old system of measuring economic progress obsolete and replaces that system with a more enlightened system of measurement and governance that aligns more closely to what people want: happiness, joy and love. I believe it is possible to re-engage the minds and hearts of all of humanity by designing a new global accounting system for measuring the well-being conditions that are relevant to the values of China, Russia, the U.S., Bhutan, Tahiti or Pakistan.
Genuine Wealth: A roadmap to building economies of well-being
In my book, The Economics of Happiness: Building Genuine Wealth (2007, New Society Publishers) I laid out a road map for co-creating a new economy of well-being using an accounting system for measuring the well-being conditions in communities that are grounded in the values and virtues that matter most to citizens. I have advised many municipal and national governments (and even some corporations), including China, Tahiti, The Netherlands, Santa Monica, Innsbruck (Austria), Edmonton, Leduc, and Suncor Energy, on how to implement the Genuine Wealth accounting system and begin developing an economy of well-being. It has resonated intuitively with many because of its common sense and practicality.
The Genuine Wealth accounting system is a tool for communities and organizations to begin to inventory the assets that contribute most to their well-being and align with their values. The Genuine Wealth model begins with a reaffirmation of virtues (those norms considered important for the good life) and examination of the values of society. The indicators of well-being and progress, in order to be genuine, must be aligned with the values of a community and what citizens consider most important to their quality of life. In addition, the Genuine Wealth model is grounded in the emerging science of well-being and understanding of the determinants of happiness, including the important work by Bhutan in developing the Gross National Happiness framework. We know, for example, that the happiest communities in Canada are those with the strongest sense of belonging to their communities.
The Genuine Wealth accounting system includes a new balance sheet that accounts for the assets that contribute most to our individual and collective well-being: 1) human capital = people; 2) social capital = relationships; 3) natural capital = natural resources and the environment; 4) built capital = infrastructure; 5) financial capital = money. Indicators of well-being, both objective and subjective, will be used to govern our communities, businesses and nations to better valuate the ‘genuine value’ or ‘well-being returns on investment’ (WROI) on those assets that contribute most to well-being and happiness. The Genuine Wealth accounting system that has been designed and implemented in my own communities; the cities of Edmonton and Leduc in Alberta, Canada.
In these new economies of well-being, the objective of governments will be to ensure the wise stewardship and optimization of the conditions of well-being, namely the five capital assets of society: human, social/cultural, natural, built and financial). The onus will be on ensuring that these assets that define happiness and well-being are resilient and flourishing providing genuine ‘utility’ and ‘value’, namely the potential for all human beings to enjoy a good life in harmony with nature.
We can co-create this new accounting system that will measure the conditions of well-being, both objective and subjective, that makes life worthwhile and contributes to genuine happiness, joy and a good life. This new balance sheet of the genuine wealth of nations would account for the flourishing and resilient conditions of our human, social, natural, built and financial capital assets while managing and mitigating the unfunded liabilities that detract from our happiness. This accounting system should be grounded in a set of virtues and values that are common across all faiths from Judaism, Islam, Buddhism and Christianity.
This new economy of well-being would consider the indigenous wisdom of the Aboriginal peoples of North America that human beings must be balanced in terms of physical, mental, emotional and spiritual well-being. My Aboriginal friends have taught me about the importance of being in right relationship and harmony with the land and each other. The circle is their symbol and they can remind us of how we can renew harmony in our world through the use of circles of shared responsibility. The circle and harmony are also indigenous to the Chinese culture, which understands the importance of balance.
China has adopted the Confucian concept of Xiaokang (society of modest means) as it’s economic policy since the early 1990s. The vision of a Xiaokang society is one in which most people are moderately well off, and in which economic prosperity is sufficient to move most of the population in mainland China into comfortable means, but in which economic advancement is not the sole focus of society. Incorporated into the concept of a Xiaokang society is the idea that economic growth needs to be balanced with sometimes conflicting goals of social equality and environmental protection. Harmonious Xiaokang society does not only denote material comforts but harmonious development in all aspects, which includes issues of urbanization, promotion of education and reshaping the social strata. As a key condition, harmonious xiao kang society also requires that human and economic development does not undermine China’s natural resource base and ecosystems without which the sustainability of human well-being itself would deteriorate.
Happiness as the ultimate objective of economic development
What if our economic systems were genuinely managed to optimize well-being and happiness? What if CEOs of corporations, prime ministers and presidents were chosen based on their capacity to improve the genuine well-being conditions of their companies and their communities? What if more world leaders adopted the Gross National Happiness system adopted by the Bhutan, a tiny Bhuddist nation of over 700,000 citizens, with a prime minister who states unequivocally ‘In Bhutan personal spiritual fulfillment is not just a spiritual pursuit, it is government policy.” Can you imagine Canadian Prime Minister Stephen Harper adopting such a policy platform?
Bhutan’s GNH provides a pragmatic approach to measure the well-being conditions of a nation that align with the values of its citizens and thus has a chance of measuring what matters most to people. It provides a more balanced accounting of progress that balances economic development objectives with the happiness aspirations. Of interest to Canadians, is that Bhutan has drawn upon Canadian wisdom and expertise to develop their GNH system, including Michael Pennock, an epedimologist who works for the Greater Victoria Health Authority in Victoria, B.C. Michael helped design the GNH survey that asks citizens about various aspects of their lived experience, based on a framework of the determinants of well-being.
Determinants of Happiness
Studies into the determinants of wellbeing and happiness show that the key contributor to a happy life are the combination of the quality of one’s upbringing and genetics (50%), followed by the strength and quality of relationships with family, friends and work colleagues (40%) and finally income and education (only 10%).
In a 2010 study of the happiest communities in Canada, researchers found that the most important factor affecting happiness was a sense of belonging to local communities. This was followed (in order of importance) by perceived mental health, physical activity levels, stress levels, being married, being a recent immigrant, being unemployed, and lastly by levels of household income.
Studies consistently show that it is relationships that matter more to people’s perceived happiness and quality of life than money. If this is so then it raises the fundamental question: why must economies continue to grow if material sufficiency has been achieved for the majority of people?
Genuine Wealth: A proposal to the World’s Leaders
At the recent (January 26-29, 2011) World Economic Forum meetings in Davos, Switzerland, I had an opportunity to present my Genuine Wealth proposal to multi-billionaire George Soros. I urged him to help finance the design and practical development of a Genuine Wealth accounting system for communities, governments and business in countries like Tahiti, the Netherlands, China, Canada, Britain, and Norway. I reasoned that these countries were already making prudent steps towards developing well-being indicator systems, building economies of well-being and focusing on happiness as an objective of economic development.
Soros responded to my proposal with the following words: “I am on board with the fundamental importance of the genuine wealth idea, but there is a lack of sentiment that framework for more holistic wealth is ready for prime time.” Caio Koch-Weser, vice chairman of Deutsche Bank, who also received my proposal, offered to sherpa focused material to the next G20 on overcoming this lack of sentiment if we can get the right material in his hands.
Aligning Money Creation with Genuine Wealth
I believe that at the heart of the failure of capitalism to improve the well-being conditions of humanity is the failure to understand the nature of money, the impact of fractional reserve banking on the destruction of natural, human and social capital, and the significant impact of usury (charging interest on money created) on the destruction of the human spirit. The world is currently stuck in a debt crisis preliminary because it cannot imagine a system of money creation without debt money. Indeed 97% or more of the world’s money is created as debt (e.g. through loans by banks) which ultimately threatens the pursuit of genuine happiness and destroys the human spirit and hope.
I believe that the pursuit of a sustainable, resilient and flourishing economy is possible only with a fundamental restructuring of the world’s financial systems where money would be created not as debt-money but aligned with genuine wealth, well-being and happiness aspirations. I have proposed and designed a new monetary system that I recently presented to ethical bankers and captains of capitalism.
It is possible to develop a monetary system that Abraham Lincoln envisioned. Lincoln stated clearly that “The Government should create, issue, and circulate all the currency and credits needed to satisfy the spending power of the Government and the buying power of consumers. By the adoption of these principles, the taxpayers will be saved immense sums of interest. Money will cease to be master and become the servant of humanity.”
Building societies based on the concepts of Genuine Wealth will be challenging; it will require virtuous actions of courage, justice and wisdom. It will require serious dialogue amongst ourselves, our children, our elders, our neighbors and our politicians to determine good paths forward which are oriented towards well-being. Redefining the nature of money, reclaiming its power over our lives and reinventing it to serve our genuine and common needs is most important for humanity. There will be opposition, but is imperative that we remember the teachings of past generations and religions which condemned usury as incompatible with a life of abundance and love.
Genuine wealth is built with every action and choice we make, no matter how small or large. Genuine wealth is achieved when our decisions and actions are grounded in core values that include love and respect for each other and the earth, and a genuine desire to work together towards improving the well-being of both current and future generations.
 This paper was presented to the Prime Minister of Bhutan at the April 2, 2012 high-level meeting on the development of a new economic paradigm based on wellbeing and happiness held at the United Nations in New York.
 Canadian Centre for Living Standards (2010). Does Money Matter: Determining the Happiness of Canadians. Canadian Centre for Living Standards, Ottawa. November 2010.