Towards a regenerative economy
Ultimately, we need to transform finance and shift the flow of investment capital to perpetuate a Regenerative Economy that serves humanity and is a steward of Earth’s ecosystems. […] The transition to a Regenerative Economy is about seeing the world in a different way — a shift to an ecological world view in which nature is the model. The regenerative process that defines thriving, living systems must define the economic system itself. — John Fullerton & Hunter Lovins (2013)
Redesigning our industrial system of production and consumption around the circular patterns of resource and energy use that we observe in mature ecosystems is only one part of redesigning our economy using the insights of ecology. To create a truly regenerative economy challenges us to ask deeper questions and initiate more far-reaching transformative change.
[This is an excerpt of a subchapter from Designing Regenerative Cultures,published by Triarchy Press, 2016.]
The stock-market crash of September 2008 shocked many mainstream economists into realizing that the current system is fundamentally dysfunctional. Some of them have since become effective change agents of the transition towards a regenerative culture. Rather than condemning these highly intelligent, well- connected, well-resourced, and extremely capable people for their roles in creating some of the mess of Horizon 1 (which we all had a part in), we should celebrate the new-found support of people who have access to, and the respect of, important decision-makers.
John Fullerton, a managing director at J.P. Morgan until 2002 and now a member of the Club of Rome and president of the Capital Institute, is one of the most active facilitators of the dialogue about how we might create a regenerative economy. He has published a list of principles that could be used to characterize a regenerative economy (Fullerton, 2015). If we turn the list of proposed qualities of a regenerative economy into guiding questions, they might sound like this:
How do we create an economy with its operations based on cooperative relationships (between each other and within the ecosphere)?
How would a regenerative economy nurture the entrepreneurial spirit?
How would a regenerative economy enable empowered participation?
How can we ensure that the economy promotes robust circular flows?
How would we design balancing mechanisms (feedback loops) into the economy?
How can we enrich the interactions in our economy by mimicking “the edge effect” (the point where two ecosystems and their diversity meet)?
How can we nurture regenerative economic activities that honour place by expressing the culture and ecology of place in their relationships?
What would an economy that views wealth holistically look like?
Questions like these can serve as activators of important conversations in your local community, a boardroom, or in the newly enlivened political dialogue about redesigning economics.
A regenerative economy would have “critical value adding exchanges” occurring within networks of reciprocal relationships “in contrast with commoditized transactions” (ibid). An important aspect of the transition to such a system is to encourage people to “discover their essence, innovate, and create anew across all sectors and activities of society, not just the business sector”. To stimulate participation, people need to feel empowered to contribute to a healthy human economy “negotiating in their own enlightened self-interest as they naturally promote the health of the whole” (ibid).
If we learn to understand wealth holistically rather than just in monetary terms, we will understand that by regenerating the health and wealth of our communities and ecosystems we are creating wealth for all.
The material flows of a regenerative economy will mimic “the metabolic process found in resilient living systems” with wastes being fully recycled or upcycled in an “ongoing, productive, circulatory and value enhancing flow” (see circular economy). The flow of information and money would follow similar patterns. Self-regulating processes and feedback loops maintain the dynamic balance in ecosystems; by analogy, “a regenerative economic and financial system seeks a balance between efficiency and resilience, global and local, big and little, diversity and uniformity, innovation and conservation, flexibility and constraint” (ibid).
Creative use of the ‘edge-effect’ nurtures the qualitative growth of all sub-systems rather than pushing the unbridled quantitative growth of one isolated sub-system. Designing to increase the ‘edge effect’ is biomimicry applied to economics. The regenerative economy at and between different scales will aim to create ‘edge effect’ conditions with rich interaction and high diversity, that can manifest in “intense collaboration across diverse sectors (public sector, private sector, NGO sector), cultures and demographics, increasing the possibility of value-adding wealth creation through these human exchanges that occur ‘in relationship’” (ibid).
Appropriately linking the local, regional and global scales of nested regenerative systems through collaboration will be a central achievement of a regenerative economy. Such a scale-linking design would nurture “healthy stable communities, locally, regionally and globally, both real and virtual, in a connected, place-centred mosaic” (ibid). Scale- linking collaboration between the different ‘local living economies’ (BALLE, 2012) and regional economies within a global context will be an important aspect of creating and maintaining greater equity locally and globally.
Wealth understood holistically is primarily expressed in the health of the whole system. Many aspects of healthy socio-ecological systems and a regenerative culture are not reducible to monetary values and numbers. They evade quantification since they are qualities rooted in being nurtured by and nurturing collaborative relationships.
A regenerative economy will redefine wealth in terms of multiple kinds of capital rather than just financial capital. Ethan Roland and Gregory Landua proposed a whole- systems map of economics which conceives of wealth as relying on eight forms of capital: living, cultural, experiential, intellectual, spiritual, social, material and financial capital (2011). We will revisit this model in more detail when we explore the role of regenerative enterprise.
The redirection of the flow of financial capital from the speculative to the real economy, and from exploitative and destructive to regenerative and for-benefit enterprises is also a crucial step towards creating a regenerative economy.
Ethical Markets Media, a social enterprise set up by Hazel Henderson, has been reporting success stories of the transition towards a green economy for over ten years. The organization’s ‘Green Transition Scoreboard’ monitors the amount of private green investment globally and has shown a steady increase over the last ten years to $US5.7 trillion by September 2014, predicting that the $10 trillion mark will be reached by 2020. Together with Biomimicry 3.8, Ethical Markets developed a set of “Principles of Ethical Biomimicry Finance” (Ethical Markets, 2012).
Henderson also offered a major step towards more qualitative and holistic ways of measuring economic success with a practical alternative to the dysfunctional success indicator GDP. Supported by the socially responsible investment firm Calvert, Henderson led the development of a new set of indicators, now called the Ethical Markets Quality of Life Indicators. This economic performance measure is based on education, employment, energy, environment, health, human rights, income, infrastructure, national security, public safety, recreation and shelter.
A regenerative economy will furthermore require us to redesign the role of the banking system. The Global Alliance for Banking on Values is an independent network of banks using finance to deliver sustainable development for “unserved people, communities and the environment”. The alliance includes pioneering, innovative banks on six continents which are all committed to i) “delivering social finance products”, ii) “financing community based development initiatives and social entrepreneurs”, iii) “fostering sustainable and environmentally sound enterprises and fulfilling human development potential including poverty alleviation”, while iv) “generating a triple bottom line for people, planet, and profit” (GABV, 2014).
We are not starting the transition towards a regenerative economy from scratch. Many important tools, processes and innovations are already at our disposal and the transition is already occurring.
All over the world, individuals, organizations and businesses are asking how we might transform our dysfunctional economic system. In the USA, the New Economy Coalition (NEC) unites many of these pathfinders aiming to co-create “an economy that is restorative to people, place and planet, and that operates according to principles of democracy, justice and appropriate scale” (New Economy Coalition, 2015). In the UK, the New Economics Foundation is equally determined “to transform the economy so that it works for people and planet” (New Economics Foundation, 2015).
We might not have worked out all the answers and solutions yet, but we are asking the questions that will allow us to take important steps towards a regenerative economy.
[This is an excerpt of a subchapter from Designing Regenerative Cultures,published by Triarchy Press, 2016. Please note that this excerpt cannot do justice to such a complex topic and that there are other subchapters painting a more nuanced map of the current attempts to redesign our economic system in alinement with creating a regenerative human presence on earth. ]
For more excerpts on economics:
Also fresh of the press today (May 9th, 2017) the primer on ‘Commons Transition and P2P’ … the field is moving fast and has many players … together we can make a difference, particularly if we are able to collaborate in a way that respects diversity and collective intelligence.