In order to transition from our present death economy and birth a new life economy, we need to bring new life-tools to our toolkit of investigations and experimentation. Given the recent realisation that our present economic science, in its present incarnation can be described as a form of “alchemy,” we have now to ask what other schools of thought are out there, in addition to Professor John McMurty’s life-value compass, to steer us in the right direction? (Please see The new astrology – By fetishising mathematical models, economists turned economics into a highly paid pseudoscience).
Specifically, have we as a species reached a level of life understanding to confidently claim that we can see clearly the outlines of a new life-science of capitalism coming to the fore? In my humble opinion, I think the answer is a resounding yes!! Two recent papers, one Institute and eight principles give me reasons to be optimistically hopeful, of which I want to share with you.
The first paper is entitled: Using Energy Network Science (ENS) to connect resilience with the larger story of systemic health and development. Here are its authors and its abstract:
- Sally Goerner
- Dan Fiscus
- Brian Fath
The concept of resilience has become popular in international development circles in recent years, but it is only one of many factors in a larger, integrated, empirical understanding of systemic health and development emerging from the study of energy-flow networks. This article explores how the Energy Network Sciences (ENS) can provide a robust theoretical foundation and effective quantitative measures for resilience and other characteristics that undergird systemic health and development in socio-economic networks. Einstein once said that “theory makes measurement possible.” We believe ENS can provide a more effective theory of economic health, which will open the door to surprisingly precise measures. Our goal is to outline the basic reasoning behind both theory and measures.”
The second paper is entitled: Why Extreme Inequality Causes Economic Collapse. Here is an excerpt from the article which I found very revealing. (Please take time to study the article in its entirety and gain from its wisdom.)
“What accounts for this strange mix of increasing concentration at the top and increasing malaise everywhere else? Putting aside the parallels to 1929 for a moment, most common explanations for today’s situation include: the rise of technology which makes many jobs obsolete; and globalization which puts incredible pressures on companies to lower wages and outsource jobs to compete against low-wage workers around the world.
So, while the impacts of globalization and technology are profound, the real explanation for inequality lies primarily with an economic belief that, intentionally or not, serves to concentrate wealth at the top by extracting it from everywhere else. This belief system is called variously neoliberalism, Reaganomics, the Chicago School and trickle-down economics. It is easily recognized by its signature ideas: deregulation; privatization; cut taxes on the rich; roll back environmental protections; eliminate unions; and impose austerity on the public. The idea was that liberating market forces would cause a rising tide that lifted all boats, but the only boat that actually rose was that of the .01 percent. Meanwhile, instability has grown.
The impact this belief system has had on the American economy and its capacities can be seen in American education. Trickle-down theories are all about cutting taxes on the wealthy, which means less money for public education, more young people burdened with huge college debt and fewer American workers who can fill the new high-tech jobs.
To be fair, this process is not just about greed. Most of the people who participate in this economic debacle do not realize its danger because they believed what they were told by the saints and sages of economics and many are rewarded for following its principles. So, what really causes the kind of inequality that drives economies toward collapse? The basic answer from the science of flow is: economic necrosis…”
Her team at the Capital Institute has put forward their version of life capitalism. It is called Regenerative Capitalism. Here is an excerpt from their white paper, REGENERATIVE CAPITALISM How Universal Principles And Patterns Will Shape Our New Economy, which describes their core idea and the eight interrelated principles of Regenerative Capitalism:
“Our Regenerative story starts with a single core idea:
The universal patterns and principles the cosmos uses to build stable, healthy, and sustainable systems throughout the real world can and must be used as a model for economic-system design.
We then distill our research into eight key, interconnected principles that underlie systemic health (see Chapter 3):
- In Right Relationship – Humanity is an integral part of an interconnected web of life in which there is no real separation between “us” and “it.” The scale of the human economy matters in relation to the biosphere in which it is embedded. What is more, we are all connected to one another and to all locales of our global civilization. Damage to any part of that web ripples back to harm every other part as well.
- Views Wealth Holistically – True wealth is not merely money in the bank. It must be defined and managed in terms of the well-being of the whole, achieved through the harmonization of multiple kinds of wealth or capital, including social, cultural, living, and experiential. It must also be defined by a broadly shared prosperity across all of these varied forms of capital. The whole is only as strong as the weakest link.
- Innovative, Adaptive, Responsive – In a world in which change is both ever-present and accelerating, the qualities of innovation and adaptability are critical to health. It is this idea that Charles Darwin intended to convey in this often-misconstrued statement attributed to him: “In the struggle for survival, the fittest win out at the expense of their rivals. “What Darwin actually meant is that: the most “fit” is the one that fits best i.e., the one that is most adaptable to a changing environment.
- Empowered Participation – In an interdependent system, fitness comes from contributing in some way to the health of the whole. The quality of empowered participation means that all parts must be “in relationship” with the larger whole in ways that not only empower them to negotiate for their own needs, but also enable them to add their unique contribution towards the health and well-being of the larger wholes in which they are embedded.
- Honors Community and Place – Each human community consists of a mosaic of peoples, traditions, beliefs, and institutions uniquely shaped by long-term pressures of geography, human history, culture, local environment, and changing human needs. Honoring this fact, a Regenerative Economy nurtures healthy and resilient communities and regions, each one uniquely informed by the essence of its individual history and place.
- Edge Effect Abundance – Creativity and abundance flourish synergistically at the “edges” of systems, where the bonds holding the dominant pattern in place are weakest. For example, there is an abundance of interdependent life in salt marshes where a river meets the ocean. At those edges the opportunities for innovation and cross-fertilization are the greatest. Working collaboratively across edges – with ongoing learning and development sourced from the diversity that exists there – is transformative for both the communities where the exchanges are happening, and for the individuals involved.
- Robust Circulatory Flow – Just as human health depends on the robust circulation of oxygen, nutrients, etc., so too does economic health depend on robust circulatory flows of money, information, resources, and goods and services to support exchange, flush toxins, and nourish every cell at every level of our human networks. The circulation of money and information and the efficient use and reuse of materials are particularly critical to individuals, businesses, and economies reaching their regenerative potential.
- Seeks Balance – Being in balance is more than just a nice way to be; it is actually essential to systemic health. Like a unicycle rider, regenerative systems are always engaged in this delicate dance in search of balance. Achieving it requires that they harmonize multiple variables instead of optimizing single ones. A Regenerative Economy seeks to balance: efficiency and resilience; collaboration and competition; diversity and coherence; and small, medium, and large organizations and needs.
The resulting theory shows us how to build vibrant, long-lived, regenerative economies and societies using the same holistic principles of health found consistently across widely different types of systems throughout the cosmos. This theory grounds our understanding of why integrity, ethics, caring, and sharing lead to socially vibrant communities and healthy economies – while at the same time making perfect practical and scientific sense.
It differs most from current approaches to sustainability in that, instead of focusing on social and environmental health using traditional reductionist logic to “solve problems,” it aims directly at building healthy human networks as the objective, drawing on universal principles and patterns, with “sustainability” becoming an outcome, a natural byproduct of systemic health. It is like (holistic) healthcare in contrast to (reductionist) disease care.
Because the theory focuses on building healthy human networks, it is not actually new. Instead, it has been discovered and rediscovered time and again over the millennia, appearing from the ancient Greeks’ invention of democracy, to the rules of mutually beneficial, give-and-take relationships that allow stakeholder-owned enterprises to be effective today.
Furthermore, instead of a political philosophy of the left or right, this rigorous form of holism specically sees regenerative economies as a new stage of capitalism built around an integration of the best of both political leanings. Consequently, instead of jettisoning capitalism wholesale, this holism uses the universal design principles underlying all systemic health to show us how to preserve and build on the many strengths of our free enterprise system, while addressing its failings head on….”
If you are still not convinced, I encourage you to dig deeper into the references hyperlinked above. If you can provide a better alternative to steering us forward and grounding us securely, confidently and sustainably in the management of our life-capital, please do share in this collective birthing process of our new life economy.
As a picture is worth a thousand words, I would leave you now with several illustrations from the articles cited above.
Fig. 1: An economy, the biosphere and metabolism as flow networks
Where classical economics focused on equilibrium theory, today’s expanded energy research studies the behavior of flow networks, systems built around circulating matter, energy and information throughout their entire being.
Fig. 9: Self-feeding return loops in the biosphere and an economy
Fig. 8: The Goldilocks Rule in banking