Multi-Capital – Page 2 – Stephen Hinton Consulting

Ecological Insolvency: When the Forestry Industry is unable to restore its damage

The term insolvency is normally used in finance. A company is insolvent when it can no longer pay its debts. What if we applied this concept ecologically?

Sweden’s forestry industry is in a state of ecological insolvency. It cannot meet the environmental obligations that come with responsible land stewardship. The industry is profitable and not financially insolvent. However, it fails to maintain biodiversity, soil fertility, water quality, and climate stability—its ecological “debts” continue to grow. This is a perfect example of where Real Capital – the forest ecosystem – is extracted and degraded and converted into money. It is becoming so degraded that it may even lose its material-producing capability.

Put Real Capital into national accounts, not just the money

In the face of ecological degradation, infrastructure stress, and social fragility, national budgets remain mired in outdated accounting frameworks. They report in money terms only, largely ignoring the real capacities that sustain economic life. But what if we treated the productive and regenerative capacities of Real Capital—ecosystems, infrastructure, human health, and institutional systems—as central to budgeting itself?

To talk science to policy you need to speak normative.

Are you a scientist who wants to influence policy? Or are you a consultant charged with writing reports as a basis for policy decisions? If so, we need to talk about normatives. If we, as scientists, want our work to actually influence policy or help guide practical decisions, then normatives are essential. This article breaks down what they are, why they matter, and how we can put them to good use in our work.

Explain it to like I’m five, in a fairy tale: How does the economy work?

People seem to be asking about this a lot, so here goes: An explanation of how the economy actually works dressed as a tale at five-year olds level with adult language. For those of you who think I’m not explaining this accurately, I’ll be back with a list of references to back everything up. But for now:

The story of the Weighty Bunt: how one nation invented its money.

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