The Capital Institute Offers an Holistic Approach to Society

by Duane Nichols on April 25, 2015

Beyond capitalism and socialism: could a new economic approach save the planet?

A holistic approach to the economy is necessary to avoid social, environmental and economic collapse, according to a new report by the Capital Institute.

From an Article by Jo Confino, The Guardian, April 22, 2015

To avoid social, environmental and economic collapse, the world needs to move beyond the standard choices of capitalism or socialism. That’s the conclusion of a new report released Wednesday by US think tank Capital Institute.

The non-partisan think tank argues that both systems are unsustainable, even if flawlessly executed, and that economists need to look to the “hard science of holism” to debunk outdated views held by both the left and the right.

Jan Smuts, who coined the term “holism” in his 1926 book, Holism and Evolution, defined it as the “tendency in nature to form wholes that are greater than the sum of the parts”. For example, in the case of a plant, the whole organism is more than a collection of leaves, stems and roots. Focusing too closely on each of these parts, the theory argues, could get in the way of understanding the organism as a whole.

Viewed through this perspective, the capitalist tendency to isolate an economic process from its antecedents and effects is fundamentally flawed. The Capital Institute, created by former JP Morgan managing director John Fullerton, says that society’s economic worldview has relied on breaking complex systems down into simpler parts in order to understand and manage them.

For example, this traditional economic view might view automobile manufacturing separately from the mineral mining, petroleum production and workers on which it relies. Moreover, this view might also not acknowledge the impact that automobile manufacturing has on the environment, politics and economics of an area. Holism, on the other hand, would view the entire chain of cause and effect that leads to – and away from – automobile manufacturing.

The Capital Institute report, titled Regenerative Capitalism, emphasizes that the world economic system is closely related to, and dependent upon, the environment. “The failure of modern economic theory to acknowledge this reality has had profound consequences, not the least of which is global climate change,” it says.

A long chain of cause and effects

According to the Capital Institute, the consequences of this economic worldview are vast and far reaching, encompassing a host of challenges that range from climate change to political instability.

For example, the current capitalist system has created extreme levels of inequality, the report says. This, in turn, has led to a host of ills, including worker abuse, sexism, economic stagnation and more. It could even be considered partly responsible for the rise of terrorism around the world, the report claims. In other words, this inequality has become a threat to the very system that is creating it. Without radical change, the report warns, “the current mainstream capitalist system is under existential threat”.

What is needed now, the Capital Institute argues, is a new systems-based mindset built around the idea of a regenerative economy, “which recognizes that the proper functioning of complex wholes, like an economy, cannot be understood without the ongoing, dynamic relationships among parts that give rise to greater wholes”.

In practice, this might lead to close analysis of supply chains, investigations of the effects of water use, circular economy initiatives, community economic development work or a host of other sustainability efforts.

While some people associate holistic thinking with mystics or hippies, the worldview is borne out in ways that are measurable, precise and empirical. “Universal principles and patterns of systemic health and development actually do exist, and are known to guide behavior in living systems from bacteria to human beings,” the report says.

Holism also can be used to study “nonliving systems from hurricanes to transportation systems and the internet; and societal systems including monetary systems”. Not surprisingly, the theory underlies other scientific and social tools, such as system theory and chaos theory.

A radical shift

This holistic approach flies in the face of a great deal of long-held beliefs. For example, while decision makers usually focus on finding a single ‘right’ answer, holism focuses on finding balanced answers that address seemingly contradictory goals like efficiency and resilience, collaboration and competition, and diversity and coherence. Taken from this perspective, holism wouldn’t approach global economics from a capitalism-or-socialism perspective, but rather from a capitalism-and-socialism perspective.

The report emphasizes the importance of innovation and adaptability over rigid structures and belief systems. It also embraces diversity, suggesting that, instead of trying to find a globalized one-size-fits-all approach to change, it is vital to recognize that each community consists of a “mosaic of peoples, traditions, beliefs, and institutions uniquely shaped by long term pressures of geology, human history, culture, local environment, and changing human needs”.

Ultimately, the report argues, a holistic perspective emphasizes that we are all connected to one another and to the planet, and therefore need to recognize that damaging any part of that web could end up harming every other part.

In business terms, what would this sort of revolutionary shift in business look like? The Capital Institute, which presented a white paper at Yale University’s Center for Business and the Environment on Tuesday, says innovators and entrepreneurs around the world are already responsible for thousands of sustainability initiatives and movements that are helping to re-imagine capitalism, such as social enterprises, B Corps, impact investing, slow food and localism.

The report says that, while some critics view these as “disconnected feel-good activities outside the mainstream capitalist system”, they are, in fact, “in alignment with the regenerative economy framework”. Collectively, it claims, “these forces provide living proof that a new regenerative economy is emergent”.

Beyond movements of change, the institute points to a number of individual initiatives that show how the world could change for the better. For example, Mexico’s Grupo Ecologico has worked to fund impoverished small farmers and ranchers, giving them the economic freedom to preserve and regenerate their own land.

Similarly, Australia’s Bendigo Community Bank splits its net income with local community enterprises. It directs a portion of community branch earnings toward grant making, giving local leaders the opportunity to become active players in their communities.

Community development is also a primary concern for Chicago’s Manufacturing Renaissance, which is forging unusual partnerships among government, labour unions, educators, the private sector, and civil society to create programs that support the region’s advanced manufacturing sectors.

Fullerton says there is great potential ahead if society can change its collective mindset: “This is a monumental challenge that holds the promise of uniting our generation in a shared purpose. We now have a more rigorous understanding of what makes human networks healthy – this alone constitutes an amazing opportunity. It is time to act. Our actions, now, will most certainly define the nobility of our lives and our legacy. This is the great work of our time.”

See also: www.FrackCheckWV.net

{ 1 comment… read it below or add one }

Sara Day Evans April 26, 2015 at 6:16 am

Accelerating Appalachia – THE FIELD GUIDE TO INVESTING IN A REGENERATIVE ECONOMY

Sara Day Evans, a sixth generation Kentuckian, tells the story of the people and places that inspired her to found Accelerating Appalachia, a new business accelerator that is nurturing natural and entrepreneurial capital to appropriately scale a post-extractive, regenerative economy in coal country.    

People are turning to one another and, to quote my colleague, Sandy Maxey, saying, “No one is coming to save us. We have to do this on our own.”  We know we “can’t build on broken.” Even though we know there is plenty that is broken, we are working to support a post-extractive, post-coal economy for Appalachia and beyond, by building on our region’s assets. It’s about sharing inspired stories of the strength, persistence, creativity, and resilience of businesses that work with nature – food, farming, forests, fiber, fuels -  developing a place-based economy.

I grew up in the Shenandoah Valley and central bluegrass Kentucky, and spent a lot of time outdoors – literally from sun up to sun down. The first conversations about Accelerating Appalachia began in 2011, but came out of the trajectory I have been on personally for all of my life and professionally for 20 some-odd years, always nested in people, place, and prosperity. Besides my parents, I’ve been heavily influenced by Wendell Berry and his daughter, Mary, who are my lifelong friends. 

Mary launched the Berry Center for Farming and Agriculture about the same time I launched the accelerator, so we’ve conspired and collaborated. Mary has beautifully taken up the charge of her father, uncle, and grandfather, but with her own unique voice. When I question my own purpose (and I often do), my parents, my children, and Wendell have always been solid barometers – and if I can reach her, I call up Mary and ask her opinion. We don’t always agree on everything, but we know we are in this together. 

For 13 years I worked on establishing Kentucky’s groundwater and solid waste programs, and then started looking at ways to support sustainable economies in rural Appalachia, with a people/place-based sensibility. 

See the following:

Accelerating Appalachia – THE FIELD GUIDE TO INVESTING IN A REGENERATIVE ECONOMY

http://fieldguide.capitalinstitute.org/accelerating-appalachia.html

Reply

Leave a Comment

Previous post:

Next post: