Mechanistic and detached from life’s creative web of interactions, the conventional model of economic development is failing our societies on all counts. What would an organic view of the economy look like?
Introduction
Earth Overshoot Day marks the date when humanity’s demand for ecological resources and services in a given year exceeds what Earth can regenerate in that year. In 2021, it fell on July 29. Globally, the ecological deficit cumulated year after year results in staggering numbers of animal and vegetal species steadily going extinct. The lesson, as anyone would suspect, is that we cannot have it both ways: pillaging the planet and expecting to do it sustainably. If the Earth Overshoot Day is a stark reminder of how heavily our current economic system is indebted to future generations, can the frame of reference that has led us to this absurd situation be modified? Is there a positive and constructive way to address both economic and environmental needs?
1. The need for regenerative economics
You may know already about Hunter Lovins’ work on natural capitalism1 as well as about the growing importance of impact investing,2 respectively clarifying the synergy between environmental concern and economic efficiency and acting upon it. The concept of Regenerative Capitalism,3 for its part, goes at the core of what sustainable development is about. It is, quite simply, the technical blueprint for the quantum leap the world so desperately needs.
John Fullerton, the author of the white paper linked to above, argues that the modern scheme of economics and finance has locked the human community in an inexorable ecological, social, and, therefore, economic crisis. This issue runs prior to the usual political opposition between right and left; what has to be addressed is the common flawed understanding of the science behind economics. Labeled either regenerative capitalism or regenerative economics, the relevance of this approach is that it is based on factual evidence regarding how all types of networks thrive. Nothing more, nothing less. But it’s a total game-changer.4The rules by which natural or man-made networks sustain and regenerate themselves can today scientifically be discerned and measured. Regenerative economics is about applying these findings to the economy. We consequently might be closer than we usually think to let go of the old extractive and exploitative scheme that widely overshoots the earth’s capacity to keep up with it.
The purpose of this article is to explain what, specifically, makes this paradigm shift toward a much more integrated economy self-evident. I do not pretend to do more or better than the author of Regenerative Capitalism. I just felt it could be useful to share a personal reading of his work. Having no particular competence on the topic, I am precisely the one guy whose struggles in clearly grasping the depth of some concepts and ideas can become as many steps on the same path of discovery for anyone else. If you think the future of humanity is at stake at that point in history, I am confident you will be glad to travel that path too.
In today’s dominant form of capitalism, broad-based prosperity is assumed to be mechanically achieved through the operations of unfettered, free markets that efficiently allocate resources. Taken at face value, this abstract construct is inherently problematic.
If mechanically achieved, prosperity is then just about the accumulation of material wealth but not necessarily about the betterment of general conditions of living. The latter requires a committed involvement in fine-tuning a whole range of conditions other than the freedom of making business deals. As growing income inequality the world over shows today, maximizing profits for shareholders, growing GDP, and optimizing consumer “material utility” (more stuff) might benefit some in the short term but are not by themselves sufficient conditions to foster lasting prosperity for the greater number.
In such a view, moreover, our natural environment is primarily considered as a resource for raw material extraction and a landfill for waste dumping, not as the biosphere we belong to. We already know that earth has lost more than half of its wildlife in the past 40 years because of the way we choose to live.5 As the sixth mass extinction of species in the history of the planet is now in order, this obvious and direct threat to our own species’ survival epitomizes the absurdity of ignoring the proper conditions of material growth in a finite world.
The idea that the economy is primarily about markets efficiently allocating resources, however, is not just some bad excuse from raging capitalists. To most of us, whether of liberal or more social-oriented economic stripes, it is the bedrock of economics as such. Common wisdom in business schools and circles of power worldwide is that economics exclusively involves human exchanges, and only at a material and financial level. In other words, an analysis of prosperity is supposed to be conducted through the sole prism of trade.
The whole purpose of John Fullerton’s paper is to show that this assumption is fundamentally at odds with the laws of systemic health in an interconnected world. We have to look at society, the economy, and nature as an interdependent whole. The good news is that we have today the ability to measure their relevant network flows. By fully taking these into account we can very likely bring about much better results in prosperity and for the planet.
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Philippe Roussel has long been interested in studying the power structures defining our increasingly unsustainable and undemocratic world. This website serves as the primary platform where he presents his ideas and findings to an international audience.