The Economy of Happiness

It’s not the economy, stupid. It’s how the economy makes us feel: it’s about time, attention, and human drives.

[Note: This text is originally in Swedish. It has been AI translated and checked for errors. Traces of the translation may remain.]

Happiness is quite difficult to grasp and is therefore difficult to make the goal and meaning of politics. It is much easier to relate, for example, to the hard currency in which we measure our material resources. There is no one who can point to happiness and say exactly what it is. Yet our need to understand and politically relate precisely to happiness and suffering is increasing.

The next level of economics is therefore about transforming the human drives that govern our actions, our economic production, our consumption, and our entire working lives. This is what we call the economics of happiness: managing the entire stream of human actions in a sustainable way that promotes the greatest possible well-being for all. The simplest way to understand this is to ask: what levels of happiness and suffering do we create through the use of our time and resources, and how sustainable are these levels?

When we ask these questions and make policy out of them, we will have begun developing an economy of happiness. The economy of happiness means that we use society’s resources in a comprehensive and conscious way to reduce suffering and improve quality of life. Just take a minute to think of how many resources we have: so many talented and inventive people with so much money and materials at their disposal. Are these resources currently being used in the best possible way to create happiness and meaning? Are we really creating safety and freedom in the best possible way? It is a reasonable assumption that we can make much better use of our resources. Surely it would be strange to assume that society could not be improved, truly improved in depth.

It is not just a question of managing material resources, but of managing all of life. It is about how we spend our collective time and attention—and what results this produces. Above all, it’s about reallocating our time and attention so that we achieve greater happiness in a more sustainable way. It is by transforming the human drives of our economic systems that we can make the economics of happiness more effective. The means to this end is so-called “economic co-development”.

1. Happiness Economics for Sustainable Development

It is important to distinguish between some currently common perspectives on how the economics of happiness relates to sustainability. Four options are presented below. The fourth option represents the metamodern stance.

  1. The first way to create more sustainable development with greater well-being is called “absolute decoupling”. This seeks to decouple economic growth from its environmental impact. This may involve emphasizing the consumption of culture and services rather than goods, and focusing on a shift to green technologies.
  2. The second approach is to question economic growth with the aim of eventually shrinking the economy and its ecological footprint. Instead, it emphasizes alternatives to economic growth and ways to reduce the overall volume of economic activity. This approach is often referred to as “degrowth”.
  3. The third approach, “inner development”, is about emphasizing the measurability of happiness and making it a more important part of our policy-making. Renowned economists have highlighted this perspective, for example in the World Happiness Report 2012, which was also the basis for the UN conference on the same topic.
  4. The fourth option is “economic co-development”. Here, inner development is used not only to reduce consumption, but to create the conditions for a transformation of the entire culture and economic systems. In other words, it is about using insights from all three of the first perspectives to manage the economy of happiness in a socially and ecologically sustainable way. It is this perspective that is explored in the following. The common thread in economic co-development is the emphasis on a balance between “inner” and “outer” development. Economic co-development constitutes the “growth” of the economy of happiness.

So-called “inner development” is thus needed to make a sustainable society possible, because inner development leads to fundamental change in society itself. Inner development is our most important tool for a rich and sustainable economy of happiness.

2. What Is Inner Development?

Inner development is about how we experience reality—about our emotions and drives, our fears, our relationships, our desires, our self-images, our trust in each other, our states of mind, our ability to see beauty in the world and in existence, our self-knowledge and our fundamental relationship to life and death, happiness and suffering. Inner development is not free. It does not come without great effort, strong priorities of both human and material resources.

What can inner development look like in practice? How do we develop our needs, our personalities and the everyday contexts in which we live, consume and work? There are, of course, many different ways of answering these questions. But there is also a very simple answer: inner development is turning our attention inwards. It is about putting time and effort into the painstaking work of examining ourselves, releasing the tension in our shoulders, in our backs, noticing the knots in our stomachs, noticing how our thoughts fly and go in all directions. We can do this in two ways.

  1. Self-observation: One way is to be guided in how to notice our own attention and then to practice individually observing our thoughts, feelings and impulses through, for example, body exercises, meditation, relaxation and mindful presence. In this way we master our own emotions and reactions. Our relationship to life’s big questions develops and changes. Our freedom and independence increase. It is well known and scientifically proven that the personality and personal development of managers are crucial for the functioning and development of companies. This is known as leadership development. The same applies, of course, to all employees in a workplace. After all, we are all, in a sense, our own bosses.
  2. Exploratory conversations: The second way is to engage in some kind of conversation where we get to know ourselves and our unconscious motives and behaviors. There is, of course, the therapeutic conversation with trained psychologists or other counsellors, but also group conversations. Companies and organizations can consciously and actively involve people in an ongoing conversation about the basic aims and objectives of the workplace, about what kind of development they want to see. In many workplaces today, it would be perceived as embarrassing if someone asked too deep questions. This is where cultural development is possible. Understanding our own and each other’s motives, desires and motivations is crucial to the economics of happiness.

3. Balancing Internal and External Development in our Economic Systems

Outer development is about things we can see and touch. It is about developing new products and services, new public services, new urban environments, better transportation, infrastructure, healthcare, energy supplies and so on. When economic systems develop, it is also outer development.

Since happiness and suffering can be explained both by the outer reality around us and by how we ourselves experience that reality, we need an economic system that supports both outer and inner development. Today’s economic life—in which we work and produce, in which we consume, in which we allocate our attention and time—overwhelmingly emphasizes outer development. The challenge will therefore be to balance outer development with inner development. We need to start seriously prioritizing inner development throughout economic life as well. This should be done in ways that are scientifically and experientially sound—ways that we find promote long-term well-being and alleviate the many small and large sufferings we experience.

So we can become better at prioritizing how we use the stream of attention and action through which we create our outer and inner reality. It would therefore be valuable to have a well-functioning democratic conversation about how we can develop our inner dimensions.

It is becoming increasingly clear that our current economic systems are failing to enhance well-being in a way that leads to sustainable development.

Developing the internal dimensions is crucial if we are to bring about far-reaching changes to economic systems in an ecologically and socially sustainable direction. Inner development is the most direct way to change the human drives at work in economic systems. It is high time that inner development started to be used more actively and consciously.

4. How Do we Change the Driving Forces of the Economy?

What exactly is the economy? The economy is not some impersonal machine far away from us. We create it anew every day by striving, wishing and demanding. The economy is created by our desires, by what we want and achieve in life—and how we and our earth can satisfy those needs.

We all have motives and drives that guide our actions and influence where we direct our attention in life. We often try to achieve what we feel we lack—it may be pleasure, security, community or recognition. In other words, the driving force in economic life is nothing more than the sum of our desires and dreams. It can sometimes be difficult for us to know exactly what these are. Sometimes it is only in retrospect, when we look back on our lives, that we understand what drove us to prioritize this or that, what drove us to act, why we made the choices we did.

If we are poor, we are driven to work for our survival, to put food on the table and a roof over our head. Then it is the fear of not surviving that drives our choices and priorities. If we are at risk of exclusion and loneliness, then we are driven by a desire to ensure that we are allowed to participate in society so that we can make friends, find a partner, and have a daily life in the context of other people. If we have doubts about our own worth and abilities, then we are driven by a desire to perform, to achieve results that win the recognition of others. In this way, our perceived needs set limits on what we can allow ourselves to do, say and think.

But there are also actions that cannot be directly attributed to something we lack, actions that seem to stem from an abundance, from spontaneous joy in life. Some of the things we do, say and think are expressions of a sincere desire to pass something on, to make something happen, to follow our conscience and our values. Other things we do merely to adapt to the hard facts of life, because we feel we have to since the price would be too high if we did not. We can therefore—somewhat simplistically—talk about two types of drivers in economic life: scarcity-driven action and abundance-driven action.

Scarcity-driven action is when we do something because we have to, when we cannot afford to feel what we really want. It is when we work because we fear losing our job, or when we consume because we feel we have to fix something with ourselves (appearance, style, lifestyle, status, to appease anxieties), when we fail to react to injustice because we feel the price would be too high (for example, we take part in the enforcement of decisions we do not consider ethically correct because we do not want to lose the esteem of our colleagues). Other examples are when we stress and sacrifice our well-being to meet the expectations of others, or when we suppress emotions to fit in. Then it is obvious that we are driven by perceived shortcomings, by our unmet needs. The same principle applies in our private lives: when we continue to be in relationships that harm us or do not serve us, when we choose not to live our dreams to avoid feelings of shame—then we are acting in a way that is driven by scarcity.

Abundance-driven action is when we use our spontaneous creative faculties. We make an effort because we have a positive desire or longing to create something or share something with others. It’s when we feel genuinely inspired, when we believe in what we are doing, when we think our work is so important that we would even pay someone else to do it if we had the chance. It is when we act from our heart and do our work out of love rather than fear of loss or failure. It is when we act from a place of abundance and pass this lust for life on to others.

Admittedly, there is no escaping the fact that scarcity-driven actions will remain present in most people’s lives. After all, not everything can be fun and inspiring. But is scarcity-driven actions really something we want for ourselves and each other? Is it ecologically and socially sustainable to build our economic systems on people’s fears and perceived shortcomings? The only answer is that we have the most to gain by expanding abundance-driven action and ridding ourselves of as much scarcity-driven action as possible.

5. What Is Economic Co-development?

In the economics of happiness, economic co-development is the equivalent of “growth” in the material economy. Economic co-development is about making society richer in terms of happiness and joy of life, making the economy of happiness more efficient in a sustainable way. Abundance-driven action is, in a happiness-economic sense, far more efficient than scarcity-driven action. Abundance-driven action creates much more freedom in our everyday choices. Scarcity-driven action arises precisely when we feel we have no real choice. Abundance-driven action causes less suffering during the effort itself—since it is a labor of love—and it creates services and products of a higher quality because we really care about the outcome of our work. This kind of work makes us feel that our time is valuable, that we are allowed to engage. Perhaps most importantly, it allows us to follow our conscience, to not feel that we have to sell out our values or sense of right and wrong—that we have a choice.

To increase the proportion of abundance-driven and reduce the proportion of scarcity-driven action, we need to create the conditions for us to feel that our needs are secure: provision, community, recognition and so on. Increasing the proportion of joy-driven action is therefore deeply linked to building the next level of welfare—the listening society, discussed in my previous post. Only when we feel truly safe and have good self-esteem can we be expected to act on the basis of inner freedom.

At the same time, more companies, workplaces and other contexts need to be created that actively and consciously support us in our abundance-driven actions.

Developing the economics of happiness requires extensive inner development—development that makes us feel more alive, that makes us experience reality in a more loving and playful way. As our perceived needs change, so do the drivers of the economy. We demand different goods and services, we make different demands on our employers, we start and run businesses with both mind and heart.

The conscious and active development of our inner world creates demand for new services and products. To meet this demand, new economic systems are needed, based more on joyful work and cooperation. These new systems contribute to the creation of a changed economic culture, in which our expectations and demands on ourselves and each other are transformed. This changing culture leads us to perceive reality differently and therefore to reassess our priorities in life. This in turn leads to a change in our needs—and so on. Desires/needs, behaviors, systems, and culture must develop hand in hand. The new needs (inner development) need to be supported by corresponding changes in the other three fields, and development takes place in small steps. No one can change economic systems overnight.

As shown in this figure, economic co-development is when inner and outer development dynamically reinforce each other towards greater well-being and sustainability.

It is by prioritizing more of our time and attention towards inner development that we can expand abundance-driven action.

6. How Do we Create a Truly Free Economy?

What is economic freedom? Many times when people talk about a “free economy” they mean a market with as little government intervention and regulation as possible. Instead, according to the ideas presented above, a “free economy” is defined as an economy with as little scarcity-driven action as possible. The above reasoning has shown that a large part of our economic system cannot in a deeper sense be said to be characterized by “free exchange” and “free choice”. Are we really free when we are driven to work, perform and consume by fears and perceived deficiencies? How free are we when we feel we need to act against our conscience or work for something we don’t feel a sincere commitment to? And are we really free if we are unconsciously influenced to consume through advertising, for example?

In a way, of course, we are always free because we are the ones who make the choices and priorities. But there are different degrees of freedom. The fact that freedom can be deepened thus applies both in democracy and in economic life. So if we consider ourselves free today, we can be even freer in the future—free in a deeper sense.

Existing economic systems can be developed to create deeper freedom. An unfree economy—characterized by fears, shortcomings and manipulations—can explain why economic life today often benefits neither ourselves, our fellow human beings nor the biosphere. We are simply not free enough to make choices from our hearts. Creating real economic freedom is therefore about economic co-development, finding balanced ways to develop the functioning of the market through our collective intelligence. Such freedom will allow, among other things, much more creative and diverse entrepreneurship.

7. How Can we Make Society More Equal and Fair?

Class divisions—what can we do to bridge them? There have been discussions on how to develop the economy of happiness, but not yet on how to make the distribution of happiness and suffering more equitable. Almost everyone experiences some happiness in life—and we all have to go through suffering. But often we see that some of us seem to suffer far more than others, that some of us are knocked out in the games of everyday life, that the weakest and most disadvantaged suffer the most. Does it have to be this way?

It seems that life must always contain a certain amount of competition between us humans: we can’t all live in the same place, have the same life partner, have the same job, be the best employee of the month, be a rock star. We have different circumstances and different kinds of talents. Sometimes we are winners, sometimes we are losers. We all want to play good and admirable roles in life and we sometimes have to take risks to win each other’s recognition, to be seen as successful, intelligent, courageous, loving and so on. We have to play the game of everyday life—a game that can sometimes be too hard for us.

There are three basic ways to relate to this “great game of life”. The first way is to deny the game. We try as far as possible to ignore the fact that there is competition between human beings. We then try to create justice by ignoring the advantages of some and the disadvantages of others, by finding ways to smooth over the differences between us. We deny the game because we simply cannot accept the great injustices. Unfortunately, this means that many of us never learn the rules of the game and therefore never have the opportunity to take control of our lives.

The other way is to embrace the game instead. Then we believe that some people “deserve” to be better off than others because they have demonstrated “good” human qualities. Those who are struggling can learn from those who are better off, so that they too can succeed in life. Then we adapt to the fact that life is sometimes hard and that everyone is ultimately responsible for themselves. The danger of embracing the game is that we start to defend the injustice. Not everyone can always be a winner in the game of life, so even if everyone learns the rules of the game, some people will be knocked out.

The third approach is to want to change the game. Then we don’t deny that people have to compete with each other, but we also don’t accept that life is unfair and that some people have to suffer so that others can have a good time. It is, of course, the third approach that is in line with the economics of happiness.

I have previously written about each of these approaches to the game of life under the titles: Game DenialGame Acceptance, and Game Change.

8. How Can the Games of Everyday Life Be Changed?—From a Society of Tolerance to a Society of Acceptance

We can redistribute happiness and suffering in society by making the everyday game as open, transparent and fair as possible. It is by changing the rules of the game itself that we can make life gentler, more forgiving, less driven by fear. We need to give people more chances, less reason to feel like failures, less reason to lose hope. Our inner development is crucial here.

In the light of the economics of happiness, a fairer, gentler game in all aspects of life—in friendships, in love, in the labor market—will lead to an increase in abundance-driven action and a decrease in scarcity-driven action. But again, how can the game be changed?

There needs to be a transition from a “society of tolerance” to a “society of acceptance”. A society of acceptance is one where we not only tolerate each other’s differences, but actually manage to accept and appreciate each other the way we are. After all, it is not so flattering to be tolerated by others: “I don’t like you, but I’ll let you be”. We all want to feel accepted for whom we are. The amount of acceptance (and of course tolerance) depends a lot on the everyday games we create together. Acceptance can develop and grow as the contexts in which we live become more accepting, more loving if you like.

The society of acceptance is slowly cultivated through changes in culture. Our culture can evolve: how we view success and failure, how we judge ourselves and each other. Our inner perceptions of reality can evolve through the cultivation of our social and emotional intelligences. Economic systems can be redesigned to support new forms of consumption, livelihoods and work. In this way, the social game itself can be changed, how we behave and interact in everyday life. In other words, through economic co-development that creates inner security and deeper community, the suffering caused by the games of everyday life is reduced. We get more chances, we judge ourselves and each other less harshly, we can afford to be ourselves to a greater extent.

In other words, through economic co-development creating inner security and deeper community, the suffering caused by everyday games is reduced. We get more chances, we judge ourselves and each other less harshly, we can be ourselves to a greater extent—and we allow ourselves to ask deeper questions about the purpose behind our actions. The economy of happiness becomes richer and we can “afford” greater acceptance.

An important consequence of the evolution of the games of everyday life is that it becomes less important that people have a certain position in society—for example, employed or unemployed. Hierarchies become less pronounced and it becomes less crucial to “have a good job” in order to feel like a valuable person. Class divisions are narrowing. The symbolic value of money decreases. We become more equal.

9. How Does the Economy of Happiness Relate to Ecological and Social Sustainability?

The economy of happiness does not, of course, replace the material economy—it merely complements it. We still need to create and allocate material resources and this has ecological footprints and undesirable social consequences in different parts of the world.

What economic co-development can do is help us become less and less trapped in our own economic systems. Economic systems can be designed more consciously to meet internal needs. This facilitates a fair distribution of resources, facilitates difficult transitions to green and ecologically sustainable systems and leads to more ethically conscious production and consumption. It is also reasonable to assume that such an economy would be much more stable than today’s, for example in times of crisis—simply because it rests on a stronger psychological and social foundation.

So it is not so simple that happier people necessarily have fewer material needs. But freer people can more easily make the right decisions and the necessary adjustments. Well-being and sustainability go hand in hand.

10. The Need for an Economy of Happiness

Our current economic thinking is not enough. We need to think differently. We need to act differently. And we must behave in new ways. Clearly, we can do better. In terms of happiness, our current economic system is just too inefficient. We need to be better stewards of our own actions, of our collective creation. We must learn to manage our attention better, to focus it collectively on what can fundamentally change society for the better.

It is not enough to have societal development that gives us “more of the same” that we already have: more jobs, more welfare, more day-care places, higher wages. We must create something new, develop what we already have, take it to a new level. What we need to change to develop our economy is how we interact, how we talk and relate to each other—both personally and politically.

We need to develop a language, a way of thinking and doing politics that allows us to talk together about the really difficult and deep issues of social life. We need to develop a new political culture. The democratic culture we have today deserves our respect and is admittedly good at solving many problems. But there are also sufferings that our current political culture simply cannot cope with. That is why a new political thinking is needed.

Hanzi Freinacht is a political philosopher, historian, and sociologist, author of ‘The Listening Society’, ‘Nordic Ideology’ and the upcoming books ‘The 6 Hidden Patterns of History’ and ‘Outcompeting Capitalism’. Much of his time is spent alone in the Swiss Alps. You can follow Hanzi on Facebook, Twitter, and Medium, and you can speed up the process of new metamodern content reaching the world by making a donation to Hanzi here.