So living systems – one of my teachers is Sally Goerner.
She was our science advisor until she retired and we still draw on her work extensively.
She taught us that living systems have what are called healthy hierarchies.
So it’s not that hierarchy is bad; it’s that hierarchy where the top extracts from
below is definitely bad and unsustainable.
So take the lion in the forest or in the jungle, the lion is at the top of the food chain,
but the lion sits around sleeping most the day rather than eating and killing all day.
And the lion therefore serves a very healthy purpose, hierarchical purpose in the food
chain keeping the balance between smaller animals and large animals.
But when the king of the jungle decides to extract as much as possible for its own benefit
you have a very unhealthy system, and unfortunately that pretty much describes how the modern
capitalist system works where there’s benefits of scale.
They bigger get bigger, they get more powerful, they get more political influence, but their
intention is to maximize shareholder value because that’s what we do.
So the cycle of growing inequality is sort of locked into the system design.
Now how we deal with that in a human economy is not trivial: the oak tree “knows” in
a forest that it serves to support a lot of life.
I suspect the only answer in the short-term we have in a human economy is an enlightened
regulatory regime that understands these principles and has incentives and disincentives that
cause the market players to move toward a more healthy hierarchy.
So for example, in the banking sector—and this actually exists post financial crisis,
it’s just not extreme enough—there are disincentives to becoming big and complex,
they’re just not strong enough.
They should be, in my opinion, be strong enough that it would force the J.P. Morgan’s and
the Goldman Sachs’ of the world to, on their own the volition, become smaller and less
complex and become more in alignment in service of the economy.
So things they do that are extractive should get penalized and the things they do that
are in service of the real economy, which they do do, should he get incentivized.
So you don’t need to “break up the banks“, you need to create an incentive system that
causes them to behave in such a way that they would be aligned with the principles of living
systems, which by the way are fractal.
Every living system, again going back to your body, your cardiovascular system is fractal.
You have a few large veins, a lot of medium sized veins and tons and tons of the capillaries.
That fractal system exists in oak trees and in humans and in river systems and in lightning
bolts.
So it’s a strong argument in favor of not allowing the banking system or any sector
of the economy to be so concentrated with a few massive firms that then end up undermining
the health of the small ones, which is essentially what’s happened across our entire economy.
So, my work around this idea of regenerative economics started through this journey of
discovery trying to wrestle with what’s actually at the root cause of our modern economic
system.
And that’s a bit of a long story, but I can’t really jump to the conclusion without
giving a little bit of context.
So the first level is that I think we’re in a much bigger shift than most of us yet
realize.
We’re in a shift in an understanding of how our economies actually have to work.
And we’ve been in what is called the modern age since the scientific revolution, and the
secret to the modern age or the magic of the modern age was the scientific method and reducing
what’s complicated into buckets that could be understood.
And that reductionist method has been the driver of great progress in many, many areas.
An iPhone or a bicycle or a car are all products of a reductionist mindset, and since we’ve
been in that mode for 400 years it’s literally baked into our DNA at this point.
The only problem with a reductionist method is that it’s not the way the universe actually
works.
You as an individual are not the sum of the parts of your body and you know that you’re
only healthy if those parts are all working symbiotically together as a whole.
The reductionist method, what people refer to as the mechanistic age, doesn’t allow
us to keep track of the whole.
And many of the problems that are manifesting in our economy I believe have a root cause
in the limitation of the reductionist method.
So for example, we discover oil, we burn oil, we have all this great growth and all this
great progress, but we didn’t know burning oil would create releasing gases to the point
that we would heat the climate, so it’s an unintended consequence that only a holistic
understanding of how gases in the atmosphere effect the weather systems that is linked
to our energy use could one have seen that problem.
So now we’re trapped in a system that is burning fossil fuels at greater and greater
rates, and yet we have already the consequences of climate change with predictions that are
literally dire for humanity and other living species on the planet.
So, to get to a regenerative economy you first have to say, “Well that system is fundamentally
unsustainable, it cannot go on forever.
And we will either burn up the planet or on the social side we will increase inequality
to the point that we have civil strife and civil wars.”
And so my search was really for how could one design an economic system that didn’t
have those outcomes?
And I know I’m not smart enough to figure those out so the idea is really very simple:
living systems that sustain themselves in the natural world work in accordance with
certain patterns and principles.
Your body does, an entire rainforest does.
And so the work we’re doing at Capital Institute, which is building on the shoulders of many,
many people that have been thinking this way for literally centuries, this holistic approach
to understanding systems is really the root or the source of what this idea is we call
regenerative economies.
So, think of a regenerative economy as the design principles that work in sustainable
living systems, it’s the process that allows a system to be sustainable.
As opposed to sustainability, which is kind of a goal, which is—boy if we could just
reduce these problems we can get to sustainability.
We believe you only have a sustainable system—whether it’s a human person or an entire ecosystem
or a business or an entire economy—if it follows the same patterns and principles that
living systems work in accordance with.
And what’s magical about it is that it turns out those principles and patterns are very
aligned with the wisdom traditions, eastern in particular, but eastern, western and indigenous
that have been around for many, many thousands of years.
So at the end of the day my argument is either make the case that the human economy is the
ONLY example of a system that doesn’t need to obey the same patterns and principles that
all other living systems (that sustain themselves) follow, or we better figure out how to get
the human economy in alignment with those principles.
And regenerative economics is the beginning of an inquiry into what that looks like and
how one might actually manifest that in the world.