First, all humans must satisfy their physiological and safety needs, which correspond roughly with Maslow’s bottom rungs. Such needs are unbelievably powerful. Imagine not eating or sleeping for a couple of days, or being stranded in a snowstorm; all other non-survival needs would be blocked out. For the average American, meeting such basic “Biological” needs is not an everyday challenge. But for some 2–3 billion people around the developing world, the next batch of calories is still a prime motivator to work.

Once the subsistent needs are met, humans crave security and order. Without such stability, planning for the future and creating widespread wealth are virtually impossible. One only needs to look at war-torn parts of Asia, the Middle East, and Africa to see how economic growth is stunted by a variety of physical and political instabilities. While everyone has higher needs and aspirations, physiological imperatives tend to shape behavior, values, and social institutions in Biological societies.

In places where people now live on $1–5 a day, life is not much different from how it might have been in the U.S. or Europe some 150–200 years ago, before the Industrial Revolution. These Biological economies tend to be agrarian, with long days spent toiling in fields. Life expectancy in these countries is among the world’s lowest, ranging from 40–65 years, versus nearly 80 years in the richest countries. Short life expectancy is also linked to infant mortality rates, which are typically between 30–90 per 1,000 births, versus 5 in the U.S. As a result of high infant mortality, birth rates tend to be greatest, along with family size. The average Biological household is roughly twice as large as the average in wealthy North American or European countries, with maybe 3–4 children versus 1 or 2, and with grandparents sometimes living under the same roof. Literacy rates, too, are low in Biological societies—often less than 50%, and large segments of the population are never formally educated. Women are often second-class citizens, legally and culturally, and minority rights rarely exist.

Biological economies tend to be statist, or centrally managed, with frequent government intervention, and geared toward meeting only basic human needs. Often, these impoverished societies can be dominated by religious beliefs that reinforce the value of order, structure, and predictability. Sometimes religious groups control government, like the Taliban did in Afghanistan. Biological populations tend to be organized in small communal units that stress conformity and tradition, with social and economic mobility virtually nonexistent. In the societies, democracy often takes a backseat to autocracy.

In short, how a society’s needs are met determines the values of that society, and Biological governmental and community networks are organized primarily around survival principles. Countries characterized as largely Biological might include Haiti, Kenya, and Bangladesh. However, some more populous, stratified countries like India and China also have large Biological-oriented segments.

This stage begins to evolve when large segments of a population move from subsistence agriculture to factory and service jobs. The Industrial Revolution ushered in this phase in the West, raising productivity, and promoting the mass production of goods, new economic efficiencies, and the advent of true markets. This migration from farming has a profound impact on people’s lives, as the amount of time and income spent on necessities falls precipitously, providing people the new opportunity to enjoy leisure. This is the great legacy of technology and industrialization: People produce more in less time and come away from work with more disposable income and time to spend it.^[6]

As personal income grows beyond what’s necessary to cover basic food, clothing, and shelter, work becomes intertwined with social and status-linked needs. Figure 1-2 shows that as societies move from agriculture to manufacturing and services, income grows and people net more leisure time and money to consume nonessential items. In 1875, when more than 95% of Americans farmed, only 18% of income was spent on leisure. By 1995, leisure spending ballooned to 67.5%, with less than 3% of Americans engaged in farming. Over the same period, the percentages of income spent on food, clothing, and shelter fell dramatically.^[7]

Figure 1-2. The changing pattern of the consumption composition of American household spending, 1875 and 1995.

Economist and author Paul Zane Pilzer argues that once basic biological and security imperatives are met, people are thrown into the realm of alchemic demand, a phase that neatly describes how economics and human needs are joined at the hip. Pilzer believes that 90% of what is consumed today in wealthy countries like the U.S. is unnecessary for Biological existence, but satisfies alchemic “quantity” and “quality” demands. A “quantity” demand is the want for more of what one already has: more food, another pair of jeans, an extra CD player. Indeed, the demand for a second or third item—like a telephone or car—is often greater than the demand for a first one in wealthy countries.^[8]

However, demand for increased quantity is often capped by Engel’s Law: One can only eat so much regardless of income.^[9] Once well-fed and clothed in a moderately wealthy society, people want better food and clothing versus more. This creates what Pilzer calls “quality” demand. There are entire industries and movements built on quality demands, segmenting products and services beyond imagination. As Pilzer observes:

In Material societies, people tend to focus on status and esteem needs, since they are no longer struggling to meet the physiological needs described earlier. In countries where large middle classes are developing, communal values tend to weaken while individualism grows stronger. Simultaneously, secularization of economic and political institutions occurs. With greater freedom from concern over survival necessities, Material populations begin to consider the possibility of controlling their own destiny, which may translate into greater democratic tendencies. Material life in the new millennium is dominated by the desires for status, recognition, and the freedom to live a life of choice.

Don’t underestimate the far-reaching importance of these social needs. In his seminal book, The End of History and the Last Man, Francis Fukuyama calls the universal need for esteem, or “recognition,” the greatest and most misunderstood motivator in history. Indeed, while such social needs manifest themselves economically in where people decide to work and what they buy, Fukuyama wisely notes that these needs ultimately create demands for democracy and liberal economics—for a strong popular voice as to how government will operate. While democratic yearnings are not limited to rich populations, they are suppressed, often severely, in countries where subsistent needs are not readily met. As a result, greater popular political participation and a tendency toward democratic governance characterize the Material phase.

Material governments and institutions are built to foster economic growth and wealth creation. They become more bureaucratic and centralized than those in Biological societies, and are focused less on supporting traditional community units. A significant feature of Material societies is the separation of traditional religious structures from everyday functions and institutions. This evolves when secular conventions—versus holy scriptures—become life’s rulebook, ultimately creating “civil” society with personal and property rights codified by laws and regulations, and enforced by an impartial justice system.

Depending on the country, life expectancy in Material societies is averaging 70–80 years. Minimum daily caloric intake is not a problem for most; in fact, obesity might even become more prevalent, as in the U.S. Literacy rates often range between 60–99%. Family size tends to be smaller than in Biological countries, and there are better medical and health practices. Urbanization trends are well-established, and suburbanization is increasing in higher income Material countries.

Some countries newly entering the Material phase still have large segments of Biological populations, like Mexico, Brazil, Russia, Poland, South Korea, and Malaysia. Middle-stage Material countries include Spain, Israel, Taiwan, and others countries with $10,000–20,000 per-capita average incomes. Material populations dominate wealthier countries like the U.S., Great Britain, Japan, and Germany. Indeed, most of these nations are more than two-thirds Material.

Generally freed from economic and social hardship, some wealthier societies have large populations that are increasingly focused on psychologically rooted needs: the Experiential phase of greater personal fulfillment.^[12] At this level, the desired quantity and quality of material accumulation have been achieved and individuals look outside of the traditional social structure to find purpose and meaning in their efforts.

No country has a majority Experiential population yet, but there are growing numbers in the U.S., Canada, Western Europe (particularly Scandinavia), Japan, and Australia. And as mentioned above, there are small segments of Experientials in virtually all countries, particularly in highly populated Biological societies such as India and China, as well as in dozens of Material-dominated countries. It should go without saying that everyone yearns for individualized, personal fulfillment, but economic circumstances often determine whether Experiential needs are pursued or lay dormant.

The University of Michigan’s Human Values Survey highlights the connection between wealth, personal well-being, and the search for greater self-expression. There is a direct relationship between output per capita and the Michigan’s Subjective Well-Being Index. Simply stated, higher output countries almost universally have more “satisfied” populations, although of course that does not mean wealthy individuals have problem-free lives.

Experiential people put less faith in traditional political and religious institutions and concentrate more on their own physical, mental, and spiritual fulfillment. In countries with growing Experiential populations, traditional government recedes into the background as people choose to participate in activities that fit their individual values and needs. The rise of tourism, the booming “wellness” industry (including everything from nutritional concerns, fitness, and cosmetic surgery to advanced medicines), and a growing interest in non-traditional spiritual practices (which may include new religious movements, or NRMs) are examples of this. Ironically, another Experiential trend is the “simplicity” movement, in which people drop out of the Material phase, believing that “less is more” in terms of achieving happiness. Having reached a level of economic security unprecedented in the world, these people are rejecting the purely material world in their search for greater holistic fulfillment. Echoing Maslow’s “self-actualization” stage, Ronald Inglehart notes that once all physical and material needs are sated, people often place higher priority on self-expression than on pure economic effectiveness.^[13]

Money Changes Everything begins with a historical overview of the world’s shifting economies, followed by an investigation of how wealth is being created today. The remaining chapters will examine how specific aspects of the human experience—government, family, religion, education, leisure, and the environment—are being transformed by prosperity. Most chapters will include a chart like Figure 1-3, showing the economic growth and historic changes that have occurred within each chapter’s area of focus.^[15]

Figure 1-3. Wealth and human progression, 2000BCE–2000CE.

From my lucky perspective as a 21^st Century American, wealth creates freedom: freedom to choose how one spends one’s time on earth. And because I see wealth increasing around the globe, I am unabashedly optimistic. But I am also realistic; I understand that wealth creation is not always fair or equal. Comparative advantage and free trade—the main engines of prosperity—are philosophies that inherently divide and segment people; not everyone gains evenly under them. The fact that some countries are split into my three phases within their own borders highlights this inequality. Moreover, it should not be overlooked that some 2000 privileged families in the world control more assets than the 2 billion poorest. Wealth creation is a tide that lifts most boats, but it certainly raises some higher and faster.

Constituencies not yet engaged in the wealth process, often illiterate and living under despot regimes, maintain traditional values at odds with those treasured in wealthy nations. The intellectually dynamic, free-market, democratic, secular lifestyle that usually accompanies greater affluence often can be despised and thought of as wanton, sacrilegious, and shameful by non-participants. Ironically, many technologies that have helped create wealth can be used to disseminate hateful propaganda or can even be fashioned into weapons to attack richer democratic societies, a risk that has greatly increased in the last three decades. The tragic terrorist attacks of September 11^th are a stark example of this.

This is why everyone, everywhere should be concerned about wealth creation and globalization. It should be clear that a sagging Japanese economy, or a surging one in China, or a politically unstable African continent, or rising Islamic fundamentalism, or global warming trends resonate across all borders and affect all lives. The needs, values, and lifestyles of every society affect many abroad, and not always positively.

My objectives in Money Changes Everything are to demonstrate that wealth is a multi-dimensional concept, and that prosperity is altering human needs, values, and lifestyles around the globe—first in the West, and now for billions elsewhere. Not every person or every society will welcome these changes, and some may reject them completely. There will be many who adopt them, but might not benefit much from them in their own lifetimes. This book will show why these monumental forces should be understood, humanely and intelligently managed, and universally embraced.

Table 1-2 outlines a framework for understanding societal development.