Part VI: Ecological Economics
Now that I’ve set the stage for what probably sounds like a supremely depressing dose of climate reality, I hope to infuse some optimism with the introduction of a new paradigm; a structure that thinks both top-down and bottom-up at the same time, for how we can reinvent our economic systems such that they nurture everyone, and all species, at the same time. The concept of Ecological Economics, while not new, is seeing a renaissance through the Regeneration, a summary of which we expound on below. The goal is to lay the foundation for a more inclusive, holistic, systems-approach to the global economy, such that we can pivot from our presently destructive path towards a healthy future one. All founded upon the ideology that we cannot afford to keep protecting each meta problem in a triage way, instead we have to get better at coordination. Ecological economics helps us to address perverse incentives at their source.
The Ponzi Scheme of Growth
As we’ve discussed previously, growth is God in our current economic system. This religiosity for growth means an infinite imperative for more, with no horizon at which there will ever be “enough”. The unquestioned assumption is that growth can and should carry on forever, for the “betterment of all”. But is it really true that growth equals good? What about the people who are not benefitting from the growth economy? Those stuck in the never-ending cycle of indebtedness. And what about those affected by the “externalities” of our growth crusade? And what about the finite resources that are rapidly running out? It seems our denial of our resource constraints is only a case of fantastical willful ignorance to the obvious expiration date that pretty much any scientist not bought by vested interests, would agree to. The solution today is to simply paper over the problem with more debt to extend the runway, at least, on paper. Spending resources from the future and brand it: “growth”. Bleeding debt to enable the extraction of things we otherwise couldn’t afford, to produce things we certainly don’t need. Growth for growth-sake is a never-ending Ponzi scheme as we pay back today’s debts with more credit claims on nature, and each other.
As we elucidated in the Planetary Boundaries post, this logic is about increased “prosperity”, defined according to goods and services sold; as we “grow”, we expand the pie, and we defy realities of finite resources. But this measurement of growth is defined in terms of thing-accumulation, not as quality-of-life improvements. There is a big difference between the two. The accepted logic goes: converting labor and creativity into currency is good for GDP and hence, good for us. But is it? Isn’t it a rather convenient act of maths wizardry that in this process, we seem to be only counting the goods but not counting the bads? Over-emphasizing the opportunity and under-emphasizing the risks seems to be the playbook du jour of everyone from big business to bright-eyed entrepreneurs. We must ask ourselves: is a farmer that uses degenerative practices — like cannibalizing the soil microbiome with herbicides, unleashing neurotoxins as pesticides on the surrounding populations, and causing dead zones in oceans from the nitrogen run-off from his fertilizer, all because it allows him to sell products faster, and hence, to compete in the market — truly benefitting the whole system? Or is he simply trying to get by in a system heavily stacked against him? It seems to me like the market has been highly effective as a mechanism to incentivize humans to do things humans don’t like to do — and frankly, shouldn’t do — acting as an extrinsic motivator in an increasingly “scarce” world. As Donut Economist proponent Kate Raworth writes: “today we have economies that need to grow, whether or not they make us thrive: what we need are economies that make us thrive, whether or not they grow.”
A Maturing Technosphere: How we can “Bend Not Break”
But this model exposes a limiting (and clearly, flawed) belief — that we must keep growing to succeed — all because the structural inefficiencies at play maintain an artificial, but very real, sense of scarcity. Though when we double click on this scarcity thing, data reveals that in fact, our waste — from food to pharma to hours slaved in rote jobs — could in satisfy the needs of many living without. So when making an evidence based-claim on the need for “more”, should we first be questioning: do we really need more? Or do we just need to be better at managing what we have? Isn’t it possible that we don’t actually need more, we just need to be better at distributing what we have?
On a more philosophical level, and as mentioned in our Growth Imperative post, the unfettered growth obligation directly deviates from the principles of natural systems, where headlong growth and all-out competition are considered characteristics of immaturity. Conversely, complex interdependency, symbiosis, cooperation, and the cycling of resources are all characteristics of mature ecosystems (none of which we seem to have succeeded in as a complete, collective, species). We have crossed the precipice where a growing Technosphere is collectively beneficial, to a point where unconstrained, is threatening our physical and spiritual existence. Exponential, external growth is inappropriate now; it is time to go inwards.
But like human biology, growth can imply not just an increase in size, but an expansiveness in maturity, also known as wisdom. A value we seem to have dismissed as quaint in a culture that pursues shallow and callous goals of endless materialism. Perhaps a return to our evolutionary roots is in order. A reassimilation to nature and to viewing us humans as part of a larger cycle of life, not just the benefactors of it.
So how do we make a Technosphere that is in harmony with the biosphere? We don’t, really. As Nate Hagens writes: “we build a new autopoietic system with faster feedback loops that is not self-terminating and it wins”. Returning to Bucky Fuller’s famous line: “you never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.”
This will, of course, require a change in the way we do business and economics. Basically, how we incent market behaviours and evaluate “winners”. We must shift our objectives to reorient around serving people’s real needs, not manufactured ones. The next stage of human economy will emphasize cooperation over competition; it will encourage circulation over hoarding; and it will be cyclical, not linear. This new model of coordination will redefine the definition of “growth” that implores our economic system, shape-shifting away from growth meaning scale, and into growth meaning complexity. We will continue to improve and develop, but just like the transition into adulthood, we will mature from our crude growth phase into elegant harmony, from the awkward and unrefined adolescent that we are today, into a noble and wise elder.
What would an anti rivalrous & totally positive-sum system look like? Consider the human body: The heart and the lungs are not rivalrous with each other. They’re not competing to extract scarce resource and hoard it. They’re in this radically (and selfishly necessary) symbiotic relationship. These systems are cyclical rather than exponential, always returning to the source. Like biology, the future system will encourage the protection and enrichment of nature, not its depletion, redefining wealth as a function of one’s generosity and not one’s accumulation; the manifestation of abundance, not scarcity.
The Shortcomings of Market-based Models
In order to workshop a model for a future healthy system, we need to first understand the architecture of our existing dogma and unpack its features and flaws. Most of the world in 2022 is brainwashed by the broadly uncontested philosophy of the market-based paradigm called Neoclassical Economics; the foundations for the Capitalist agenda that dominates modern money models. This type of mainstream economics is largely preoccupied with measuring economic activity in monetary terms — which as I mentioned earlier, is measured against the yardstick of Gross Domestic Product (GDP). This has led to a bias in assigning value to only that which can be bought and sold on a market, discarding all other forms of human and biological interactions that facilitate our collective cohesion. While this money systems insists on continual expansion, it not only ignores, but dismisses the limits nature places on throughput resources. Arguing that value is determined by a willing and paying consumer and that competition leads to efficient resource allocation, they are blind to the obvious perverse incentives that arise as consequences of this system. This model also operates under the illusion that throughput resources underpinning all “value” in the economy may be indefinitely relied upon as available and affordable. It establishes a complete amorality over the extraction of nature, shepherded by a resounding contention that nature is a resource for our consumption. Neoclassical economists have a robotic tendency to reduce human existence to dollars and cents, inherently decoupling social or spiritual realms from the physical, proclaiming what they call “natural resources” (a clever rebrand of the living things we have abused) as lacking in intrinsic value until they are taken out of the ground and sold. The price these resources fetch on commodity markets then becomes the measure of their value. According to this logic it is only rational to maximize the extraction and use of minerals, fossil fuels or forests, as these “resources” are “ours” to consume. As resource economist Erich Zimmerman put it back in 1951, resources are not, they become”.
The assumption of capitalism allows problems of intergenerational, intragenerational, and interspecies equity and sustainability to be ignored (or at least postponed), since they are seen to be most easily solved by additional growth. But parsing back any moral debate on this theory, the logic is flawed most critically in its expectation of infinite substrate to convert into economic value. The mainstream either doesn’t recognize those limits, or is deluded into the belief that technology can create substitutes for depleting resource problems. Innovate our way out of our limits, they say. They also say that price increases will signal any impending shortages and prompt remedial actions. Former World Bank chief economist and US Treasury Secretary Lawrence Summers, former advisor to President Obama, once bluntly stated: “There are no… limits to carrying capacity of the Earth that are likely to bind at any time in the foreseeable future…the idea that we should put limits on growth because of some natural limit is a profound error.” Woof. I bet he’s eating those words.
This whole industrial economic theory championed by the Neo-classists works well-ish when Land, Labor, and Capital are present, as they are represented in textbooks. But this cycle of prosperity breaks down when Land no longer exists. While natural resources can be replenished with compensatory time, overexploitation can lead to a resource’s total collapse. What happens when natural resources (“Land”), one of the pillars of the factors production, disappear? The whole equation sort of…collapses…
Some more food for economic thought — a “true market economy” as these guys champion, is purely a textbook fantasy. Policies, regulations, and science are all routinely abused, stealthily co-opted to support certain business interests over others. Barely hidden in plain sight, lawmakers are strong-armed into passing bills that favour industries and products for which there is no real demand for. Even more nefarious is the corruption of science, as scientists and “research institutions” are basically prostituted to produce studies serving the propaganda machines of big business, convincing unwitting customers that they need something they don’t want. Or how about landmark rulings like Citizens United rolling back rules around campaign finance, such that any corporation can fund political campaigns, with the under-the-table expectation that their sector will be subsidized, or barriers conveniently lifted, or rulings made in their favour? It’s no secret that business invests in political candidates with the expectation of a return on that investment in the form of favourable policies. How is that we can have true “supply and demand” mechanics in these scenarios? Markets (and hence their prices) are in fact, strongly shaped by a society’s context of laws, institutions, regulations, policies and culture. When it comes to the workings of the economy, the power of the wealthy to reshape the economy’s rules in their favour demands significantly more attention. Forget the free market: think embedded market. An overly reductionist view on the true behaviours of market players, neoclassical economics is a phenomenon grossly in need of a reality-check.
Last point on my assault on the free-market mania, mainstream economic theory is so obsessed with the productivity of waged labour that it entirely disregards the unpaid work that makes it all possible. What about all the unpaid house workers or civil servants performing thankless jobs in the home? Why does it matter that this core economy should be visible in economics? Because the household provision of care is essential for human well-being, and productivity in the paid economy depends directly upon it. As futurist Alvin Toffler would callously question: ‘how productive would your workforce be if it hadn’t been toilet trained?’
You see, when the market is unconstrained or un-intervened, it simply fails to satisfy its core purpose: to serve its people’s best interests. Too easily corrupted due to its embedded perverse incentives, it fails deliver on its promise of a functioning society. Indeed, essential public goods which are less profitable or desirable–from education to healthcare to infrastructure –on which its own success deeply depends, are for sale to the highest bidder. Or these essential services are disqualified for profit and deemed undesirable or superfluous. Low ROI means back-burner. I mean, how self-defeating is this? How can you possibly have a high-functioning is a “productive” society without first being educated on how to be productive? It’s a feature of lunacy that nature’s economy (environmental regeneration) and the human economy (invisible, unpaid work) are being systematically exploited to create “productive” growth in the global market economy, all at the expense of the people and the nature that provided the growth. This feels awfully myopic to me.
Historical Eco-Socialism (Marx had more right than we credit him for)
Conscious that Karl Marx is not a favourable name in capitalist circles, I hesitated to include his teachings in this thesis for risk of being branded Socialist. But in the name of apolitical and balanced thinking, I feel we’d be remiss if we left out his musings on the consequences of capitalism to nature. Well before the evolution of Capitalism — indeed, closer to the dawn of the Industrial Revolution — he cogently predicted the exploitation of labor and ecology, prescribing that the single focus on maximization of profit would have disastrous effects on the planet.
To Marx, the main importance of technical progress for Marx was not the infinite growth of goods (“having”) but the reduction of the labour journey and the increase of free time (“being”). Marx’s emphasis on self-development, on free time for artistic, erotic or intellectual activities — in contrast to the capitalist obsession with the consumption of more and more material goods — leads to a decisive reduction of the pressure of production on the natural environment.
Stating way back in the 1860s that “capitalist production … disturbs the metabolic interaction between man and the earth, i.e. prevents the return to the soil of its constituent elements consumed by man in the form of food and clothing; hence it hinders the operation of the eternal natural conditions for the lasting fertility of the soil… all progress in capitalist agriculture is progress in the art, not only of robbing the worker, but of robbing the soil; all progress in increasing fertility of the soil for a given time is progress toward ruining the more long-lasting sources of fertility. The more a country, the United States of North America, for instance, develops itself on the basis of great industry, the more this process of destruction takes place quickly. Capitalist production, therefore, only develops the technique and the degree of combination of the social process of production by simultaneously undermining the original sources of all wealth — the soil and the worker[1].” He sounds a bit like Nostradamus to me.
Marx considered the preservation of natural conditions as an essential task of socialism. In Volume III of Capital, he opposes to the capitalist logic in agriculture, based on brutal exploitation and exhaustion of the soil, with the logic that “the conscious and rational treatment of the land as permanent communal property”. Considering land not as the source for near-term profit, but as “the inalienable condition for the existence and reproduction of the chain of human generations”. Who would have thunk?? The idea that progress can be destructive in the degradation and deterioration of the natural environment, while prescient, is quite a silenced perspective today.
His perspective on land ownership in general is a philosophical exercise worth debating. He writes that “from the standpoint of a higher socio-economic formation, the private property of particular individuals in the earth appears just as absurd as the private property of one man in other men”[2]. Originally, land rights were almost always held in common, accruing to the village or tribe, and not the individual. In the great agrarian civilizations such as Egypt, Mesopotamia, and Zhou Dynasty China, there was little concept of private land ownership. All land was the property of the king, and because the king was the representative of the divine on earth, all land was the property of God. It wasn’t until we shifted away from our primordial animistic and nomadic tribes into our more familiar urban dwelling modern societies thanks to the innovation of agriculture, that any of this changed.
The Dawn of Exploitation
Indeed, it is reasonable to claim that what we call economics started with agriculture and the plough. In the hunter gatherer world prior, surplus of food was impossible (either they were not plentiful enough or did not store well enough to create meaningful long term calorie subsistence beyond seasonal needs). This reality meant that we lived in a dynamic relationship with the natural world, and in undeniable interdependence with each other. The advent of agriculture allowed for storage of grains grown and harvested in quantity. As social philosopher Daniel Schmachtenberger states: storable surplus is a prerequisite for the concept of property ownership, as there needs to be something that is ownable. What we think of as economics is based on the concept of transaction (trade), which is based on the concept of owned things that can be transacted.
On a more philosophical level, long before growth as a our God-in-chief, we had Animism — the belief that natural objects, natural phenomena, and the universe itself, as possessed souls. This meant that both nature and animals were imbued with human characteristics, blurring any separation between culture and nature, humans, and our environment. For pre-agricultural foraging peoples, the sacred and secular were inseparable. The same animals they preyed upon, they also prayed to; there was a ritual of honor, apology, and gratitude, and full utilization of all parts of the animal. A more recent term that describes the same basic worldview is deep ecology, which includes a conviction that all life has value in and of itself, above and beyond its usefulness to us, and therefore deserves our respectful treatment. This all changed when we established modern agriculture.
Agriculture involved animal husbandry, which necessitated a further separation from nature. As Schmachtenberger writes: to yoke an ox, castrate it, and beat it all day long to keep pulling a plough, required removing our empathy from it — the same dehumanizing, othering tactic employed in recent human genocides. Seeing the animal (or in genocide, other humans) as different enough to not be able to relate with, so as to not have to care about its rights or feelings. This was the beginning of the commoditization of other life forms. Man’s dominion over nature. This commoditization of life — extraction and abstraction — in the service of accumulation — bled over into the commoditization of people: the jump from animal husbandry to slavery is not that far. In the win-lose game of accumulation economics, with our balance sheets as the score cards of the game, other people are either resources for me to get ahead or they are competitors for the scarce resources.
Cultural memes change from: Man exists within the web in the great circle of life, to Man has dominion over nature (which conveniently has no feelings). The playbook is: identify a difference, remove empathy, and see sentient things as utilities. It’s a lot easier to abuse something you believe is worthless than something integral to your cycle of life. And the impossible reality is that because technology like the plough (extrapolated also to any new technology, especially of the hydrocarbon variety) conferred a physical (or economic) advantage or capacity of a rivalrous context, it meant that everyone had to use it or they would become fodder for those that did. In essence, the plough, much like today’s fossil fuels, became obligate. Either use them, or lose.
Enter: Ecological Economics
Now that we understand where we’ve come from, I want to propose some solutions for where we might go. I want to unpack a not-so-new but certainly under-represented economic paradigm to establish true societal equilibrium that accounts for the whole system: Ecological Economics. An alternative economic philosophy originated in the 1980s, Ecological Economics takes a macro-and-long-term view of our economic and sociocultural relations and ascribes a holistic, systems approach to coordination. A trans-disciplinary field, it is not trying to be a subdiscipline of economics or a subdiscipline of ecology, but is a meta bridge across not only ecology and economics but also psychology, anthropology, archaeology, and history. It is a belief that the economy should be observed as a subsystem within a larger ecosystem, not that it should dictate the behaviour of the ecosystem. Almost comically sensical, it contends that economic growth should be limited to a scale that is sustainable to the regenerative capacity of an ecosystem. It’s an attempt to observe and predict human behaviour as embedded in their ecological life-support system, not separate from the environment. Ecological economics, then, can be seen as an evolution in our co-creative partnership with Earth.
Philosophically, ecological economics is governed by three interrelated conditions: sustainable scale, fair distribution, and efficient allocation. Sustainable scale refers to the equilibrium between how much we need versus how much we have. Distribution refers to the equality of resource ownership in societies; the more unequal the distribution, the more competition and less cooperation between groups, which is ultimately less productive and more problematic. Allocation refers to efficiently sharing resources, which the market has proven incapable of doing, considering the growing list of externalities. It also emphasizes the importance of distributive justice, arguing that economic growth and development should be directed towards improving the well-being of all members of society, rather than just a privileged few. Not necessarily from the perspective of socialist re-distribution after production and earnings, but rather, front-loading a more equitable opportunity to produce and earn from the outset.
Unsurprisingly, ecological economists reject using GDP as a measure of progress, particularly because it rewards the maximum distribution or sustainable scale of throughputs. Take the example of a refrigerator. The more energy the appliance uses, the more GDP grows. The GDP increases in the year a new fridge is purchased and increases again the sooner it is replaced. Therefore measurements using GDP do not promote either energy conservation or the long-term durability of consumer products. Ecological economics requires us to learn how to live on the annual flows or “income” from existing stocks of natural capital, without depleting them unsustainably.
The Grandfather of ecological economics, Herman Daly, compares the exclusive focus on money flows to behaving like a medical doctor who treats only the patient’s blood circulation while ignoring the digestive system, the bone structure, the pulmonary system and other vital organs. He contended that we need new measurements that assign a value to the Earth and its produce as well as the unpaid labour performed mostly by women. Daly also believed that those things that ‘we classify as “external” costs are elected external for no better reason than because we have made no provision for them in our economic theories’. This is a critical distinction between ecological economics and neoclassical.
In contrast to the neo-classical view, ecological economists recognize the human economy as a subsystem within the earth’s ecosystem. Wisely appreciating that all economic activity depends on the use and reuse of limited material inputs which cannot expand forever, they developed a more robust (and realistic) model. Ecological economics does not deny the need to develop cleaner production techniques, but neither does it accept the claim that technological advances alone can be sufficient to resolve the grave environmental challenges we face today.
In addition to the aforementioned three conditions of ecological economics, a Regenerative Economy — one which not only prevents destruction but actually regenerates and remediates — goes a step further, outlining eight guiding principles. Amalgamating the foundations of ecological economics with the ideals of regenerative economics can serve as a vital compass for the journey through this new economic paradigm in which we co-exist symbiotically with nature.
1. In Right Relationship:
Humanity is an integral part of an interconnected web of life in which there is no real separation between “us” and “it.” The scale of the human economy matters in relation to the biosphere in which it is embedded. What is more, we are all connected to one another and to all locales of our global civilization, as both our lived experience and quantum physics tell us. Damage to any part of that web ripples back to harm every other part as well. So the principles of reciprocity and mutualism found in both biology and indigenous wisdom, and even the Golden Rule common across all the World’s religions, are foundational to a regenerative economy.
2. Views Wealth Holistically:
True wealth is not merely money in the bank. It must be defined and managed systemically in terms of the well-being of the whole. This can only be achieved through the harmonization of multiple kinds of wealth or “capital” — to use economic language — beyond the conventional financial, material and technological capital to include social/relational capital, cultural, experiential and yes spiritual capital, however one defines it. But all of these forms of capital rest on the foundation of natural capital and in particular healthy ecosystem function, upon which all life — inclusive of our human economies — depend. Critically, the whole is only as strong as the weakest link.
3. Innovative, Adaptive, Responsive:
In a world in which change is both ever-present and accelerating, the qualities of innovation and adaptability are critical to health. It is this idea that Charles Darwin intended to convey in this often-misconstrued statement attributed to him: “In the struggle for survival, the fittest win out at the expense of their rivals.” What Darwin actually meant is that: the most “fit” is the one that fits best i.e., the one that is most adaptable to a changing environment. Therefore, the entrepreneurial dynamism associated with a free enterprise system and the free flow of capital is essential. Yet both must somehow be channeled in a way that is responsive to the changing dynamics and essential needs of systemic health rather than short term individual desires of wants and greed.
4. Empowered Participation:
In an interdependent system, fitness comes from contributing in some way to the health of the whole. The quality of empowered participation means that all parts must be “in relationship” with the larger whole in ways that not only empower them to negotiate for their own needs but also enable them to add their unique contribution towards the health and well-being of the larger wholes in which they are embedded. Thus while “inclusiveness” may be morally desirable, empowered participation is a non-negotiable quality of systemic health for the entire system.
5. Honors Community and Place:
Each human community consists of a mosaic of peoples, traditions, beliefs, and institutions uniquely shaped by long-term pressures of geography, human history, culture, local environment, and changing human needs. Honoring this fact, a Regenerative Economy nurtures healthy and resilient communities and regions, each one uniquely informed by the essence of its individual history and place. While the pattern of eight universal principles apply to all places, each place must define how the pattern applies based on their own unique contexts. Just as every snowflake looks like a snowflake, every snowflake is also unique.
6. Edge Effect Abundance:
Creativity and abundance flourish synergistically at the “edges” of systems, where the bonds holding the dominant pattern in place are weakest. For example, there is an abundance of interdependent life in salt marshes where a river meets the ocean. At those edges the opportunities for innovation and cross-fertilization are the greatest. Working collaboratively across edges — with ongoing learning and development sourced from the diversity that exists there — is transformative for both the communities where the exchanges are happening, and for the individuals involved. Specialized silos of expertise, while necessary in our complex world, also create barriers to new ways of manifesting regenerative potential.
7. Robust Circulatory Flow:
A living economy demands a healthy metabolism to flush toxins and nourish every cell at every level of our human networks. Just as human health depends on the robust circulation of oxygen, nutrients, etc., so too does economic health depend on robust circulatory flows of energy and materials in a “circular fashion” where waste is food as in all biological systems. But it also demands robust circulation of money out to all extremities of the system, the robust circulation of accurate information enabled by the internet (but severely damaged in our post truth society), and even the circulation of empathy to help raise consciousness, support trust and healthy dialogue. It should go without saying that a healthy economic metabolism also demands healthy, toxin free material and financial inputs, while disposing of wastes in a way and on a scale that does not undermine the health of the whole.
8. Seeks Balance:
Being in dynamic balance is essential to systemic health. Like a unicycle rider, regenerative systems are always engaged in this delicate dance in search of balance. Achieving harmony requires balancing paradoxes with both/and thinking rather than either/or thinking. Healthy systems harmonize multiple variables in a unified whole instead of optimizing single ones at the expense of others. For example, a Regenerative Economy seeks to balance masculine and feminine energy and qualities such as analytical thinking with intuitive ways of knowing, and competition with collaboration. It also balances efficiency and resilience; diversity and coherence; and supports fractal structures that balance small, medium, and large organizations in healthy hierarchy, all in service to the health of the whole.
What is next?
This post continues in the following post called “Building for the Regeneration”, in which we dig deeper into the nuances of novel economic theories and sociopolitical philosophies all dancing around the same thesis: that our current extractive model is simply not working. Stay tuned for the continuation of this post coming soon!
[1] (Marx 1970, 637–638)
[2] (Marx 1970, III, 911, 948–49).
