Search results for capital

OPINION: Business as usual destroys more capital than it creates.

Stephen Hinton, photo Maj-Lis Koivisto

Business schools purvey the amassed experience of successful entrepreneurs from the last few hundred years. The problem with that is this experience is based on the availability of increasingly vast quantities of energy and cheap raw materials, along with licence to basically release waste straight out into the environment. This two century’s worth of “business” experience treats nature as an unlimited resource store and waste dump. An out-of-date mindset. We have moved on. There is a need for a new way of doing business: a system that takes into account the limitations of the planet and needs to maintain human well-being. That system is called circular economy. Read More…

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EXPLAINER: capital, sustainable development and peace

As world population expands, and the demand for a better standard of living drives the world economy, it is becoming clearer to many that using up the world’s resources will actually put us at risk of ending up with a lower standard of living. It could even drive conflicts. Insecurity and lack of the capability to produce the basics are likely to fan the flames of conflict and undermine peace in the world. We urgently need a new mindset – one that focusses on bringing security of the basics to everyone whilst preserving and indeed increasing the capability of society to provide.

Part of this new mindset requires us to rethink capital. This article breaks down the importance of capital to society, and how the economy should manage capital if we are to transition to a sustainable and peaceful future. Read More…

We are not running out of energy; capitalism is.

Stephen Hinton 2016, photo Maj-Lis Koivisto

Most of the energy used in the world economy comes from non-renewable sources. Analysts fear that the expanding extraction of energy will not keep up with the expanding economy and …well… the the economy will deflate like a balloon and everyone will be worse off. Worst for the poor who have very little already. Or they fear that the climate will collapse because we are pouring too much carbon dioxide into it just to stay alive. Either way, the economy is so dependent on energy, they say, that we will go into a period of recessions and undermine peace is many ways. Not strictly true in my opinion  that there is too little energy: there is enough energy to keep everyone fed and housed within planetary boundaries. It’s just that there is not enough to keep capitalism going. And it is the failings of capitalism that we need to address if we are to make this peace project real, not energy supplies. Read More…

Suppose capitalism mimicked nature

Article updated June 6 after consideration of all the recent comments

We are stuck. On the one hand you have people who talk about economic growth as being the objective of policy – necessary to be able to pay back debts and achieve prosperity. On the other hand, you have the sustainable camp that claims infinite growth is impossible and therefore the whole economic system is bound to fail as it relies on it. You have people who claim we need GOOD growth as opposed to BAD growth. Bad growth would be the increased economic activity due to storms, break-ins and failures of products. Either way, the term capitalism comes up as if it were a system. Perhaps if we explored the idea of developing our thinking about capital we might find some ways forward.

My aim here is to clarify the idea of using capital as a central social planning approach, using the idea of settlement maturity. This is the idea that settlements, and the societies in them, like an eco-system, can mature. If society can mature, then maybe its capital profile will mature too.To be able to take this analytical line we need to understand first what ecological maturity is.

Let us look, then, at how nature grows and see if we can find some insights into how capital can grow, and what economic growth would look like through the eyes of sustainability.

Growth =net increase in mass

Growth (rapid increase in biomass)is a stage the ecosystems go through on their way to ecological maturity

There is still growth in mature eco-systems. Trees still grow, albeit slower. However, for the system as a whole there is little net increase in biomass.

Ecologists describe how all eco-systems strive to become mature. You probably have the idea somewhere in the back of your mind, how smaller animals give way to large predators, small plants become forests, rushing water becomes a swamp, etc.

One well-known description of maturity comes from the ecologist Odum,(ref 1) (table below)

Let’s take it bit by bit:

  • Gross production. This means the total amount of biomass that accumulates in the system. Note that as a system matures, the slower biomass increases. For example, young trees grow very fast, older trees grow much slower.
  • Biomass supported. As the system matures, more biomass is in the system – more trees grow, more animals and plants more in, and they are larger.
  • Total organic matter. As above, the more mature the system, the more in the eco-system.
  • Size of organism. In immature systems, the organisms are small. As the system matures, and there is more for predators to eat, for example, the more and larger the organisms become.
  • Niche specialism. As the system matures so does diversity. More specialized organisms move in.Mineral cycles. Eco systems need minerals to cycle in them in order to function, so to have more biomass they must retain nutrients.
  • Nutrient exchange rate organisms <> environment . Immature systems “leak” both heat and nutrients to other eco-systems.Role of detritus in nutrient cycling. As the system matures, detritus is more and more important as a source of minerals and energy for the organisms in it.Nutrient conservation. Mature systems conserve minerals and do not leak them to other systems.

We now need to explore the idea of capital.

The diagram below breaks down the categories of capital often used.
The categories should be be self evident. But from the point of view of accounting, human capital and social capital are not normally put on the books.
Financial capital is divided into that owned by the organisation and that borrowed. In English the terms foreign capital is used for money lent and equity is the money put into the company by its owners.

Now let us apply the idea of maturity using the idea of the built environment; a settlement.

An immature settlement might be a few tents that settlers might bring with them. They have no agriculture, there is no infrastructure, but they are surrounded by the bounty of nature and can begin to convert, for example, trees to buildings.We can envision an immature settlement, but can we envision a mature one? Surely our cities act like immature settlements: nutrients are lost to surrounding environment, metals and minerals end up in tips, and even our building reflect heat rather than gather the energy from the sun. The list below is an attempt to bring together ideas of what a more eco-mimicking city or settlement might look like.

GROSS PRODUCTION. Here we would see the production of buildings and transport infrastructure as complete, only repair and upgrade would be needed. Most production activity would be turned to food and heating and lighting.

BIOMASS SUPPORTED. The mature settlement would have a high level of biomass supported in the form of tree, and food -producing facilities.

TOTAL ORGANIC MATTER Total organic matter would be higher, to provide eco-system services like shade, energy capturing, building and clothing materials etc. A field does not represent this vision, we would expect more organic matter intensive methods, like forest agriculture, food forestry, would be used.

SIZE OF ORGANISM. It can be imagined that in this case, for a society organism means body, like an organization. As society matures, more specialized and larger organizations can provide efficiency of scale and specialization.

NICHE SPECIALIZATION. People could have more specialized jobs as society matures. Early settlers might need to master a broad range of tasks without being able to go too deeply. In the specialized society everyone could master subjects deeper.

MINERAL CYCLES. It makes sense that an immature society digs up iron and other materials to get started. But after a while, the extraction of these substances can become polluting and maybe lead to scarcity. In this case, minerals already extracted should be recycled ad not released in to the biosphere. This approach is being pioneered by the natural step and Cradle to Cradle. The mature settlement is a mineral recycling society

NUTRIENT EXCHANGE RATE WITH ENVIRONMENT. The same here as for minerals. The mature society will retain nutrients for recycling, and do the surrounding environment a favour by not putting this burden onto it, as well as minimizing the work needed to obtain nutrients. These building blocks of life can stay within the settlement. More are only needed for growth.

ROLE OF DETRITUS Early settlers could make waste without it creating a problem or being seen as a loss of valuable resources as there probably were not much of them. Not so for the mature settlement, where the amount of biomass is high. Detritus is a resource and in the mature society there may be much of it. It can also accumulate and be a pollutant. So it needs recycling. This will mean a soil to soil perceptive for food systems – from soil to plate back to soil.

NUTRIENT CONSERVATION. Gathering nutrients requires a lot of work in an immature settlement. Mature settlements recognize the energy and effort needed in obtaining nutrients is far greater than the effort and work required to cycle them.

What we are describing, then, is that the concept of economic growth is not an end in itself but the process by which economic maturity is reached. At this point, capital is accumulated, analogous to the build up of bio-mass in the mature eco-system.

The effect on capital.The diagram below illustrates how capital is converted and increased in the maturing society, using money merely as a medium of exchange.

Natural capital to man-made capital (A) : For example, minerals and nutrients would be used to create housing and machines. At the same time, man-made capital should be in place to promote development of natural capital(B). Man-made capital cannot increase at the expense of natural capital, the two must grow together. Otherwise, the services that natural systems provide (like building materials, food, clean water, etc) will be unavailable.

Conversion of human capital to man-made and natural capital(C): human capital conversion works uniquely. Taking knowledge and applying it to solve the problem of creating man-made capital and natural capital can, if applied right, increase human capital through learning.This knowledge could be institutionalized in social capital in organizations and information systems.

Social capital, the development of organizations (D), would in turn be needed to run, organize, and develop the man-made capital (E) and natural capital(B).

The role of Financial Capital. In this diagram, money represents an accounting system that has significance in that the value of the whole increases over time. (If all forms of capital can be valued using the same system of measurements.) As the system matures it will accumulate biomass and minerals for recycling and organizations that accumulate knowledge. An accounting system could be developed that calculated in this way. Growth would slow down as the settlements matured- I leave it to later articles to explore how such an accounting system might work.

REFERENCES

1) Odum, E. P. 1969. The strategy of ecosystem development. Science, 104:262-270.

Capitalism Revisited — Reform is Good Capitalism

I am reblogging this post by Dr.Pano Kroko calling for the reform of capitalism. It is high time thought leaders gather to have this conversation. Those of us not fortunate enough to be at the Drucker conference will be with Polly Higgins and Jem Bendell on Mallorca for http://sacredvalleydialogues.org

Bleeding Edge Blog

I led a two day High Level Economic, Business, and Finance Summit on Capitalism in London and these are the conclusions we arrived at and the actions we aim to take in the near and longer term:

Capitalism is a sure Guide to Desires fulfilled.

Capitalism is a network of marketplaces that interact and fulfil basic needs as well as frivolous desires.

No other social, economic, and philosophical system, provides that much faith in fulfilling our needs and desires. From simple basic human needs — food, shelter, and procreation — as well as extremely harmful desires all are met through relatively free markets enabled by capital. That is capitalism. It is an endless parade of goods and services all available for a price, to meet the cravings, the gratification, and consumption, to fulfil our near endless desires.

Capitalism works well to provide for people.

Sadly it also promotes Excesses, Corruption…

View original post 2,559 more words

Shop your way to fossil freedom

Sixteen-year old Greta Thunberg is asking good questions like “why are we doing nothing about climate change?” She tells it like it is as we stand unmoving – no group wanting to give anything away. Unions rightly take the stance that workers should not pay with lowered standards. Some want to play with small tax adjustments to see the poor OK.

The New Green Deal says “never mind the economics of it – we’ll just invest in the planet we want.” That is good, but you need to make sure people have the money to pay for those new high speed rail services and electric buses.

So. No easy solution? Perhaps there is.

Read More…

Opinion: The problems in Sweden are the problems in the world

Stephen Hinton 2016, photo Maj-Lis Koivisto

With the coalition of the left’s 144 seats in parliament and the right-wing block’s 143, and with the ultra-right wing Sweden Democrats left out of the block, many might be wondering whatever happened to the cozy social democratic, progressive Sweden held up as a model of a modern welfare state. Read More…

The green library

Libraries are a great resource for getting people closer to the environment. See this video of a case study we were involved in some time back.

COMING SOON!

We are offering online training in “Greening the Library”. To enroll in advance, click the image below.
Click on the image above to sign up to be notified when the course is ready  for release
 

To understand more about how libraries are examples of a sustainable use of capital see this article series

See this site for training in the circular economy, again something else the library represents.

Do contact us if you would like help in finding an “inspirer” or advice and support on setting up your own library project.

Focussing on creativity rather than skill – the art of Transition?

This summer I had the pleasure of attending a rather unusual type of art class: the lessons were about creativity with basically nothing taught about actual painting. That’s right. I spent a lot of time in front of a canvas with brushes I knew very little about how to use and paint I knew even less about. And I learnt more than I could have dreamed of, even painted some paintings. Read More…

Explaining the extractive economy as embedded mindset

Extractive economy is business-as-usual and the mental model taught in business schools. It is not called that of course, but examining any business textbook will reveal that the mental model – or paradigm – of extraction is underlying most teaching. This article aims to explain in clear terms what extractive models are, point out some of the shortcomings  and hopefully opens up to the possibility of other, more functional, models. Read More…