The recent article on Regenerative Economics got a lot of reads (for this blog at least). It raised a lot of interesting questions, some of which I will address below. First, I need to re-iterate a few things. The first is the big take-away I was aiming for:
for the capability of a nation to provide basic needs to everyone, a measure of the state of real capital and the performance of the aggregate of the organisations employing that capital are essential for informing policy.
not all economy can come under this measurement. Definitely not the art market.
the essence of the regenerative economy is to put in place measures, track and respond to the state of the Real Capital that is employed to provide the security of the basics.
the focus must always be on stewarding and regenerating the capital needed to provide basic services.
Renting out your car, selling second stuff etc. is part of the circular economy but there is more. Firstly, things from nature need to circulate – food waste goes to compost goes to soil goes to food- for example. And trees go to wood to waste wood to fibre board to fuel maybe. And things come from the earth, like metals and they are made into, say, raw iron, then steel, then a product, then scrap, then more steel, and so on.
Most people take a narrow view of the circular economy, seeing it as renting out your car, selling second stuff etc. All true, but there is more to it. Firstly, things from nature need to circulate – food waste goes to compost goes to soil goes to food- for example. And trees go to wood to waste wood to fibre board to fuel maybe. And things come from the earth, like metals and they are made into, say, raw iron, then steel, then a product, then scrap, then more steel, and so on.
But money needs to go round too. Forget government hoarding surplus – that only removes money from the economy. We need the workers to get good wages so they buy stuff from factories that make good profits that pay good taxes and wages and so it goes round.
Many people react to the idea of people spending more because they think business will extract some stuff and dump others and leave the earth exhausted and polluted. They will. Unless there are either strict laws or stiff fees to stop them. So the circular economy will make it very expensive to extract or dump. And that is where the first and last invoice come in. In the life of a material, be it iron or sand, for example, the first invoice (paying for extraction) is the start of a long chain of invoices that the circular economy continues as long as possible. It puts dumping or burning off – the last invoice – and delays it in time. And the economy is rigged to reward them.
Most of us would like to think that people taking important decisions – ones that affect our lives deeply – would be basing their judgement on deep criteria. We hope that they are being reasonable and rational, balancing long-term and short term, what is fair and what is equitable etc. What many might suspect, however, is that decision-maker’s logic is more ruled by the economics of the situation and the budget covering just the domain of their decision. Indeed, many social experiments like the Stanford Prison Experiment show how authority and social pressure alter decision making. Of course economics are important but should they be the trump card that overrules compassion, equity, decency and plain common sense? The initiative Invest in Peace proposes a safe house for humanity. Continue reading “Envisioning a Safe House for Humanity”
ABOUT COMMUNITY FINANCE: We are living at the peak of human achievement, but also at the peak of our resources. A change towards sustainability includes handing over to future generations the possibility to create for themselves a standard of living at least equivalent to that we enjoy. This requires fundamentally re-thinking how we use resources, indeed many of the social arrangements we take for granted, including our relationship to money. And we need to start now. The basic values in this article come from Permaculture: People care, Earth care, Fair share. However, you do not need to know Permaculture to understand the article. We will explores ways, within the current financial system, to create communities that align to these values.Continue reading “Community finance: a Permaculture approach”