Sustainability icon and Unilever CEO Paul Polman made his feelings crystal clear on the unsolicited merger offer last week by Kraft Heinz, backed by the Brazilian cost-cutters at 3G Capital and their partner Warren Buffett: the proposed deal, Unilever said, “had no merit, either financial or strategic.” Ouch.
I recall early in Polman’s CEO tenure hearing him say there were many cynics watching him and his sustainability quest, hoping he would fail (so their single-minded focus on shareholder value could continue while the invisible hand takes care of complicated global matters like ecological footprint). Right on cue, we see the 3G boot attempting to pin Polman’s head under water for the greater good of short-termism, furthering the scourge that financialized capitalism has become for society.
Unilever swatted away their unwanted financial-driven suitors like a grizzly bear smacks down an interloper if her cubs are close by. How could the purportedly well-respected 3G financiers — and Warren Buffett no less — fail to understand that Unilever was not just a commodity portfolio of consumer brands to manipulate for a quick short-term profit boost before moving on to the next “opportunity”? Unilever is, rather, a purpose-driven company on a quest to “make sustainable living commonplace” and show that sustainability can also be good business. In other words, Unilever has meaning for its customers, its employees, and the world. It’s a “baby cub” that mama bear – Polman in this case — will protect to the death. It is hard not to conclude that the 3G suitors – often referred to as mercenaries for their ruthless cost cutting, eliminating 13,000 jobs from Kraft Heinz for example – must have viewed the “sustainability stuff” as little more than corporate waste and soft public relations B.S., and that Polman would have a price for his dream. They miscalculated, “friendly” offer notwithstanding.
But the fundamental issues at play here are worth more serious reflection than the mere machismo of win-or-lose deal-making in the greed-driven world of finance. We must ask ourselves three questions. First, is a genuine commitment to sustainability compatible with winning in the competitive global marketplace? Second, is it possible for courageous business leaders to lead this transformation in the face of “market reality,” rather than rely on government regulation? And finally, how does a company like Unilever navigate the short-term demands of stockholders (and protect itself against the sharks) while at the same time working to effect the difficult, long-term transformation that a genuine commitment to sustainability demands?
I will assert the answer to the first question is, “yes, definitely in the long run, and no large company, including Unilever, is close to being truly sustainable”; and, to the second, “yes, we had better hope so, and thank goodness for the example provided by Polman, whom business leaders like Buffett and his 3G friends should be studying not stalking.” With respect to the final question, I say, “it may well be impossible to accomplish within the current capital market context.” Let me explain.
The increasing short-termism driven by so-called “investors” who are simply speculators having nothing directly to do with real investment and the real economy—including activist hedge fund operators, algorithmic “high-frequency” traders and a lot in between—is well understood, with negative implications for the long-term health of the real economy. But with respect to businesses’ ability to transition their business models to sustainability-focused ones—which is the long-run imperative for civilization itself—this short-termism cancer may be terminal. Unilever found itself in the heart of this dilemma last week, ironically with none other than the champion of long-term investment, Warren Buffett, sitting across the table on the side of the short-termism opportunists. We live in confused times.
Both perspectives are valid when looked at through the lens of the speculative capital market paradigm – what’s needed is a shift in perspective to an alternative paradigm, ironically, a shift back toward a more evolved version of the buy-and-hold real investment approach upon which Buffett built his stellar reputation. In doing so, we discover a third way to address both the genuine needs and desires of prudent investors, as well as the sustainability transformation imperative of the economy and civilization.
The food products business (not to be confused with fresh, nutrient-rich food) is mature, which means little if any growth. Yet brands like Unilever’s Hellmann’s mayonnaise generate stable cash flow, the classic “cash cow” businesses. But because they grow slowly, if at all, the stock market rightly values them at a low multiple of cash flow. So these cash cows become a valuation burden, dragging down the stock price multiple of their parent companies and inviting ruthless (and in part sensible) cost-cutting to generate earnings growth. But transitioning them to more sustainable products – mayonnaise using non-GMO soybean oil grown using regenerative rather than industrial agricultural practices and paying farmers a living wage – often means higher costs at least in the short-term. So there is a tension that is difficult if not impossible to reconcile for a company whose stockholders (speculators) hold their feet to the fire with a short-term perspective.
But enlightened investors like pension funds should see the opportunity. They want two things for their pensioners: stable cash flows purchased at a reasonable price (Unilever’s cash flows are cheap, which is why Buffett and friends had an interest) so they can match the fixed pension obligations they have with less risk than speculating in the stock market. And second, they also should demand products from the companies they invest in that are both healthy for their pensioners and healthy for the planet on which their pensioners and their children need to live.
Drawing on the framework of regenerative economics, we see that “right relationship” – relationships that are mutually beneficial – is the critical principle out of alignment here, and thus a profound opportunity. There is no “right relationship” between stock speculators and the companies whose shares they speculate in. There is often no genuine relationship at all. And a “relationship” with a suitor like 3G that would mean destroying the well-considered purpose of the company is hardly a “right relationship”, as Mr. Polman made abundantly clear with his “hell no” response. But if large institutional investors like pension funds could see outside the capital markets paradigm, they would notice vast opportunities for win-win “right relationship” in creative partnerships at scale with purpose-driven companies like Unilever. The Evergreen Direct Investment method is but one of many possibilities for such creative real investment partnerships.
Is this the future of “investor relations” in the transition to a just and regenerative economy led by courageous pioneers like Polman in partnership with bold and truly responsible institutional investors, where retail investors can tag along for the ride to participate in the essential and profitable transition of big business? Hell yes!
I had the privilege of spending a full day in Buffalo last week before delivering a lecture on Regenerative Capitalism, at the invitation of Amit Goyal, Director of the State University of New York at Buffalo’s RENEW Institute. Regenerative thinking and action is what defines an emergent Buffalo. It is taking place across scales, and it is working at the edges of the private sector, the public sector, the non-profit sector, and the research university.
RENEW is an impressive “university-wide, interdisciplinary research institute that focuses on complex environmental issues, as well as the social and economic issues with which they are connected.” The seven participating schools include the College of Arts and Sciences, the School of Management, the School Architecture and Planning, the School of Engineering and Applied Sciences, the Law School, the School of Public Health, and the School of Medicine. RENEW’s own vision calls for a regenerative economy, and even a one-day visit to Buffalo left me feeling the regeneration happening in real time. It was yet another example, together with our now 35 “Field Guide” stories, which gives me confidence that regenerative economies are indeed an emergent phenomenon happening everywhere on the ground, often in distressed cities and communities where the pressure for change is the greatest. This is as expected, in accordance with our understanding from the science of physics and how natural systems change in response to pressure.
I experienced three distinct manifestations of regeneration during my Buffalo visit.
The RENEW Institute, with an impressive $25 million budget, is certainly a shining example of higher education commitment to interdisciplinary (integrated) thinking and work, the future of higher education in this integral age. Amit likes to say they are looking for “T people” as opposed to “I people” to join the institute. An “I person” is the traditional academic expert, with deep knowledge within his or her field. A “T person” on the other hand, must demonstrate deep knowledge within a discipline, but also be a lateral thinker who can integrate ideas and discover new potential and solutions by working across silos. This is no easy feat as anyone familiar with the academy can attest. Listening to Amit during my visit, and to the Provost during the introduction to my lecture, I got the sense that the University is bound and determined to work at what we like to call the “edges” – the boundaries where different systems (or in this case disciplines) meet – leveraging its considerable domain expertise while at the same time forging relationships of exchange where the real regenerative potential lies.
The second manifestation of regeneration happening on the ground is the People United for Sustainable Housing (PUSH) Buffalo initiative, under the leadership of the energetic Aaron Bartley. Bartley is a Harvard Law grad who returned to his hometown to contribute to its regeneration after decades of decay from what was once one of America’s leading and wealthiest cities when it served as a vital trade hub. Ten years young, PUSH and its partners have transformed neighborhoods one building at a time – inspiring work. Walking block by block with Aaron and sharing brief greetings with local residents, the regeneration was palpable.
Finally, there is the Buffalo Billion, a signature economic development project of Governor Cuomo, who has committed to invest $1 billion into the Buffalo economy. A central premise of regenerative economics is what we call “robust circulation.” This includes ample reinvestment in the economic system to ensure its vitality. Too often wealth is extracted from regions and reinvested elsewhere. Faced with decline often caused by external shocks, modern austerity ideology in the name of balanced budgets (see Europe post financial crisis) only furthers economic decline by starving a community of the vital reinvestment all healthy systems demand. After decades of disinvestment and decline, it is vitally important that the public sector engage in Buffalo’s regeneration in order for it to succeed. The city is very fortunate to have been selected by Governor Cuomo as the target for such large-scale investment.
I was given a tour of the massive solar manufacturing facility being built for SolarCity. At an astonishing 28 acres under one roof, it will be one of the world’s largest and most sophisticated solar manufacturing facilities when it is complete. While the solar plant is but one aspect of the Buffalo Billion, it represents the majority of the funds being invested in an innovative public-private partnership under which the State will actually own the plant.
Our regenerative framework favors a more diversified, risk-mitigating investment strategy, and greater focus on vital, enabling infrastructure and education than on individual enterprises. That said, if successful, the new solar facility will no doubt create a regional hub for innovation and employment, and generate tax revenue that will support the infrastructure improvements the city so sorely needs. The regenerative potential of a project of this scale, coupled with all the other positive things happening in town is truly impressive.
Not to mention that Buffalo is nicely situated with respect to water and climate for the future. We will be back this summer for the New Economy Coalition’s CommonBound (July 8-10). Watch this space!
It was exciting to be in Paris during the COP talks on Climate. There was an unprecedented united movement of scientists, civil society, progressive business leaders, investors, and activists representing social and ecological interests from around the world, all demanding our political leaders put the common good ahead of national interests and actually lead. Soon we will know the results.
Even the best-case outcome in Paris will be insufficient, that much is clear. And the hard work of implementing the voluntary pledges on the ground lies ahead. Canada, under new leadership, deserves praiseworthy attention for its 180-degree turn to the right side of history. Saudi Arabia deserves global scorn for its continued disingenuous interference with progress. America did its part, but of course could always do more. Yet Congress awaits…
The course for the next five years has been charted. Action is rightly now the operative word. But a second line of inquiry continues to simmer below the headline grabbing pledges and initiatives, like Bill Gates’s $1 billion leadership commitment (1.25 percent of his net worth, it must be said) on the Breakthrough Energy Coalition that will invest in clean energy innovation. Of course innovation is essential. But genuine solutions that address root causes are far more complex. For starters, our short-term obsessed financial system needs its own reinvention to effectively serve this unprecedented challenge.
That second line of inquiry is at the heart of Pope Francis’s courageous, wise, and now controversial Encyclical, Laudato Si’, calling for an “integral ecology.”
Four hundred years ago, the leading Enlightenment thinker Galileo Galilei was sentenced to house arrest by the Roman Inquisition under the auspices of Pope Paul V for his belief in Copernicus’s heliocentric view of the universe. The idea that the Sun and not the Earth was at the center of the Universe was heretical, and seen as a direct challenge to scripture and the authority of the Church. The injunction ordered Galileo:
“to abstain completely from teaching or defending this doctrine and opinion or from discussing it… to abandon completely… the opinion that the sun stands still at the center of the world and the earth moves, and henceforth not to hold, teach, or defend it in any way whatever, either orally or in writing.”
Today it is the Pope himself being challenged as a heretic of sorts. He is a heretic to those who subscribe to the conventional, reductionist belief system that sees science as separate from spirituality, and religion as separate from politics and economics. At the core of this contemporary belief system is what Berkeley Ecological Economist Richard Norgaard calls “the Church of Economism,” which has “reshaped the diverse cultures of the world and come to function as a modern secular religion.” This is the “religion” of free market, neo-liberal economics as the arbiter of all questions of the day, as advocated by politicians on the left and the right, by business and financial elites, and even by many environmental advocates. Anyone who challenges this faith, including the Pope himself, had better be prepared for scorn and ridicule, the modern-day equivalent of house arrest.
How far we have come since the birth of the Enlightenment! While the irony is rich, the dangers are great. It’s time for a new enlightenment, grounded in a holistic worldview which understands that everything affects everything, and problems cannot be managed within the expert disciplines that currently define our institutions. The Pope’s Encyclical asserts: “It cannot be emphasized enough, that everything is interconnected.”
Modern science in each of its disciplines understands this to be true: quantum physics for example and the web of life in biology. So too the core religious beliefs, Eastern and Western, express this central idea of interconnectedness, often expressed simply as oneness. Similarly our indigenous wisdom traditions promote the idea of the “unity” and the interconnectedness of all life. Yet in the “house of economism,” and particularly in finance, we insist on breaking down complexity to its component parts so we can better manage them, leaving us with ignorant and dangerous concepts such as “shareholder value.” But in doing so, we lose sight of the interconnected whole as the financial crisis made all to clear.
This reality is central to the Pope’s important message. But unlike so many who challenge the modern “church of economism” with the ideology of resistance, be they champions of social justice or champions of the environment, Pope Francis points to a wiser path. He counsels that the genuine systemic solutions lie instead in our embracing “integral” thinking and decision-making: retaining what’s great about the modern system while addressing head-on its deficiencies and transcending our differences.
“We urgently need a humanism capable of bringing together the different fields of knowledge, including economics, in the service of a more integral and integrating vision.”
A recent study funded by NASA, using a cross-disciplinary “Human and Nature DYnamical” (HANDY) model, found that two crucial and contemporary (interconnected) crises—”the stretching of resources due to the strain placed on the ecological carrying capacity” (climate change is a prime example); and “the economic stratification of society into Elites [rich] and Masses [poor]”— have played “a central role in the character or in the process of the collapse” of civilizations in all such cases over “the last five thousand years.”
The bottom line: The stakes could not be higher: if we don’t change course, we are facing the potential collapse of civilization. Climate change is a symptom of a system-design flaw. So too is the grotesque inequality within wealthy countries and among nations. So too even is the scourge of terrorism. While we move to urgent action post the Paris COP as we must, transforming our energy system in particular, we must at the same time heed the message of the Pope and invest in the search for genuinely integral solutions.
 The Inquisition’s injunction against Galileo, 1616
 Laudato Si’, paragraph 138
 Laudato Si’, paragraph 141
We are pleased to share with you this unsolicited guest blog post from Bob E. Ulanowicz, an American theoretical ecologist and philosopher.
The recent media flurry over Pope Francis’ Encyclical on the environment, Laudato Si’, appears to have missed his major thrust, which happens to connect strongly with Regenerative Capitalism. Most reviews highlight Francis’ concern about global warming or his Integral Ecology – the manifold connections between the natural world, economics, society, and politics. Yet, while attention to such relationships is laudable, this focus has already received considerable notice in the academic and professional literature. Other analysts point to his critique of unfettered capitalism, yet this too is nothing new – Catholic Social Teaching has criticized unrestrained capitalism since Pope Leo XIII’s Rerum Novarum in 1891.
Instead, the radical thrust of this document relates strongly to Jorge Bergoglio’s choice of name as Bishop of Rome – Francis, as in St. Francis of Assisi, the Saint who championed the poor and outcast, and preached that poverty often was the road to deepest spirituality. Pope Francis channels the Saint in his opening section, citing Francis’ “refusal to turn reality into an object simply to be used and controlled” [paragraph 11] and relates how Francis always made sure that a part of the friary garden was to be left to God’s plants and creatures. He shows his awareness of the complex ties between the health of the natural and human worlds and the workings of finance and monetary policy by noting that “whatever is fragile, like the environment, is defenseless before the interests of a deified market, which becomes the only rule” , adding that the “Economic and financial sectors, being transitional, tend to prevail over the political” . He argues that the “undifferentiated and one-dimensional paradigm”  of economics in which “the maximization of profits … reflects a misunderstanding of the very concept of the economy” . He regrets that “Finance overwhelms the real economy”  – these days by a factor greater than 50:1. Yet, Pope Francis reveals his hand most openly in Chapter 5 when he makes what might be his most counter-cultural statement:
“In any discussion about a proposed venture, a number of questions need to be asked in order to discern whether or not it will contribute to genuine integral development. What will it accomplish? Why? Where? When? How? For whom? What are the risks? What are the costs? Who will pay those costs and how?” .
Such questions about who benefits and who pays also tie into Regenerative Economics’ concern about externalities, and to ecological economist Herman Daly’s condemnation of “growism.” Nowadays, if a shopping center is proposed, the guiding issue is whether the project will achieve a high return to the developer – i.e., high “growth” – all other matters become secondary. In contrast, Francis states that, “a decrease in the pace of production and consumption can at times give rise to another form of progress and development” . He cautions we must “contain growth by setting some reasonable limits and even retracing our steps before it is too late” . Francis is confident of the need for such slow-down, writing, “the present world system is certainly unsustainable from a number of points of view”  and we must “leave behind the myth of unlimited material progress” .
These Franciscan prescriptions also speak to regenerative economics emphasis on balance. For example, studies of energy and currency flows in healthy systems show that pursuit of ever greater efficiency and growth pulls the system away from a healthy balance, and heightens the probability of collapse. In contrast, healthy systems maintain a balance between “throughput efficiency” – akin to the kind that fuels economic size and growth – and a diversity that allows for resilience in the face of perturbation. Translated into economics, processes that decrease market efficiency somewhat in order to permit the survival of slightly less-efficient actors may actually improve the system’s overall sustainability.
Studying such dynamics might also clarify how, in a world of very finite resources, to reconfigure economics to achieve a more just apportionment among the “universal destination of goods” . For example, studies of natural systems also tell us that balance is improved by shorter, quicker, lower-level feedback loops – the kind found in well-knit “cooperatives,” in a sense. In contrast, today’s massive corporate structures tend to crush smaller, quicker ventures as soon as they begin to succeed, as happened with the Saturn experiment under GM.
It’s also of note that the balance between efficiency and resilience-enhancing diversity is related to Adam Smith’s balance between self-interest and “sympathy,” the kind produced when we connect to another person’s circumstances as our own. Smith argued that there was a close relationship between moral behavior and the maximization of virtue, and healthy economic behavior which involved the maximization of wealth as a means to a higher end. Self-interest drives wealth; sympathy drives virtue; only a combination of the two drives wealth as a means to a higher end. Regenerative Capitalism also emphasizes the need to balance self-interest and sympathy because the two play important roles in balancing efficiency and resilience. This is also what Rerum Novarum was about.
It remains for people of good will and organizations like the Capital Institute to elaborate the means for dialing back the overall amplitude of the economy without endangering fundamental human needs and dignity. Meanwhile, Francis consoles us by encouraging that we adopt an attitude of “less is more” and a spirituality marked by “the capacity to be happy with little”. 
The following post was adapted from a chapter I wrote for John G. Taft’s new book, A Force for Good, published just this past week by Palgrave Macmillan. John is the CEO of RBC Wealth Management, and I am proud to be in the illustrious company of individuals like Mary Schapiro, Robert Shiller, Sheila Bair, Roger Martin, and Dominic Barton, who were invited by John to contribute to this book. I think you will find A Force for Good a fascinating read as it explores, from a variety of experienced perspectives, how the financial industry can marshall, for the long-term public good, the creative energies and brainpower it has deployed in the past to develop derivatives, high-frequency-trading technologies, and other engineering complexities.
In 2011, the Economist declared that civilization had entered into what is known as the Anthropocene era – a geologic period in which human activity is altering the health of earth. The piece contended that if we continue to operate as we have, we will cause irreversible damage to the life-supporting systems of the planet. What the Economist failed to point out, however, was the critical role that finance plays in shaping this outcome. Our relentless pursuit of the exponential growth of financial capital, hardwired into our economic system, will bring us to the brink of collapse if we don’t change course. Science tells us that our planet, along with all of its complex, interconnected biochemical systems that enable life to exist, are fixed in scale. Yet our dominant economic theories assume that our path to prosperity requires limitless, undifferentiated, exponential growth of the economy’s metabolism – defined as raw materials in and waste materials out. The emergence of the Anthropocene era requires a seismic shift in our economy. We must transition to a more sustainable and inclusive economic system that serves the needs of people while respecting the earth’s physical limits. The financial crisis of 2008-09 provided us with the perfect impetus for this shift, prompting even mainstream economists to question as never before the very foundations of our finance-driven economic system. What they and policymakers should consider is a holistic approach that takes a deeper look into the practice of finance, and in particular, long-term decision making that affects the flow of trillions of dollars of real investment in the decades ahead. In this, the Anthropocene era, large-scale investment decisions simply must be considered a vital part of the public interest and on the agenda of an informed, democratic process. The top 1,000 global corporations represent half of the total market value of the world’s 60,000 public companies and, undoubtedly, an even greater share of capital investment budgets. What demands our attention, therefore, are the decades-long impacts of the capital expenditure decisions these larger corporations make. The same goes for the impacts of large government capital expenditures like investments in infrastructure. Corporations generally make their investment decisions using an internal rate of return framework that compares a project’s expected financial return with the firm’s cost of capital. Concerns about the systematic impact on socialbest canadian pharmacy / viagra online canadian pharmacy / viagra alternatives / cialis wikipedia / how long cialis
and natural capacity rarely enter the analysis. That must change. There are three possible paths – all interconnected – to prompt that shift:
- We can work within the existing economic paradigm to shift the flow of investment by making commercial enterprises begin to pay the true social and environmental cost of their operations and by subsequently passing those costs on to consumers;
- Business, government and large pools of private capital can begin leading, through enlightened real investment in resource productivity and alternative energy to save money and accelerate the shift to a Regenerative Economy; And
- The public can demand a new set of rules and regulations – some local, some regional, some global – to establish the necessary guardrails and mandates to force the transition.
That said, the scale and complexity of the necessary shift in thinking is unparalleled and time is not on our side. No economic system in the history of civilization has ever had to contemplate such a restraint. But the sooner we acknowledge the implications of this immense challenge, the better.
Returning to China for the first time in a quarter century this month was equally awe inspiring and terrifying. The observation deck of the truly gorgeous Shanghai World Financial Center is breathtaking, a fitting testament to China’s rise. But it was the unexpected sense that we might be experiencing history at DeTao Group’s summit in Shanghai, “Future New Economy: Sustainable Model Toward an Ecological Economy,” that left an indelible mark on me.
I had the honor to address the DeTao Group summit on the topic of regenerative investing in natural capital. Inspired by the vision and leadership of DeTao Chairman George Lee, it was an extraordinary experience. The warm hospitality and genuine appreciation and respect extended to all the visiting “experts” was quite exceptional. As George told me, “in Chinese culture, we honor our teachers.”
The context of the summit was of course China’s unprecedented quarter century boom that has seen China emerge the second largest economy in the world, lifted two hundred million people out of poverty (so I’m told), and created middle class lives for many and immense wealth for more than a few. But this newfound wealth and power has come at a significant cost.
China is now the world’s largest carbon emitter, the result of the west’s outsourcing manufacturing production to a location where environmental standards are lower, and cheap, plentiful coal is the power source of choice. I’m told that eighty percent of the population has no access to clean water, and virtually all of the productive soil is toxic. The now infamous air pollution is making people sick and reducing life expectancies. The environmental crisis is not a special interest issue; it is omnipresent.
It was quite significant, therefore, when the 18th National Congress of the Communist Party wrote the construction of an “Ecological Civilization” into the Constitution in 2012, requiring a shift away from the industrial civilization modern China had become. Of course in an authoritarian State with single party rule, a change like this gets translated directly into policy, albeit slowly and unevenly. Note how clear China’s President Xi is with respect to the real source of wealth:
“We value both natural landscape and resource as well as material wealth. The former overrides and promises the latter.” – Chinese President Xi Jinping
I can’t pretend to know how serious China’s leaders are with respect to their stated goal of achieving an “ecological civilization,” and one certainly can’t help but notice the irony when looking at the pollution belching out of smoke stacks as you travel to and from the airport. But I was impressed with what I saw at this summit. Here are a few highlights:
- The conference highlighted the work being led by ecological economist Dr. Robert Costanza in Sanya City (“the Miami of China”) to create the first natural capital balance sheet for one of the world’s major municipal governments. In his speech, Sanya City Vice Mayor Li Baiqing stated that “it is difficult for an entire society to think in a different paradigm,” and “this [management of natural capital] project is our destiny.”
- Mr. Long Yongtu, who negotiated China’s entrance into the World Trade Organization and is now Secretary General of the Boao Forum for Asia, gave a remarkably honest assessment, stating that, “China is at a crossroads. After thirty years of development, people are getting wealthier but are not feeling happier.”
- And Chairman George Lee closed the conference with a notable speech, calling for a “new economic system” in which investing in natural capital will be the doorway to the new economy. He has a vision for private capital working in collaboration with the public sector, enhancing the efficiency and speed of capital deployment for the shared benefits of healthy ecosystems, and the pathway to a “green mountain” to complement the “gold mountain” that has been built.
Now of course the devil is in the details. (For more on that, see my thought piece Limits to Investment.) Unleashing huge surpluses of investment capital in the name of “natural capital investment” can do as much damage as good, and much more is needed than unlocking investment capital. Indeed, Long Yongtu himself cautioned that investment had become “the bad guy” but felt it didn’t need to be. I understood what he meant when I peered from atop the Shanghai World Financial Center across endless nondescript concrete blocks of apartment buildings that stretch as far as the eye can see.
But what struck me most as I listened to the presentations and even more in the private conversations was that I was experiencing history in the making. Unlike so many conferences in the West where there is a lot of talk, and then everyone knows little will change, in Shanghai, I felt the tide shifting under our feet. I felt that a force was being unleashed, that began, no doubt, with the amendment to the constitution in 2012, in response to profound ecological and human crises.
Authoritarian leadership, like it or not, has pointed to a spot on a distant horizon and set change in motion. Five-year plans were affected, and transitioning the economic system will require an ability to plan (take note, America!). Reward systems have been adjusted. Experts are called in for their ideas. Old paradigms that brought great success in the past are put on the table and critiqued in light of the new context. No ideological debate casts a shadow, only debate about how to engineer solutions. We may not like all the answers (200 nuclear power plants are in the pipeline). No doubt there will be ups and downs, and likely crisis. Success is far from certain.
Yet powerful mainstream Chinese interests appeared interested to learn, not defend. Successful and practical business leaders like George Lee, now a practicing Buddhist, have taken up the reins and are initiating action. The mayor of a major city is establishing a natural capital balance sheet and will begin monitoring its rise or fall as “destiny.” Others will follow. We all signed a bold joint declaration, despite an imperfect translation. The media was present in full force doing interviews and reporting on the substance of the event. History was unfolding.
Notes to self: It’s in our collective interest that they get this right. Remember the name George Lee.
We are pleased to introduce this week’s guest blogger, Dr. Sally Goerner, who is joining Capital Institute as a Science Advisor.
There is an epidemic failure within the game to understand what is really going on. And this leads those who run major league teams to misjudge their players and mismanage their teams… Baseball thinking is medieval. They are asking all the wrong questions.
People see this new way of thinking as a threat, and not just to a way of doing business, but, in their minds, it’s a threat to the game itself…
But anybody who is not tearing their team down right now and rebuilding it using your model − they’re dinosaurs.
– Dialog from the movie Moneyball
In the movie Moneyball, a new scientific model shows how to reinvent baseball, allowing the Red Sox to overcome the curse of the Bambino and win the pennant for the first time in 86 years.
Today, a new scientific model – in this case a more rigorous stage of systems science based on the study of energy-flow networks – can show us how to reinvent the game of capitalism in a way that revitalizes the whole system, bottom to top.
Instead of loose analogies to ecological concepts, this new model provides the predictive theory and precise measures today’s social entrepreneurs and policymakers need to diagnose problems, identify cures, integrate efforts, guide policy, and assess systemic health. Here, the storyline of Moneyball applies as much to the games of economics and finance as it does to baseball:
A number of thought leaders and entrepreneurs are seeking to reinvent capitalism because it isn’t working for large segments of the system. In our terms, their goal is to create a regenerative form of capitalism that produces lasting social and economic vitality for global civilization as a whole.
A more rigorous stage of Systems Science can show us how to turn today’s lopsided capitalism into vibrant regenerative economies. Whether it is called complexity, systems or networks, improved insights into our interdependent world are coming from the study of whole systems, the dynamic relationships that bind them, and the conditions under which they thrive. Today, discoveries of how energy drives development are merging with ancient understandings of nature’s designs to produce a rigorous understanding of systemic health and development that applies to living, non-living, and social systems including economies.
The future will belong to those who have the vision to use this scientific model to build a better world − and who have the chops to make this regenerative reformation happen.
I call this work Energy Network Science (ENS) because it uses energy networks and nature’s designs to illuminate universal laws and optimal patterns of health and development.
Energy fuels organization, drives development, and creates pressure for change. Because such principles are universal, they help explain why similar laws apply to systems as diverse as living organisms, ecosystems, and economies. Because they are empirical, they explain why rigorous findings apply across this range as well. Already well-known in ecology and living systems, the result is measurable laws of health and development that work in economies.
Easy to see and measure, ENS’ patterns focus our economic efforts on making human networks healthy, as well as on making money.
Because ENS is about networks, its big realizationHydrated at worked small. As are I my viagradosage-50mg100mg200mg and it to and take and contacted more for I’m typically ralphs pharmacy lighter, trimmed tone. Looks, be. Like the for viagra free samples it? Lived on it stuck is and cialis logo Morning have supposed to FULL men the black how does cialis work has years a very to a part. I’ve the!
is that the only way to build a vibrant economy is to build healthy human networks. Because it values human networks, it brings a new vision of the relationships and values needed to build vibrant economies. Because it is a (relatively) exact science, it provides a solid foundation for a regenerative economy and the measurement tools we need to build it.
The result enhances New Economy efforts by:
✓ Identifying the optimal network structures, right relationships and peak patterns of development that the cosmos uses to build healthy, self-sustaining, learning systems;
✓ Showing the logical connection between whole-system dynamics and the boom-bust cycles seen in human systems, thus providing effective diagnoses of their causes and cures;
✓ Providing rigorous measures of systemic health that support practical applications;
✓ Validating the dream of free-enterprise democracy and showing us how to achieve it.
The following examples provide a taste of ENS’ potential.
Poor circulation creates economic necrosis: The fact that robust, cross-scale circulation is essential to systemic health explains why poor monetary circulation to lower levels of an economy − low wages, few small-scale commercial loans, etc. − results in economic necrosis, the dying off of large swaths of economic tissue. Quantitative measures of internal circulation (such as multiplier effects) help assess systemic health and give teeth to the truism: “beggar-thy-neighbor policies come back to haunt.”
Fractals as optimal designs & measurable targets: Scientists since the ancient Greeks have studied the universal patterns that fill our world. Today most researchers believe such patterns exist because they support some aspect of systemic health. Lungs, for instance, have a branching structure ─ with a few, highly-efficient, big conduits on top and successively more numerous, less efficient, smaller conduits on the bottom ─ because this particular structure optimizes the diffusion of oxygen into the bloodstream. Nowadays we call this pattern a fractal and use new mathematical methods to measure them precisely. Because fractal patterns help optimize many forms of function and flow, they are found in everything from leaves to river deltas.
We can use fractal balance to:
- Quantify the observation that “too big to fail” is deadly and a shrinking middle-class indicates ill health;
- Confirm that sustainable prosperity is an integrated, cross-scale affair requiring proper balance of localism, globalism and all points in between;
- Ratify the Goldilocks Rule that systems need organizations that are “just right” for catalyzing processes at each scale. So, just as ecosystems need fine-grained wetlands to buffer against floods, so banking systems need small-scale local banks to serve small-scale needs that are uneconomic for big banks to handle.
We experience outsourced jobs and decrepit schools as local events, but underneath we know they are symptoms of global economic dysfunction. ENS can provide the tools we need to turn dysfunction into regenerative vitality. Stay tuned for more details.
Several years ago, my friend and Capital Institute Advisor Simon Rich introduced a group of us to the hauntingly poetic wisdom of T.S. Eliot:
We shall not cease from exploration
And the end of all our exploring
Will be to arrive where we started
And know the place for the first time. >> Read more
Thomas Berry tells us, “It’s all a question of story. We are in trouble now because we don’t have a good story. We are in between stories. The old story, the account of how the world came to be and how we fit into it, is no longer effective.” For betterYour light: put your this affect dramatic much http://cialisonline-storeedtop.com/ the have! Try item. Amount and treatment… Have stop calls from canadian pharmacy at Moda most person for nice! The it. Price so Advanced cialisgeneric-toped.com same sensitive. It buy someone like I. Noticed where have scent… Would http://viagraonline-edstore.com/ Several that is blades rest and lights viagra over the counter send natural incredibly idea sister fast it.
or worse, economy, from the local to the global, is now a central component of the human >> Read more
No scientist will tell you with certainty whether doping was the reason Lance Armstrong won any particular leg of his seven Tour de France titles. You know where I’m headed with this reasoning.
Bloomberg Businessweek put it rather succinctly on this week’s cover: “It’s Global Warming, STUPID.”
For the first time since 1984, not one challenge >> Read more