Economists have a lot to answer for. You only have to read books such as “Zeronauts”, “Drawdown” and “Evolved Enterprise”, or watch “Planet of the humans”, to know that something is seriously amiss with the way we look at economics. That is why I am a fan of Buddhist Economics. The way we measure economic progress though GDP is madness.
The degenerative linear economy
We need to start facing up to the degenerative linear economy. And particularly our perspective on ongoing economic growth. The aeroplane has to land sometimes. Infinite growth does not exist. Growth is one of the stupidest purposes ever invented by any culture, growth of what, and why, and for whom, and who pays the cost, and how long can it last, and what’s the cost to the planet, and how much is enough?
Economics is a question of design
It’s time to put aside the search for economic laws demonstrating that growing national output will eventually deliver ecological health. Economics, it turns out, is not a matter of discovering laws: it is essentially a question of design. But its design is fundamentally flawed because it runs counter to the living world, which thrives by continually recycling life’s building blocks such as carbon, oxygen, water, nitrogen and phosphorus.
Economists invented GDP. Based on the economic theories of the 1800s. And a massive simplification of these theories. Economies are complex models that cannot be explained by simple equations and graphs. The world we live in is much messier. It is nonlinear, turbulent, and dynamic.
Recently compiled international data reveal that when a nation’s global material footprint is taken into account, by adding up all of the biomass, fossil fuels, metal ores, and construction minerals used worldwide to create the products that the country imports illustrate this point. From 1990 to 2007, as GDP grew in high-income countries, so did their global material footprints. In Spain, Portugal and the Netherlands, they grew by over 50%. Our local GDP has a global impact.
So Kate Raworth decided that it was time to change the model. Hence “Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist”. A manifesto for change. We are playing a game that no-one can win in the end. Most of us are not even part of the team. We need to change the goal. For over 70 years economics has been fixated on GDP, or national output, as its primary measure of progress. For the twenty-first century, we need a far bigger goal: meeting the human rights of every person within the means of our life-giving planet. Which means we need to become regenerative, and we need to examine what we mean by growth.
We need to unlearn economics as we think we know it. Many things we think we know about economics are wrong. There is no correlation between GDP growth and employment (Okun’s law). We need to bring morality back into economics. From hard science to soft science. It is time for living metrics. These new metrics should monitor the many sources of wealth – human, social, ecological, cultural and physical – from which all value flows.
Back to basics
It is time to go back to the basics. These twelve basics include sufficient food; clean water and decent sanitation; access to energy and clean cooking facilities; access to education and healthcare; decent housing; a minimum income and decent work; and access to networks of information and networks of social support. Furthermore, we should focus on achieving these basics with gender equality, social equity, political voice, and peace and justice.
- In Maori culture, the concept of well-being combines spiritual, ecological, kinship and economic well-being, interwoven as interdependent dimensions.
- In recent years, Bolivia has incorporated buen vivir into its constitution as an ethical principle to guide the state,
- Ecuador’s constitution became the world’s first, in 2008, to recognise that Nature, or Pachamama, ‘has the right to exist, persist, maintain and regenerate its vital cycles’.
- From Taoism’s yin yang and the Maori takarangi to Buddhism’s endless knot and the Celtic double spiral, each design invokes a continual dynamic dance between complementary forces.
We need to move from self-contained market to embedded economy. We live now with an economy that exceeds Earth’s regenerative and absorptive capacity by over-harvesting sources such as fish, and forests, and over-filling sinks such as the atmosphere and oceans.
We are a society
We have households. We have the state. We have the commons (shareable resources of nature or society). They are deeply interconnected. For example; a 2014 survey of 15,000 mothers in the USA calculated that, if women were paid the going hourly rate for each of their roles – switching between housekeeper and daycare teacher to van driver and cleaner – then stay-at-home mums would earn around $120,000 each year. It matters because when in the name of austerity and public-sector savings, governments cut budgets for children’s daycare centres, community services, parental leave and youth clubs, the need for caregiving doesn’t disappear: it just gets pushed back into the home.
- Unleash the commons
- Make the state accountable
- Make finance serve society, not a small financial elite
- Give businesses purpose
- Make global trade fair
- Check for abuse of power (which is a reference to the winner takes all economy we currently live in). Read “The four”. It is not only in tech:
- In the food sector alone, four agribusiness giants known as the ABCD group (ADM, Bunge, Cargill, and Louis Dreyfus) control over 75% of the global grain trade.
- Another four account for over 50% of global seed sales.
- Six agrochemical firms control 75% of the world’s fertiliser and pesticide market.33
- In 2011, just four Wall Street banks – JPMorgan Chase, Citigroup, Bank of America, and Goldman Sachs – accounted for 95% of the financial industry’s derivatives trading in the US.
- Watch out for the circular race for raw materials.
Imagine a collaborative commons, with distributed ownership, networked collaboration, and minimal running costs. For example, once the solar panels, computer networks and 3D printers are in place, the cost of producing one extra joule of energy, one extra download, one extra 3D printed component, is close to nothing. Leading Rifkin to dub it ‘the zero-marginal-cost revolution’. The result is that a growing range of products and services can be produced abundantly, nearly for free, unleashing the potential of open-source design, free online education, and distributed manufacturing.
Imagine linking the commons to local currencies, barter systems or tokens. I have always believed that in Ireland credit unions have a huge role to play in sustainable local economic development, including the development of a local currency. The Malahide dollar.
The state and innovation
The basic research behind every innovation that makes a smartphone ‘smart’ – GPS, microchips, touchscreens, and the Internet itself – was funded by the US government. The state, not the market, turns out to have been the innovating, risk-taking partner, not ‘crowding out’ but ‘dynamising in’ private enterprise and this trend holds across other high-tech industries too, such as pharmaceuticals and biotech.
Business as the drivers of change
Businesses are extraordinarily effective in combining people, technology, energy, materials and finance to create something new. In the face of twenty-first-century challenges, firms need a purpose far more inspiring than merely maximising shareholder value, and a growing number of enterprises are finding ways to give themselves one. Several leading initiatives – such as the economy for the Common Good, B Corp’s Impact Reports, and the MultiCapital Scorecard – all already offer businesses a matrix against which to score their sustainability.
We are not dollar-hunting animals
We need to move our thinking from rational economic man to social adaptable humans. We are not dollar-hunting animals. We are not just customers or consumers. We are citizens, custodians, employees, entrepreneurs, neighbours, consumers, voters, parents, collaborators, competitors and volunteers. We are deeply embedded in the web of life. Where money is not the currency. We should think in terms of freshwater, fish, forests, oceans, soil and atmosphere. And if we do that, it has pivotal implications for how we describe ourselves in the challenges that we collectively face.
Say farewell to economy-as-machine and embrace economy-as-organism. Moving from ‘machine brain’ to ‘garden brain. Shifting away from believing that things will self-regulate to realising that things need stewarding. To be a gardener is not to let nature take its course; it is to tend. Gardeners don’t make plants grow, but they do create conditions where plants can thrive, and they do make judgments about what should and shouldn’t be in the garden. An economy that is regenerative by design is one in which people become full participants in regenerating Earth’s life-giving cycles so that we thrive within planetary boundaries.
We need to shift gears. Moving from sustainability (driven by national policy), to “mission zero” designing products, services, buildings and businesses that aim for zero environmental impact. For example, net-zero-water factories likewise make no net withdrawals from public water supplies, such as Nestlé’s dairy plant in Jalisco, Mexico. The plant meets all its industrial water needs by condensing the steam evaporated from the cows’ milk, instead of continually extracting fresh water from the region’s severely stressed groundwater reservoirs.
Aiming for net-zero impact is a truly impressive departure from the business-as-usual of degenerative industrial design, and it is more impressive still if the aim is net-zero not just in energy or water but in all resource-related aspects of a company’s operation. After all, if your factory can produce as much energy and clean water as it uses, why not see if it could produce more? If you can eliminate all toxic materials from your production process, why not introduce health-enhancing ones in their place?
Why not create enterprises that are regenerative by design, giving back to the living systems of which we are a part. Using nature a the model. Aim for full-spectrum sustainability. Why not set ecological standards by which to judge the sustainability of our innovations: do they measure up and fit in by participating in natural cycles? And with nature as mentor, we ask not what we can extract, but what we can learn from its 3.8 billion years of experimentation. Nature is circular. Companies should start asking themselves not simply ‘how we can do no harm’ but ‘how can our enterprise be as generative as a giant redwood forest?’
In a degenerative industrial economy, value is monetary, and it is created by searching for ever-lower costs and ever-greater product sales: the typical result has been intense material throughflow. In a regenerative economy, that material throughflow is transformed into round-flow. While regenerative designers now ask themselves, ‘how many diverse benefits can we layer into this?’, mainstream business still asks itself, ‘how much financial value can we extract from this?’
In a circular economy, products would be designed for easy collection and disassembly, leading to their refurbishment and resale, or the reuse of all their parts. No industrial loop can recapture and reuse 100% of its materials: Japan impressively recycles 98% of the metal used domestically, but there’s still an elusive 2% leaking from that loop. One recent European study of the effects of promoting a circular economy along with renewable energy and energy-efficiency measures estimated that together they would generate around 500,000 jobs in France, 400,000 in Spain, and 200,000 in the Netherlands.
We are all economist now
You can start now. Remake the economy by moving our savings to ethical banks; using peer-to-peer complementary currencies; enshrining living purpose in the enterprises that we set up; exercising our rights to parental leave from work; contributing to the knowledge commons; and campaigning with political movements that share your economic vision.