Why should the Next Economy go beyond Circles? — Part 1
Discerning our level of effect as businesses in reshaping the economy
By Sidney Cano
Co-Founder & CEO / DUIT Corporation
(with the Regenerative Economy Collaborative)
As a founder and member of a holding company, I am always looking for better ways of evolving our businesses to better serve our customers. My entrepreneurial and business activities are grounded in the profound belief that our businesses are instruments to serve greater purposes and contribute to society and all living systems.
As many business owners and CEOs looking to go beyond making money through and for the business, I explored different models and practices, including Social Responsibility and Sustainability models and metrics. I was following an impulse to evolve the way we do business in the world, having made a commitment that both I and our corporate group will always go as far as we can to make a positive impact.
Having worked for more than five years with thinking partners and colleagues to make profound shifts in the way we think and operate in the business world, we have reached a high-level commitment to regenerating systems, using our businesses as instruments. When we say “regenerate systems,” we are referring to processes and practices that continually replenish and enhance both life and wealth within the systems we impact.
As part of the change process, we have made an agreement to build discernment in all people involved, so that we enable our organizations to evolve continually. According to this agreement, we have engaged several business cocreators in a practice of examining diverse business ideas against the Levels of Paradigm Framework offered by Carol Sanford:
(…) In building paradigm discernment (…) one must overcome the tendency to accept at face value the authority of well-established figures and institutions. Instead, one must rigorously examine the level from which their ideas are sourced. If one accepts their initial axioms, then the conclusions they come to make sense. But should these axioms be accepted? What do they reveal about the paradigms that lie behind them?
Following her recommendation, we have learned to never accept or reject any idea until we have understood the paradigm on which it is grounded and whether the idea is contributing to the level of effect we want to have in the living systems our companies are embedded in.
In this article, I encourage the examination of circular economic approaches — specifically, the Circular Economy and the Doughnut Economic Model — with the intention to help business owners, executive directors, entrepreneurs and investors increase their discernment and their understanding of the effects they might have while engaging in actions based on such models. I also offer approaches to begin reflecting on the possibilities of business development towards an Economy for Life — a truly Regenerative Economy.
Our companies should consider approaching all changes at the level of the Regenerate Life Paradigm.
Towards a New Economy: from linear to circular
The Circular Economy is frequently presented as a model to integrate operations into business in order to produce goods sustainably. This model is based on 3 principles: 1) design out waste and pollution, 2) keep products and materials in use and 3) regenerate natural systems.
The Circular Economy Model offers an alternative to the linear approach to production and consumption (Figure 1), which is not only damaging our planet’s natural systems, but also cannot be sustained. As we know, there are limits to the resources we can extract to create the products required to maintain humanity’s standard of living.
In place of the linear approach, the Ellen McArthur Foundation has, in the last few decades, promoted a circular model (Figure 2), which aims to change the way we see and engage in production, distribution, and consumption of goods. The foundation anticipates that this change will positively impact economic dynamics.
This approach offers a solution to the negative effects that conventional linear production-and-consumption processes have on natural systems, i.e. the extraction of materials to create and distribute products for human consumption. It redirects manufacturers’ efforts toward developing processes and business models that instead mitigate or eliminate waste.
In a similar attempt to move towards a new economy, Kate Raworth presents a different proposal, the Doughnut Economic Model (Figure 3), as a way to think about sustainable economies in the 21st century. The doughnut is made of two circles. The inside ring presents the social foundation, which consists of 12 human needs, including water, food, justice, and education. The outside ring presents nine planetary boundaries, a kind of ecological ceiling. When humans’ productive or pleasure-seeking activities transgress those boundaries, the equilibrium is broken, and we enter an unsustainable state.
Between these two rings is what Raworth calls “a safe and just home for humanity.” This is — as she states it — the ideal space for our economies.
Producing goods based on a circular operation
The Circular Economy Model is asking us to shift away from our globally accepted way of living and production-consumption framing to urgently stop the damage we cause by extracting, producing, distributing, buying and trashing materials. It asks us to begin to care about our environment.
Similarly, the Doughnut Economic Model asks us to increase our awareness of the social and environmental boundaries that our current production-consumption society is transgressing and aims for achieving an equilibrium: “a safe and just home for humanity.”
In my opinion, these proposals are taking an important step forward in comparison to the current globally accepted and encouraged economy. Upon close examination of these proposals, it appears that they derive from an axiom that emphasizes the importance of ceasing the damage caused by human activities. Therefore, when examined in light of the Levels of Paradigm framework presented by Sanford and Haggard, it can be discerned that they are anchored in an arresting disorder paradigm.
These circular approaches aim for producers and distributors of goods to move away from creating the problem to mitigating or even neutralizing the negative effects of the way we produce and consume goods. Their goal is for human activities to remain inside the limits of social and ecological boundaries, so that we do not harm humans or the planet. By using these models, we are trying to solve our society’s problems from a paradigm which focuses on ceasing damage. These models are far from promoting an economy for life.
As Sanford and Haggard state:
“At this level [arrest disorder paradigm], one expands the scope of one’s attention and awareness to include relationships within systems, which allows one to see the effects one’s actions are having on others. One becomes concerned with achieving balance and the long-term sustainability of human endeavors. As a result, one seeks to correct the systemic problems created when people or institutions pursue their own narrow self-interest to the detriment of others. (…) Also, this paradigm’s problem-solving orientation leads to approaches that are programmatic in nature, severely limiting the kinds of creativity that become available at higher levels of thinking.”
What would it mean then to move up to a higher-level paradigm and from there to redesign our economic system and mode of production?
First, we could start from moving from an anthropocentric perspective to a systemic perspective.
In our corporate group’s assessment, we were able to acknowledge that the circular approaches mentioned were also directing producers and consumers to open their minds to moving from caring only about human needs to seeing the effects of our work (and ultimately our lives) on bigger systems.
As stated in the Circular Economy proposal:
“The goal is not to minimize the cradle-to-grave flow of materials, but to generate cyclical, cradle-to-cradle ‘metabolisms’ that enable materials to maintain their status as resources and accumulate intelligence over time (upcycling).”
This statement teaches us that, if we anchor our change efforts here, we are aiming to maintain and restore natural resources. At first sight, this seems compelling! It would be a good thing to no longer generate waste. It would be even better if our production-consumption efforts continue to move up along the chain of value. Learning to work in a way in which we maintain and restore natural systems by “upcycling,” meaning that conditions are created for their enhancement within their life cycles, sounds like a great idea.
Continue to part two, to learn about the nested nature of systems and a new mindset for economics:
