Multi-Capital – Page 2 – Stephen Hinton Consulting

Real Capital supports Modern Monetary Theory

Modern Monetary Theory (MMT) and Real Capital Frameworks both stress the importance of understanding the capacity of the economy to deliver, using real resources.

MMT demonstrates how the economic system works: a government budgets for a year at time, planning its expenditures and expected levels of tax returns. The expenditures are calculated on resources being available to purchase. Real Capital frameworks offer ways to measure production capability and capacity, and the status of the real capital that will be employed through the budget year. This article explores how MMT and real capital align.

How Money in National Budgets and Real Capital work together

This short video answers the question many have asked: how can you talk about Real Capital without talking about money? Or how can you talk about money without talking about Real Capital?

Real Capital: A terminology list

For those studying and learning Real Capital (Multi-Capital) and its application to producing bases for decision-making, this glossary may be of help.

What are normative statements?

How to use normative statements, so science can speak to policy in terms they understand.

In the context of scientists communicating with policymakers, normatives are statements or guidelines that express how things should be, based on values or standards. They are used to frame recommended actions or standards by considering established values and desired outcomes. Essentially, normatives translate scientific findings into actionable recommendations aligned with societal values.

Representing Real Capital in Asset Liability Equity tables

Applying ALE tables to the material world: an introduction.

You’ll need to be familiar with the concepts of real capital and systems dynamics from previous posts, if you are not already.

The Assets – Liabilities – Equity (ALE) accounting method is a fundamental approach used in financial accounting to record and report the financial position of an organization. It involves the classification and measurement of an organization’s resources (assets), obligations (liabilities), and owners’ interests (equity). This method is widely appreciated by businesses, non-profit organizations, and governmental entities as it provides a comprehensive and transparent overview of an organization’s financial health.

The approach therefore, is favoured by economists advising policy makers. However, not just money, but physical resources – their function, availability, capacity, etc. are vital to the workings of society. This dimension can be lost when looking through an economics-heavy lens. What is needed is the robustness of the ALE method applied to the material world. Let us present it here:

Decisions made just on economic grounds? Real Capital holds the alternative decision basis

A more holistic way of thinking about value. A truly thriving society is built on four key pillars.

Natural Capital
Built Capital
Social Capital
Human Capital

Real Capital Framework: a deep dive podcast

For those readers who have followed the articles in the category Multi Capital and its focus on Real Capital, you’ll have probably seen me attempting to get to a framework with which to create decision basis for policy. A decision basis that does not rely on economic information alone.

How to use Real Capital and its valuation to inform policy

Link here to the full briefing on Research Gate

The table above gives an example of how to use Real Capital accounting to clarify policy. Policy is an asset, liability is shortfall and equity is performance against policy. Find more explanations in the video and briefing.

Is it possible to present information in a rational way, to policy makers, that does not need financial information to be useful to policy makers? Could scientists do this without becoming economists? In an era where scientific advancements shape our understanding of the world, the gap between science and politics remains a significant challenge. This divide often results in politicians struggling to effectively process scientific information and translate it into sound policy decisions – leaving it to economists.

The video explains the main content of the methodology brieifing

Applying Real Capital to the Circular Firm

Several thinkers (including, for example, Boyd 2020 and Hazel Henderson) have suggested that the concept of real capital – or multi-capital – be introduced into the political economy to aid decision-making at policy level as well at corporate level. This may overcome one of the failings of standard economics: Policy makers often rely on economists to provide their decision bases. However, one of the failings of standard economics when preparing decision bases for policy makers, is that anything that cannot be valued in money is seen to have no value or little value. The Earth does not send a bill for the use of its atoms so the stewardship of the material world is left out. Without a comprehensive valuation framework, policy makers and strategists are likely to miss the full picture by just relying on monetary values and make decisions that could be detrimental to society, counter to the intentions of the policy.

This article gives a general explanation of the category of real capital that is built capital, and how to use its valuation in preparing decision bases. The Real Capital approach gives a more robust decision basis, helping identify long term investment needs and policy that steers investment and activities to avoid capital degeneration and promote capital regeneration.

Not degrowth, but economic maturity

Economic growth sounds great! But as with all growth you have to ask yourself what it will look like when it’s fully grown. So too with the “economy”. I’m not talking about the monetary system that produces tokens and circulates these tokens around between citizens, companies, governments and back. I’m talking about the arrangement for keeping a roof over your head, food on your table and a load of other essential services.