Purpose – The purpose of this paper is to offer a new theory of human nature to explain the happiness paradox of capitalism. Design/methodology/approach – It is argued that happiness crisis in capitalism stems from the lack of full understanding of human nature which is like a black box from which key assumptions in capitalist market system are derived. The author attempts to unlock this black box in order to understand the failure of capitalism in bringing happiness. Findings – As the success of capitalism comes from its partial understanding of human nature, its failure comes from its partial misunderstanding or exploitation of human nature. This leads to ignoring the needs and desires of certain elements of human nature for the sake of serving only the animal spirit and self-centric ego. The proposed new theory offers a new understanding of happiness and its determinants. Comparing the human body to a luxury recreational vehicle (RV) and the elements of human nature to the companions on this vehicle, the theory suggests that an individual cannot be truly happy if he or she listens only to one of his/her residents while disregarding the others. The new theory offers better explanation for the 2008 financial crisis and the happiness paradox in wealthy nations. It also provides an underlining framework for the existing happiness theories. Research limitations/implications – The new theory needs to be tested through empirical studies. Social implications – The paper theoretically argues that that authentic happiness is possible if individuals listen to the voices of all elements of human nature and try to fulfil their needs and desires in a balanced manner. Originality/value – The paper offers a new comprehensive theory on human nature. Keywords Capitalism, Consumerism, Human nature, Happiness, Subjective well-being, Hedonism