Introducing the Well-being Economy

Introducing the Well-being Economy

The concept of well-being is highly related to good, enjoyable, and fulfilling lives. And that cannot be achieved through industrial output alone. In fact, such output can easily endanger human well-being, leading to the deterioration of the social relationships and the environmental balance upon which well-being depends. And we have seen this happen, with the increase of natural crisis, due to global warming, and the widespread feeling of isolation and alienation that individualism brought us.

According to Professor Lorenzo Fioramonti, a well-being-driven economy should focus on the individuals rather than economic growth per se. In a recent published paper, he theorized about how a well-being economy can be accomplished.

According to Fioramonti, society must redesign its social organization, starting with a restructuring of the economy that will trigger profound changes in both political institutions and society at large.

The problems of the old world

From a governance perspective, the economy is a decision-making system. The economic “rules of the game” shape behaviours, define incentives, and guide collective action. “For instance, by dividing responsibilities between producers and consumers, organizing the distribution of goods and services, and designing a monetary system for exchange, the economy becomes the arbiter of social organization. Its rules and roles are so ingrained that order is easily maintained, even in the absence of an overarching political authority. Therefore, if we can successfully alter those economic governance rules, we stand a real chance of reorganizing society, both politically and socially,” the expert said.

For him, it is also crucial how roles have to be altered in this new view of society. The separation of production and consumption roles leaves “consumers” on the receiving end of the growth process. Nonetheless, our current economic system works in a vertical structure in which wealth created by growth at the top of the pyramid is “expected” to trickle down to the lower layers. But does that really happen?

The professor of political economy thinks that “in this vertical economy paradigm, natural wealth has no value unless owned and exploited. To contribute to development, nature requires top-down control (ideally via a large company, which can maximize output) and must be commercialised through market channels. Neither the preservation of natural beauty to enhance the welfare of ecosystems, nor the management of natural resources for the common good, allows the vertical economy to grow.”

This model has proven to be obsolete and has triggered all sorts of crisis under these rules, such as environmental degradation, rising inequality, mass migration, and resource depletion. The current system is evidently unsustainable and inefficient.

The well-being economy will take the ecosystems as the centre of their concerns

Designing the new well-being economy

What Fioramonti proposes as an well-being economy, is one that is adaptable, integrative, and empowering.

  • Adaptable because the new economy will operate like a network, abandoning the conventional vertical structure to expand horizontally and build resilience against external shocks through a system of nodes;

  • Integrative because it locates systems of production and consumption within the broader biosphere;

  • And Empowering because its users will take control, rather than performing the passive role of “consumers.”

New economic trends have already emerged as alternatives to the old economic system. They are the result of innovarion, and are creating a whole array of new scenarios, filled with possibilities.

As“pockets of experimentation are mushrooming around the globe, where a technological revolution in peer-to-peer software and hardware, 3D printing, decentralized renewable energy systems (microgrids), and agroecology is advancing a new economic model based on collaboration rather than reductive competition. These possibilities for scale and impact of innovation at the global level are unprecedented.”

Empowered by new innovative networks, globalization can slow down without compromising global markets or worldwide communications. This network economy that scales horizontally will thrive in a climate-compatible economic system. The localization and blending of production and consumption will result in a better circular system, with less waste and negative externalities. Moreover, adaptability to local conditions will ensure a better connection between supply and demand, minimizing environmental and social impacts.

Introducing the well-being economy

The challenges become real when the theory has to turn into practice. In this matter, the professor sees the key to change in shifting institutional frameworks, which will free up space for bottom-up business models to change the status quo.

With the blurring of the distinction between entrepreneurial profit and well-being, the parallel difference between producer and consumer (and the transactional, profit-driven activities that seek to separate them) will begin to fade.”

Therefore, a new role will stand as the main character in this new economy. The emergence of this new phenomenon of “prosumer” will change the very meaning of work, as well-being accounting shows how human beings can be productive in ways that transcend the traditional framework of paid employment.”

As new measurements are followed by their relative rewards and sanctions, some business models will have to change to stay profitable and socially acceptable, while those most impactful in terms of negative effects will need to be phased out. Everything has to be commonly shared in the new well-being economy. Even the money system will need to follow the same distributed model of governance as the economy itself, in order to provide appropriate levels of economic stimulus and control at local, national, and international levels.

For the professor, he really believes that is possible, and much more equity economy that will bring fairness to an unfair world.

The well-being economy is a vision that unites all these and many other streams of governance innovation into a coherent narrative, placing fundamental change within our reach,” he concludes.