17th IEF International Conference
in partnership with ebbf
Co-creating Sustainable Wealth: how can we combine ecology and economy?
Barcelona, Spain, 3-6 October 2013
What is Sustainable Wealth?
Arthur Lyon Dahl
International Environment Forum
What is sustainable wealth? The two words are central to combining ecology and economy. We need to look beyond standard definitions and ask new questions about what we can co-create. Sustainability is a dynamic process that touches everything we do. As we acknowledge the failure of traditional economics and accept that the economy is also a dynamic and evolving complex system threatened by unsustainability, we can integrate new concepts of wealth and new social purposes into our business models and our individual lives. This paper raises questions about both sustainability and wealth to stimulate further exploration of these concepts and their application.
What is sustainable wealth? It is useful to think outside of the box about these two words. "Sustainable" is central to the purpose of the International Environment Forum (IEF), which explores the science and values inherent in achieving sustainability for the environment, our economy, and world society. "Wealth" is at the center of the concerns of ebbf, the Baha'i-inspired forum for values in business. In combining the two terms, we can explore how the ecology or our planet and the economy at the center of our present society can be integrated more harmoniously. What can science and business co-create to make the transition to a sustainable society?
Sustainability is a dynamic process that touches everything we do. The word "sustain" means to keep up, to maintain, to cause to continue, all with reference to an on-going action. "Sustainable" describes the characteristics of dynamic systems that continue to function, to perform essential processes, and to maintain a dynamic balance, and that can change to adapt to changing conditions. What kinds of things can be sustainable? The term can be applied to almost any system, organism, machine, technology, scientific theory, business, corporation, institution, community, nation, government, economy, civilization, the human species, the planetary biosphere, etc. Sustainability includes the element of time, but different things can be sustainable over different time frames. For an individual human being, we can hope to be sustainable over a maximum of 100 years, exceptionally 120. For a species reproducing and evolving over time, sustainability can be measured in thousands to millions of years. Our species Homo sapiens has been around for about 200,000 years. A civilization might survive and be sustainable for hundreds, maybe a thousand years, but the future potential of humanity to build an ever-advancing civilization could extend for up to 500,000 years. For our planet Earth, its sustainable future is linked to that of our sun, which might in another billion years run out of fuel, turn into a red giant, and obliterate the planets around it. As to the sustainability of the universe, we cannot imagine whether there might be limits to its sustainability, since it might even go from a big bang to a big crunch, producing another big bang, etc. Clearly sustainability is a term that has a lot to tell us about our present civilization and economic system.
As we acknowledge the failure of traditional economics with its concepts of equilibrium, selfish actors and perfect markets, and accept that the economy is also a dynamic and evolving complex system threatened by unsustainability, we can integrate new concepts of wealth and new social purposes into our business models and our individual lives. Conceptually we might consider what could be called a "Maslow's pyramid" of kinds of wealth, starting at the base with material wealth, and then adding layers of social, intellectual, and even spiritual wealth. It is important to make a distinction between individual wealth, where the presence of excessive wealth, or its lack among the poor, can have moral implications, and the collective wealth of an economy, society or nation, which is essential for its prosperity and advancement. While we devote great efforts to the creation of wealth, we have not succeeded in halting the opposite processes of war, revolution, and violence that lead to the destruction of wealth. History records almost endless cycles of the creation and destruction of wealth. Breaking that vicious circle would open the door finally to an ever-advancing civilization.
Our first thought of wealth is of material wealth, usually measured as money, and the more you have, the more "successful" you are considered in today's society. We are attracted to money, and envy those who have it, but we also have a negative term for it: lucre. The press is full of stories and lists of the world's richest men and women. This wealth is meant to be shown off with luxury goods. As one expression goes: "If you have to ask the price, you can't afford it". The excessive consumption associated with wealthy lifestyles is an important contribution to unsustainability. For many people, their central purpose in life is to get rich. But does this lead to happiness? Studies show that there is a plateau in wealth (measured as GDP per capita) in relation to happiness. Once the level of wealth allows basic needs to be met and provides a certain level of material security, happiness stops rising and may even decline with further increases in income. Other things become more important.
Furthermore, in many cultures and spiritual traditions, individual wealth is seen as morally suspect, with frequent warnings about riches and spirituality. For example, Baha'u'llah wrote: "Know ye in truth that wealth is a mighty barrier between the seeker and his desire, the lover and his beloved. The rich, but for a few, shall in no wise attain the court of His presence nor enter the city of content and resignation." (Bahá'u'lláh, 1932). A more recent expression of this is "to make the accumulation of wealth the central purpose of one's life is unworthy of any human being. ...what will... ensure true happiness both in this world and in the next is the development of spiritual qualities, such as honesty, trustworthiness, generosity, justice, and consideration for others, and the recognition that material means are to be expended for the betterment of the world" (UHJ 2010).
Collectively, however, wealth is capital. It is an essential economic component along with labour, a means of investment, empowering development and providing savings for the future. We have created a whole set of powerful institutions, with the multinational corporation at the apex, devoted to wealth. The corporate purpose is to create wealth for the shareholders, and the central goal and measure of success is making the maximum profit. Today, it is worth asking if this is sufficient as a corporate purpose, or an invitation to abuse. Is profitability an end in itself, or only a fundamental constraint for survival and a sign of efficiency? Is wealth a means or an end? Does the end justify the means? Many today are saying that business should also have a social purpose (Porter 2011; Sukhdev 2012). "It is the concentration of wealth in the hands of the few that is in urgent need of attention. Indeed, the tremendous wealth generated by transnational corporations could be an integral part of the solution to tackle poverty, through strict regulation to ensure good global citizenship, adherence to human rights norms and the distribution of wealth for the benefit of the larger society." (Bahá'í International Community, 2008)
More generally, what should be the end purpose of the economy, if not to generate material wealth? "The ultimate function of economic systems should be to equip the peoples and institutions of the world with the means to achieve the real purpose of development: that is, the cultivation of the limitless potentialities latent in human consciousness." (Bahá'í International Community, 1998). Clearly the creation of wealth should only be a means to the higher development of civilization both individually and collectively. However, to achieve this end of empowering the development of each human being, that wealth needs to be accessible to everyone. The distribution of wealth is also important, and it is presently going in the wrong direction, with more and more wealth concentrated in fewer hands at the top, and even many in the middle classes falling into poverty. Such extremes of wealth and poverty are socially destabilizing (Turchin 2010).
At the other extreme, the absence of wealth leads to grinding poverty, with perhaps a third of the world population unable to meet basic needs, to feed or educate children, and sometimes homeless.
Some examples of unsustainable wealth today are the wealth associated with fossil fuels, which must be left in the ground to save the planet from runaway global warming; the enormous wealth in financial markets made up of financial derivatives out of proportion to the real economy; the overwhelming levels of public and private debt which can never be reimbursed when the growth rate stays below the interest rate; and the wealth concentrated in the biggest multinationals in monopoly positions or "too big to fail", but which like the dinosaurs may not be able to adapt to a rapidly changing world.
In this context, the book by Eric Beinhocker, "The Origin of Wealth" (2006) provides a well-reasoned critique of traditional economics. He draws on the latest work on complex systems theory to rethink the economy in a systems perspective. Traditional equilibrium economics needs to be replaced by complexity economics with agents using market mechanisms and government leadership to co-evolve fit order. In such non-zero-sum systems, there is an incentive to cooperate in a culture of learning and adaptive management. The result is the evolution of systems with low entropy based on a high information/knowledge content. He thus concludes that knowledge is the true wealth.
Applying this concept to business, he shows that a successful business has the right social architecture, including the behavior of people, the structures and processes in which they operate, and the culture that emerges. Most important is the micro level and the rules and norms of individual behavior. Trust is essential to build social cohesion. He identifies the norms that favour economic development. At the individual level, these are a strong work ethic, individual accountability, and a belief that you are the protagonist of your own life, with benefits from a moral life in this world, being realistic about the present situation but optimistic about the future. The norms for cooperative behavior include a belief that life is not a zero-sum game and that cooperation has benefits, that generosity and fairness have value, and that free-riding and cheating are sanctioned. Norms also need to favor innovation by valuing rational scientific explanations of the world, tolerating heresy and experimentation, supporting competition and celebrating achievement. It is important to have an ethic of investing for tomorrow, saving for future generations, sacrificing short-term pleasures for long-term gain, and enjoying high levels of cooperation (Beinhocker 2006). Still, Beinhocker stays within the framework of material wealth and material and social benefits, when a broader systems framework can highlight other dimensions generating human well-being (Dahl 1996).
Any reflection on what is important for individuals, communities and whole societies will identify a number of dimensions of what can be called social wealth (Dahl 2013a, b). For the individual, these include the family, with all that it brings in close relationships, solidarity, education, and the sustainable replacement of the human species; the community where one lives and works, so essential to humans as a social species; the many other dimensions of social relationships, now being extended through social networking; and the results for the individual, such as a sense of dignity and belonging to a group.
Another dimension of social wealth is incorporated collectively in the institutions of governance, the laws and the system of justice at the core of social organization; and the many other ways we code for and organize our community and society. We have a whole set of structures devoted to creating and managing wealth in itself, including business entities, corporations, the structures of the economic system, markets, the financial system and banks. Beinhocker highlighted some of the social wealth in norms mentioned above that can make this dimension work better.
Beinhocker identified knowledge as true wealth, something that has been evident long before in various spiritual and philosophical traditions. This intellectual wealth includes knowledge in general (including traditional and indigenous knowledge), the sciences and technologies, arts and crafts, and even that other great knowledge system represented by religion and the great spiritual traditions. This wealth has suffered from an economic paradigm based on the allocation of scarce resources, because unlike material goods, knowledge and information increase in quantity and value the more they are shared. This is the inverse of what intellectual property regimes attempt to do, restricting access to knowledge to those who can pay for it.
This intellectual wealth also includes not only its content, but the way such information is communicated and stored. Information unused is only potential wealth. It must be transmitted, read and implemented to fulfill its purpose and become wealth. It would be true to say that the accumulation and application of knowledge is the real wealth of a civilization.
Is this then the ultimate wealth, or is there something more? The old expression about material wealth "You can't take it with you" when you die, raises an interesting question. Maybe real wealth for the individual is what you can take with you. Most spiritual traditions accept the continuation of the individual in some form after death, but even those who believe in an afterlife do not know what it is like apart from some metaphorical expressions (heaven, hell, nirvana, etc).
Our best supposition is that it is not material, and not constrained by time or space. We apparently retain knowledge of what we have achieved (or not), and our impact on others. The emphasis in all spiritual traditions is on the spiritual qualities acquired in this life. This includes our love for others and others' love for us (expressed in their prayers for us), as well as our love for the absolute perfection, unknown and unknowable, both our love for God and receiving His love, as it is often described. This intangible expression of wealth may be the true fruit of an individual life and collectively of civilization.
A broader and more sustainable concept of wealth underlined by spiritual principles can lead to practical applications even when participating in today's economic system. First of all is the acknowledgement that wealth is not inherently bad or to be avoided, but a means to an end. "Wealth is praiseworthy in the highest degree, if it is acquired by an individual's own efforts..., in commerce, agriculture, art and industry, and if it be expended for philanthropic purposes. Above all, if a judicious and resourceful individual should initiate measures which would universally enrich the masses of the people, there could be no undertaking greater than this.... Wealth is most commendable, provided the entire population is wealthy." ('Abdu'l-Bahá, 1957, p. 24-25)
In the context of the broader definition of wealth, and of higher human purposes, it is necessary to question many current business practices. The acquisition and use of wealth are means to achieve higher ends, and should be judged by ethical principles. For example: "Many would readily acknowledge that the acquisition of wealth should be governed by the requirements of justice, which, as a principle, can be expressed to varying degrees, on different levels. An employer and employee, for example, are bound by the laws and conventions that regulate their work, and each is expected to carry out his or her responsibilities with honesty and integrity. At another level, however, if the deeper implications of justice are to be realized, the other two preconditions to the legitimate acquisition of wealth mentioned above must be taken into account, and prevailing norms reassessed in their light. Here, the relationship between minimum wage and the cost of living merits careful evaluation--this, especially in light of the contribution workers make to a company's success and their entitlement... to a fair share of the profits. The wide margin, often unjustifiable, between the production costs of certain goods and the price at which they are sold likewise requires attention, as does the question of the g eneration of wealth through measures that "enrich the generality of the people". What such reflection and inquiry will no doubt make abundantly clear is that certain approaches to obtaining wealth -- so many of which involve the exploitation of others, the monopolization and manipulation of markets, and the production of goods that promote violence and immorality -- are unworthy and unacceptable." (UHJ 2010). In this light, much of the wealth generated by current business activity could be considered morally unsustainable.
In conclusion, the following quote sums up the wealth that can truly lead individuals to build a sustainable society: "Man's merit lieth in service and virtue and not in the pageantry of wealth and riches." (Baha'u'llah, 1978, p. 138)
"The pathway to sustainability will be one of empowerment, collaboration and continual processes of questioning, learning and action in all regions of the world.... As the sweeping tides of consumerism, unfettered consumption, extreme poverty and marginalization recede, they will reveal the human capacities for justice, reciprocity and happiness." (Bahá'í International Community, 2010)
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Bahá'í International Community. 1998. Valuing Spirituality in Development: Initial Considerations Regarding the Creation of Spiritually Based Indicators for Development. A concept paper written for the World Faiths and Development Dialogue, Lambeth Palace, London, 18-19 February 1998. Bahá'í Publishing Trust, London. https://iefworld.org/bicvsid.htm
Bahá'í International Community. 2008. Eradicating Poverty: Moving Forward As One. http://bic.org/statements-and-reports/bic-statements/08-0214.htm
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Bahá'u'lláh. 1858. The Hidden Words (Persian) 53. Baha'i Publishing Trust, London, 1932.
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Last updated 30 October 2013