Foreword by Herman Daly

Foreword to The Economics of Happiness: Building Genuine Wealth

By Herman E. Daly
Professor School of Public Policy
University of Maryland
Co-author of For the Common Good
 (with John Cobb Jr.)

Suppose that God sent an auditor to Earth to review the accounts of individuals, firms, municipalities, and nations, with the purpose of assessing their stewardship of Creation and their success in converting resources into good lives lived abundantly, righteously, and joyfully. What accounts or ledgers would this auditor want to review, and by what criteria would he judge their adequacy? In reading this book I could not help thinking of Mark Anielski as “God’s auditor.” I do not want to attribute to Mark any divine authority or ability (he certainly does not claim such), nor am I sure that the Almighty would not ask for some parts of the report to be redone. Of course an omniscient God has no need of an auditor’s report, and the intended audience and beneficiary of the audit is us human beings.

The main criterion guiding the audit is “genuine wellbeing” which is derived from “genuine wealth,” which in turn consists of five capital accounts that assess both the quantity and quality of each type of capital. These five capitals are: (1) human capital — individual minds, bodies, spirits and their capabilities; (2) social capital — quality and strength of our relations in community: trust, honesty, common values, including tolerance; (3) natural capital —stocks and funds of things in nature that yield flows of natural resources and life-supporting ecosystem services; (4) built capital —machines, tools, durable consumer goods; (5) financial capital — money and other liquid assets, fungible and acceptable for payment of transactions and debts.

Our current system of national accounts focuses on (5), pays some attention to (4), and ignores (1), (2), and (3). The problem is that it is the first three that are most responsible for genuine wellbeing. While there is some marginal substitution possible among these different forms of capital (often overemphasized by economists who advise not to worry about depleting, say, natural capital as long as you accumulate an “equal amount” of built capital or human capital), it is important to recognize, as Anielski does, that the different forms of capital are mainly complementary. A shortage of any one limits the productivity of the others. In particular financial capital quickly becomes worthless as natural capital is excessively depleted. And a lack of trust (social capital) limits the value of knowledge (human capital), etc. The fact that financial capital is the most measurable category has biased our attention too much in its direction. But just how measurable is money really? Do we mean M1, M2, or M3, and what kind if measuring rod is it that can be created out of nothing and then destroyed, and while it exists can become longer or shorter? We must not make a fetish out of measurability. What really counts is often not countable. Assets can be recognized and celebrated and maintained and cared for even if we cannot add and subtract them.

Anielski learns from many people: from Luca Pacioli the Italian inventor of double-entry bookkeeping, from Karl-Henrik Robert of the Natural Step, and Mathis Wackernagel of the Ecological Footprint analysis, and from many others, including even me, which makes this old professor feel good. He looks at examples ranging from Ray Anderson’s Interface Carpet Co with its ecological closed loop materials accounting, to China and the idea of xiaokang, or the “moderately well off society” as an alternative to the ever-growing economy. He studies the Italian province of Emilia Romagna, the Inuit, Bhutan, and the city of Santa Monica. The style ranges from textbook to personal memoir, to philosophical reflection, but all aimed at elucidating and applying the concept of Genuine Wealth.

So, gentle reader, I will take up no more of your time with further summary and endorsement. After all, you now have the book in your hands, so by all means read it carefully. You will be glad you did.

— Herman E. Daly