Redesigning Economics based on Ecology12th July 2019
“To make the world work for 100% of humanity in the shortest possible time through spontaneous cooperation without ecological offense or the disadvantage of anyone.” — R. Buckminster Fuller
Much of our day-to-day behaviour and cultural activity is structurally determined by our monetary and economic systems. Their redesign is a crucial enabler of the transition towards a regenerative culture. To transform our economic system(s) at every scale is an audacious salutogenic [health generating] design intervention, yet it is the only way we can effect changes deeply enough to avoid the collapse of civilization and further damage to ecosystems and the biosphere.
Q: Is it possible to create a regenerative economic system based on cooperation rather than competition?
Q How can lessons from ecology — like symbiosis, circular no-waste systems and whole-systems optimization — inform the redesign of our economic and monetary systems?
In line with Buckminster Fuller’s central design intention, we have to ask ourselves: does our current economic and monetary system work for 100% of humanity without ecological offence and disadvantage to anyone? Clearly it does not! We need new economic rules and fundamental structural changes that incentivize regenerative and collaborative relationships. The redesigned system will need to discourage the kind of pathological behaviour patterns our current culturally dominant narrative of separation, supported by neo-Darwinian biology and neo-classical economics, justifies and rewards.
As human beings, we are in our very nature compassionate and collaborative, but our current monetary and economic systems are based on the narrative of separation that creates and encourages competition. For too long, we have told a story about nature ‘red in tooth and claw’ and excused the worst of human behaviour as natural. Scarcity is primarily a mindset and lack of collaboration not a biophysical reality! Competition creates scarcity, which in turn is used to justify competitive behaviour (a vicious circle).
The natural limits of bioproductivity and healthy ecosystems functions don’t create scarcity as such. Collaboration can turn these natural planetary limits into enabling constraints to create abundance for all within healthy ecosystems and a healthy biosphere. Collaboration creates shared abundance, which in turn invites more collaboration (a virtuous circle). We choose which world we want to bring forth together!
Our economic systems have to be redesigned to enable rather than inhibit vital changes towards improved whole-systems health. The healthier the whole system is, the more abundance is generated by healthy ecosystems functions. Our current monetary system generates money out of nowhere based on debt (every time anyone takes out a loan). Differential interest for lending and borrowing, along with compound interest, further drive a system that is not only set up as a win-lose game, but also requires continuous economic growth to keep going.
Furthermore, this system depends on continuous extraction of natural resources, turning them into (privatized) economic assets while externalizing the ecological and social costs. This is a structurally unsustainable system.
Rather than creating a medium of exchange and a store of value that incentivizes appropriate participation in the life-sustaining processes of the biosphere, we have created a monetary and economic system that drives the systematic exploitation and destruction of healthy ecosystem functioning. In addition, this badly designed system makes us compete rather than collaborate with one another. Our profoundly unsustainable monetary and economic systems lie at the root of many of the converging crises around us. They reinforce a self-fulfilling prophecy of competition and scarcity. A regenerative culture will only emerge if we address these necessary and fundamental structural changes.
On his website Peak Prosperity, Chris Martenson, a former Fortune 300 executive, provides an excellent crash course using a series of short video presentations exploring the interconnected forces of our structurally dysfunctional economic system. The economic growth phase of the global economy is nearing its systemic (structural) end. I recommend this resource to everyone willing to invest four hours in gaining a better understanding of why economic and cultural transformation is inevitable and urgently needed. Like an ecosystem reaching maturity, our economic systems need to shift from quantitative towards qualitative growth by revitalizing local and regional economies through the prosperity that comes from collaboration and community resilience.
The word ‘regenerative’ in ‘regenerative cultures’ refers — in part — to a culture’s ability to regenerate and transform itself in response to change. Most importantly it refers to a culture’s ability to maintain and regenerate healthy ecosystems functions as the basis of true wealth and wellbeing. If we finally understand that our current monetary and economic systems are not fit for purpose, we can initiate structural changes that will create conditions for life as a whole, including all of humanity, to thrive.
The founder of the World Economic Forum, Klaus Schwab, said in the run-up to the 2012 forum that “capitalism, in its current form, no longer fits the world around us […] a global transformation is urgently needed” (Economic Times, 2012). In Chapter 5 we explored how design keeps on designing, how there is a self-reinforcing feedback between our worldview and designs that reinforces the way we see the world. We need to break out of this vicious circle of bad economic design decisions — they reinforce a perspective of scarcity, separation and competition that drives ecological and social degradation. Human beings designed this system and human beings can redesign it to serve people and planet.
Nothing about our current economic system is inevitable or unchangeable. Remember, economics is at best a ‘management system’ and at its worst a dangerous ideology. Unlike biology and ecology, economics is not a science. We created our current economic system and we can redesign it, based on ecological insights, to better serve our common purpose: promoting the health and wellbeing of humanity and the community of life.
To redesign economics from the ground up challenges us to design new monetary systems, trade policies and financial institutions, as well as scale-linked local living economies and regionally based circular bio-economies supported by global collaboration and resource- and information-sharing.
The structural failure of the current system is no longer a provocative hypothesis of a few thought-leaders. The World Bank, the United Nations, the world’s financial institutions, many political leaders and most importantly a groundswell of increasingly informed global citizens, have all recognized the dysfunctionality of the current economic and monetary system.
We are challenged to redesign the plane we are on in mid-flight. The necessity of ‘Horizon 1’ — to keep the lights on and people fed and in jobs — is driving many people in leadership roles to react to short-term electoral and economic cycles with little room to manoeuvre, rather than to initiate transformative change with the long-term benefit of humanity and life in mind. This structural lock-in drives ‘business as usual’.
Here are just some of the key faults in the current monetary and economic system:
- ‘money as debt created out of nowhere’ drives extreme inequality and sets ‘competition’ as the rule
- compound interest on loans and deposits creates an economic time-bomb that drives the perverse necessity for exponential growth and unbridled consumption, structurally establishing a win-lose rather than a win-win-win ‘playing field’
- inappropriate and misguided measures of economic success like GDP divert our attention from creating systemic health and wellbeing (caring about qualities) to economic throughput (caring about quantities)
- anachronistic subsidies and international trade policies established under the economic stranglehold of big lobbies favour the wrong kind of industries and energy sources
- current trade rules favour financial gains for the shareholders of multinational corporations yet sabotage local and regional production and consumption (to the detriment of most of humanity’s 5 billion poor and of ecosystems functions)
- tax systems that are set up to tax work rather than resource-use structurally increase inequity and drive environmental and social degradation
- value creation is based on an exploitative system of extraction, production and consumption that externalizes the social and ecological costs of (and damage caused by) degrading our resource base and causing dangerous climate change
- the flow of investments and subsidies is not supporting salutogenic and regenerative activities and technologies, as would be the case if value creation was based on healthy ecosystems functions and regeneration
Economic and monetary systems as they stand are structurally dysfunctional and at best serve a few (for a while). Under no circumstances will they deliver a healthy, meaningful and happy life for all. On a crowded planet with failing ecosystems we have to learn that out-competing others while destroying the planetary life-support systems is not an evolutionary success strategy. Win-lose games in the long run turn into lose-lose games.
Starting with the systemic leverage points mentioned above, we can transform our global economy and strengthen resilient regional and local economies as the foundations of thriving, diverse, regenerative cultures. If we want to create healthy economies that protect rather than destroy local ecosystems, we will need to rewrite international trade rules in ways that include the social and ecological costs of production and consumption, as well as trade.
We need to protect local economies from ‘cheap’ imports made possible by hidden subsidies, externalizing true costs, and outsourcing production (exploiting international inequality). Re-localizing and re-regionalizing economics — while maintaining international collaboration and fair trade — creates jobs and community resilience. It supports an economics of positive social and ecological impact.
Neo-classical economic dogma would call this ‘protectionism’ and oppose it because ‘we need deregulation instead of regulation to ensure the free-market’. What a pervasive myth this so-called free-market is proving to be! In a conditioned knee-jerk response, many intelligent people will defend an ideal (the free market) that simply does not exist. Kenny Ausubel, co-founder of Bioneers, hit the nail on the head:
“The world is suffering from the perverse incentives of ‘unnatural capitalism’. When people say ‘free market’, I ask if free is a verb. We don’t have a free market, but a highly managed and often monopolized market. […] we have banks and companies that are ‘too big to fail,’ but in truth are too big not to fail. The resulting extremes of concentration of wealth and political power are very bad for business and the economy (not to mention the environment, human rights, and democracy). One result is that small companies can’t advance too far against the big players with their legions of lawyers and Capitol Hill lobbyists, when in truth it’s small and medium-sized companies that provide the majority of jobs as well as innovation.” — Kenny Ausubel in Harman (2013: 77)
The transformation of our economic system is already under way. Social, cultural, ecological and economic innovators around the world are already offering and exploring a plethora of alternatives. Our socio-economic systems are being reinvented from the ground up.
In Money and Sustainability — The Missing Link, Bernard Lietaer and his colleagues (2012) explore a variety of ways in which complementary regional currencies can be designed to address the problems created by our current monetary system. We have already started to ask different questions about the purpose and objectives of economics and money:
Q How can we reinvent our economic system to cure its current structural dysfunctionality and create an economy that is in service of all people and the planet?
Q What kind of monetary systems would serve us at what scale?
Q Can we design a full-reserve currency based on bioproductive capacity, biodiversity and the healthy functioning of ecosystems?
Q What would circular bio-economies look like and how do we effectively create them, and at what scale?
Q What kind of economic system would help us to optimize resource sharing and (biologically regenerative) resource creation locally, regionally and globally?
Q What would an ‘economy for the common good’, an ‘economics of happiness’ and a ‘sacred economics’ look like in our community and how do we co-create them?
Q How can new rules in economics facilitate a fair sharing of, and a common responsibility for, the global commons?
Q How do we create monetary and economic systems where value is ultimately based on healthy ecosystem functioning and where ecological and social regeneration are structurally incentivized?
Q How can ecological literacy and learning from the rest of nature help us to redesign a more fitting economic system for a regenerative culture?
I cannot do these important questions justice here. But I will highlight some of the excellent work of people who — to my mind — hold a piece of the puzzle. All these approaches are based on the important ecological insight that regenerative systems in nature are collaborative. Effective resource-sharing in natural systems is based on collaboration in circular patterns of resource use and regeneration.
Creating a healthy economic system requires us to meet humanity’s needs within the limits of the planet’s annual bioproductivity and to do so while attempting to regenerate the bioproductive capacity of damaged ecosystems everywhere. Willem Ferwerda, Executive Fellow at the Rotterdam School of Management and special advisor to the IUCN, explains why the restoration of damaged ecosystems is an economic imperative:
“Ecosystems form the basis of all wealth creation. Ecosystem services flow from natural capital and are an investor’s primary asset. […] Ecosystems provide societies with soil fertility, food, water, shelter, goods and services, medicines, stability, pleasure, knowledge and leisure. […] Today 60 per cent of the services provided by ecosystems are threatened. Economic activities aimed at achieving short-term wealth are destroying ecosystems worldwide and thus economies’ primary asset. Restoring damaged ecosystems is essential if we are to secure the livelihoods of future generations.” — Willem Ferwerda (2012: 13)
[… the book continues with a chapter on Creating Circulare Economies. This excerpt from Designing Regenerative Cultures, published by Triarchy Press in 2016, opens many more questions than it anwers. So does the rest of the book, as the way to create diverse regenerative cultures that are elegantly adapted to the bio-cultural uniqueness of the places they inhabit has to be by living the questions together. There are no silver bullet pathways to a regenenerative human impact on earth.]
Redesigning Economics based on Ecology was originally published in HackerNoon.com on Medium, where people are continuing the conversation by highlighting and responding to this story.