The stream of enjoyment, or happiness which we derive from this present unquantifiable state is derived from our inner values and beliefs as to what makes us ‘Happy’
These experiences are what we call ‘living’ and happiness in this sense can be measured by the ‘cost of living’ or ‘earning a living’ These experiences can be measured in terms of outlay or cost, the deeper inner experience is unquantifiable.
The quantifiable is what Irving Fisher would call ‘objective’ income.
The non quantifiable is subjective , or indeed ‘psychic ‘ income.
This is very close to a definition of Happiness which Sociologists have struggled with, there are accepted definitions of objective happiness, having a nice house, big car or other material and measurable assets, there are however other subjective notions of happiness which underpin our materialistic reward structure and that deep down , people ,may be rich but unhappy with their lot.
Being objectively happy, or indeed enjoying a material stream of income is different and shorter lasting than ‘Capital’ .
If such Capital ‘Value’ is simply the discounted future enjoyment stream of material possessions, what is the expected return on Capital which provides the ‘enjoyment’ or indeed, if the relationship is turned around, what is the discount rate applicable to derive a Capital sum from the stream of enjoyment?
Whilst a capital asset may provide a stream of income/enjoyment/happiness, maintaining such assets are fraught with difficulty as we often confuse income and the value of the income., i.e short term objective income with longer term subjective value.
In short the wheat crop depends on the land , but the value of the crop does not depend on the value of the land, but rather the other way round, the value of the land is dependant on the value of the crop.
The interrelationship between Capital ‘Happiness’ and Income ‘Happiness’ therefore is not clear, especially when we introduce notions of Capital Gain, or holding gains, due to external factors outside of the income stream.
This is a bit chicken and egg, what to value first, the Capital asset per se, or the discounted Capital value arising from the enjoyment stream.
When we talk of being happy or sustainable happiness,, what we are saying is that individually we do not want to harm our ability to relish the enjoyment stream, such enjoyment being personal and highly subjective.
The most widely accepted definition of Income was put forward by Hicks, and is paraphrased here as the stream of enjoyment experienced whilst leaving the Happiness Capital intact and undiminished at the end of the enjoyment period.
So there is a transactional flow of happiness , and presumably we can go back to our personal discount rates to value Capital and ensure it remains intact.
But let’s take a more metaphysical view, if a tree ( Capital) bears a fruit (apple) we can enjoy the fruit and leave the tree to it’s own devices, thus assuming that the general environment will attend to the needs for sunshine and water as necessary. We are happy with this seasons fruit and we are equally content to know that next season there will be more fruit.Each year we can appreciate the income stream and enjoy the apples, and indeed as the tree grows , then more apples will be produced and hence the income stream enhanced. Our own ‘Income Happiness ‘
is maintained as we have a short term supply .
This is all very well in the short term, we are happy because the fruit is being enjoyed, the tree and Human Capital remains intact and productive and yet we may be ignoring the long term issue here.
Eventually the tree will die through no fault of it’s own , it may be struck by lightning, it may wither through lack of water, it may be chopped down by other people who want it for firewood.
What has happened here is a lack of understanding that income/enjoyment (apples) come at a cost.
Maintaining Capital intact
There is a cost of maintaining the Capital intact, there is also a trade off that says not all apples may be consumed as the seeds are required to replenish the Capital stock and provide future income streams over and above the present tree..
This is where it gets complicated, simply because our actions are not just determined in isolation, they depend on external influences and social co- operation.
The man who then decides that his happiness income from the tree will be in the form of firewood will be at variance with the man who wants to continue eating apples. Taking both stances to their logical conclusion means that there are differing end dates to this stream of enjoyment . and so it is with Human Capital Happiness
General Economic activity is based on the desire of each individual to maximise Utility, or their own personal preference enhancement (happiness).
We must now introduce the concept of welfare, which has been described as ‘states of consciousness’ (Pigou) Welfare is thus increased as the amount of income is increased, the problem being is that there is a strong preference for one sort of income over another, firewood as against fruit, and so therefore what is for the greater good or happiness has to mean that everyone should join in the income, but understand that the Capital has to be maintained, or pretty soon the income will disappear.
It is this definition of income and it’s relationship with time and Capital Value that is problematical.
Maintaining Capital intact
So, in this definition of Happiness, we must appreciate that the deeper stock of Happiness Capital has to be preserved, this is part of the definition of sustainability..
The other part of sustainability definition is that it is a function of time because
a) some capital assets have a ‘natural’ life span according to the environment in which they operate,
b) Welfare requirements and ‘Societal Utility’ change over time as circumstances and technologies change
The quantity of ‘Happiness’ Capital will not always remain constant.
We then come back to the thought earlier that a Capital value can only be achieved as long as the Capital asset is generating a stream of enjoyment that is seen as enjoyment by everyone who participates in the income., this will involve trade offs between each others personal utility.
This is the problem with sustainability, there needs to be a common understanding as to what is sustainable happiness (firewood or fruit) and how long can the Capital asset remain in place before the enjoyment diminishes?
This dilemma is at the heart of sustainability
These subjective measures are difficult to quantify as attitudes and societal values can change very quickly. Managing depression may be important in one country as a long term Capital issue, but in others Human rights may be more important.
And so it is with other Capital Assets, there is a continual set of revolving, and often contradictory requirements which dictate what scarce resources are allocated to whatever Capital maintenance is required in conjunction with the prevailing thought of the day.
Expediency often comes into play as we juggle with an ever set of changing priorities and enjoyment streams all with the trade off of short term objective happiness and longer term subjective and sustainable happiness.
Herein lies the dichotomy, on the one hand the here and now is important as we could all be dead tomorrow, on the other hand there is a legacy beyond our short nasty and brutish lives that lives on longer than us.
At the heart of sustainability is an issue about Happiness, but deeper than this is an issue about collective goals and spirituality in protecting Capital for future generations.
How do we judge what is sustainable and what is not?
There are many reasons why we get decisions wrong, especially on sustainability, and the most important explanation lies in the central insight of cognitive psychology
We collect, assimilate and decide by using two processes, , one is the objective process which uses our conscious mind to ‘rationally’ weigh the pros and cons of resource allocation and come to some view on what does and what does not make us happy, this is the part of the mind that understands data and reason .
The other part is the subconscious mind which has been engineered over centuries to instinctlvely ‘feel’ happiness.
These feelings come to us as intuition, hunches or just plain gut reactions, We can feel that something makes us happy, even if we may not be able to verbalise these instincts. Daniel Kahneman suggests we are unaccustomed to ‘ thinking hard’ whereby the unconscious minds instinctive responses are consciously weighted, assimilated and debated by the conscious mind before there is a collective, mindful decision. This I believe it what Budhhists would call ‘mindfulness’, which rejects short term plausible arguments in favour of a much more considered approach. This is a fundament of sustainable happiness. If we are to get the decision right on what is sustainable and what of our external environment we should care and caress, then understanding this decision making process and managing this process so that mindful, and dare I say it, considerate, decisions are made, we must be aware of the psychology of Happiness.
The role of Society via any one of the recognised ‘states’ is to ensure that circumstances are promoted which enables it’s members to think in an mindful manner and the subjective, unconscious income/enjoyment that we all seek stays in harmony with the maintenance of Capital, ultimately the Earth.
Questions about sustainability are questions about our subjective values and how we deal with the world and it’s resources.
The capacity to enjoy income and understand the overarching principle of maintaining capital intact is inherent in the Golden Rule of doing onto others etc.
The fundamental values of society need to be more empathic with the environment in which we operate and this will at least slow down the rate of self destruction. Compare the thoughts of Malthus and how innovation and technology might make us ‘Happy’ both in the short term, until the next disaster and in the long term, avoiding disaster altogether
We need to come into the age of Empathic Capitalism, which might just be a by product of ‘sustainability’
There also needs to be an empathic shift in the way we debate with each other, again going back to compromise and empathise rather than confront and deny.
The role of education, in it’s broadest sense is important here, opening the debate and giving people a voice based on their considered views is paramount, this also needs to be followed up by those in public office giving the lead and living by societal values, thus maintaining Human Happiness Capital intact and providing societies wherein Humans have the ability to understand how to sustain Capital and enjoy the short and long term but not at the expense of the future. Sustainability and Happiness are therefore interwoven
Readings and references
I Fisher- Income and Capital –The Theory of Interest (New York –McMillan 1930)
H C Simons- The definition of income- Personal Income Taxation University of Chicago press
J R Hicks Value and Capital – Oxford Clarendon press
A C Pigou Maintaining Capital Intact -Economica 1941
Jonathan Porritt- Capitalism as if the world matters -earthscan