Capitalism 2.0: Life, liberty and the pursuit of happiness

“Life, liberty and the pursuit of happiness.” 

These words from the US Declaration of Independence also form part of our collective consciousness here in Canada.  We live in a free and democratic society, where we value our rights and freedoms as guaranteed under our Constitution.  The right to pursue happiness and the freedom to experience it – who among us would not want this for ourselves and those we love.  But what does happiness have to do with Capitalism 2.0?

On March 4, 2014, Mark Anielski, author of The Economics of Happiness: Building Genuine Wealth, shared with the TSSS audience at the offices of LoyaltyOne in Toronto, his passion for understanding the value of happiness and well-being as a measure of success.  He discussed how, “we have been living our lives as though the accumulation of wealth is the key to our dreams” and yet despite ever-increasing financial prosperity in North America, people’s ratings of happiness and well-being do not reflect a similar increase.  Clearly there is a disconnect between our goal, happiness, and the techniques we are using in our pursuit of that goal.

[Join TSSS and CSRwire on March 20th 1:00 – 2:00 pm EST for a new WEBINAR SERIES, Capitalism 2.0: A Deeper Dive.  We will be joined by the author of “The Economics of Happiness”, Mark Anielsk, who will share his views on the Future of Capitalism and how well-being is emerging as the new bottom line for business.  To listen to the recorded event please Click Here]

As sustainability legend Ray Anderson, founder of Interface Inc., expressed in his foreword to Anielski’s book, “Anielski has visualized … a possible future, in which affluence will be measured in terms of more happiness and less stuff…Read this and lift your expectations; a saner world is possible, and surely most desirable.” In Anielski’s “saner world”, wealth is not simply about financial capital.  He measures Genuine Wealth in terms of five capital assets:  human, social, natural, built and financial.  This is reflective of the changing asset landscape described by sustainability thought leaders including Bob Willard.

Our current economic model, Capitalism 1.0, often looks at only one of those five assets, financial, when evaluating wealth. This is an anachronistic approach that we must work to change.  The assets that drive our economy have shifted significantly over the past many decades.  While in 1945, tangible assets such as natural resources, inventory, equipment and real estate were responsible for 80% of the economy’s development, by 2010 the balance had shifted completely, with intangible assets such as customer equity, business processes, patents and trademarks now accounting for 80% of economic drivers.

A Cloud of Radioactivity is Not a Success

And yet, we still cling to Gross Domestic Product (GDP) as a measure of economic viability and success.  Why is this problematic?  Because GDP is limited by definition; it has no regard for well-being, only for financial capital and the pace at which it flows through an economy.  As the David Suzuki Foundation recently explained, “Suppose a fire breaks out at the Darlington nuclear facility near Toronto and issues a cloud of radioactivity… All the ambulances, doctors, medicines and hospital beds will jack up the GDP. And if people die, funeral services, hearses, flowers, gravediggers and lawyers will stimulate GDP growth.” Recent events including Hurricane Katrina, the BP oil spill and Ontario’s December ice storm have created increases in GDP – does this mean we should be hoping and praying for more disasters?  Clearly not.

The need to look beyond such measures of financial capital as GDP in assessing the well-being of our economy, and our society, has been identified by thought leaders for many decades. Anielski reminded us of Robert Kennedy’s words:  “…we seem to have surrendered community excellence and community values in the mere accumulation of material things. Our gross national product … counts air pollution and cigarette advertising, and ambulances to clear our highways of carnage. It counts special locks for our doors and the jails for those who break them. It counts the destruction of our redwoods and the loss of our natural wonder in chaotic sprawl…Yet the gross national product does not allow for the health of our children, the quality of their education, or the joy of their play… it measures everything, in short, except that which makes life worthwhile.” Kennedy spoke these words in 1968 – have we learned nothing in almost 50 years?

Stiglitz, Aristotle and The Buddha

Joseph Stiglitz, recipient of the Nobel Prize in Economics (2001) and former chief economist at the World Bank, has suggested alternative measures of progress and well-being, saying that, “GDP has failed to capture the factors that make a difference in people’s lives and contribute to their happiness.”

Well-being and happiness are important for human beings.  Of this there is no doubt.  Aristotle saw happiness as, “A sense of well-being, resulting from achieving excellence in the fulfillment of one’s functions.” The Buddha explained his view that, “The purpose of our lives is to be happy.”  So how do we measure well-being?  How do we know how happy we are as a society?  How do we incorporate such measures into a new economic model, Capitalism 2.0?

Canadians have been involved in the development of tools to respond to these questions: Genuine Progress Indicators (GPI) attempt to measure both the positive and negative impacts of economic activities such as product development and service delivery.  GPI move beyond the simple financial capital measures of GDP and include measures from other asset realms that include social and environmental impacts.

Progress and Well-Being is Severely Lacking

Anielski illustrated the interesting pattern that emerges when we compare GDP, GPI and Environmental degradation and resource depletion over the past 60 years.  There is a constantly climbing graph seen for GDP; GPI shows minor growth until the 1970s but then stagnates at a much lower level than GDP; Environmental degradation and resource depletion is ever increasing, though not as dramatically as GDP growth.  What does this tell us?  According to GDP things are getting better and better – but we’re destroying the resources of our finite planet and our genuine experience of progress and well-being is severely lacking.

Attendees at Anielski’s TSSS talk on March 14 had the benefit of sharing their ideas to imagine what is possible.  Led by Leslie Bennett and Heather Shapter of Open Spaces Learning, participants were asked to create a ‘Graffiti Wall’ to answer the question of what, “it would look like, feel like, sound like to live in a world where competitive advantage in the marketplace is measured by the creation of well-being.”  The walls of the room soon filled with a collective vision of a society that recognizes there is no genuine wealth without consideration of well-being.  Through both words and images, people expressed the themes of inner and outer peace, health, sense of fun and play, appreciation for the natural environment and green spaces, passion and enthusiasm, and time for self, family and friends.  These ideas are just a beginning, a shared vision of that possible, saner world Anielski and Anderson have envisioned.

What are the Metrics for a Sustainable Economy?

We all know the truism, “What gets measured gets managed.”  Shapter and Bennett asked participants to discuss in small groups the question of, “What metrics should we track to build this type of sustainable economy?” Metrics that were suggested fell mostly into the following realms:

• Health (e.g. lifestyle related diseases, trips to doctor, longevity, stress, sleep quality),
• Environment (e.g. waste production and disposal, clean water supply and access, greenhouse gas emissions, access to green space),
• Social (e.g. social interactions and collaboration, prisons per capita, political involvement and engagement),
• Economy (e.g. income inequality, sustainable/living wage, personal/corporate/government debt levels) and
• Education (e.g. literacy levels, access to education, freedom of the press).

Clearly, there are many metrics that could be used so that GPI could be implemented to measure the well-being of our economy and our citizens.  But this will not happen overnight, and there is still a need to help more corporate and government leaders understand that a short-term focus on “maximizing shareholder value” is not the economic Holy Grail that they have come to believe it to be.

Anielski offered suggestions to those in attendance who asked him how they could start to make a difference at both a societal level and in their own professional lives.  He suggested that change starts with discussions around the kitchen table and at block parties with neighbours, that we need to be having these discussions at the community level.  He also expressed his belief that we must hold our governments accountable – that we must ask our finance ministers not only how they plan to stimulate GDP but also what they’re doing to measure well-being.

I’m Happy

For those looking for a concrete plan they could use to start putting theory into practice in their own organizations, Anielski offered this advice: “Implement a Monthly Joy Index. Ask people, on a scale of 1-100, this month, did your work bring you joy and meaning?”  He explained, “I left secure government work and I’m now a private consultant. Don’t get me wrong, there’s stress sometimes, I wonder if the phone’s going to ring with work for me … but it does.  And I’m happy.”