Wellbeing & Happiness: Defining a New Economic Paradigm Time for a sustainable economic paradigm







In June, 1992, in Rio de Janeiro, the world’s assembled leaders vowed to “cooperate in a spirit of global partnership to conserve, protect and restore the health and integrity of the Earth’s ecosystem” (Article 7). In order “to achieve sustainable development”, they further pledged to “reduce and eliminate unsustainable patterns of production and consumption” (Article 8).

On the same occasion, the Rio partners adopted the landmark Framework Convention on Climate Change, whose declared objective was “stabilization of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system”. Now, 20 years later, we should be gathering to celebrate our progress towards attaining these vital and noble goals, on which our future survival literally depends. Instead, sadly, it is a time for tears. It is a time for deeply sober reflection on our failures to meet the Rio aspirations of 20 years ago, and on our blind progression on a dangerously unsustainable path that threatens the survival not only of our own but of many other species of life on Earth.


Instead of progress, we have perilously accelerated ecosystem decline. In the 1990s, CO2 emissions increased by an average of 1.1% per year. Since 2000, they have increased by more than 3% per year. The UN Millennium Ecosystem Assessment, based on the best and most comprehensive scientific evidence available, concludes that two-thirds of the world’s ecosystem services are now in serious decline. And ecological footprint assessments show that humanity is now using up natural resources at a 35% faster rate than nature can regenerate. And we know too that this ecological destruction is not separate from global economic realities that are increasingly dividing rich from poor:

  • that 20% of the world’s people consume 86% of its goods while the poorest 20% consume just 1.3%;
  • that the richest 20% use 58% of all energy and the poorest 20% less than 4%;
  • that 20% of people produce 63% of the world’s greenhouse gas emissions while another 20% produce only 2%;
  • that 12% of the world’s people use 85% of the world’s water;
  • that the richest 20% consume 84% of all paper and have 87% of all vehicles, while the poorest 20% use less than 1% of each.

The stress of poverty on countless millions of our fellow human beings is no less than the stress on the planet of the lifestyles of the rich.


This is neither the time nor the place for a detailed litany of the world’s environmental woes or of its gross inequities. We are all too familiar with the news of melting icecaps and receding glaciers, resource depletion, species extinction, preventable disease, war, famine, and more. But this 20-year marker is certainly the appropriate historical moment to acknowledge that we literally cannot afford another 10 years on the same trajectory as since Rio 1992. Business as usual is certain doom for the world – or at least for the habitability of the planet by human beings and many other species. And so it behoves us now to take a brutally honest look at why we have been so shockingly incapable of implementing the noble aspirations of Rio 1992, and it particularly behoves us not to fall into the same trap again. If we care at all about this precious planet that sustains us, there is much at stake in this analysis and the actions we now take.


Counting it wrongly

It is now clear that a fundamental impediment to progress towards the Rio 1992 goals is that we have been measuring progress wrongly, and that our present progress measures are sending distorted signals to policy makers worldwide:

  • Our present GDP-based measures, in which economic growth is mistakenly seen as synonymous with wellbeing, literally report more fossil fuel combustion (and therefore more greenhouse gas emissions) as economic gain.
  • The faster we cut down our forests and haul in our fish stocks to extinction, and the more excessively we consume and deplete resources, the more GDP grows. But is that really “progress”?
  • Even pollution, crime, war, sickness, and natural disasters make GDP grow, simply because these ills cause money to be spent.
  • And GDP measures don’t even help us measure progress towards Rio Principle 5 on “eradicating poverty as an indispensable requirement for sustainable development,” because GDP can grow even as inequality and poverty increase.


If we continue to measure progress like this, then Rio + 40 will be a tale of woe and disaster so grim that course correction will no longer be possible. This prognosis is not overly dramatic but is based on the best available science.

Nor is our failure to achieve the Rio 1992 goals a matter of blame. When the Bretton Woods conference of 1944 enshrined GDP as the global accounting system, and created institutions like the World Bank and International Monetary Fund to regulate the present global economic system, economists did not consider that nature’s capacity to support human economic activity might have limits. Not even the most renowned scientists knew that human activity could change the climate of the planet earth, let alone that climate change would become “the greatest challenge facing humanity,” in the words of the UNDP.


Today we know better ― much better! In fact, we know so well that we can no longer hide behind the veil of ignorance that obscured the vision of the 1944 Bretton Woods architects. If we are to understand our failure to meet the 1992 Rio objectives and remove the key impediments to genuine progress, it is the economic system itself, based on long out-dated assumptions, at which we must take aim. And we have no choice. We simply will not undertake the massive greenhouse gas emission reductions required to stave off impending catastrophe for life on earth, and to stabilize atmospheric greenhouse gas concentrations for the first time since the Industrial Revolution, under the present economic paradigm that propels us steadfastly in the opposite direction.


We need nothing less now than a new sustainability-based economic paradigm, with new progress measures, accounting systems, and regulatory institutions, if we are to save humanity and avert disaster. We have a narrow window of opportunity before it is too late.


Table of Contents
  • Introduction
  • Counting it wrongly
  • An unravelling global economy
  • A new sustainability-based economic paradigm
  • Need for a global consensus
  • The new Bretton Woods
  • Towards full-cost national accounts
  • The big leap
  • Creating a happy and sustainable human society