Redefining Wealth

The sub-title of EF Schumacher’s classic book Small is Beautiful was ‘A Study of Economics as if People Mattered’, an ironic reference to the way in which our fixation with money – an abstract conceptual system – has eclipsed those things that really matter – happiness, relationships, community. This is what the philosopher Alan Watts called the ‘first great fallacy of civilisation’, the confusion of conceptual wealth which we have created, like the world’s financial markets, with the real wealth which our lives depend upon - topsoil, forests, clean water to drink, food to eat, oxygen to breathe.

Schumacher first introduced the notion of ‘natural capital’ to account for these life-support systems currently ignored by our economics. As he observed, most of us fail ‘to distinguish between income and capital where this distinction matters most. Every economist and businessman is familiar with the distinction, and applies it conscientiously and with considerable subtlety to all economic affairs - except where it really matters: namely, the irreplaceable capital which man has not made, but simply found, and without which he can do nothing.’

Studies show that we have been in a period of ‘ecological overshoot’ since the 1980’s, blowing our way through our collective inheritance of natural capital in a huge binge, using 30% more resources every year than can be replenished by natural processes in that time. In other words, what we are using in 12 months, nature needs 16 to replace. Some of our consumption rates are wildly in excess of this. For example, we currently use as much oil in one year as Nature takes one million years to create.

Although it may sound heretical to some, it is not consumption per se that is the problem. Like all other organisms, humans will always consume and make an impact. The problem is not always what we consume, but the rate at which we consume it and whether or not the toxins or by-products we create in the process can be absorbed, or sequestered, by natural processes. In other words, for sustainability to be a reality, we need to be living off ‘nature’s interest’, not our natural capital.

As the visionary economist Paul Hawken says, ‘The restorative economy unites ecology and commerce into one sustainable act of production and distribution that mimics and enhances natural processes.’ We tend to forget that an economy can always be built on an ecology, but that an eco-logy can never be built by an eco-nomy. The two words actually have the same Greek root, oikos, meaning house, and refer to the management of the household for the mutual benefit of all. As Schumacher was one of the first to recognise, true sustainability can only emerge when Ecology and Economics are realigned.