Global Systems Accounting Beyond Economics

Submitted by admin on 30. April 2022 - 19:10
Author
Dahl, Arthur Lyon
Year
2021

Global Systems Accounting: Beyond Economics

Arthur Lyon Dahl
Revised and updated periodically - Version 7
  30 April 2022


Key proposals

• A new system of global accounts for the common good relevant to human and natural well-being is being developed using relevant science-based non-financial units of account.

• Nine initial indicator forms of capital are identified to respect both the planetary environmental boundaries of the global commons and the minimum human and social standards for the common well-being of all humanity.

• These accounts could become the basis to internalise environmental and social externalities, leading to global taxes or fines on damaging activities and supporting payments for social contributions and environmental regeneration in the common interest, in an integrated dynamic global system aiming for human and natural well-being and sustainability.

• Development of these accounting systems will provide the basis for the gradual replacement of the present economic paradigm and financial system which values only monetary wealth and GDP.

Webinar presentation on 8 December 2021 for ebbf (40 minutes): https://www.youtube.com/watch?v=VWUFwHH0uX0

Powerpoint: https://www.ebbf.org/_files/ugd/59a585_cc3dcb215afc4d3999a38f0684c8dd4b…


What is wrong?

Despite significant efforts over the last 50 years to create forces of integration in a world that has become a single economic system while remaining socially and politically fragmented, the forces of disintegration are continuing to win out. Increasing wealth has not benefited half the world population, and our environmental decline accelerates. We need to identify the root causes of our problems and the transformation that is needed to succeed in the urgent transition required to address the global environmental crises of climate change, biodiversity loss and pollution, the human crises of poverty, hunger, educational failure, unemployment, inequality, lack of meaning, and all the related social crises representing existential threats to our future.

We are trapped in an economic paradigm that calculates everything in terms of monetary profit and loss, capital and interest, return on investment and the theoretical efficiency of the market. Dimensions of society that cannot be monetized, bought and sold are ignored. Modern neoliberal economic thinking is founded on the assumption that people are fundamentally selfish and aggressive, so we accept as normal that markets and politics are powered by ego, greed, apathy and violence, and that our society values wealth, power and fame. The ultimate indicator in this system is the flow of money measured as GDP, and its endless growth as the solution to all our problems. Yet these factors and measures have no inherent relationship to human or planetary well-being. Many corporations consider only profit and return on investment while ignoring the decline in environmental and social capital and related costs treated as externalities and borne by the whole of society. The solution would be to develop an alternative set of accounts more organically related in a systems perspective to the functioning of the biosphere, the desirable direction of human society, and the right of everyone to a life of dignity and fulfilment.

This paper, revised from time to time, is a thought piece to stimulate reflection and discussion. It is based on integrated systems thinking but makes no claim to originality. There has been no academic search for prior knowledge, although it is obvious that many others must be thinking in the same direction, at least in part. It has benefitted from informal discussions and meaningful conversations with many, including working groups on different types of accounting formed by ebbf – Ethical Business Building the Future, early in 2022. Its aim is simply to encourage creative thinking on better ways forward.

A Conceptual Framework

The science of complex systems can give us a rational conceptual framework to understand the challenges we are facing and to suggest where we want to go to improve universal human well-being in an ever-advancing civilization. Any evolving system seeks to incorporate and support a greater number of components with increased efficiency and higher levels of integration. The system needs to be sustainable over time, with resilience to potential perturbations. As a system develops at larger scales, it will tend to evolve nested sub-systems with ever-higher levels of integration. Systems are dynamic, driven by the capture and flow of energy through the system with increasing thermodynamic efficiency. More complex systems show emergent properties beyond the simple sum of the parts. Examples might be a new coastal community evolving into a complex coral reef ecosystem, or a subsistence village becoming a city. In human society, we are now advancing towards the global level of spatial organization at the scale of the planet, with all the increased complexity and potential that this implies.

Each individual human being is also a complex system, biologically and intellectually, and as a social species, we need to integrate as part of larger human social systems at multiple scales through cooperation and reciprocity. Our individual qualities spread between two extremes, our animal nature which tends to be selfish and aggressive, qualities that are destructive of social good and civilization, and our higher “spiritual” nature, with the potential through education to acquire virtues that contribute to evolving systems that progress human society. This potential defines a dual human purpose, an individual purpose to refine our character, and a social purpose to advance civilization.

We can identify three levels of our life experience from a systems perspective. As individuals we are born and progress through growth, service, fulfilment and ultimately death, with some believing in the prospect of an afterlife. We are also part of communities, immediate social networks with direct physical or virtual contact with others, building relationships. These communities include where we live in a neighbourhood or village, our circle of family and friends, and various social, professional, organizational, religious and recreational communities. Then there are the institutions at larger scales of human organization beyond one’s communities. These include governance institutions (local, national, international) for the rule of law and protection of the common good, economic structures like businesses or professions, and more or less organized communities reflecting cultural, linguistic, artistic, scientific and technological identities. All these are critical for our well-being and success in life, individually and collectively, and our goal should be to maximise all them, leaving no one behind.

A systems perspective also helps us to understand the enabling conditions for success. The environment must provide conditions and resources for us and all life to exist. The planet has three energy systems. Solar energy absorbed and reflected maintains the planet at temperatures within a narrow range suitable for life. The biospheric energy system captures solar energy through photosynthesis feeding plants and everything else including us. Then nuclear decay, largely within the planet. Provides geothermal energy and powers geological processes. All systems are powered by this flow of energy. The biosphere with its ecosystems and species not only provides all our energy, but many ecosystem services, sustainable natural resources, and all our food. Non-renewable resource use must ultimately be circular to avoid running out. We have now extracted or invented many substances with which we are polluting our environment, damaging the biosphere and human health. For all of these, we are now overshooting planetary boundaries, threatening our future.

As humans, we have our own enabling conditions: basic physical needs for shelter, energy, water, and security; food and a sustainable food production system; and good health to enable us to contribute to society. Then there are our social needs for dignity through work and service, for knowledge and education, both individually and collectively, and our need for values, principles and system rules, individually to improve our character, collectively to organize our communities, and institutionally to provide rules for system organization. This systems perspective maps out the framework for an accounting system that measures what is really important.

Rethinking Accounting

Accounting is a rational way to determine the state and trends in a system or process, while generating indicators useful for management. There is no reason why it should be applied only in terms of monetary capital and currencies. These proposals suggest ways to apply this tool to measuring and motivating human and natural well-being, the real aim and purpose of development.

Principles of accounting and indicators

In designing new forms of accounts, we can apply the conceptual tools of economic accounting. Since indicators are important in telling us where we are and suggesting where we want to go, we can start with basic accounting principles and relevant indicators. Capital is a measure of the standing stock of a resource, that can either be static, like a mineral in the ground or a gold bar, or dynamic like a forest or investment in a factory, able to maintain itself, grow and provide beneficial services. Interest is extracting wealth or benefit from capital, either diminishing static capital (which is unsustainable) or harvesting part of the increase in wealth (sustainable). Debt is when we borrow capital with a promise to reimburse it at some future time, generally with interest. The assumption is that the direct investment of the capital, or some other source of income, will allow reimbursement. We usually think of all this in terms of financial wealth, but capital and its services or benefits can be of many kinds, contributing to the functioning and well-being of the biosphere and human society. Considering wealth or benefit only in narrow financial terms is a materialistic approach and the cause of many of our problems.

A critique of the present system

The fundamental fault of relying on accounting in the present financial system is that it favours profit or interest in monetary units (dollars, etc.) over all other benefits. The stock market links capital value to return on investment as dividends or interest, regardless of the purpose of the company. Profit is the basic aim of the banking system and corporations, and is seen as an end in itself and legally as a fiduciary responsibility. This unique focus on material wealth and an endless desire for more has traditionally been labeled as greed, now institutionalised. Money is borrowed through loans with interest determined by risk, and invested in what are expected to be productive activities generating further wealth. There is no inherent link to any other measures of well-being or of beneficial services provided, and negative impacts are ignored. With risks increasing and interest rates down, central banks have pumped great quantities of money into the system to prevent its collapse, inflating government debt while the stock market hits record highs. Since wealth generates wealth in this system, the rich get ever richer and nothing filters down to the middle classes, not to mention the poor. A giant debt bubble has built up between government debt, corporate debt and consumer debt, with no imaginable possibility of reimbursement, only postponement of a reckoning to some indefinite future as debts are rolled over with further borrowing.

This carries over to the extreme differences in wealth between countries. Development aid, in terms of capital transfer to poor countries, is largely as loans, but this seldom goes into activities generating adequate financial returns in weak and perhaps corrupt economies with a large informal sector, and increased risk means higher interest, which accumulates in a vicious cycle of debt. Apart from the exploitation of a neocolonial economic system that removes more wealth from poor countries than it creates, developing country governments must spend much of their available income on debt servicing, and are unable to invest in infrastructure or to meet basic human needs like health care and education. This even impacts development at the local level. Money is often available, but projects aiming for a measurable economic return are lacking. Moreover, donor criteria requiring financial return on investment or reimbursement of loans for projects will also extract wealth from the local economy and ignore all the other non-cash benefits that may be more important to a local community.

By addressing only financial returns in a very narrow view of economics, the system ignores all activities that contribute to society and human well-being without generating measurable financial wealth. Subsistence agriculture feeds a major part of the human population without food being bought or sold. The informal economy of barter or individual entrepreneurship allows many to earn a living and support a family, often hand to mouth, beyond economic statistics or taxation. Indigenous societies functioned very well with reciprocal obligations, cooperation and sustainable resource use without any money involved. Major social services, often provided primarily by women, such as bearing and raising children, keeping a home, feeding a family, caring for the infirm or elderly, and meeting other basic needs, are ignored economically until they have to be replaced by a commercial service. In fact, actors in the economic system often attempt to take over, replace or destroy these activities to increase their scope for profits.

Underlying values and principles

There are two domains that should be at the heart of a system aiming for human well-being and sustainability. The first is what should be the common good of any human society, to maximise the well-being and fulfilment of all of its members, today generally described as human rights. The second is to respect, maintain and improve the common property that we all inherit on a planet endowed with an atmosphere and climate, land and oceans, a rich and productive biosphere with natural systems providing ecosystem services, all of which are intrinsically essential to life but not valued by our present economy except where they can be exploited and often damaged or destroyed for profit. Rather than treating these as externalities, they should be considered the essential human capital and natural wealth at the centre of the system.

To design a new system, we need to start with the underlying values and principles that define our human purpose. These are presently identified by our global society as human rights and obligations. Achieving these is what human well-being is all about. In summary, the foundational principle of justice includes the right of everyone to human dignity, and to equitable treatment leaving no one behind, with special attention to women, children, the disabled and those otherwise marginalised. This expresses the fundamental truth that we are one human family and citizens of this planet in all our diversity, above any other more limited identity.

Following on from this, everyone has the right to the necessities of life such as food, water and shelter, and to the possibility to develop their capacity to contribute to human well-being and social advancement. These should not be conditioned by any artificial limitation such as nationality, ethnicity, religion or place of birth.

As the now-dominant species in our biosphere, we have the responsibility for the care and management of the natural world upon which we ultimately depend for our survival. This requires learning to live within planetary boundaries, moderating our material civilization, restoring past damage, and enhancing the regenerative capacities of nature that ultimately provide all the resources necessary for life and civilisation. This is what is meant by sustainability and is defined in the Sustainable Development Goals.

The human species is distinguished by its intellectual capacity for science, art, culture and spirituality, the intangible dimensions of life and civilisation beyond our material existence. This dimension values science that reveals the realities of our physical world, together with respect for truth as the foundation for trust and trustworthiness to build social cohesion. Human civilisation emerges through cooperation and reciprocity, building institutions that allow ever-higher scales of organization in space and time, perpetuating an ever-advancing society. Enriching, preserving and transmitting this heritage of learning and knowledge must be another central process as we imagine our way forward.


New Forms of Capital and Relevant Currencies

For the environment and our planetary commons, three major environmental accounting systems for energy and climate change (reflected in carbon flow), biodiversity loss, and pollution would already provide major drivers both to internalize environmental costs and to fund environmental restoration and regeneration. They could be interrelated to provide a more integrated view of the state of the biosphere. For our human capital and the well-being of the whole, a set of accounts could cover physical needs to escape from poverty, with adequate food and good health, and less tangible needs for work and service, knowledge and education, and values, ethics and spirituality, would capture some significant dimension of human well-being. Each would use as the unit of accounting, or currency, a science-based measure of the central component, process or function. Other accounts could be developed in the future as needed.

Environmental accounting

Our planetary environment is the foundation for all life and natural resources, but we are now exceeding planetary boundaries and system stability, and eroding the resource base upon which we depend, representing existential risks to our future. Accounts measuring our energy and climate imbalances through carbon flows, our management of biodiversity, and global contamination by pollutants, would target the most critical risks.

1. Carbon (energy) accounts

The climate change crisis is a carbon crisis since planetary heating is largely caused by the greenhouse gases carbon dioxide and methane extracted from fossil storage and increasing in the atmosphere. Measuring their atmospheric concentration has been the main scientific contribution. The present focus is to put a price on carbon emissions from the extraction of fossil fuels, perhaps as a carbon tax, to create a motivation to economise on its release into the atmosphere. Physical carbon accounting at present therefore aims to measure carbon emissions so that their cost can be determined and compensated for in some way. Efforts to account for the other half of the carbon cycle, when carbon compounds are taken out of the atmosphere and returned to terrestrial or ocean storage, often called negative emissions or carbon sequestration, are only considered when someone is paying for it. This is subject to the same flaw as the financial system, thinking in terms of money.

What is needed is a whole accounting system with carbon as the unit of account. The planet became suitable for animal life long ago when plants removed enough carbon from the atmosphere and stored it in the ground to bring down the planetary temperature to be more suitable for life. The global carbon budget has since largely been in balance, with animals releasing carbon dioxide and plants absorbing it, until the beginning of the industrial era.

Extraction of fossil fuels has upset this balance, raising the carbon concentration in the atmosphere to dangerous levels. A proper carbon accounting system would consider the biomass of the planet and stored organic carbon in fossil deposits as the carbon capital stock. Plant-dominated ecosystems maintain that capital and provide ecosystem services as well. Excess carbon in the atmosphere is carbon debt causing global heating, and all releases of carbon dioxide and methane increase that carbon debt. We are living beyond our means in terms of carbon accounting. In this framework, countries with biological resources have the most carbon storage capital and should be valued accordingly, with incentives for environmental regeneration to increase stored carbon stock. All activities that destroy biological resources or release fossil carbon are increasing carbon debt and should be penalized accordingly.

The carbon accounts can be linked to the financial system, since the sale of fossil energy generates monetary wealth that can be taxed, and those taxes could be used to reward carbon removal. Since excess carbon in the atmosphere continues to cause harm, there should be a carbon tax not only on new releases of fossil carbon, but also an annual tax on historic emissions until the carbon is removed, like paying interest on a debt. Where a specific responsible entity (state or corporation) can no longer be identified, this would become a public responsibility of the fossil energy consuming countries. Conversely there should be corresponding payments for carbon capture and sequestration, whether by natural systems, environmental regeneration or technology. Note how differently this would rate industrialized and developing countries, with corresponding incentives. It could become a mechanism to compensate for loss and damage from climate change.

Science can measure the amount of carbon in the atmosphere and estimate the flows corresponding to inputs and withdrawals. It would not be necessary to measure the total geological carbon stock. The total carbon accounting system would provide the basis for quantifying national and corporate responsibilities and the corresponding payments by or to those directly responsible, especially in the private sector and civil society, generating positive and negative incentives to achieve a stable carbon balance. Countries with high per capita fossil energy use would pay the most, supporting climate change mitigation and adaptation in poor countries.

Carbon accounting should be seen as a first step towards what ultimately, from a global systems perspective, should become energy accounting. A system, as a set of connected things that form a whole and work together, requires energy to drive it. Otherwise it is a dead planet, an immobile machine or a smartphone without a battery. Energy can best be though of as a flow, from high or concentrated to low or dispersed according to the second law of Thermodynamics. Systems use this flow to function, and as they evolve they can increase their energy efficiency through complexity.

Our Earth and its biosphere have three important energy systems, two powered by the sun. The first maintains the energy balance of the planet and its atmosphere suitable for life by receiving sunlight and radiating heat out into space, controlled by the atmosphere. This is a delicate balance mediated by greenhouse gases like CO2 which are transparent to incoming light and retain outgoing infrared radiation, as well as particulate matter that blocks incoming light. We see the effect of the latter when a volcanic eruption sends ash to the stratosphere, or if a war with atomic weapons causes a nuclear winter. This impacts the climate and is the subject of extensive modelling.

The second energy system is that of the biosphere, where plant life captures solar energy to make organic materials with carbon, powering all life, the most fundamental of many ecosystem services. This should be valued as the most essential form of capital generating the energy interest upon which we all depend, including all our food. Since carbon is critical to both these energy systems, carbon accounts are a useful currency to assess both.

The third energy system is powered by nuclear reactions of fission (decay of radioactive elements) or fusion (as in the sun). The heat of these reactions radiates out from the planet’s core, as seen in volcanic eruptions or captured as geothermal energy. We also use this for nuclear power generation, but the economics of this are dubious because they do not consider the high cost of the technology and the mining and concentration of fissionable elements, nor the high cost of dismantling nuclear plants and disposing of nuclear wastes safely for tens of thousands of years.

The present economy ignores most of these energy systems, simply profiting from the energy of ancient biosphere carbon as fossil fuels while denying full cost accounting including the impacts of climate change and pollution. Full energy accounting would integrate renewable sources of solar energy through direct capture or indirectly through wind from solar convection or hydroelectricity driven by solar evaporation and precipitation. Biofuels and hydrogen as an energy transporter would be included. The accounts would need to consider the needs for energy storage, concentrated energy for industry and transportation, as well as energy systems economy and efficiency.

From the above, we see carbon accounting in isolation is just a start, before eventually moving towards both planetary energy accounting as it relates to climate change, and accounting for the way human society captures, stores and uses energy to power both human lives and civilization. Biodiversity and food accounts will be complementary to this.

2. Biodiversity accounts

Similarly, we need a biodiversity budget and accounting system, with natural ecosystems and their component species the capital, and every reduction in biodiversity increasing debt. Species extinctions would be bankruptcies and should be penalized accordingly. The accounts can be based on biological inventories and measures of ecosystem services such as generation of organic matter and primary materials, oxygen production, carbon sequestration, and the balance or imbalance in ecological systems, using remotely-sensed imagery of natural and cultivated systems and their dynamics, etc. This would provide an objective scientific basis for the biodiversity capital stock and accounting changes.

There is already a massive effort underway to collect data on biodiversity around the world and to develop relevant indicators, including headline indicators. Organizations like IUCN and the UNEP World Conservation Monitoring Centre have been doing this for decades. The UN System of Environmental-Economic Accounting (SEEA) includes natural capital accounts for biodiversity (https://seea.un.org/content/biodiversity) that are already relatively complete, The SEEA focuses on measuring ecosystems diversity, their extent, condition and services generated while it also helps make the case for protecting and conserving biodiversity by providing a full picture of its connection to the economy. In particular, the information generated by the SEEA can be used to inform biodiversity policies in an integrated manner and develop indicators for monitoring progress toward the biodiversity target.

A major effort at synthesis is now being led by the Secretariat of the Convention on Biological Diversity (CBD) and its various expert groups. The greatest effort has been addressed to documenting species, particularly those threatened or endangered with extinction. Some work is done on the status of ecosystems such as forests, mangroves and coral reefs. Research is now underway to document genetic biodiversity, which adds a whole new dimension, and can identify unique life forms not previously known. The first step, then, is to review all this to determine how it can fit into a larger integrated accounting for human and environmental well-being. Biodiversity creates many forms of wealth which our economic system has exploited massively and unsustainably, and its rapid loss is accumulating debt of lost opportunities for present and future generations, not to mention many free services that will be very costly or even impossible to replace.

Global biodiversity capital needs to be measured in all environments and ecosystems, including global commons such as the open ocean and ocean bottom which are poorly known. It would need to include both a geographic focus on where species and ecosystems are located and how localized or widespread they are, and a functional focus on their roles in the productivity and stability of the biosphere, and the ecosystem services provided, to document cooperation, reciprocity and dependency in the dynamic web of life. With new techniques, it should also be possible to document, inventory and account for genetic diversity, since this can capture information on forms of life not yet identified in other ways.

What still may need to be done is assemble all this into a coherent set of biodiversity accounts that not only document the planet’s capital and natural wealth of biodiversity, but also the biodiversity debt being created as this capital is eroded and lost, and the dynamics of these processes over time.

Where the loss of biodiversity, such as through land conversion, deforestation and overfishing, generates financial income, this should be taxed as interest on debt, with the revenues directed to biodiversity conservation and restoration. Since climate change is becoming a major new driver of biodiversity loss, this should also be accounted for and compensated in the integrated system of global accounts. As with the other forms of accounting, to be complete the financial wealth being generated by the exploitation of biodiversity should be balanced by rewards or payments for its restoration and protection. Then we need some accounting of the services provided by species and healthy ecosystems that are essential both to the efficient functioning of the biosphere and to contributing to human welfare.

Obviously, as in any accounting system, the detail needs to be summarised into overall messages useful for protection and management. A systems perspective would be needed to integrate this into the overall systems dynamics identifying important relationships, interconnections and dependencies, as well as emergent properties that demonstrate the benefits of biodiversity. This could be represented as key “indicators” of ecosystem services that would be meaningful to decision-makers and the general public. Some examples might be:
• soil protection and regeneration
• pollination
• ecosystem diversity, stability and resilience
• coastal protection
• sustainable production of natural resources (wood, fibre, fuels, building materials)
• food production (links to food accounting)
• carbon sequestration (links to carbon accounting)
• contributions to human health (links to health accounting)
• significant threats to biodiversity (invasive species, ocean acidification, etc).

The concept needs to be simple enough for general understanding, and applicable at all scales from local communities and ecosystems (with community participation), scaling up to regional ecosystems, watersheds and bioregions, and up to the national and global levels. The Netherlands is an example where biodiversity concerns are addressed at all levels, with wide public understanding and participation.

What is perhaps of more concern is the fact that extensive official accounting for natural capital and biodiversity has existed for some time in the SEEA and seems to have had little or no impact on economic actors and the financial system. Just as the fossil fuel industry has not only ignored but tried to discredit the science behind climate change, so the exclusive focus on profit continues to drive the rapid destruction of the planet’s natural resources and biodiversity.

3. Pollution accounts

A pollution budget system would consider a clean environment as capital to be maintained, with no wastes accumulating in nature and diminishing its future, and no chemical threats to human health or ecosystems. All releases of pollution and discarding of wastes would increase debt. The environment has some capacity to clean itself of some pollutants, as a kind of wealth generation, but persistent pollutants are becoming an enormous debt burden on the future that is not presently accounted for. The quantification of pollution debts would permit the implementation of the polluter pays principle, with the damage to health and the environment from pollution no longer an externality to be ignored, but quantified and attributed to sources.

The accounts would need to distinguish pollution in different components of the environment. Air pollution is both highly mobile, spreading chemicals around the world and depositing them far from the place of origin, and concentrating human health impacts as in urban air pollution, where nitrogen dioxide from diesel exhaust causes high levels of childhood asthma, for example. Water pollution has significant environmental effects and can contaminate human water supplies and groundwater. Pollutants in soils can be very persistent and affect agriculture. The ocean is the ultimate sink for many pollutants, and the quantities of pollutants and plastics now accumulating in the seas are having significant large-scale impacts.

The challenge in designing an accounting system for pollution and waste is the complexity of all the substances involved and the lack of good data on many of them. The UN Environment Assembly has just agreed to establish an Intergovernmental Science-Policy Platform for Pollution to provide a global scientific assessment, and to negotiate a Global Convention on Plastics. In the meantime, we must simplify to come up with an accounting system that will be capable of signalling the main problems and risks for decision-makers and the public. This would mean selecting just a few key "indicator" pollutants that would tell the story for all the others. Initially, accounts could be developed for some of the main pollutants already well known and identified in international conventions, such as Persistent Organic Pollutants and mercury. Fixed nitrogen would be another possibility because of the high human contribution to nitrogen fixation exceeding the planetary boundary, and its excessive use along with phosphorus as fertilizer. Pesticides are have a significant environmental impact, for example on pollinators. Another possibility is a widely used antibiotic or other pharmaceutical escaping into the environment that could represent that category and is perhaps already monitored.

Global waste is predicted to grow by 70% by mid-century, so it would be necessary to select a few waste streams predicted to grow the fastest, and to relate them to the capacity for their management and treatment. The focus could be on those most likely to cause harm to human health and the environment. Plastics are at the top of the agenda, but a clear definition is needed. Electrical and electronic waste, including digital devices, are another important category with many toxic components. Used lead-acid batteries represent another high volume of waste with toxic lead. The waste streams for these are well documented, the elements are well studied through their life cycle and can be recovered, recycled and reused. Among other wastes, cement might be used as an indicator both of the greenhouse gas impact of its production and its disposal as construction waste.

It would be necessary to start with a minimum set of pollutants and wastes that would characterise the main global human health and environmental impacts, probably not more than ten. The recent scientific announcement that the planetary boundary for the release of novel chemicals and other pollutants has now been exceeded, with measurable planetary consequences, increases the urgency of this form of accounting. The UN Environment Assembly has called for a global convention on plastic pollution and an intergovernmental science-policy process to assess and report on pollution as a support for international action, such as already exists for climate change and biodiversity.

The second challenge is conceiving of an accounting system using the full cycle of these elements or compounds as the accounting currency, from their sources through chemical transformations and uses to becoming pollutants and wastes, and hopefully being recycled or neutralised to complete the accounting circle. This makes it possible to go beyond just the negative view of pollutants to the positive view of useful materials and products, so that the negative accounting of damages can be balanced by encouraging the positive services these elements/materials can render, or their replacement by less damaging alternatives, and ultimately their circular use, rather than linear use and discard. Taxes on releases could go to finance cleanup measures, while creating a negative incentive for further production. For example, there could be a tax on nitrogen fertiliser production, and perhaps on its use in industrial-scale agriculture, to reflect its environmental costs to the global commons.

Once the pollution accounting systems are designed with relevant "currencies" that can be measured and monitored, the next step would be to develop the spatial dimension of their distribution and the dynamics of changes over time, since the impacts are ultimately seen at the local level. One could imagine an animated global map of one indicator pollutant, showing where it is manufactured, incorporated into products, traded around the world, used, and released or discarded. That would show where the responsible parties and victims are. It could also identify who are the corporate actors that profit from this, and the consumer demand that drives the market. Such an accounting system would work as a step towards overcoming the power of the present economic and corporate system that ignores environmental and health costs.

Human well-being accounting

For social sustainability, a similar set of accounts could be created for major dimensions of human well-being, again using as “currencies” direct measures of well-being. Eliminating poverty by meeting basic needs and restraining excessive wealth are a clear priority, complemented by specific accounts for the food system and achieving good health for all.

4. Minimum living standard (poverty) accounts

Addressing poverty has been the top global priority since the Brundtland Commission popularised sustainable development in 1987, and is the first Sustainable Development Goal, yet extreme poverty is increasing again with the pandemic, and half the world population struggles to make ends meet. There are both individual and national definitions of poverty, both in financial terms, which is a problem. At the national level, it is low GDP per capita. Individual poverty is defined in financial terms as a lack of income or low share of per capita GDP. The international definition is living below $1.90 a day in 2011 international prices. Since the present economy only prices things that are exchanged in the market of the cash economy, much is left out. For example, one of the poorest countries in GDP is Tuvalu, a nation of tropical atolls where most people have lived comfortably for centuries at a subsistence level with reasonable nutrition, health and comfort, with a strong sense of community and cultural and spiritual heritage. There may not be resources of value in the international market apart from tuna, but does that make them poor? One of the priorities of the Secretary-General’s Our Common Agenda is to find other measures to complement the failings in GDP.

To escape from this trap of financial measures, we need to redefine poverty and wealth in non-monetary terms, using as currency the well-being that a minimum living standard to meet basic needs can produce, and at the other extreme the harmful impacts that can come from too much wealth and an overabundance of material goods.

The Bahá’í International Community has defined poverty “as the absence of those ethical, social and material resources needed to develop the moral, intellectual and social capacities of individuals, communities and institutions.” Material resources include access to nutritious food, clean water, shelter and some form of energy. To this we need to add access to education, communication and information, health care, community support and security, and the means to fulfil ethical and spiritual needs. An individual or family for whom all these basic needs are met would not be defined as poor, and achieving this for every human being would mean the elimination of poverty. While individual effort is obviously required, there will also be a collective need to provide a social safety net when necessary. This would remove the material barriers to achieving the other dimensions of human well-being defined in this accounting system such as work, knowledge and culture.

The complement to eliminating poverty will be the elimination of extreme wealth as part of reducing inequalities, one of the Sustainable Development Goals. Apart from the other forms of wealth and capital identified in these alternative accounts, we refer here to material wealth generally defined as money, financial capital, treasure and other easily convertible forms of wealth.

What principles might be used to define excessive wealth? For a start, if our higher human purpose is to refine our character and to contribute to social advancement, then too much wealth can be a handicap and distraction, and since resources are inherently limited, such an accumulation of wealth could deprive others. Ethically we should be content with little and freed from all inordinate desire, taking only to the measure of our needs and not what exceeds them. We do not need to accumulate riches, embellish our homes, and acquire things that are of no benefit, just to be extravagant. On the contrary, wealth can be a barrier to learning qualities like contentment and detachment.

This does not mean that we cannot profit from the things of this world when this does not deprive others. Wealth is praiseworthy when acquired through individual efforts in commerce, agriculture, art and industry and expended for philanthropic purposes. If judicious and resourceful efforts can lead to wealth for everyone, this is a great benefit for society. The voluntary sharing of wealth is highly desirable.

Beyond this, there are many social mechanisms to address inequality and the excessive accumulation of wealth. A graduated income tax is one commonly used measure, which could be accompanied by a system of guaranteed minimum income to make up any failure to generate enough revenue to meet basic needs, as one way to eliminate poverty. A tax on new accumulation of capital or increases in wealth, apart from a primary residence, would also share the benefits of this. In a company, a fifth of the shares can be given to the workers so that they receive part of the profits as well as a salary.

Within this conceptual framework, the social capital here could be defined as every human being having a guaranteed access to the means necessary to meet basic needs, which might include a minimum income to make up any shortfall in earnings from employment or subsistence. This means abandoning the myth that poverty is a sign of lack of motivation and a necessary incentive to seek employment. The separate accounts for work (below) address this issue more directly. There is adequate wealth in the world, so this is a matter of a universal social safety net without any conditions such as nationality, handicap or migration status. Having enough to meet basic needs is a human right.

Statistics on poverty are reasonably well developed to measure the debt side of the accounts. More work is needed to create adequate measures of individual wealth, especially since much escapes from national control. The accounting system could then highlight issues of wealth distribution, which is an enormous challenge today between wealthy and poor countries, as well as in the growing inequality within countries as wealth is concentrated at the top. Graduated income and wealth taxes could transfer a share of that wealth adequate to meet the needs of the poor and to provide common services. This would require a harmonized global tax system and social safety net so that no one can escape their social responsibility and everyone can benefit.

There is an overwhelming problem of debt accumulation in the present financial system driven by its many faults and biased accounting, much too complex to address here, and reinforcing past injustices. The above proposals would at least make it possible to restart on a new and more equitable basis.

5. Food accounts

Food security is a growing problem, linked to poverty, crop failures, soil erosion, drought and rising food prices. Food should therefore be considered another form of capital necessary for human well-being. An accounting system would start with the products of all the elements of food production, including commercial and subsistence farming and fishing, aquaculture and other innovative food production systems. Next would be distribution and marketing of food, with commercial actors, food processors and supply chains around the world, as well as failures in food access or distribution leaving people hungry. The purpose of food, as the capital in the account, would be its consumption, paying attention to the ideal of meeting the nutritional needs of all as the ultimate purpose of food capital. At the end of the food accounts would be food waste and its disposal or recycling.

With the population still increasing, soil degradation and water shortages rising, extensive over-fishing, and the limits of planetary food production closer, a comprehensive global assessment of food production capacity is necessary. This needs to include measures of efficiency and sustainability, assessing the damage to soil and ecosystem services from intensive farming, chemical inputs, forest destruction, land conversion, and overuse of water resources, all to maximize current production while eroding the resource base. Overfishing and illegal or underreported fishing are depleting the oceans. Measures are also needed to account for the high food inefficiency in meat production. Finally, the future of agriculture is threatened by climate change, and most current agricultural practices contribute to greenhouse gas emissions.

The global food system is highly integrated through trade, and increasingly dominated by large agro-industries, consolidating their dominant positions and promoting large-scale intensive agriculture dependent on industrial inputs while squeezing out small farmers and unsustainably eroding the resource base. Food accounts would make this system more transparent. There are also the increasing challenges of dependence on unreliable supply chains, food waste, threats to food security and self-sufficiency in crises, and the impacts of climate change and other causes of crop failures and uncertainty. Trade in food will always be needed to adjust for different seasons and capacities, but food accounts would allow this to be planned in a long-term perspective of sustainability. Agriculture is the foundation of society, and the system needs to be designed to give adequate remuneration to the farmers at its base.

The other side of food accounting is its distribution and consumption. The goal should be universally-adequate human nutrition as the aim of food capital. We are far today from a system where everyone is properly fed, requiring both poverty reduction and major improvements in the system of food distribution, and local production where possible. The set of food accounts could be the basis for controls or taxes on unsustainable production methods and on commercial foods of low nutritional value, and support to maintain and regenerate food production capacities guaranteeing a decent income to both subsistence and commercial farming and fishing.

6. Health accounts

Health is another essential requirement for well-being. A health budget would obviously start with individual health and the ability of each person to optimize their physical capacity to achieve well-being and to contribute to society. Such accounting would treat human health and productivity as capital, and all activities that damage health would increase debt. This is presently measured largely as increasing financial costs of the health care system, not as a loss of human well-being. The accounts would need to consider health at all stages of life, both in terms of the characteristics of a healthy body and its biological requirements for care and nutrition (linked to food accounts) and behavioural determinants of health from exercise to harmful addictions. While ageing and death cannot be avoided, much can be done to improve well-being at all stages of life as part of human health capital. However, no person lives in isolation, but in a family and community that determine many health outcomes, so health accounting should include family and community health.

There is, of course, extensive medical information on individual health, more perhaps on the curative perspective of causes of disease and bad health, rather than a preventive approach of encouraging good health. However, looked at over an individual lifetime, the health of a baby and growing child is largely determined by the family behaviour and environment. As the child leaves the family circle, it is the community that has an increasing influence on health. Marriage and raising a family then become an important framework for health outcomes, including those of the next generation. Through adulthood, while individual behaviour and choices of diet and lifestyle are important to health, there is still a significant component of community influence, including incentives for good and bad actions and access to information and health care. The inevitable decline in old age increases dependence on the family and community as determinants of the best possible health in the last years of life. Health in this larger context obviously includes mental health, which is closely linked to physical health, and even spiritual health, which again has a powerful influence. This would suggest the need to measure good health and its positive benefits as health capital to be maximised.

The other side of the health accounts would address all those things damaging human health. Control of diseases is an obvious dimension, linked to improvements in health care systems everywhere. Tobacco use and narcotic drugs presently generate financial profits, because the human health impact is not integrated into the accounting system with rewards and punishments, especially for producers. The same could be said for fast foods with little nutritional value and the high use of sugar and salt for their addictive potential in highly processed and heavily marketed food products. Pollution also impacts the health budget, as do all the impacts of climate change on health, so there are interlinkages possible between accounts from an overall systems perspective. Recent research, such as in the book Stolen Focus: Why You Can’t Pay Attention by Johann Hari, shows the damaging impact of the new information technologies, particularly smartphones, social media and online games, in creating addictions and destroying the brain’s capacity to concentrate. This can be added to other social ills like alcohol, drugs and consumerism that have detrimental impacts on health, where the community plays an important role.

A preliminary listing of factors damaging health that should be accounted for could include: general measures such as life expectancy, child mortality (under 5 years), number of sick days, people under regular medication, lack of regular exercise, food insecurity, starvation, poor nutrition, food contamination, and inadequate health care. Another category would be diseases: malaria and other vector borne diseases, pandemics, cancer rates, diabetes, obesity, asthma, water borne diseases, and others depending on the region and country. Natural disasters and accidents are also a significant cause of mortality and invalidity: traffic accidents, earthquakes, heat waves, flooding, and radiation exposure from nuclear accidents, among others. Then there is ill health and death from mental illness and social problems: gender violence, violence from racism, hate crime, gun violence, drug abuse, suicide, depression, stress from poverty, racism and other forms of discrimination, work stress and burnout, work accidents and unhealthy work environment (agricultural chemicals, indoor pollution, etc.), war and conflict, and even lack of access to nature.

The challenge for defining an appropriate “currency” for accounting in this area will be to find scientifically-valid and measurable descriptors of the ideal health outcome for an individual throughout life. Such accounting would support individuals in both the refinement of their character and their contributions to society. A healthy body is a tool to achieve other ends rather than an end in itself. Even serious health problems or physical handicaps can be incentives to grow and develop spiritually and to compensate and contribute in other ways to society. This is where the roles of the family and community are important in helping each individual to find their place and to develop their capacity for meaningful service in dignity.

The existing framework of health statistics can provide the basis for this accounting, although more work may be needed to collect statistics on good health for everyone and on high life expectancy as the desirable outcome, to balance all the data on disease and morbidity. A multicultural perspective would consider all the contributing factors to good health, beyond the curative approach of Western medicine.

From this perspective, accounting in some “health currency” is really a measure to optimize each person’s ability to contribute to individual and collective well-being in this world as we build a global civilization. This would represent the maximum health capital, perhaps with some measure of “service/years” that each person in good health is able to contribute at each stage in life, from junior youth activities to the stories of the elders. Each person born into this world would therefore have an ideal potential lifetime health capital in service years on some curve from the earliest contributions of a small child to the last efforts of a dying elder. The listing above enumerates many of the contributors to “health debt” that destroy this capacity or even cut a life short. Measures of all those factors and their prevalence in a community, nation or the world society would provide indicators of how much human potential has been lost through our neglect of health.

The health accounts would cross-link to some other forms of accounting, for example with the food, poverty and pollution accounts measuring some of the factors damaging health, and the work, knowledge and spiritual accounts relating to the contributions healthy people can make to our collective well-being.

Social accounting

In addition to the material dimensions of human well-being, we need to measure key dimensions of our organization as human societies. Every human being has a capacity to contribute to the wealth and well-being of society, so we need accounts to measure how we use this capacity for work and service, whether in paid employment or in other contributions to society. The intangible dimensions of society, including all forms of knowledge from science and art to culture, and their transmission through education, need to be accounted for. Finally, the values by which social systems are organized, in what might be termed spiritual capital, determine the functioning of all social institutions.

7. Work and service accounts

The foundation of wealth creation in all its forms is human work. Accounts are therefore needed to measure how well this potential is developed and utilized, both for the benefit of the individual and to be useful to society. Every human being has some capacity to contribute productively to society, and should both receive the education necessary to develop that capacity and the opportunity to use that capacity through some form of meaningful work or employment. Work is not just to earn money, but has a social function for human dignity, to be of service to others, and even to develop what might be called higher spiritual or moral qualities through effort and overcoming difficulties. It is therefore a human right. Obviously this definition of work goes far beyond present definitions of wage employment to include social services by both genders like homemaking, raising children, caring for the elderly, subsistence food production, and many environmental and cultural services that escape from present economic measurement because no salary is involved. The first step in designing work accounting is to broaden the definition of work. The goal in this accounting system would be to maximise every person’s productive potential throughout their life as the ideal capital stock.

The work/employment accounting system would value all these contributions, and apply them to all genders, ages, capacities and situations as full employment. This could even lead to considering many additional forms of productivity and service as worthy of remuneration. Unemployment leaving people idle is a form of debt, reducing this potential capital and the society’s capacity to generate further wealth, as does marginalizing part of the population because of gender, ethnicity, handicap or other biases. Many social problems are due to the frustration and exclusion that comes from unemployment. Indicators of the many forms of useful human services, providing positive encouragement to create opportunities for all and negative incentives to discourage the waste of human potential would be the drivers for a more inclusive and productive society.

Accounting for work would emphasize its central role in human society. Providing meaningful work is an essential component of poverty alleviation. For youth it is an important part of the maturation process and provides a focus for individual development. Helping every individual to acquire the necessary talent in some kind of profession and also the means to use that talent, both for its own sake and as the means of earning a living, should be seen as a responsibility of the institutions of society. Any occupation that profits both the individual and others, such as homemaking, is a highly honourable and responsible work of fundamental importance to society. The concept of retirement also needs reexamining. While ageing can affect physical and mental capacities requiring changing the forms of work, arbitrarily requiring the end of work at a certain age makes no sense if work is not seen as a burden to be lifted but a positive contribution that can draw on accumulated wisdom and experience. Accounting for the many diverse forms of work and making visible the contributions they make will provide a creative force for community building and social evolution.

8. Knowledge and education accounts

Beyond the purely material and social dimensions of well-being, humanity has through its intellectual capacity developed a vast storehouse of knowledge, science, technology, art and culture that are intangible yet essential parts of human reality. Unlike material wealth which is physically limited, these distinctly-human dimensions increase in value to society the more they are shared. Knowledge in a book serves no purpose until it is read. The beauty of art must be seen, and music heard. Scientific knowledge must be accessed and used to solve problems and to create new knowledge.

Developing an accounting system in this area is particularly challenging because the relevant currency, which might neutrally be called information when abstracted from its uses, is essentially intangible. It is independent of the platform on which it is stored and the means of its transmission. Take language, for example. It can be spoken, written down, printed in a book, digitized and communicated over the Internet as an image of letters and words or as spoken sound, but the meaning is independent of any of these.

Information can also be static or dynamic. The former is like written text in a book, available and preserved as long as the book exists and its language is still understood. But in this form it has no impact. When someone reads the book, the information is transferred into the brain and consciousness of the reader, where it can have an impact and be used, performing some service or inspiring and guiding some behaviour.

From the perspective of the science of systems, information is what determines how the system is organized, how its components fit together, communicate and interact, and how it evolves and maintains itself dynamically over time. It can have different roles and operate at different scales, from the information enshrined in atoms that determines how they combine into molecules, to the values that determine what is just or unjust in a society.

Information in this broad sense is at the heart of all human development and organization. It is the foundation of civilization, and more advanced civilizations have much greater information content. Therefore an accounting system that can measure in some rational way the amount of information in each component of society, how it is mobilized and used in the functioning of the social system, and whether it is growing and contributing to social progress, or regressing and being lost, would describe an essential element of what is necessary for human well-being.

Human information can take many forms and have different purposes. Science, for example, is the accumulation of information about the physical universe, the natural world, the principles of physics, chemistry, biology, medicine and our own physical and psychological functioning, as well as tools of science such as mathematics and computer programming. Language is another tool we have created to communicate, record and preserve human information, to tell stories, describe history, and transmit thoughts, ideas and feelings in literature, for example. Art is another way to share information, whether a representational picture or sculpture or a more abstract sharing of emotion or a sense of beauty that resonates in others. Cave paintings are some of the earliest records of human information communicated through art to have survived. Music transmits information of another kind, including emotions, through our sense of hearing. Then there is the information on capacities of the human body encoded in sports or dance, which communicate in their own way. All of the manual crafts and skills are also forms of information on the ways an individual worker can contribute something to society. The institutions of society are another expression of information, whether in the structures and processes of governance, the ways to execute economic activities, and all the ways that humans organize with the laws, rules of behaviour and values that underlie human interactions. The scope of information for the human species places us at the apex of evolution of life as we know it.

Perhaps the most fundamental level of human information is the collection of values by which society is organized, and their origin, although often underappreciated today, is in religious scriptures or traditions, which have provided the principles and values for each major stage in the evolution of human society. Whether in the world’s major religions or in the world-views, traditions and conceptions of indigenous peoples, these revolutionary concepts can usually be traced back to unique figures who claim to have received their message from a greater reality beyond themselves, and to be simple instruments for its transmission, generally at great personal cost. At least in their initial pure form, they have represented a creative force for social and individual progress from families to tribes, city states, nations, and now to a global community, as most recently demonstrated in the Baha’i Faith. Some accounting is needed to measure the presence of such values and their effective impact on individual behaviour and institutional functioning, and this is addressed separately as spiritual capital.

Our present materialistic society has tried to turn knowledge, science, art and other forms of information into intellectual property, sold to those who can afford it, which is to deny its true social value and to exclude those who cannot pay for it. This prevents the full wealth creation potential in the information, resulting in a kind of knowledge debt relative to the broader benefits to society of open access. The concept of property as a physically-limited possession is inappropriate for information. Instead, there should be a benefit to the creators or innovators for the work or service they have performed. Where the information content, of whatever form, increases in value or generates revenue, an appropriate share should go to the creator. Any sale of a work of art or paid performance should continue to reward the living creator, so a painter, for instance, should benefit from the increasing value of his works of art even if sold long before, without restricting the ability of everyone to appreciate the beauty in its immaterial forms. The same should apply to scientific advances and inventions.

Another unique feature of this form of capital or wealth is that it must be stored and then transmitted, primarily through education. Every person is mortal, and their acquired knowledge is ultimately lost. Each new generation starts over to receive relevant knowledge through formal or informal education.

One of the remarkable features of the modern age of globalization, starting in 1844 when the first telegraph message was sent, is the rapid advance of technologies for the capture, preservation and transmission of information in all its forms. In pre-literate indigenous cultures, transmission was oral and by direct teaching of practical skills like hunting, food gathering and tool-making. The spiritual principles, values, history and traditions were maintained by the wise men and women of the tribe and memorized by their chosen successors from generation to generation, with cave art or inscriptions on stone where technically possible. Writing was the first tool for recording information in more permanent form, on clay tablets, stone carvings or copied on parchment, beyond what could be retained in a human memory. The invention of paper and printing was another important step forward where information could reach beyond an educated elite. Other forms of information included painting, sculpture, architecture and crafted objects and tools. The recent explosion in technologies has brought photography and printed images, recorded sound for music and the spoken word, and things like film and video to capture movement integrating all together. With the digital revolution, all this information has been freed from the physical formats previously necessary, enabling their instant replication and communication around the world. The collective accumulation of information is now phenomenal.

However, while we now have personal information technologies and access in ways never possible before, our biological capacity to capture, store and use information has not increased, so we have to learn to be selective and to set priorities. The new technologies present new challenges, including a concentration on entertainment and distraction for personal pleasure, manipulation, and cultivating addictions and dependency, not to mention the capture of information as intellectual property to be sold to the highest bidders, excluding all those who cannot afford it.

Access to knowledge should be a human right, and new technologies enable this. We need to rethink how this phenomenal new capacity for information, which increases in value the more it is shared, can contribute to an ever-advancing civilization. How do we give everyone access to science, art and beauty, for example? What is worth recording in the history of peoples, the great spiritual traditions, the advance of civilization, the rich diversity of human cultures? What is useful to inspire, educate and transmit? How do we condense, synthesize, preserve and share all that is best for the human race? Accounting for information can give us the tools to plan for a better future for all humankind.

The accounting system in this area would start with measures of the standing stock and preservation of various forms of knowledge and culture. This would include all the written documents, books and records, digitally-stored formats, objects of art and culture, music in written forms and recordings, languages, and the oral traditions of different cultures around the world. Practical knowledge of farming techniques, crafts and manufactures would also need to be identified. Full documentation of all the sciences and the relevant primary data must be part of the inventory. This would only be the starting point of capital accounts. Next and more importantly, would come the dynamics of access to all this knowledge including through new technologies, the creation and storage of new knowledge, and its effective transmission from generation to generation. The accounts should highlight and favour education, both formal and informal, as the process of keeping this intangible heritage alive and ever-enriched within people. These processes operate at multiple levels from the global and national to local communities and within families. This is an enabling condition for empowering people and creating many forms of human well-being. More needs to be done to define this accounting system because of the intangible nature of the subject, but an increasing number of educational statistics, knowledge inventories and uses of big data may suggest ways forward.

Given all these challenges, a full accounting for knowledge and information is probably beyond reach at present. A starting point would be to focus on the transmission of knowledge and information through education. A unique feature of this form of capital or wealth is that it must be stored and then transmitted, primarily through education, in order to be useful, and the process needs to be constantly renewed. Every person is mortal, and their acquired knowledge is ultimately lost. Each new generation starts over to receive relevant knowledge through formal or informal education, and that education is a life-long process as we are constantly learning. A set of education accounts that looked at the optimal process of education at each stage of life and adapted to each individual capacity, as well as the content of that education as the means for individual fulfilment and service, would define the ideal capital. Failures or interferences in that process would represent educational debt as the loss of human potential and well-being and social progress.

9. Spiritual capital and values accounts

System science shows that the most basic level of organisation in any system is the rules by which it operates. It is through their operation that higher levels of organisation emerge. To change a system fundamentally, you need to change its rules and objectives. In human systems, those rules are defined by the values and ethical principles at the heart of the society, and underlying those is the very purpose of human life. If that purpose sees humans as materialistic, just intelligent animals driven by self-interest, this then justifies greed, dishonesty, lust, indolence, pride and violence in the quest for power and wealth. But collectively, these values lead to social disintegration. At the opposite end of the spectrum of values are unity, cooperation, love, justice, humility, altruism, selflessness, trustworthiness, forbearance and others often labelled as ethical or spiritual.

Efforts to include a spiritual dimension in accounting systems such as Bhutan’s Gross National Happiness are frequently criticised and rejected as subjective, irrational and unacceptable to those who do not share such beliefs. At the root of this objection is a refusal to question the basic assumptions of the materialistic consumer society and economy that humans are fundamentally aggressive and self-interested, competing for scarce resources with a winner-take-all mentality, with the ends justifying any means. Yet recent research shows that we are fundamentally a social species more inclined to cooperation and sharing, and the great majority of the world population adheres to some spiritual tradition acknowledging a reality beyond our physical reality. Any system accounting for human well-being must take this into account.

We also have the example of nature to follow. Since the most highly evolved complex systems, whether natural ecosystems like coral reefs or tropical rainforests, or human civilisations, require cooperation and reciprocity, then an alternative set of human values beyond our basic animal nature of self-interest is necessary for success, with a higher human purpose to develop individual qualities of altruism, love, humility, justice, moderation, truthfulness, respect for nature and the earth, and service to the common good. These are the values that enable higher levels of human organization and social complexity. They are also at the heart of all the major religions and spiritual traditions, including indigenous world-views and value systems, that bring out the best in each person as a contributor to the well-being of the whole. It would therefore complete a set of accounting systems for human well-being to identify a core set of positive human values and to account for their presence or absence in individuals and communities as an enabling condition for systems change at other levels.

There has been considerable research in the social sciences about this dimension of human experience, sometimes referred to as spiritual capital. This may be defined as the accumulated and enduring collection of beliefs, values and dispositions that drive social, organizational and individual behaviour. Another definition refers to the individual and collective capacities generated through affirming and nurturing the intrinsic spiritual value of every human being. This research has identified three fundamentally different ways of looking at spiritual capital. The first is at the individual level, including traits and qualities that relate to individual character, virtues and values that influence or regulate individual behaviour. Their source is in the world's spiritual traditions, cultures, philosophies and world-views. The second is collective spiritual capital that resides in societal structures such a culture, religion and institutions like a church. We are all born into a particular structure, so the influence of this type of spiritual capital is mostly top down. It tends to be seen as limiting, constraining or predetermining, but it also enables people to navigate their reality within the rules of each structure. Sociology sees this more as a subconscious asset in life that we take for granted. The third perspective on spiritual capital is as an ideal that imagines the world and humans as it should or could be. This provides a normative lens that envisions a different world and inspires change toward such a world through individual, organisational and societal transformation. An example of research on spirituality as an ethic is Max Weber’s description of how the values and world-views enshrined in Protestantism shifted individual norms and behaviour from conformist to entrepreneurial.

Assessments of spiritual values or ethics would need to address these three levels, as expressed in individuals, in societal structures, and as the ideal to which the society aspires. They would also need to distinguish the verbal description of those values to which at least lip service is paid, and the extent to which they are really expressed in daily life and institutional performance. One challenge for a global assessment will be to work out the equivalence for languages used to describe values in different cultures, which can be highly variable. However the behaviours that express those values will be more universal, so this is not impossible.

Despite the considerable work in recent years in the social sciences to explore spiritual capital, many questions still remain. For example, what could characterise a spiritual person or community, or moral leader? Given the intangible nature of spiritual capital, what might be some specific values that could indicate its presence or absence? Could these be expressed as a spectrum between a positive value and its absence or negative opposite? Are there ways to measure this in some at least semi-quantitative way? Could this be measured in individuals, and/or collectively in communities? Are there behaviours through which such a value would be expressed that could be measured scientifically?

Trust has been demonstrated as something correlated with spiritual capital, as have active indicators such as volunteering and civic engagement. To go from this recognition to something useful for accounting, further questions need to be addressed, such as how to go from identifying a value like trust as a good indicator, to designing a data collection and assessment system that could determine its presence or absence around the world as a basis for accounting. For example, there are reports that trust is declining, especially in governments, but can this be measured and tracked over time in some consistent way? How might trust be measured in a local community? Is anyone systematically measuring volunteering and civic engagement? Would this work as well in Africa as in Europe or North America? Can it adapt to different cultural frameworks and world-views? More research will be needed to take these concepts forward.

Building on this, it is conceivable to define the components of an accounting system for positive and negative human values, spiritual capital and moral or ethical debt. This could include the values of ordinary people, collectively for whole communities, and as demonstrated by those widely considered as moral leaders (or despots). Once these are made obvious through such accounts, there will be a clearer motivation for the improvements needed for systems change. For all those with more than a purely materialistic perspective on life, this might be defined as the ultimate in human wealth.

Scales of accounting systems

One other consideration is also necessary to complete the conception of an accounting system for human well-being, and that is the distinction and complementarity between the individual, the community, and the institutions of society. Much of the prior discussion on global systems accounting is most relevant at the institutional level of the processes of governance, especially concerning the health of the global environment and the need to remain within planetary boundaries. It is also essential to designing the parameters of the evolving global society beyond the nation-state, bringing justice at the world level. Accounting has traditionally been seen as a national responsibility, with national statistical offices and comparisons between countries, and this will obviously continue. It is possible without too much difficulty to imagine adapting and applying the same accounting principles at the community level, where they would be highly relevant to reading the local reality and consulting on collective priorities and social action.

The individual is a different case. If we are to bring ourselves to account each day, how might those accounts be defined? How to they apply to a person evolving through life from childhood to adulthood to old age? From probably even before we are born, we are acquiring a sense of relationship from contact with our mother, and a baby is already learning through observation and imitation before developing language. Education in the family and community then evolves into formal schooling, as each individual develops the knowledge and skills necessary to function in society and to make a contribution through work and perhaps through other social services or entertainment. There is physical education to maintain good health and to develop the capacities of the body as a tool for service. None of this is permanent, since we all ultimately age, learn detachment from what was previously possible, and eventually die, when all of that individual experience and knowledge, having performed its useful functions and hopefully enabled some spiritual progress, is lost.

The purpose of accounting for an individual is different from that collectively for communities, institutions and the human species. One potential of the individual is to reproduce, creating new human beings and passing on information to the next generation. Any accounting in human terms must capture this dynamic process of transmission from generation to generation within a community or society, which is critical to its survival and development. Since we each must acknowledge that we cannot live forever, we must decide what information, knowledge and life-long learning to transmit directly to our offspring, and what perhaps should be preserved for society and transmitted in some other form, perhaps as a memoir or archive.

It may help to consider individual accounting in the context of our spiritual purpose. From an individual spiritual perspective, the transient things of this world such as wealth, power and knowledge that a community may bestow, count for nothing. On our death at the inevitable end of our physical health, all we take with us is our love for the unknowable essence that is God, the spiritual qualities that we have developed, and some sense that whatever good we accomplished in this life will somehow be remembered and acknowledged in the after life. Our spiritual purpose could be considered happiness in the after life and civilization and the refinement of character in this. Happiness is obviously spiritual happiness, not necessarily what is measured in Gross National Happiness. Civilization is the social contribution we make in living a life of service that contributes to the common good. Refinement of character is cultivating our spiritual qualities and values, or what collectively in a community might be considered spiritual capital and be part of that complementary set of accounts in an ever-advancing civilization. Any person can use this accounting framework to set individual priorities and goals in life, deciding for example what education to get corresponding to one’s own potential, and choosing an occupation that might best advance one or more of these dimensions of human and planetary well-being in one’s family, community, country or the whole world. All these dimensions would help an individual to turn away from a self-centred perspective towards a life of service to others. Individual impact also increases by example, by deeds before words, where self accounting can be an important discipline. The more people set out on this life path, the faster we can advance along all the dimensions of global accounting as we contribute to a better future.

New global definition of wealth

Together, all these forms of capital would become the basis for a new global definition of wealth and progress expressed in a set of complementary currencies, no longer subject to manipulation in the national interest of states, and founded on scientific standards of human and natural well-being. Oversight would be the responsibility of institutions of global governance, in the same way that national central banks take decisions to ensure national economic well-being under the oversight of national governments. The proposals here could easily evolve from what we have already built and available capacities (see transitions below).

The main thrust of these proposals is to replace the complete reliance on the present economic system and its exclusively financial accounting exemplified by GDP, by constructing and proposing a better system in its place. In particular, the existence of a new accounting system makes it possible to question the basic assumption upon which the economic and financial system and its institutions are based: that humans are by their very nature selfish and aggressive.

Modern neoliberal economic thinking is founded on this assumption. We accept as normal that markets and politics are powered by ego, greed, apathy and violence, and that our society values wealth, power and fame. This reflects the animal nature of man. Animals have no free will, but are constrained within their ecosystems. When humans give free rein to their animal nature, they have no natural limits and become worse than animals, as demonstrated by our violence, wars, and multiple forms of inhumanity and exploitation.

The present economy measures success as wealth, whether personal wealth or national wealth measured as GDP. At the corporate level it is profit, return on capital and stock market valuation that generate this wealth, and success requires endless growth in this wealth. Competition is seen as necessary for success, with winners replacing losers in a survival of the fittest. While we condemn individual behaviour that is so greedy, selfish and aggressive that it injures others, we do not see as easily how these values are incorporated in our institutions, particularly modern corporations. Many of the dominant corporations today are greed institutionalized, ready to do anything to maximise profits, with the ends justifying any means. And as institutions, they have little conscience, moral framework or sense of humanity to restrain them. They are behind climate change, biodiversity loss, massive pollution, human exploitation, extremes of poverty and wealth, the arms race, and most of the other ills we have failed to control. The present system of financial accounts is designed to document this wealth and to encourage endless accumulation.

Normally it is government that should ensure the common good of all, but corporate lobbies and corruption now control most governments, and there is no global governance for non-state entities like corporations. All the efforts at multilateral cooperation among states to address human rights and environmental sustainability fail in implementation because they have little influence over those with the real power today in the economic system. This biased accounting system drives decision-making in both government and business.

Selfishness is behind the consumer society, where businesses cultivate endless wants and even addictions in the search for profits, regardless of the human and environmental costs. Think of the alcohol and tobacco industries, the arms industry, junk food, fast fashion and many other sectors that take no responsibility for the impact of their production. One recent example is COVID-19 vaccine development captured as corporate intellectual property to be sold to the wealthy for extravagant profit while depriving the poor of protection and extending the pandemic. Similarly, the government focus on GDP growth ignores the devastating impact of harmful economic activities on human health and well-being and the environment.

This is not a new problem. Black racism has its roots in the transatlantic slave trade beginning over 400 years ago. Colonisation was driven by the entrepreneurial search for wealth by conquest, but exploiting the rich soils of the new world required cheap labour, and Africa was the nearest source. Governments supported these new entrepreneurs by passing laws defining blacks as property rather than human beings to facilitate their exploitation, legalising and justifying slavery, and laying the foundation for modern racism. Today exploitation takes other forms, but the consequences are equally immoral.

There are strong bases to challenge these basic economic assumptions about human nature. Drawing on all faith traditions and many other philosophical sources, we can identify universal values by which to judge such assumptions. There is wide consensus across many faith traditions that human reality includes a non-material or spiritual dimension, at least in potential. We can and should rise above our animal reality. This requires education, and especially education to higher values like honesty, integrity, trustworthiness and generosity. We also have a capacity for social values such as moderation, justice, love, reason, sacrifice and service to the common good. These are the values upon which civilisations have been built, and they are now needed today more than ever. They can provide a framework of values for our rapidly evolving world society, physically united but still rejecting our unity in our diversity, producing today’s crises.

The opposite of selfishness is acceptance of the oneness of humanity, that every human being is a trust of the whole, and suffering anywhere in the world causes all of us to suffer. True happiness comes from living a virtuous life, refining one’s character and contributing to the advancement of civilisation through one’s profession and acts of service.

We can replace the neoliberal free market driven by competition, profit and greed by a just market system based on service to the common good of all as defined by these new measures of well-being. Market transactions would take place with full information, trust and transparency, ensuring an equitable distribution of responsibilities and benefits around the world through open consultation. Service to all would be the motivation for innovation, adapting to changes with nested systems and subsidiarity within a global framework, finding the optimal size and distribution for each productive activity, with sustainability and care for future generations. Everyone’s contribution would be valued, with income based on needs plus moderate rewards, and those more successful giving voluntarily beyond their needs. A guaranteed minimum income, graduated income taxes and a tax on accumulated wealth would eliminate extreme inequality and support public services. The concept of intellectual “property” would be replaced by various forms of recognition for creativity and services rendered, including opportunities for further service, wide sharing of art and culture, and the rapid global spread of useful inventions. The availability of capital through both public and private mechanisms according to opportunities would replace excessive debt. Such a system would be self-regulated by the values underlying it and would not require heavy centralized management. It may seem idealistic, but it represents the potential now released by a globalized society.

In this new framework, money would return to being a currency of exchange between parts of the system, a means and not an end in itself. Logically this would mean a single global currency to eliminate all the manipulation of exchange rates in defence of national interests and speculation. People still need to earn wages, profits are a legitimate measure of efficiency in providing a service, capital investment should generate a moderate level of interest, and the financial system should be sized accordingly. As shown above, the capital defined in the different accounting systems often generates wealth that is converted to monetary units. What is needed is a better balance of inputs and outputs, revenues generated and contributions distributed. The ideal of endless growth would be replaced by moderation, optimal sizes for any activities, efficiency and productivity expressed in all the forms of wealth, and all this sustainable within the confines of our planetary home.

We must transform those economic and financial institutions and their accounting systems that are the embodiment of greed and selfishness which are inherent in their legal charters and stock markets that give absolute priority to profit and return on investment. Business competition can be replaced by cooperation and reciprocity, with innovation motivated by service to the common good, and wide consultation on the best use of discoveries for the advancement of society as a whole. A market can work best with an honest consultation between buyers and sellers about a just price between cost and need. Economic entities such as corporations need revised legal charters that define a social purpose to do good and avoid harm, with profit only one measure of efficiency among others. Governments also need to provide a framework of law and regulation that defines the common interest to be respected, including at the global level. The economic system can still generate wealth, but with the aim of making everyone wealthy.

Where wealth is the measure of economic success, power is its political equivalent. Political leaders driven by a desire for power and fame are similarly selfish and aggressive. Clearly the concept of power as a means of domination, with the accompanying notions of contest, contention, division and superiority, are behind the failure of governments today to serve the common good. We need systems of governance that empower everyone to contribute, consulting on needs and searching for solutions that provide for the wellbeing of all and the sustainability of the environment upon which we all depend, free from the battles of ego that define politics today.

The accounting system proposed here using non-financial measures can define this new vision of progress and motivate positive action. It can guide us to restore climate stability and productive ecosystems and prevent pollution. It can define a society able to meet the basic material needs of all with proper nutrition and good health, to provide meaningful work and access to education, to encourage knowledge, science, art and culture, all by fostering the values and spiritual capital that would be the measures of an ever-advancing civilisation.

Planning the Transition

Fundamental systems transformation to a new paradigm is never an easy process. Change is difficult, and there will always be winners and losers. Our present materialistic system dominated by a financial economy reflects self-centred values of national or personal interest, greed and competition, while these new accounting proposals aim towards a more human-centred, just and sustainable future. This is the challenge even the best-intentioned leaders face today. Climate science says that we must turn the corner within a decade. But what do we do with those millions of people whose jobs and lives depend on the fossil fuel industry, the consumer society, the military-industrial complex, and all the other parts of the economy that depend on unsustainable activities or are not contributing to human betterment? The present system is extremely powerful and fights to maintain itself. The transition will inevitably be traumatic if not catastrophic one way or another.

However, it is not that we are at a standing start. The world has already gone a long way towards defining the necessary components of global common interest, for which accounting systems are needed, in the structures already created for elements of global governance in the United Nations system and other international agreements. The UNFCCC and IPCC could evolve into a global central bank for carbon accounts. The CBD and other conservation conventions, with their scientific advisory bodies, would be responsible for biodiversity accounting. UNEP and related conventions would become a global environment agency to manage the pollution accounts and other aspects of global biosphere accounting that would also link to carbon and biodiversity accounts for management of the overall health of the planet’s natural systems and life support services. The FAO would be responsible for food accounting to ensure that the planet produced adequate food for everyone through sustainable methods and that it was properly distributed to ensure that no one went hungry. The WHO would be charged with ensuring the health capital of all humanity, and that global risks like the pandemic threatening that capital were addressed in the common interest. The ILO would have oversight of the human capacity to generate wealth and well-being through work and employment globally, ensuring that systems were in place everywhere to give every person some useful skill and the means to use it to earn her or his living through some meaningful service. The development organizations like UNDP and the World Bank could be reoriented to redress the present imbalance in global wealth and to devise mechanisms to guarantee a universal minimum income and eliminate poverty. UNESCO and related institutions would manage the accounting of the global capital of science, culture, knowledge and all forms of information to ensure its increase, preservation and transmission through education. Finally the UN Statistics Division could integrate all these accounts with supporting methodologies and train all national statistical services in their use, as they have with the System of Environmental-Economic Accounts (SEEA).

This list is not exhaustive, and there are certainly other dimensions of social and environmental health and well-being that should be included in the accounting system of an ever-advancing civilization. Obviously the institutions above would not manage everything, applying principles of national autonomy and subsidiarity to encompass the wonderful diversity and creativity of human institutions at multiple levels from global to local. They would be responsible for accounting for the global commons and common interest in their area of concern, and of signalling and motivating the maintenance and increase in global capital and wealth, and thus human well-being.

As this new approach to global accounting is researched and refined, it will be necessary to invite many partners to join in its further development to the point where it is ready for initial implementation. The relevant parts of the UN system need to see its interest in the context of their own mandates. Finally governments will need to be brought on board, since they will be the main implementers and beneficiaries of the new system. Only then will it be possible to replace or seriously improve the present systems of national accounts in monetary units with true measures of human and environmental well-being.


Author Profile

Dr. Arthur Lyon Dahl (http://yabaha.net/dahl/prof_e.htm) is an environmental scientist, President of the International Environment Forum (https://iefworld.org/), on the Advisory Board of the Global Governance Forum (https://globalgovernanceforum.org/), and a retired Deputy Assistant Executive Director of UNEP, with 50 years' experience in international organisations. He participated in the 1972 Stockholm Conference on the Human Environment, organised the Secretariat of the Pacific Regional Environment Programme (SPREP), served in the secretariat for the 1992 UN Conference on Environment and Development (Rio Earth Summit), coordinated the UN System-wide Earthwatch, and led the development of indicators of sustainable development. His recent work concerns proposals for UN reform, co-authoring the 2020 book "Global Governance and the Emergence of Global Institutions for the 21st Century" (Cambridge University Press) and recently “Towards a Global Environment Agency: Effective Governance for Shared Ecological Risks” for the Climate Governance Commission: https://globalchallenges.org/wp-content/uploads/2021/11/FINAL-%E2%80%93…

This paper originated as a blog on 7 November 2021 during COP26 (https://iefworld.org/node/1200), and has been revised and extended based on positive feedback on 17 November, 24 November, 17 December, 20 December 2021, 26 January and now 30 April 2022 (https://iefworld.org/ddahl_accounting). ebbf – Ethical Business Building the Future, organized a webinar to present the concept on 8 December (https://www.youtube.com/watch?v=VWUFwHH0uX0), and has set up several working groups to take some of the ideas forward (https://www.ebbf.org/global-systems-accounting). Everyone is encouraged to take the concepts expressed here and develop them to contribute constructively to saving the world before it is too late.


Last updated 30 April 2022