The Regenerative Economic Shaper Perspective Paper— Part 1
By Carol Sanford and Ben Haggard (with the Regenerative Economy Collaborative)
The problem with the global economy isn’t how we do it, it’s how we think about it. The dysfunction and destructiveness of the current economy is all the evidence one needs for how bad our economic thinking is. Yet human intelligence has the inherent potential to create an economy that activates life — for people and the planet — if we shift the paradigm from which we’re thinking.
This paper is for those who want to create profound economic change. It provides a framework from which to innovate designs for the next economy.
Toward a New Economy
Leading edge economic thinkers and shapers are attempting to transform the way human beings build and maintain their economies. For too long, economic theories and practices have contributed to a range of destructive outcomes, such as extreme wealth inequality, conflicts over resources, and degradation of the world’s ecosystems. A plethora of experiments and new theories have attempted to address these issues, loosely held within the rubric of the next economy. They range from impact investment strategies to the localism and slow money movements to retooling national policies within well-being, circular, or doughnut economic frameworks.
Recently a great deal of interest has arisen around ways to apply regenerative thinking to the design and development of economic systems. From our perspective, much of the resulting conversation has suffered from a lack of discernment with regard to what differentiates regenerative thinking from other approaches. This is important precisely because regeneration works on transformation, rather than on incremental improvement of existing practices. Unable to tap into the distinctive perspective characteristic of a regenerative approach, many worthy efforts to invent a new kind of economy are falling short of their transformational potential. With this article, we hope to provide a basis for discernment in support of the many practitioners who are interested in pioneering a regenerative economy.
In what follows we offer several frameworks designed to stimulate useful questions for those who wish to pursue this inquiry. We assume that it will take several generations of sustained experimentation and effort to shift local, national, and global economies from a degenerative to a regenerative basis. For this reason, we do not propose answers or recommendations for addressing specific economic issues, policies, or infrastructure. Our purpose is to support the right level and nature of thinking required to evolve economic innovations with the potential to transform the ways people live in the world.
We have chosen to describe this article as a perspective paper, an essay that explores a new or unique viewpoint with regard to a specific topic. Unlike white papers, which are authoritative reports intended to help readers understand an issue or make a decision, perspective papers don’t use documentation in support of their arguments. Rather, they are based on the observations, ideas, and concepts of the authors. Our desire is to help our readers disrupt their thinking and frame their own research with regard to new ways of approaching the subject of economics.
What do We Mean by Regenerative Economics?
We begin with definitions because so many of the concepts associated with economics are understood in fundamentally degenerative ways. In what follows, we don’t make a distinction between macro- and microeconomics. Our basic premise is that, to be effective, the concepts and principles laid out here need to be applied at all scales.
First of all, economics today is generally defined as a field of study related to the production, distribution, and consumption of goods and services. This definition implies a world of material existence and exchange, evoking concepts such as resources, labor, trade, capital equipment, and so on. The emphasis on goods and services, independent from the generation of systemic effects, subtly reinforces the idea of a world from which finite resources are extracted, refined, sold, and used up, creating winners and losers in a zero sum game. The field of modern economics arose in response to Newtonian physics, when Adam Smith endeavored to apply Newton’s scientific reasoning to human exchange in order to reduce its complexities to predictable material mechanisms governed by universal laws.
However, the word economics (or oikonomos) comes from Ancient Greece, where Aristotle defined it as the pragmatic science of living virtuously as a member of the polis (or community) through wise household management. This definition offers a entirely different basis for thinking about economics. First, the household is a whole, a living system nested within larger community and landscape systems. Second, in a household wise management takes precedence over production and consumption. And third, a household’s whole enterprise is oriented toward creating stronger and more beautiful (or virtuous) communities by means of the qualities cultivated in their citizens.
As seed ideas, these can be translated into a regenerative frame for a twenty-first century context. The emergence of ecological understanding and the growing influence of indigenous science have taught us that the ultimate household is Earth itself. When one thinks of economics as the wise management of the planet as a whole, one begins to recognize that the idea of externality — a cost to a third party that did not choose to incur it, such as factory pollution imposed on a local community — no longer makes sense. Instead, it is necessary to consider the systemic effects of each and every economic activity on the planet and its nested socio-ecological systems. It is not possible to throw anything away because there is no such thing as away in a planetary household.
Within a regenerative economy, the focus moves up from the purely mechanical activities of production and consumption to the developmental activity of wise management. By invoking wisdom, Aristotle is suggesting that one needs to manage for more than the present moment. One must look at how the household fits within the nested systems of community and territory, and how the choices one makes will play out through time and over generations.
This implies that an economy of wise management seeks to grow not only wealth but the wealth-generating capacity of all of its participants. The commonplace understanding of wealth is abundance of valuable possessions or money that can be used in transactions. However, the etymological origin of the word (Old English weal) contains a cluster of meanings that includes happiness, prosperity, and well-being or health. At its root, then, the concept of wealth encompasses the range of qualities that enable us to live well.
Given this enlarged understanding, it makes no sense to think of accumulating the qualities associated with wealth through hoarding. In a living and dynamic world, they grow to the extent that they are shared, exchanged and circulated — through generosity, in other words. The superabundance of acorns produced by a mature oak tree, far beyond what is needed for simple reproduction, supports the well-being of countless other species and thereby creates the conditions within which an oak tree is happiest. This is why we assert that an economy, if it is managed wisely, will result in the continuous evolution of the wealth-generating capacity and therefore the collective or systemic wealth of all of its participants, human and non-human. The practice of regenerative economics is the art and science of building this wealth-generating capacity into living systems at all levels and scales.
Thus, the ability to engage in wise management of a whole system is the core capability that a post-extractive economy requires its members to develop if they are to live in stronger and more beautiful communities. One could say that this is why societies build economies in the first place, to organize and fuel their own evolutionary development. From a regenerative perspective, the wisdom needed must be rooted in a shift from seeing the world in terms of closed systems or even open systems, to seeing the world in terms of living systems.
From a closed systems view, one can know, manage, and measure all of the inputs and outputs of an entity, such as a business, government, or economy. This is a way of thinking that is deeply rooted in the ideas of control and predictability. From an open systems view, one seeks to manage one’s relationships with the larger systems within which one is nested: household, tribe, community, lifeshed. This view embraces the idea of reciprocity. From a living systems view, one seeks to manage the conditions that will allow each living being to evolve its capacity to express its essence over time as a relevant contribution to a living world. A living systems approach to wise management values differentiation, wherein everything living finds its own unique way to participate in unfolding new potential for life on the planet.