The Real Wealth Of Nations

The Real Wealth Of Nations

by Riane Eisler
I have called this book The Real Wealth of Nations because it shows that our most important economic assets are not financial that the real wealth of nations consists of the contributions of people and our natural environment. To address the needs of our world today, we have to bring together knowledge from many areas. I therefore draw from many fields in addition to


I have called this book The Real Wealth of Nations because it shows that our most important economic assets are not financial that the real wealth of nations consists of the contributions of people and our natural environment. To address the needs of our world today, we have to bring together knowledge from many areas. I therefore draw from many fields in addition to economics, including advances in both the social and natural sciences. I also propose practical steps for moving both economic and social systems in a positive direction. I have written this book to invite discussion and action. It is a book for everyone who wants a better life and a better world, and is looking for practical tools to realize these goals. I am confident that together we can build a new economic system that promotes creativity and generosity rather than greed and destructiveness. Indeed, I am convinced that this is the only viable option at this critical juncture in our cultural and planetary evolution.

Editorial Reviews

Publishers Weekly

Accomplished feminist social theorist and activist Eisler follows up her 1987 international bestseller The Chalice and the Bladewith an inquiry into the nature and causes of "the real wealth of nations" in a contrarian work of grand economic theory. She begins with her original thesis: that we inherit and inhabit a personal and social world that masculinity has built by consistently devaluing and subordinating the feminine. Pointing out the socially and ecologically destructive flaws inherent in both capitalist and socialist economies, she then asserts that our emerging global society needs a new story of what human nature and economics are and can be. For Eisler, economies are social inventions imbedded in larger social systems. She offers a clearly written and compelling account of how the masculine "dominator" mentality brought us to our present juncture, and how a feminine "partnership" mentality can help us redefine key concepts such as "value" and "needs." Citing the most recent economic data and offering numerous relevant examples of places where efforts to practice a caring economics have succeeded both in preindustrial and modern societies, such as the Nordic nations, the book is ambitious in breadth, depth and scope. Eisler delivers another impressive work that's remarkably well referenced, well argued, insightful and hopeful. (Apr.)

Copyright 2007 Reed Business Information
Library Journal

Eisler (president, Ctr. for Partnership Studies; The Chalise and the Blade), a notable feminist social scientist, here proposes a new economic model that supports the work of care giving. Eisler believes that the first step toward achieving human equality, reducing poverty, and eliminating war is to replace our current economic systems of capitalism and socialism. She asserts that these systems, which she calls Dominator economics, misallocate our world's resources and reward nonessential human labor. For instance, people who create new products for consumption or who sell gadgets for entertainment are typically more highly paid than those who work with the sick, the elderly, and children. Such work, traditionally assigned to women, needs to be revalued so that it requires more education and is more highly paid and respected. Eisler's Partnership economics would also integrate unpaid household labor (chores, childrearing, etc.) either through trade or compensation. Eisler makes sure to point out that she is not a trained economist and does not use any conventional economic methods or terms. She does not shy away from using subjective language, e.g., referring to current economic models as evil, which may make the book less suitable for scholarly collections than for general ones.
—April Younglove

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Berrett-Koehler Publishers, Inc.

Copyright © 2007 Riane Eisler
All right reserved.

ISBN: 978-1-57675-514-3

Chapter One

We Need a New Economics

Jim Cross graduated at the top of his applied computer science class. But he hasn't found a job in California's prosperous Silicon Valley, once the golden Mecca for high-wage technology jobs. While sales and profits in the region have been skyrocketing again—an average of more than 500 percent over three years—employment has actually declined.

In Nigeria, Marian Mfunde has just buried her second baby. Like her first son—and millions of African children every year—her five-month-old daughter died of hunger. Marian herself is sick with HIV, which she contracted from her husband before he left to seek work in the capital, and was never heard from again.

In Rio de Janeiro, nine-year-old Rosario Menen sleeps on the street. She lives in terror of rats, rapists, and the police squads that periodically evict and brutalize street children. Like thousands of Brazilian girls and boys, Rosario has no place to go and no one to care for her.

In Riyadh, eighteen-year-old Ahmad Haman just joined a fundamentalist terrorist cell. In his native Saudi Arabia, his financial prospects are dim. Population in the Middle East has tripled in the last fifty years, to 380 million in 2000 from 100 million in 1950—and today close to two-thirds of those 380 million Middle Easterners are under age twenty-five, and jobs are scarce. Even in his oil-rich nation, Ahmad finds the promise of a heavenly afterlife with seventy virgins if he blows himself up in a suicide bombing more promising than his earthly future.

In the midst of all this runaway dislocation, misery, and insanity, economists argue endlessly about free markets versus government regulations, privatization versus central economic planning. They talk about corporate profits, international trade agreements, job outsourcing, employment figures, interest rates, inflation, and gross national product. That's what's discussed in the news, in business schools, and in thousands of economic treatises—usually in a jargon most people find frustratingly out of touch with their real needs.

Of course, it's not that economists are unaware of people's real-life needs. Some, like Nobel laureates Amartya Sen and Joseph Stiglitz, vigorously criticize practices that cause hunger, ill health, and environmental destruction and pollution. A few, like MacArthur fellows Nancy Folbre and Heidi Hartmann, also note that even in the rich United States working parents are stressed because they have too little time to care for their children, and even well-to-do people find it hard to juggle work and family. But even now, when globalization is creating increasing stress for many families, most mainstream economic writings don't pay much attention to how economic models impact our day-to-day lives.

Generally, economists don't write about people's daily lives—except as employers, employees, and consumers. And when they address our environmental and social problems, they're usually still caught in the free markets/privatization versus central planning/government regulation debate that framed the conflict between capitalism and communism.

These discussions ignore the fact that neither capitalist nor communist systems have been able to solve chronic problems such as environmental degradation, poverty, and the violence of war and terrorism that diverts and destroys economic resources and blights so many lives. Indeed, many of these problems have been the result of both capitalist and communist economic policies.

To effectively address our problems, we need a different way of looking at economics. In our time of rapidly changing technological and social conditions, we have to go much deeper, to matters that conventional economic analyses and theories have ignored.

There's a common denominator underlying our mounting personal, social, and environmental problems: lack of caring. We need an economic system that takes us beyond communism, capitalism, and other old isms. We need economic models, rules, and policies that support caring for ourselves, others, and our Mother Earth.

An economics based on caring may seem unrealistic to some people. Actually, it's much more realistic than the old economic models. Our old models strangely ignore some of the most basic facts about human existence—beginning with the crucial importance of caring and caregiving for all economic activities.

Consider that without caring and caregiving none of us would be here. There would be no households, no workforce, no economy, nothing. Yet most current economic discussions don't even mention caring and caregiving. This too is odd, since economics comes from oikonomia, which is the Greek word for managing the household—and a core component of households is caring and caregiving.

This book proposes that a radical reformulation of economics is needed for us not only to survive, but to thrive. It shows that the exclusion of caring and caregiving from mainstream economic theory and practice has had, and continues to have, terrible effects on people's quality of life, on our natural life-support systems, and on economic productivity, innovativeness, and adaptability to new conditions. Failing to include caring and caregiving in economic models is totally inappropriate for the postindustrial economy, where the most important capital is what economists like to call human capital: people. Moreover, it's not realistic to expect changes in uncaring economic policies and practices unless caring and caregiving are given greater value.

As Einstein remarked, we cannot solve problems with the same thinking that created them. We are at a critical juncture where a new way of thinking about economics is needed.

Giving greater value to caring and caregiving won't cure all our problems. But it is impossible to solve our current global crises, much less advance our personal, economic, and global development, unless we do. If we are to change dysfunctional government policies and business practices, we need a new approach to economics in which supporting caring—or even talking about caring—is no longer taboo.


In the fall of 2004, I was invited by the Dag Hammarskjöld Foundation to a meeting to explore the future of economics. The site was the home of my long-time friend and colleague Hazel Henderson, a leading light in the movement toward a new economics. The twenty-five other participants came from Latin America, Europe, Asia, Africa, Australia, and the United States. They included academicians, social activists, and former government officials.

The departure point for our discussions was a critique of the so-called neoclassical economics that is today the dominant, often only, economic analysis taught in Western universities. Deriving from the earlier classical economics developed by Adam Smith, David Ricardo, and other "fathers" of modern capitalist theory, neoclassical economics is primarily concerned with analyzing and predicting how markets function. It relies heavily on mathematical modeling, and this modeling is something of a closed loop, as it is founded on some basic, indeed hallowed, assumptions.

One of these assumptions is that "rational economic man" makes informed economic choices based on rational self-interest. Another assumption is that competition then regulates these self-interested choices in a self-organizing dynamic that ultimately works for the common good. Still another assumption is that governments should keep a hands-off policy when it comes to the operation of markets. This last assumption is a centerpiece of the most recent offshoot of neoclassical theory: the so-called neoliberalism espoused by neoconservatives in the United States and elsewhere, who claim that privatization, market deregulation, and trade unhampered by national borders or interests will cure all our ills.

For a while, the Hammarskjöld Foundation meeting focused on the shortcomings of neoclassical and neoliberal economic theories and models. Some participants argued that these models are out of sync with scientific advancements. They cited the new work of physicists debunking the math of orthodox economic models, pointed out errors in computerized analysis methodology, and argued that these "reductionist" methods produce false pictures of reality. Some pointed to how markets are today heavily manipulated by sophisticated advertising campaigns that create artificial tastes, even artificial needs. Others critiqued the premise that competition regulates the market, pointing out how, all around us, huge corporations gobble up smaller firms through acquisitions and takeovers, or put them out of business by cutting prices until competitors are out of the picture.

The discussion then turned from economic theory to what is actually happening in the world today. Many participants criticized the trend toward privatizing water and other essentials of life and the consolidation of ever more wealth and power in multinational corporations. Others deplored the lack of accountability of globalization agencies such as the International Monetary Fund and the disastrous lack of regard for the destruction of our natural habitat. Still others advocated innovations such as new quality-of-life indicators like the Kingdom of Bhutan's "happiness index," international tribunals on product liability, and new textbooks and classes that would propagate alternative economic perspectives.

But as our discussions progressed, something else gradually became apparent. Despite many common concerns and critiques, there was one area of strong disagreement. This disagreement focused on what the domain of economics is and should be.

Some of the participants were only interested in the narrow band of economic relations in the market economy—just like the conventional economists they critiqued. They were adamantly opposed to economic models that take into account the nonmarket work of caring and caregiving performed primarily in the household and other parts of the nonmonetized economy. They began by arguing that this work could not be quantified. When it was pointed out that it can, and actually has been, quantified, they were unified in holding that it shouldn't be. While they noted that flawed economic models make for flawed economic policies, they made it clear that they were not interested in expanding, much less redefining, the domain of economics.

Nonetheless, this expansion and redefinition of economic models is already in progress. Thousands of women and men worldwide have for some time noted the irony of not including the most foundational human work in economic measures and policies. A few years ago, Marilyn Waring wrote a groundbreaking book on the subject. More recently Barbara Brandt, Ann Crittenden, Marianne Ferber, Nancy Folbre, Janet Gornick, Heidi Hartmann, Hazel Henderson, Marcia Meyers, Julie Nelson, Hilkka Pietila, Genevieve Vaughan, and other economic thinkers have focused on the need to make caring visible in economic theory and practice. Nirmala Banerjee, Edgar Cahn, Herman Daly, Devaki Jain, David Korten, Paul Krugman, Amartya Sen, and other pioneering thinkers have also started to insist that we look at economic relations from a broader perspective. Their work, particularly that of Pietila and Henderson, provides the basis for the expanded economic model needed for a caring economics.


To build a new economic model, we must include the full spectrum of economic relations—all the way from how humans relate to our natural habitat to intrahousehold economic interactions. This requires a complete and accurate map that includes all economic sectors.

This new economic map begins with the household as the core inner sector. This sector is the real heart of economic productivity, as it supports and makes possible economic activity in all the other sectors. The household is not, as most economics texts have it, just a unit of consumption. It is, and has always also been, a unit of production. Its most important product is, and always has been, people—and this product is of paramount importance in the postindustrial economy where "high-quality human capital" has become a business mantra.

But no attention is given in conventional economic analyses to what is needed to produce this high-quality human capital: caring and caregiving. (See "The New Economic Map" and "The Old Economic Map").

The second sector is the unpaid community economy. This includes volunteers working for charitable and social justice groups in what is today often called civil society, as well as some aspects of the barter and community currency economy (which is growing). Here too caring and caregiving are important activities.

The third sector is the market economy. This sector is the focus of conventional economic analyses and indicators. The market is fueled by the first two economic sectors, but its measurements and rules accord them no value. As presently structured, the market economy often tends to discourage rather than encourage caring—even though studies show that when employees feel cared for they are much more creative and productive.

The fourth sector is the illegal economy, which includes the drug trade, the sex trade, some of the arms trade, and other economic activities that are in the hands of crime syndicates and gangs. The illegal sector's defining characteristic is lack of caring—not to speak of the killings and other horrors that are its hallmarks.

The fifth sector is the government economy: the sector that makes the policies, laws, and rules governing the market economy and provides public services, either directly or by contracting them out to private enterprises. Some of these services entail caring activities; for example, services provided by public health agencies. But in most nations, government policies give little support to the caring and caregiving activities of the household and unpaid community economy on which all economic sectors depend. Present government policies are often also uncaring of the mass of people, channeling funds to the wealthy. And in many nations, including the United States, government policies fail to protect nature from reckless exploitation and pollution.

The sixth sector is the natural economy, which like the household, is basic. Our natural environment, too, produces resources out of which the market economy maintains itself. But again, conventional economic models give little value to nature. Consequently, nature is exploited, with increasingly disastrous results as we move to ever more powerful technologies. Caring for Mother Earth is viewed as a liability in the conventional cost-benefit analysis, and until recently was not even an issue in economic theories.

These six economic sectors are in constant interaction. Only by taking all of them into account can we make the changes we need in our world today.

The challenge is to develop economic models, measures, and rules where the first, second, and sixth sectors are recognized and highly valued. This is foundational to a caring economic system where human needs and capacities are nurtured rather than exploited, our natural habitat is conserved rather than destroyed, and our great potential for caring and creativity is supported rather than inhibited.


Economic systems are human creations. They can, and do, change.

During the last five hundred years of Western history, different technological phases gave rise to different economic systems. Gradually, as we shifted from mainly agricultural to primarily industrial technologies, feudalism was replaced by capitalism and in some areas, socialism. Today, we are in the throes of another major technological shift. But the shift taking us from industrial to postindustrial society is different from earlier ones.

Unlike earlier shifts, the shift to postindustrial/nuclear/electronic/ biochemical technologies is not happening over several centuries but over a few decades. Unlike earlier shifts, it is the subject of intense analyses while it is happening. Moreover, it is happening globally and is accompanied by growing consciousness that we cannot go on with business as usual, that we face a very uncertain future unless we make fundamental changes.


Excerpted from THE REAL WEALTH OF NATIONS by RIANE EISLER Copyright © 2007 by Riane Eisler. Excerpted by permission of Berrett-Koehler Publishers, Inc.. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
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Meet the Author

Eisler is a pioneer in women's rights. She is an honor graduate from the UCLA School of Law. She founded the Los Angeles Women's Center Legal Program, accredited by the University of Southern California School of Law.

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