Helena Norberg-Hodge: The Economics of Happiness

by Bruce Boyers,

Back in the early nineties, I had occasion to spend a fair amount of time in a Mexican village called Ajijic, on the shores of Mexico’s largest freshwater lake, Lake Chapala. Looking back, I can see now that I was there in the midst of a very pivotal event: the encroachment of a global economy on what had once been a thriving local economy. Daily, still making their way up and down the town’s cobblestoned streets were local merchants of all kinds, selling lake-caught fish, handmade furniture, ice cream, water and many other products. The weekly open-air market sold locally grown fruits and vegetables (the tastiest I’ve ever had to this day), meats, and handmade nonedible products as well.

The American retirees who, for the most part, lived in a housing development outside the town, were quite excited about the very first supermarket, which had just opened. Like its typical American cousins, it brought produce and food products from hundreds and thousands of miles away, totally ignoring that which was produced in the local community. Locally made clothing, which at that time could be seen adorning members of the indigenous population, was being replaced by the trendy fashion seen in movies and television—both of which were still relatively new commodities in Ajijic. You could also see on the faces of the older children and teenagers that because the mass media was telling them they lived in a sleepy, backward village, they couldn’t wait to get away to places like Guadalajara, Mexico’s second largest city, sixty miles north. Thus was being quickly eroded what once was a lively local culture.

As it turns out, the things I had seen were not at all unusual and were not even the best example of the effects of globalization on local economies. Helena Norberg-Hodge—analyst, author, speaker, filmmaker, and producer of a new documentary entitled The Economics of Happiness—had made a far more dramatic and demonstrative investigation, going back 30 years.

Norberg-Hodge spent considerable years studying a unique region called Ladakh, in northern India. Known as “Little Tibet” through its cultural and religious connections to Tibet, it is one of the highest-altitude places on Earth to be inhabited, and until relatively recently Ladakh survived in virtual isolation through farming and regional trade.

“Over the years, Ladakh has become a second home to me—or almost like a first home,” Norberg-Hodge says in the film. “It was a huge source of inspiration. I learned about social, ecological and personal well-being—about the roots of happiness.

“Even the material standard of living was high. They had large, spacious houses, plenty of leisure time. There was no unemployment—it had never existed—and no one went hungry. Of course they didn’t have our luxuries, but what they did have was a way of life that was vastly more sustainable than ours. And it was also far more joyous and rich.”

In the mid-1970s, the Indian government began to see Ladakh as a considerable source of income from tourism. As a result, it was very suddenly exposed to the outside world—and thence came truck after fuel-burning truck, over newly paved roads, bearing cheap food and goods, undermining the local economy. The area became overwhelmed with the imagery of Western consumerism, which made its own culture seem pitiful. The people—much like I had observed in Ajijic—began to think of themselves as backward, primitive and poor.

Today there is air and water pollution, unemployment, a widening gap between rich and poor, and, most astonishingly for a people who had been so spiritually grounded, criminality and depression.

Expanding her view from Ladakh as a microcosm to the world at large, Helena Norberg-Hodge was able to see the same effects occurring all over the globe. “I had my eyes opened in Ladakh in the seventies,” she told Calmful Living. “Then when I went back to my native Sweden and to other countries, I suddenly saw that the same thing was going on.

“For instance, in Sweden I found that the biggest food corporation was American company Philip Morris. I discovered that potatoes were being sent to Italy to be washed and put in plastic bags and then sent back again to Sweden. It was utterly outrageous.”

Economic Theory

As she analyzed the problem further, Norberg-Hodge realized that the basic problem was rooted in the fundamentals of Western economics. “What economics has become as a discipline is a really disgraceful set of myths that were essentially formulated at the time of slavery and colonialism,” she said. “One of the fundamentals that was set in stone was that it’s in everybody’s interests to specialize for export, instead of providing a range of things for their own region or their own people. These theories were put in place at the same time that very wealthy merchants and emerging industrialists were benefiting from turning entire diversified economies into monocultures that produced just cotton, gold or copper, as the whole world was sort of coming under this one umbrella from Europe.

“We really have to question those assumptions from the outset. Economic theory often becomes nonsense when we’re talking about primary production—particularly food production. The idea that industrial specialization leads to an efficiency in nature is an utter and total myth. Inside the efficiency of ecosystems is complexity and diversity. If we would mirror that in our primary production and allow that diversity to flourish, we would have a very different world.”

GDP Madness

Part of the economic practice is that countries use GDP (gross domestic product) as a measure of progress. The more Norberg-Hodge analyzed this, the more she saw it as a very shortsighted view. “Using GDP as a measure of societal progress is little short of madness,” she points out in the film. “If there’s an oil spill, GDP goes up. If the water is so polluted that we have to buy it in bottles, GDP goes up. War, cancer, epidemic illnesses—all of these things involve an exchange of money, and that means that they end up on the positive side of the balance sheet.”

Part of Norberg-Hodge’s philosophy—as one might surmise from her statement on GDP—deals with an actual redefinition of economics. “A broader definition of economics would embrace how we use resources, how we use the natural world, including the animals and people, to provide for our needs and perhaps a degree of comfort,” she explained. “That’s how we should see it.”

The Economics of Happiness clearly demonstrates that, with the “old” definition of economics very much in play, globalization has been, from colonization forward, reducing our planet to trade-dependent societies and economies. Being exposed to idealized marketing imagery, local children are motivated to leave behind their farms and their families; local agriculture disappears, along with local culture. The continuing trend of urbanization exacts a high cost in natural resources as cities continue to swell and require more energy, more food—and more water—all the while expelling mountains of trash. Subsidized food systems mean that goods are transported thousands of miles, wasting precious fuel and contributing to climate change. People and groups moving into cities come into conflict for the few jobs available. Competition from local producers is cut down as giant corporations importing food and goods continue to be subsidized by governments and are encouraged by deregulation and legislation in their favor.

From another, perhaps more important, standpoint, it is also clear that this economic path has not led to happiness. Bill McKibben, author of Deep Economy, quotes a very telling statistic in the documentary, which speaks volumes. “Every year since the end of World War II, one of the big polling firms has asked Americans, ‘Are you happy with your life?’ The number of Americans that say, ‘Yes, I’m very happy with my life,’ peaks in 1956 and goes slowly but steadily downhill ever since. That’s interesting, because in that same 50 years we’ve gotten immeasurably richer; we have three times as much stuff. Somehow it hasn’t worked, because that same affluence tends to undermine community.”


Norberg-Hodge first enumerated her observations and analyses in a 1991 book entitled Ancient Futures: Learning from Ladakh. It was in this book that she originally made public the events she’d seen as globalization hit Ladakh. She also proposed the antidote to what had happened there and in many other parts of the world: localization. Simply, localization means creating more sustainable economies by producing much of what we need closer to home. It also means preserving our customs and cultures, and interweaving these into the goods that are locally produced.

Localization of businesses is a compelling argument. In the film Michael Shuman, author of Going Local, explains an alarming trend. “In the United States right now, local governments are giving $50 billion a year to attract and retain nonlocal business, and we’ve calculated that the federal government is giving another $63 billion. That’s $113 billion a year that is making local business less competitive.”

These subsidies are misdirected, Shuman argues, and he goes on to give a specific example. “One of the most important studies that we have on the effects of local business compares the impact of $100 spent at a local bookstore versus $100 spent at a chain: $100 spent at the local bookstore left $45 in the local economy; $100 spent at the chain left $13. So you’ve got three times the income effects, three times the jobs, three times the tax proceeds for local governments. The principal difference was that the local bookstore had a local high-level management team; it used local lawyers and accountants; it advertised on local radio and TV. None of those things were true of the chain store.”

A case is also made for the localization of finance. Local banking would preclude the liabilities of huge speculation and the vagaries of world markets and would provide greater stability. Money could go into credit unions so it is reinvested into the community.

The most obvious and impactful candidate for localization, however, is the food system. Proponents of industrial-scale monoculture farms argue that they will produce far more food than local farms and end global famine, but hard facts do not bear this out. For 15 years Dr. Vandana Shiva, author of Monocultures of the Mind, has helped analyze local farms in many regions of India—wetlands, high mountains and deserts. “Our research has shown, again and again and again, that biodiverse small farms, using ecological inputs, produce three to five times more food than industrial monocultures,” Dr. Shiva points out in the film.

“We’ve helped to set up local food systems—CSAs and farmers’ markets—all over the world,” Norberg-Hodge continued. “We started promoting this 25 years ago. As an example, one farmer told me that he’d been a farmer all his life and selling to big middlemen in the large distant cities. He said that when we started the farmers’ market and he began selling there, it was like entering another galaxy. He’s now growing 18 or 20 different crops, he has a direct relationship with the customers, and he’s getting the proper remuneration and respect that he deserves, doing one of the most important things that anybody could do.”

Localization doesn’t just benefit far-off rural locales. “I think there are certain myths that keep rearing their heads,” said Norberg-Hodge. “One of them is that localizing is only something that could happen in a small village or town. The fact is that, as a movement, it’s emerged out of quite big cities all around the industrialized world. People have begun reconnecting with their regions and they’re seeing multiple benefits from it.”

Localization in Action

The Economics of Happiness documents instances of successful urban food movements. In San Francisco, government policy now requires all public institutions, from schools and hospitals to prisons, to obtain their food from local sources. In Detroit, where the auto industry has been in decline for decades, a local food movement has emerged that uses vacated land to raise food. In some cases, people can obtain what they need from the garden for free; the organizers only ask that “customers” put in some work on the garden.

The film also covers a number of unique local movements that are gaining momentum. Beginning in the United Kingdom, transition towns were formed in response to climate change and the decline of cheap oil-based energy. In this model, the community becomes dedicated to making the entire municipality fully sustainable. There are currently 96 transition towns in progress in the US.

An outstanding example of a thriving local economy is Ogawamachi, Japan, in which a community-owned biodigester produces energy for the community and compost for a nearby farm. Produce from the farm is sold to local residents and a local food restaurant. Purchases within the community can be made with the town’s own currency and much of the money remains there.

Moving Toward Community

From these initiatives Norberg-Hodge sees hope and a growing awareness.

“I see the world moving in two different directions,” she concluded. “The one promoted by our business and government leaders is toward this outdated model of growth, pushing harder and harder to expand, to scale up and speed up that system. In the meanwhile, the earth is crying out against it, people are crying out against it, and in virtually every economic forum now there are demonstrations. The great hope is that from the bottom up people are moving in exactly the opposite direction, which is toward community.

“What also gives me hope is that there is a growing awareness within many people from the environmental movement that we need to look at the economy, and to understand the economy in a deeper and broader way.

“The wonderful thing is that as we decrease the scale of economic activity, we actually increase our own well-being. That’s because, at the deepest level, localization is about connection. It’s about re-establishing our sense of interdependence with others and with the natural world. And this connection is a fundamental human need.

“I can still maintain my faith in basic human desire for peaceful coexistence and more sustainable ways of living, because virtually everywhere you go you will find people who are trying to work in that direction.”

For more information about the film, projects and events, visit www.theeconomicsofhappiness.org.