Wellbeing Economy: A Paradigm for the 21st Century

Purchase PDF
UN Photo/Cia Pak
A ten minute film introducing the Sustainable Development Goals is projected onto the UN Headquarters ahead of the UN Sustainable Development Summit in September 2015. The goals can provide at least an entry point for institutional change towards a wellbeing economy at the global level.

For the past century, most societies have adopted a narrow definition of economic growth as the route to development. Growth has become an end in itself, as a result of which, the true meaning of development has been lost. Rather than an end goal, development should be viewed as a process towards an improved state of existence for humanity and for ecosystems.

The concept of wellbeing, with its multidimensional character, is far better suited to describe this improved state. Good, enjoyable, and fulfilling lives cannot be achieved through material output alone. Indeed, such output can easily endanger human wellbeing, leading to the deterioration of the social relationships and environmental balance upon which wellbeing depends.

The question is: “How do we build economies designed to achieve holistic wellbeing?”

The current economy can be described as a vertical structure in which wealth created by growth at the top of the pyramid is ‘expected’ to trickle down to the lower layers. The separation of production and consumption roles leaves ‘consumers’ on the receiving end of the growth process. The model is reinforced by the predominant economic growth measurement, which is the gross domestic product (GDP).

By contrast, an economy designed to promote wellbeing needs to be adaptable, integrative, and empowering. Adaptable, because the new economy must operate like a network, abandoning the conventional vertical structure to expand horizontally, and to build resilience against external shocks through a system of nodes; integrative, because it locates systems of production and consumption within the broader biosphere; and empowering, because its users will take control, rather than performing the passive role of mere ‘consumers.’

Moving beyond GDP with the introduction of wellbeing indicators to steer economic policy can massively support this transition. A wellbeing system of accounting would emphasize the costs associated with centralized, polluting, and wasteful production, thus eroding many corporations’ social licenses to operate. It would also highlight the contributions that GDP either downplays or ignores, from the value of natural inputs, to the unpaid activity of households and the social benefits to be derived from small distributed businesses. Civil society will also benefit: its activities will no longer be perceived as marginal (as implicit in definitions such as ‘non-profit’ and ‘third sector’), but rather, as among the key drivers of wellbeing.

The ‘beyond GDP’ debate is now high on the agenda. Many international agencies, including the United Nations (UN), the OECD, the World Bank, and the European Union are actively engaged, as are a number of national governments. Moreover, the UN 2015 Sustainable Development Goals, although at times contradictory in their objectives, provide at least an entry point for institutional change at a global level. As more social actors become aware of how a move beyond GDP can assist their causes, it is to be expected that grass-roots social pressure will also grow, connecting bottom-up movements for change with top-down political reform. The pace is quickening, and radical change within the next decade can be anticipated, provided pressure is maintained.

In a wellbeing economy, the money system will need to follow the same distributed model of governance as the economy itself in order to provide appropriate levels of economic stimulus and control at local, national, and international levels. Local, debt-free currencies, which are mushrooming around the world, would underpin prosperity and economic resilience at a regional level, straddling arbitrary national borders to reflect economic and social networks. A national network of currencies (similar to the Regiogeld in Germany, the largest network of alternative currencies in the world) could replace the national currency to allow communities to trade with each other. Alternatively, a national currency could continue side by side with local currencies. At a global level, a complementary system of crypto-currencies would facilitate the worldwide interchange of ideas and knowledge (the so-called ‘light economy’).

In theory, the GDP economy can only operate within the boundaries of social needs and planetary resource capacity. As an extractive system, affording no value to unexploited resources and making no judgment as to the qualitative value of production and consumption, its growth must ultimately conflict with natural and social equilibria. In contrast to this destructive path, the wellbeing economy model is designed specifically to strengthen social and natural capital while generating human development. A ‘virtuous circle’ is created whereby value that is measured in terms of wellbeing feeds the improvements in the human and natural capital upon which the creation of value depends. The negative impact on the environment will be greatly reduced as the ‘circular economy’ model of resource recycling and systems for up-cycling are integrated into mainstream business models. The services that the GDP model considers to be provided free of charge by nature (so-called ‘ecosystem services’) will become fully valued components of society’s infrastructure, supported by new, horizontal structures of governance that connect people more closely to the natural ecosystems in which they live and work.

The convergence of transformative technological innovation, from 3D printing to the Internet of Things, with a systemic crisis¬ as evidenced by global warming, mass migrations, and rising inequality ¬demands a radical shift and creates the conditions for a profound restructuring of the economic system at the global, national, and local levels. The wellbeing economy is a vision that unites existing streams of governance innovation into a coherent narrative, placing fundamental change within our reach.