Posted by: Dr Churchill | December 3, 2013

Business Failling

In the face of overwhelming distraction from powerful, entrenched interests harvesting, mining, raping and pillaging the Earth for our greedy desire for resources to make many useless consumer discardable goods — our challenge at this time is not only to conserve and protect our ecosystem, but to design & midwife the future we want, and then wait and see what tomorrow may bring.

It is our job to define, adapt, and adhere to what is emerging before our eyes. And act upon our principles to bring this beautiful, bountiful and abundant future around.

Like the unexpected fall of the Berlin Wall, or the seemingly unimaginable end of the Apartheid era,  the emergence of the new economic paradigm that will succeed our present unsustainable economic model of the Financialization of our economies — is inevitable. The refutation of  Corpo-Capitalism is imminent. And the falling of business as usual is already a reality. Yet Sustainable capitalism is rising all around us….

A new dawn is rising as Business as usual of old is failing. Sustainability and Resilience is the New Stability. The Era of Clean Energy Growth and the Clean Economy is already here, and those who have eyes can see…

It’s a new story and a new day. Whether it’s Sustainable capitalism, or the Evolution of Keynesian Economics or the gospel of Adam Smith and Regenerative Capitalism, or even something quite different, it’s likely to happen when You are not watching.

And even then it will seem inevitable. But only in hindsight.  Yet the work of its emergence is well underway today, as the subjects of our Economic Leadership Manual suggest, and many other regenerative projects make clear.

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 better or worse, our difficult yet resilient economies — from the local to the global, is now a central component of the current human story.  In our search for a new story, we are offering up a vision of what we are calling Sustainable Capitalism.

As part of that effort, we convened a gathering of sustainability economists, practitioners, academics and start-uppers — all experts in the new resilient sustainable economy and coming from many countries and diverse backgrounds, to discuss Economic Innovation.  The remit is to define the Economic Innovation for a ”New Millenium – New Economy” project, as well as a white paper entitled “Sustainable Capitalism,” which draws on business models studied within the EP Leadership Innovation Master Class, and integrating them into a practical framework.

The new story, is CARBONOMICS,  and must be grounded in the physical reality of a planet whose natural resources, growth trajectories, and carbon banks, are not unlimited, and the ethical reality that unbounded inequity is intolerable.  The modern expansionist material economic story, despite its magnificent achievements in the past two centuries when its scale was far smaller, fails on both grounds and above all else it fails on the Environmental and Climate realities of the day. making it unsustainable.

The new Economic paradigm must address Social Justice and also be relevant to a growing global population of seven billion people, half of which are currently living in urban environments, with the trend of continued urbanization appearing to be locked in for the foreseeable future.  China alone anticipates building cities for 250 million new inhabitants in just the next five years.  That’s thirty New York Cities.

The new story must also mesh well within the reality of current global corporations whose scale and span of influence exceed that of all but a few nation states. Large Corporations whose annual balance sheet exceeds that of the GDP of all small countries and yet they don’t have capital investment decisions will lock in much of the underlying infrastructure and technology choices that will define the quality and scale of the “global economy” of the future.  This reality exists despite the fact that these global actors employ only a small minority of the world’s population, even after three decades of “globalization.”

Sustainable Capitalism has two components: first, a shift to a “new economic paradigm,” and second, an evolution to a more complex understanding of what we need to understand as “sustainable long term capital” if the economy is to be ecologically sustainable and also promote shared well-being.

The sustainable paradigm is adapted from the leading edge of the business and economy start-up building & design field.  It demands a profound shift from the mechanistic and reductionist worldview of the industrial age, of burning things up and unfettered pollution, to a holistic approach towards living systems and ecological worldview. This is consistent with our understanding of how life on this planet, actually works and how the physics of our world operate.

This sustainable economic paradigm helps us understand the economy as embedded in culture, social justice, and embedded in the healthy working of the ecosystem. It demands that it is part of and parcel of the existing biosphere.  In this worldview, economic products, social goods and ills, along with the environment, are not “special interests,” separate from the whole, anymore than a healthy blood circulatory system is separate from a healthy person.

Leading systems thinking allows for this new economic paradigm which requires a new kind of thinking, allowing us to reconnect with the essence at the level of the individual, at the level of institution, and even at the systems level.

The nation, the economy and the citizens are all aligned together in this new economic paradigm…

And because our mounting ecological, economic, financial, social, and moral crises, are all connected in an incomprehensibly complex web of life and are converging into a global emergency that even the most entrenched denialists will soon be unable to ignore — we need the new economic paradigm led CHANGE now.

Science tells us that our economic system’s physical growth imperative, fueled by financial capitalism, is fundamentally misaligned with the finite boundaries of the biosphere. Notwithstanding all of its remarkable historical achievements, the global economy must now evolve not only to align itself with this scientific reality, but also to address other critical challenges, most notably the grotesquely inequitable distribution of wealth, intractable poverty in much of the world, and chronic unemployment.

Addressing these issues demands not merely problem solving, but systemic change that can address root causes.

1) We suggest that the most important leverage point for enabling system change is to change the paradigm, or belief structure, within which a system operates.

2) We believe that we must evolve beyond the outdated mechanistic worldview and impossible exponential growth paradigm which defines contemporary economics, finance, and business, to a sustainable paradigm grounded in the holistic ecological or living systems worldview of contemporary science.

3) Sustainability is the “continuous process of becoming” necessary to sustain life in the natural world. Now, as we shift from the ten thousand year old and stable Holocene to the human controlled and volatile Carbon Era,  Anthropocene, it is our evolutionary destiny and the creative challenge of our age to usher in the Era of Sustainable Capitalism, bringing the human economy into holistic balance with nature, and harmonizing with the core beliefs our many wisdom traditions that have stood the test of time Sustainable Capitalism is characterized by the following two examples:  A) An expansion of the meaning of “capital” to include multiple forms of capital, and the vital patterns of their interdependencies, in keeping with a holistic understanding of true wealth; and  B) A recognition that the regenerative process that defines thriving, living systems, enabling many of them to be sustainable over the long run, must define the economic system itself.

4) Developing differing Kinds of Capital : For simplicity’s sake, we recognize three forms of capital in our analysis: A) Natural Capital upon which all life depends; B) Social Capital; and C) Financial Capital (broadly covering all assets that are convertible to money, from stocks and bonds to factories and machines). As we seek to harmonize these multiple kinds of capital we will be required to make judgments about limits and to redefine and expand the meaning of wealth and well being. Merely optimizing single variables such as financial return will no longer be seen as sufficient to investment decision making in the Era of Sustainable  Capitalism.

The Elements of a Sustainable Economy:
We identify eight elements of Sustainable Capitalism, abbreviated here:
1) Long Term Investment Capital holds survival of humanity and the premise of the continuation of life as the key priority. In short Capital means Life.
2) Human economy is embedded in human culture and the biosphere.
3) Entrepreneurialism draws on the innate ability of human beings to innovate, transform, and create anew across all sectors of society.
4) Wealth must be Viewed Holistically: True wealth defined in terms of the Good achieved through the harmonization between the multiple forms of capital.
5) Democratized Financial Wealth: Financial wealth equitably and necessarily equally, distributed in the context of an expanded view of true wealth.
6) Real Economy Circularity: A continual striving to minimize energy, material, and resource throughput at all phases of the production cycle.
7) Abundance: This transformation requires collaborations increasing the possibility of adding wealth creation through relationship, exchanges, and resiliency. Resiliency is the ability to recover from shocks and scale adaptability to change valued over brittle concentrations of power and hyper efficiency.
8) Sustainable Capital Operates to nurture healthy, stable, and sustainable communities; real and virtual connected as a mosaic of place centered economies.

Sustainable Capitalism is already manifesting in a multitude of scalable real world projects, and enterprises on the ground. But Capitalism must be relevant to large global enterprises as well, and this is a critical challenge. But even here, there is evidence of its presence striving to take root. The emergence of Regenerative Capitalism, particularly within the present mainstream economy dominated by large scale enterprises and State actors, is dependent upon a fundamental transformation of finance. We have identified Eight Elements of Sustainable Finance consistent with the shift from a mechanistic to ecological worldview.

The Elements of Sustainable Finance are the following and the ‘practice makes perfect’ axiom applies here too: 1) Means not Ends is the capacity to understand that finance is a means to a healthy economy, not the “ends” of economic activity. 2) Ethical and In Service: Behave as an ethical professional, grounded in a culture. 3)Emergence: Advice to clients and service to the emergence of a sustainable economy. 4) The Supremacy of Relationship: Value relationships over transactions. 5) Transparency: Value transparency over complexity, while embracing genuine value adding innovation. 6) Real Wealth:  Seek to generate long term wealth creation, harmonizing multiple forms of capital in the right relationship, using a fair financial return as a constraint for investment decisions. 7) Right Scale: Appropriately scaled as a system embedded in the economy, which in turn is embedded in culture and the biosphere. 8) Collaborative: Value collaboration among values aligned investors, financial institutions, and enterprises from multiple sectors. 9) Resilient: Balance efficiency with structural resiliency at the system level through decentralization, diversity, and buffers within institutions and even within the money system itself.

The road to Sustainable Capitalism is inevitably full of stability, glory, and profit… because the present immense concentration of wealth and power in the top tenth of one percent is clearly unsustainable. Our current regime that is not providing Equanimity and Social Justice for the vast majority of the global population simply provides instability and a sure path to violent conflict. Therefore if we keep doing business as usual we will surely harvest the grapes of wrath. That is our Damoclean sword, if we don’t choose a wiser course. Managing the complexity ahead is an unparalleled epic challenge, raising many political and practical questions beyond the scope of this economic pursuit — yet is eminently worth it.

We dare not predict the unknowable, the if, the but, and the without… because we do not know what humanity will choose to ultimately adopt as the new Economic Model. Yet chances are that the Sustainable capitalism is the pivot upon which the world will move.

Yet because of what we do know is that continuing on our present path leads most certainly to social, ecological, and economic collapse. Wars are started with a lot less imbalance and disequilibrium…

We conclude with three declarations:

An ecological worldview must replace our outdated mechanical carbon based economy and business approach. The sustainable Capitalism paradigm that defines life and enables it to sustain itself has to be adopted.

Entropy must succeed the impossible exponential growth paradigm.

A transformation of finance, in both theory and practice, is essential for this.

The emergence of this transformation in our economic belief system is already happening, as demonstrated by the examples we explored, and many thousands more that will become apparent to all of us if we have eyes to see them.

Let’s keep harvesting the best ideas and put them to action in order to enable and enhance the journey to the New Millenium evolutionary necessity of the New Economic model of Sustainable Capitalism.

Preach this Gospel of Economic Development to all and sundry because it works and serves us all better than the existing reality of Carbon based exploitation capitalism.

Yours,

Pano

PS:

I always say that it is easier to help a young elephant stand up, than it is to prop up an old Elephant falling…


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