Measuring wealth

Real wealth is a measure of wellbeing. I am wealthy if the way I am, the people I have around me, the work of my life and my relationship to the world are all how I would want them to be. Our culture is hopelessly entangled in using money as a proxy measure for wealth. To be able to experience this difference and this gap between the proxy measure and the real thing, we need to find and use simple measures of wealth.

One reason for our entanglement is our near ubiquitous use of money as a medium of exchange and transaction. First we need to recognize that we can measure the wealth effects of a transaction by asking the parties how satisfied they are with it. As soon as we do this a gap opens up between the monetary aspects of the exchange and the wealth aspects.

Wealth is largely about being rather than having, about relating rather than consuming. Being and relating allow us a sense of our role in the world that is intrinsic and authentic: having and consuming we now understand to be profoundly unsatisfying and destabilizing. If we set out to pay attention to this type of insight by measuring wealth, this effect would be greatly strengthened. Money by its existence promotes owning and consuming, and owning and consuming promote the importance of money. We need to consciously sever this loop before it is severed for us.

The conventional wisdom that money is the bottom line, somehow fundamental and unavoidable is clearly just wrong. Whether we are thinking of money as a store of value or as a measure of value, it fails at the level of the global economy and it fails at the micro level of company accounts. It simply doesn’t tell us what we need to know, and its estimates are subject to wild swings. We know that it is subject to political interference, criminal interference and plain incompetence.

So the fundamental of wealth measurement is transparency. Actually asking someone about their state of wellbeing and how that is changing is far more fundamental than any money measure. We need to be able to detect directly whether a given transaction or change is wealth creating or wealth destroying. Our proxy measures appear to be systematically misleading in this respect: often money increases and wealth decreases in the same event.

I have emphasized elsewhere that wealth, in measuring the degree to which fundamental needs are met, is necessarily multi-dimensional. We are not rational economic man and we have complex needs that may even conflict with each other. This makes it crucial to understand just which dimensions are being met and which are not. Any single dimensional measurement scheme must fail to do this. Of course in today’s world systematically measuring ten (say) dimensions is trivial. What would be less trivial would be getting used to seeing people as complex when trying to meet their needs!

People caught up in fantasies about money tend to forget that the only economic motor that has ever existed is the production of goods and services to meet other people’s needs. Fantasies about money also strangely distort what we consider our needs to be. Human society is such that if we spend our lives meeting other people’s needs and having ours met in return, we find this much more fulfilling than just meeting our own needs. Of course the better we can state our own needs or the degree to which they are satisfied and the better we can understand the needs of others, the more potential this economic motor has. A multi-dimensional scheme must have more descriptive power than a single-dimensional scheme such as money.

Wellbeing is being

Wellbeing is a possibility of being, not a matter of owning or having. If we think of wealth as something we can have or own, we think it does not matter how we acquire it. But our premise here is that we feel wellbeing when we are part of a real economic motor that cares for others as others care for us. We need to pay attention to how that works, not to do some financial engineering or financially driven business planning, but simply because we get more satisfaction by doing it better. The likelihood that in the current system doing it better leads to financial potential is misleading if we make it an aim. (If all this feels strange it is only 100 years since our great business leaders worked on exactly these principles.)

My favorite insight from Marx is that “all that is solid melts into air”. For some reason we invest our energies in building “assets” of all kinds which eventually prevent us from achieving what we want: our toxic families, genocides, ghost cities, rust belts, polluted rivers, destroyed forests. It is an easy step from there to see that our measures, all that is solid, our bottom line, has a dynamic that causes what is measured to melt away. We pay attention to the flotsam and jetsam not to the currents that carry it.

Wellbeing is relating

If we get satisfaction from meeting the needs of others, so we get distress form causing others pain and suffering. This is also a theme of the modern world, that we think we need to consume and that we cannot be responsible for the complex web of exploitation that follows our consumption choices.

But why can’t we measure distress as easily as we can measure the meeting of needs? We can. The economic systems in our world may be complex but there is no doubt about the pain and suffering they create. Why are we so quick to say that the (money) upside justifies all the death, destruction and misery?

What this tells us is that it is our economic systems that relate us to others: at present we don’t get to choose except via our patterns of consumption. If we measured the meeting of needs and we measured the distress we might bother to choose who to relate to so that we could take proper care.