stephenhinton

Beyond Growth and Degrowth: The Compelling Vision of Capital Maturity

For decades, our economic discourse has been trapped in a false choice between two unsatisfying futures. On one side stands the familiar model of endless economic growth. This path that relentlessly consumes natural resources and risks environmental devastation. On the other is the alternative of degrowth, a concept often perceived as a narrative of reduction, scarcity, and diminished quality of life. This document introduces a third, more inspiring path forward: the pursuit of Real Capital Maturity. This vision reframes our ultimate economic goal not as perpetual expansion, but as the achievement of a stable, high-quality, and regenerative state where the fundamental needs of everyone are met with sufficiency and efficiency.

Economists dominate policy making for now, but there might be a way around them

One thing that gets my goat is the way economic thinking – with its stupid ideas about the way people work (maximizers) and the way companies work (increasing marginal costs) and the way nations work (banks lend other people’s money) – pervades policy making. Most politicians seem to have swallowed economics 101. I made it my personal crusade to find ways to get around this disingenuous bunch. I might have found something. Read on.

I understand the appeal. It all comes down to money anyway, why not just manage a nation based on money – as long as it looks like all is under control why worry? But as I point out in my Real Capital Blog, things you want to keep functioning – health, forests, railways, water cycles, metal access – get downgraded to a point where they might collapse.

The alternative is complicated. Say you are a scientist that sees that a city has got 3 years left of groundwater. Your report will probably end up nowhere. The machinery, to get from warning through the engineering, through the companies pumping, through the city administration, through the planning, through the political leadership is so complicated and you would need specialist knowledge in every layer to be taken seriously. Just finding out who is actually responsible for what is months of work. And as a scientist you won’t have a workable alternative.

Or, it USED to be that way. You can now get AI to do all the heavy lifting. I tried it with the Real Capital Framework. Get this: there is nothing new with Real Capital, in all its components, the ideas have been around a while (read accessible to AI). The only trick to getting AI to do the work is to point it in the right direction.

This is where AI prompts come in. If you just get the prompts right, in the right order AI will sail through the spaghetti of causes, responsibilities, effects, etc to produce clear, policy decision basis reporting synthesising dozens of professional domains.

This is what economics should be, and AI can prise the role from the sweaty grasp of economists.

Soon, AI will do system dynamics Ravel simulations for you so you can show your work.

I am testing AI prompts just now, and the results are encouraging.

Subscribe to my Patreon to keep up to date.

The Challenge

This is a letting my heart out moment and I can’t promise it is going to be coherent. But I see some very important things that have happened recently as stakes in the new ground of economic thinking and in politics. There is a challenge laid down to find something new, built out of the old

How to use the Real Capital framework on national budgets

Most national budgets tell us how much money governments plan to spend and collect. But they rarely say anything about whether the nation’s forests are thriving, its infrastructure is decaying, or whether citizens are healthy and capable of sustaining the next generation’s wellbeing.

In other words, the budget tracks the money — but not the real foundations of value that the money is meant to mobilize.

That missing link is what the Real Capital Framework was created to address.

The Real Capital Framework for local advocacy-a how to guide

The Real Capital Framework (RCF) helps scientists and policy advisors create compelling decision basis reports for policy makers. Using the RCF you will present the science in a way that policy makers will find actionable.

However, there are a lot of groups out there who want to get their message across – citizen advocates, nature protection associations, local community developers etc. So this post is for you. It is early days, though. What follows is the RCF adaptation for testing.

Economists see humans as homo economicus? Still?

I really recommend listening to this Youtube with Richard Murphy, Emeritus Professor of Accounting Practice and John Christensen, co-founder of the Tax Justice Network.

The subject was the idea of homo economicus – the supposed rational economic actor at the heart of mainstream economics – and its critics.

John traces the origins of the concept back to the late nineteenth century, when economics shifted from being a branch of moral philosophy into the mathematically-driven neoclassical framework most of us were taught at university.

One of the key figures was Francis Ysidro Edgeworth, a mathematician and economist at Oxford. Edgeworth drew on Jeremy Bentham’s utilitarian philosophy – the idea that human beings are rational calculators of pleasure and pain – Edgeworth sought to create a perfectly tidy model of human behaviour. We were, he argued, calculating machines engaged in constant cost-benefit analysis, each of us pursuing our own utility.

Modern models of the economy, like – the DSGE models used by the Bank of England and the UK Office for Budget Responsibility – still rest on the fiction of a single rational agent – or homo economicus – who knows everything and always restores balance.

And these models continue to shape policy. They produce neat forecasts that always return to equilibrium, because the assumptions guarantee that outcome. They are sadly blind to the lived reality of power, inequality, exploitation and environmental breakdown.

Investors in peace, one of my projects, something else. We don’t see homo economicus, we see homo pax. Our true nature is peace and as long as we don’t realise and get to enjoy and appreciate that, we will continue to be homo errorum leading to homo insatisfactus (man of error, unsatisfied man).

This is where Investing in peace and political economy overlap: as long as economics and business continue to model their art on misguided views of what it is to be human, they will continue to guide policy in the wrong direction.

If you are working with economic policy we urge you to look closer at yourself: what is it you really want, what is driving you? Can it be that is something you share with the rest of the people on the planet?

Checklist for product development

I like simple. Especially in a complicated, hectic world. Here is a checklist in which I have collected all the basic questions a product manager should be able to answer. The list contains all the angles, or most of them, you need to investigate in order to go from product idea to product selling and making money.

Latest on the Real Capital Framework

The Real Capital framework bridges the gap between scientific insights and policy-making. It critiques traditional economic models for undervaluing non-monetary assets (e.g., ecosystems, social systems) and proposes a methodology to quantify and manage Natural, Built, Human, and Social Capital for sustainable decision-making.

Where to Download the Methodology Briefing- applying the Real Capital Framework to influence policy

Communicating science to policy makers in a way they will understand and action science-based insights requires more than just presenting figures. The process is multi-layered, multi-dimensional and multi-discipline.

Our methodology briefing brings together all the tools needed to develop your abilities in this area.

Brace yourself

Gail Tverberg, an insurance industry actuary, turned her skills towards understanding the world energy situation some twenty years ago. And she has been following and analysing the impact of oil, gas, etc on the world since then. In a recent blog post she summarizes the situation with the world economy as “Brace Yourself”.

In many ways, the situation of the industrial age is the situation of man finding oil. With oil, which is transportable, concentrated energy, we could create, build, organise society to offer a level of material comfort only previously enjoyed by kings.

But like life itself, all developments have endings. Maybe 21st century man dreams of the comfort offered by a spaceship, or of a world of technical toys. In her article, Gail suggest that the industrial age has peaked already. In 2008. You can forget the dreams. And we are on the way down. Hence the Brace Yourself warning.

Life, which for the majority got more and more comfortable, is now getting less and less comfortable for many. And this is only the beginning.

Our very way of life – the paradigm if you like – is based on having vast quantities of easy to get, use, transport and develop energy. The sky is the limit. We can dream. Except it isn’t. It’s not as if the amounts of resources we can use are unlimited, sooner or later, with expanding world population, there is less and less per capita to go round.

Gail points out that everything evolves to increase complexity. From single celled organisms to a biodiverse array of ecosystems, from simple tribes to complex societies. She sees the hand of the creator behind it all, and yes, the predicament with dwindling resources she sees as a step in the evolution of man.

From a peace perspective I can only agree, that there is a hand of the creator in there. Indeed the hand of the creator is within us all. It’s the longing for peace, the essence of life itself. We need peace, we need to feel it, and connecting with that longing is the compass for getting the best out of the situation we are in.

To have a wonderful life is built in. We need peace with ourselves, and if there is basic security of food, housing, inclusion, that is easier to focus on. So we need to have another dream, one based on the deepest longing we can find.

With any luck, humanity might survive.