This paper was prepared by Mark Anielski and presented to Prime Minister Jigme Thinley of The Kingdom of Bhutan
April 2, 2012, New York City
Presented at the High-Level Meeting on a New Economic Paradigm based on Happiness and Wellbeing with the Prime Minister of Bhutan Jigme Thinley, at the United Nations, New York City
Money is capable of doing what we want it to do, rather than (as at present) making us do what it wants us to do. Money is capable of reflecting reality and conveying the policy we want. The true worth of money as an invention, frankly, has never been fully explored. The range of reform facing us, once we decide to correct the overbearing mathematical defect of debt, are as rich as the diverse opportunities and material benefits our economies can possible offer. In fact, in a sense they are the one and the same thing. — Michael Rowbotham (Author, The Grip of Death)
There must be an alternative to creating money only through debt, charging interest on these loans, exponential and unsustainable economic growth, leaving the power over debt-money creation in a few private banking hands and as a consequence leading to the destruction of the very genuine wealth that contributes to societal well-being.
The key barrier to achieving the goals of GNH is the predominance of the current debt-money system. Current money is debt. My vision is that money could be wellbeing or the creation of money could be tied to improving and enhancing the conditions of wellbeing and happiness from the local community level, national and international
The following are my suggestions for redesign of the global financial system that would directly support the goals of GNH. That is, a system where money would be created and lent into existence in parallel with wellbeing.
Who should create the money? The power of creating money would be returned to the power and overview of the people of the communities and nations for which money, as a medium of exchange, belongs. This would be consistent with what Abraham Lincoln envisaged.
President Abraham Lincoln spelled his vision for a sovereign US banking system, in an address to the US Senate in 1865:
Money is the creature of law, and the creation of the original issue of money should be maintained as the exclusive monopoly of national government. …The monetary needs of increasing numbers of people advancing towards higher standards of living can and should be met by the government. Such needs can be met by the issue of national currency and credit through the operation of a national banking system.
Adopting Lincoln’s model would require major structural reforms to the nature and operations of central banks, the Bank for International Settlements, the IMF, the US Federal Reserve and other financial institutions. Their mission would be reoriented towards building economies of well-being, sustaining the five capital assets of genuine wealth within and across nations, oversight of the trade in the comparative genuine wealth advantages of nations.
In this new system of Genuine Wealth (see figure 1), money should be created in parallel with genuine wealth (wellbeing) asset accounts, which are linked to the values of people in community, the known attributes of well-being (as articulated in Bhutan’s Gross National Happiness framework), and in harmony with nature. The goal of this system is to ensure that each citizen have the essential elements for a good life; sufficiency of basic needs.
Money creation would also be governed by a Genuine Wealth accounting and management system, based on regular inventory and analysis of the conditions of the human, social/cultural, natural and built capital asset of a community. The key focus is on the resilience of these five capital assets of Genuine Wealth. Risks or liabilities to well-being would be constantly monitored. In addition, the ecological integrity and biocapacity of ecosystem would be carefully monitored and resource and land use decisions calibrated accordingly to ensure the resilience of ecosystem services and sustained natural capital benefits.
The fundamental question at play at all times would be: what do we want money to do for us?
The answer to the question would be found in examining the state of Genuine Wealth, to maintain the integrity and resilience of the genuine wealth of a community, watershed or region, including the happiness of the people in community.
All decisions, policies and budgeting would be made according to a set of the five-capital asset Genuine Wealth accounts. A number of approaches to creating sufficient liquidity or money supply would be available including Genuine Wealth ‘bonds’, regional currencies (backed by Genuine Wealth), local interest-free micro-loans to support local entrepreneurs, businesses, students. Again, money would be directly connected with the needs, goals and aspirations for well-being and happiness as defined by the people living in the community as a whole.
Money would be created in sufficient supply to maintain the resilience of the five capital assets of genuine wealth, in harmony with nature’s capacity to flourish and maintain integrity. Money can be created without attaching interest charges, though costs to maintain this new Genuine Wealth monetary system would be recovered with genuine service fees. This system would require a robust inventory of these various assets, measuring their integrity, potential utility and long-term resilience; particularly when it comes to natural capital. In addition the attributes of steady-state economy would be incorporated into the governance model.
Money would better represent the unique and genuine value, aligned with the skills, capacities and aspirations of people in community; unique to each culture and geography (e.g. by watershed or other geographic boundaries that make sense to an ecosystem).
The Genuine Wealth management system would be supported by the information contained in the Genuine Wealth accounts (quantitative, qualitative, and subjective indicators of well-being and happiness), plus the use of advanced analytic tools (to measure the interrelationship between various aspects of well-being in the five-capital accounts), visualization techniques (for presenting the information) and supported by narrative (stories) on any number of attributes of well-being, happiness and knowledge of ecosystem.
Future new money would be created in parallel with the needs of people for a good life (respective of cultural values and ecosystems) and in relationship with the real assets that support quality of life. Investments in building capacity in various Genuine Wealth asset classes would be facilitated to issuing new liquidity, such funds to support entrepreneurialism and the exploration of new solutions to emerging challenges that may threaten future well-being.
While money creation should be tied as closely as possible to support local living economies, there will be need for regional and national Genuine Wealth currencies and monetary authorities to ensure that the trade in comparative genuine wealth ‘advantages’ is possible to help in the distribution of real wealth to serve the needs for a good life.
Decision-making and governance would be made based on citizen representatives, supported by experts in taking inventory and measuring well-being (economists, biologists, engineers, sociologists, psychologists, medical doctor, anthropologists, etc.). Governance decisions would also be based on fundamental understanding of the determinants of happiness and well-being from psychologists and sociologists. The decisions to create money would be linked to ecological principles and attempt to be in harmony with the natural ecosystems. This would allow for a careful calibration of the money supply; to increase or decrease the supply in effective proportion to meet a populations’ basic needs (a guaranteed basket of basic needs) while allowing for innovation, pioneering and entrepreneurialism.
Progress would be measured by new indicators of progress that relate to well-being. A new approach to measuring the Well-being Returns on Investment (WROI) would be introduced. The measure of ‘return’ would be defined in terms of changes in objective and subjective attributes of well-being and happiness. Bhutan’s Gross National Happiness framework and policy that shifts the attention from GDP growth to well-being, is a great starting point for experimenting with the Genuine Wealth monetary system. The focus would be on investing in building and enhancing human, social, natural and built capital assets, while reducing liabilities or risks to well-being and ensuring a fair and equitable distribution to genuine wealth within and across communities.
There are obvious and enormous compelling benefits from such a new system of money creation and genuine wealth management. Humanity would be free of the debt slavery that has so long hindered genuine progress and the true pursuit of a good and happy life. People would no longer be concerned about lack of money in the future; in their old age. The scarcity of money would be eliminated; instead the true of abundance found in nature would be fully realized in that money can be created in amounts sufficient to finance a good life.