My capital manifesto

Over the course of this quarter I’ve learned about the theory behind various forms of capital - financial, social, human, natural, etc. And I realized that not only do we interact with capital everyday, but we also create capital, we use capital, and in some ways we are capital. It sounds eerie and reductionist at first, but I wonder if there isn’t some way to feel ownership (pun intended) over the construct of capital. How can we make it ours and make it work for the communities and environment we care about?

Traditional economics speaks to the ways in which capital does “work”. As Investopedia explains, “Capital...is used to generate wealth through investment...Capital itself does not exist until it is produced. Then, to create wealth, capital must be combined with labor, the work of individuals who exchange their time and skills for money… [and] Capital has value because of property rights.”

So the traditional definition of capital is linked to wealth creation. It must be created, and owned. How can we re-imagine wealth, creation and ownership then?

Wealth - It is excess that you don’t use immediately, resources that we can stored or saved. Depending on who you are talking to, wealth is manifested in the form of money, possessions, knowledge. Yet, interestingly it can be used to described people and things. It is more than possession it can also be a descriptor: a wealthy family, city, and nation.

Creation - Bringing something new into existence. But is anything new ever really “created”, or is it just repurposed, a shifting of ideas, atoms, and elements. Charles Eisenstein certainly feels that most things that are sold was once an object and services that humans provided for themselves and their community without exchanging money for it.

Ownership - It is to possess, rule, control. Those words are very different from service or stewardship, yet all three can look the same in action. I own my dog, but that just means that I have to pick up his poop and make sure that he doesn’t get hurt or hurt other. In fact, it seems that he controls me.

Now, just for fun, with this new look at wealth, creation, and ownership let’s look at what financial, social, human, and natural capital we interact with, use, live and create on a daily basis. There is the obvious physical environment that surrounds us. Each building serves use-value and transaction-value. It is owned by someone and created by someone. It is probably making wealth for someone (the bank, the landlord) as well. What about the people walking around and working? They all have capital, which is to say knowledge and skill that they own, created, and are driving wealth from (or at least we hope there is an excess of resources taking place). In fact, I am using mental capital right now. I am building my writing skills, and deepening my understanding of economics. I own these new skills and I hope to profit off of them in the near future.  What about trees and parks. They create wealth because they improve quality of life (who doesn’t like excess quality of life?). They are “owned” by taxpayers and are created by nature and human intervention.

It seems that with a broad sense of capital, wealth creation, and ownership we can apply the label capital to almost everything we come in contact with.

Yes, the world is unjust. Yes, there are many institutional, systemic, and structural barriers that keep people from achieving the mythical “American Dream”. But, we all have some capital.

How are you going to use your’s?

The New Econ-o-what?

What is this “new economy” all about? People talk about sharing economies, complex economies, Ecological Economics, self-reliant bio-regional economies, the New Economy, the sacred economy. How are we to imagine a new reality when there are a number of people voices saying different things? How do these different ideas work together or pull the movement apart?

It seems to me that all these names, new paradigm, or suggestions boil down to three fundamental changes - change the rules that set the system in motion (and allow for self organization), change how value is measured (change the goals), and transform which stories are chosen to be glorified (shifting the paradigm).

Allow for self-organization

Marjorie Kelly, Mirran Raphaely and Jeff Mendelsohn both talked about clever ways to lay strong foundations that affect whole systems. As Kelly so eloquently said in our webinar, “Structure is purpose expressed through design.” As with the nature world, there are simple rules that have long lasting effect. These natural laws result in a multitude of combinations and self-organization. What on the surface may seem like a boring project - coming up with a business’ articles of governance - actually lays a foundation and sets into motion the complex and exciting organization that will birth something new and innovative into the world. It is worth spending the time to make sure that the governance and ownership structure are in line with the ethos of the company. Doing so, means that business models are not extractive, instead the focus on supporting  life. As a result, not only does the business product or service positively impact customers, but also the environment and all stakeholders within the system.

Mendelsohn  and Raphaely talked about the ways that organizations are living beings. They are not something to be bought, sold, or traded. They exist independently of people that make them up. Why should some people own parts of it and not others? What does it mean to give away equity in exchange for capital? Will we soon see that to be similar to giving away your first born during a financial transaction?

Change the goals

David Korten clearly stated the ways in which increasing GDP is a poor goal for a healthy economy. He argues that GDP and Market Indexes as economic indicators favor the rich and does nothing to improve life for all (Korten, 2013a), and that Money measures value and making more of it is the purpose of firms and economies. When these are our goals and values, they can have disastrous effects. For example, when focusing on increasing GDP, the result can be that sustenance farmers leave the farm to to make money (which contributes to GDP) at the expense of growing food. So, money goes up, but food security goes down. (Korten, 2013a).

The solution from many authors - for example David Korten and Charles Eisenstein - suggest a change to the means of measurement. GDP sets the wrong goals and the wrong focus.

Shift the Paradigm

Perhaps the most radical argument against the current system looks closely at the narrative that perpetuates it. Both David Korten and Charles Eisenstein take issue with the story that gives meaning to our world.

Korten talks about the three meta-narratives of our time: Distant Patriarch - “most important relationship is to a distant god who bestows agency and meaning”; Grand Machine - there is no meaning and agency in the world, we are just part of a machine going round and round; and Mystical Unity - relationships and meaning are all illusions, we are one. He urges us to move beyond these stories that legitimate the extractive economy that we live in.  Korten argues that in order to move into a place of healing for the Earth, Humanity, and all living beings, we must change the narrative the connects us to the world around us. That narrative needs to be based on a new story - the Integral Spirit. This story celebrates humanities ability to be self-directed interconnected beings on a “journey of creation and discovery.” (Korten, 2013 pg 9)

Eisenstein encourages us to change the way we interact with money as money was once sacred and key in bring people together. Similar to Korten, he suggests that the narrative of divide, conquer, sell and commodify has changed our relationship to one another and the Earth. To move beyond that reality, money has to take on new meaning and occupy a new place in the world.

Breaking these concepts down into bit-sized pieces helps me understand that just as our economy is multi-layered, so are the problems and potential solutions. I may not agree with all of them, but they remind us to question what we know and explore that which we do not. If we stop taking the system as a given and support alternatives (varied as they are) when we see them, perhaps we can kick-start some change.

(Endnotes)

Eisenstein, Charles. 2011. Sacred Money: Money, Gift, and Society in the Age of Transition. Evolver Editions.

Korten, David. Taking Ecological Economics Seriously.

Korten, David. 2013a. Defining a New Development Paradigm.

Korten, David. 2013b. Religion, Science, and Spirit: A Sacred Story for Our Time.