From Expansion to Harmonisation ~ A New Economic Trajectory
Paddy Le Flufy
This article was originally published in Kosmos Journal, Volume 2023, Issue 2, July 2023
REPUBLISHED WIT PERMISSION
Click the image to enlarge.
If we do not stop degrading the natural environment, it will collapse, so we must harmonise our global society with the natural world. If we allow global inequalities to remain embedded, we will perpetuate hardship on a vast scale, so we must harmonise our human cultures with one another. And if we continue to desire ever-increasing consumption without regard to its negative effects, we will suffer terrible consequences, so we must harmonise our aspirations with our opportunities.
Many people realise our economic system is stopping us from averting the environmental crises that are currently threatening to cause catastrophe. Various approaches to resolving this situation have been suggested. Some people propose individual government policies for each issue we are faced with; others think we should slam on the brakes with planned economic degrowth; yet others say we should keep the economy as it is and concentrate on accelerating the energy transition. But to truly resolve the concatenation of problems before us, we need to change something fundamental: our trajectory of development.
For hundreds of years, Western development has been on a trajectory of expansion. From the days of empire-building and colonisation, through industrialisation, to the recent fixation with economic growth, our economy has always been expanding. This expansion increased rapidly in the second half of the twentieth century, a period known as the Great Acceleration. Many measures of human activity grew exponentially: global population; real GDP; energy use; food production; and much else besides.
The Great Acceleration
This accelerated expansion of the last century had many positive effects, because it enabled us to greatly increase our quality of life. But it also increased our environmental impact dramatically, and this is now threatening to damage, and perhaps even destroy, our civilisation. The fact is that we have expanded as far as we safely can, because we have expanded to a global size: we are now a planetary-scale species. Virtually everyone in the world relies on the global economic system to some extent, and we are collectively affecting the natural world on a global scale. We cannot keep expanding without undermining the ecological basis upon which we rely, with disastrous consequences.
We need a new trajectory, one of harmonisation. If we do not stop degrading the natural environment, it will collapse, so we must harmonise our global society with the natural world. If we allow global inequalities to remain embedded, we will perpetuate hardship on a vast scale, so we must harmonise our human cultures with one another. And if we continue to desire ever-increasing consumption without regard to its negative effects, we will suffer terrible consequences, so we must harmonise our aspirations with our opportunities.
Our current economic system is a system of expansion, so although it was suited to the expansion of the last century, it is no longer appropriate. We need a new system, and it must be a system of harmonisation.
The components of an economic system
To understand how to move to a system with a better trajectory, we need to understand those aspects of the system that combine to create its trajectory. We can then see what those components are comprised of in the current system, and what they should be comprised of in the new system.
The relevant components of an economic system are as follows: there is the goal, what it is that constitutes progress; the development dynamic, the method society generally uses to reach the goal; and the economic agents, the individual units that use the dynamic to reach the goal. These combine to create the trajectory of the system: the goal sets the overall direction; the dynamic determines the routes available to get there; and the economic agents decide which specific pathways to take.
The specific elements that make up those components in the current system are these: the goal is economic growth; the development dynamic is capital accumulation for profit; and the economic agents are shareholder value maximising businesses and people encouraged to model themselves on ‘rational economic man’. Each of these is very well-suited to the current trajectory of expansion.
Economic growth is the main economic goal for governments the world over, because it is generally taken to be a proxy for overall human welfare across society. For much of the twentieth century there was quite a strong correlation between economic growth and other indicators of human welfare. But economic wealth and other important indicators aren’t necessarily correlated – for example, according to World Bank data, the US has the 12th highest GDP per capita but only the 62nd longest life expectancy. Ultimately, economic growth is a dubious proxy for human welfare. But it’s a great aim for an economy built on expansion, as growth and expansion are synonymous.
The second component is the development dynamic of capital accumulation for profit. This was already entrenched as a driver of economic expansion when Marx wrote Das Kapital, and continues to be a core element of our economic system. It is based on the belief that the best way to attain economic growth – and therefore, in this paradigm, the best way to improve society – is for the owners of capital to strive to increase the capital they personally own, and the profit they make from it. Whether or not capital accumulation is a good way to improve society, it is certainly a good way to cause economic expansion, because an efficient method of getting more capital is creating new capital – which means expanding our economic footprint.
Finally, there’s the third component: the economic agents of shareholder value maximising businesses and ‘rational economic men’. These are the idealised agents of efficient capital accumulation: people and organisations whose sole criteria for decision-making is that which will increase their own wealth most effectively.
In the case of people, this is of course an idealisation, because in reality people have many other criteria for decision-making. But acting in an ‘economically rational’ way is both used as an assumption in economic modelling and encouraged as a way to actually behave, because it aligns people with the logic of expansion.
In the case of businesses, the ideal has been attained, because businesses have essentially been defined like this. The directors of businesses are duty-bound to work on behalf of the interests of the owners of the business, and this is interpreted as working to increase the economic value of that ownership.
In both cases, these economic agents are very good at moving our economy along the trajectory of expansion. All such agents try to expand their own economic wealth, with the net result of expanding the economy as a whole.
The components of the new system
To create a new system of harmonisation, we need replacements for each of these components, and we need the replacements to be ones that will help us achieve our aim of harmony.
The meaning of harmonisation isn’t quite as clear as the meaning of expansion, so let’s take a moment to think about what it means in practical terms. Firstly, to begin harmonising with the natural world, we need to stop destroying it. If you are in harmony with something, you do not harm it.
But harmony goes further than not causing harm. If we are to have a truly harmonious global society, we must actively enable the billions of people living in poverty to escape that poverty and live fulfilling lives – to be rich in a broad sense. If you are in harmony with someone, you have a mutual respect and collaborative generosity that balances independence with interdependence, and results in both of you having better lives than you would alone.
Finally, a harmony combines many different parts into a pleasing whole. To reach global harmony, we should seek fulfilment in making our own contributions to the whole, and we must avoid enabling small groups to dominate or undermine it.
The new goal: bounded abundance
We have expanded beyond important bounds set by the nature of the world. Remaining beyond them for much longer would be catastrophic, so a foundational goal of society must be to return within the bounds, and to stay there. But being bounded needn’t feel limiting, if we understand those bounds as a framework within which to thrive. Combining those two aspects into a single goal, we should be aiming for bounded abundance.
The first set of bounds we must learn to abide by are environmental. Our greenhouse gas emissions are destabilising the climate; our land use is close to causing a mass extinction; and our plastic is polluting the whole world. We must decrease our environmental impact. Exactly which environmental limits are important, and what levels are safe, have been studied and calculated.
Courtesy Stockholm Resilience Centre. Click the image to enlarge
Prof Johan Rockstrom and his team at the Stockholm Resilience Centre have identified nine planetary boundaries, within which we must stay if we are to avoid destabilising critical environmental processes at a global level. Their studies have shown that we have already exceeded the thresholds for seven of the planetary boundaries, so if we do not decrease our negative impacts in all of these areas, we are risking environmental catastrophe.
Another important set of bounds are those of resources. Our current society is reliant on resources whose supply is ultimately limited, such as metals and other elements, so as we use more of these resources, we are beginning to run out of them.
There have been calculations of resource limits over many years – the Limits to Growth reports by the Club of Rome have been particularly influential. More recently, Dr Simon Michaux has shown that limits in our resources and mining capacity mean it is impossible to perform the energy transition as governments are currently planning to: we simply won’t be able to produce essential materials in a large enough quantity.
A third set of boundaries are equally important to creating a trajectory of harmonisation. These are lower bounds, the minimum each person needs to meet their basic necessities – everyone in the world must have enough food, shelter, social networks, and so on, to have a decent life.
Doughnut Economic Model. Source: Wikipedia. Click the image to enlarge
Kate Raworth, through her invention of the Doughnut, has combined the planetary boundaries with the social necessities into a single goal of aiming to ‘meet the needs of all within the means of the living planet’. She has created an image that encapsulates this beautifully, with two concentric rings representing the social foundation and the ecological ceiling. It looks like a doughnut, hence the name, with the goal being to ‘get inside the Doughnut’.
It is essential we get inside these bounds if we are to have a better future. But to decrease our negative environmental impact, the rich West must decrease their material consumption. For many people, this is a dishearteningly austere aim, because their subjective quality of life depends upon their material consumption.
There are ways of having a good material quality of life despite using far less resources, such as by creating a circular economy, and through ‘private sufficiency, public luxury’, as described by George Monbiot. But there are much greater possibilities for improvement if we take a wider view of what might constitute a good life: a wider view of abundance.
Our current culture focuses on increasing our abundance of material goods, but in doing so it limits our access to many other things. The necessity of full-time work limits the availability of time, and the monetisation of social spaces limits opportunities for social connections, for example.
We can stay inside the bounds of the world while improving our quality of life if we take a wider view of abundance, and we recognise that true abundance means different things for different people. To have a fulfilling life, some people need an abundance of time, an abundance of social connections or an abundant connection to nature. For many, it’s important to have an abundance of creative expression, of learning and sharing knowledge and skills, or of adventure. Perhaps you would prefer an abundance of joyful celebration or an abundance of cultural expression. All of these can be compatible with a bounded world, and together they can create the abundance we should really be aiming for: an abundance of human flourishing.
The new dynamic: cosmolocal collaboration
Getting from where we are now to a world of bounded abundance is not an easy task. A team at Leeds University has shown that, at the moment, not a single country is ‘inside the Doughnut’. Not only that, but different countries have different challenges to get there. Poor countries must begin providing for the basic needs of their citizens without overshooting environmental limits. Rich countries must decrease their environmental impacts, while continuing to provide for the needs of their citizens. Some middle-income countries need to do both: they are currently overshooting environmental limits without achieving the social thresholds for their whole populations.
On top of this, ‘abundance’ will mean different things in different cultures. Clearly, a one-size-fits-all solution to reaching bounded abundance is not realistic. Instead, we need a flexible approach that enables communities to meet their needs in an environmentally sound way, without forcing them to adhere to a particular way of life.
Such an approach does exist, and it is called cosmolocalism. The basic idea of cosmolocalism is to combine local manufacturing with a digital knowledge commons, so that communities can provide for their own needs while drawing on, and contributing to, a global database of knowledge and experience.
A good example of this that exists today is Fab Labs. Fab Labs is a network of makerspaces – places with tools to enable people to ‘make (almost) anything’. It was started at MIT in the early 2000’s and there are now thousands of Fab Labs around the world.
A Fab Lab. Click on the image to enlarge.
All the Fab Labs have a similar design – the Fab Foundation has put the blueprints for an ideal Fab Lab online, and other Fab Labs base their own designs around this. But the labs don’t have to be identical – they just need to have approximately the same capabilities. They also need to agree to a Charter and abide by some conditions. A key condition is that as soon as something is invented in a Fab Lab, its designs must be put onto the Fab Cloud, where they are immediately available for anyone in a Fab Lab anywhere in the world to download and use. Information about the equipment used in the labs is also shared globally, so that if one Fab Lab begins using a new piece of equipment, other Fab Labs can learn about it immediately.
A similar system can be applied to manufacturing, so that local factories can connect through global networks and share designs of factories and products. This sets up a powerful collaborative development dynamic. Everyone can draw on the knowledge and experience of everyone else, while being free to apply it in ways appropriate to their local situation.
If this is combined with regional circularity, so that materials used cycle continuously around the local economy, and community ownership, so outside owners of capital do not extract value nor direct development, it can simultaneously increase access to material goods, decrease production of waste, and maximise the freedom communities have to choose their own way of life.
The new agents: networked communities, Future Guardian companies, and responsible humans
Clearly, the main economic agents of cosmolocalism are globally-networked local communities. But the current system is dominated by corporations, that are not only profit-maximising but also highly centralised. We need a corporate form that enables corporations to overcome the primacy of the profit motive and have more positive impact. Fortunately, such a form has already been invented. It’s called the Future Guardian model and it’s being pioneered by Riversimple, a hydrogen fuel cell car company based in Wales.
In the Future Guardian model, the articles of association of the company are rewritten so that the company has an overall purpose and, subordinate to the purpose, a group of six aims, one for each of six stakeholder groups: the customers, the employees, the investors, the commercial partners, the community, and the environment. There is a system of Custodians and Stewards to ensure the aims of the model are manifested in the functioning of the company.
The articles state that the company should pursue its purpose while ‘balancing and protecting’ the benefit streams – effectively mini statements of purpose – that relate to, and in fact define, each of the stakeholder groups. The purpose itself can be explicitly social impact-based, but it doesn’t need to be – for example, a low-cost furniture company could make its purpose ‘to provide durable and desirable furniture that is affordable to at least 95% of adults in each of our markets’.
As one of the stakeholder groups is the investors, the Future Guardian model does not require companies to do away with the profit motive completely – it just says it must be balanced with the aims of each of the other stakeholder groups. The company’s profits must be no more important to it than its environmental impact, its contribution to the local community, and its effects on each of the other stakeholder groups.
There are various other governance structures, such as community interest companies and non-profits, that are appropriate in some situations. But the Future Guardian model is unique because it combines two important attributes: firstly, it overcomes the primacy of the profit motive without doing away with the profit motive completely; and secondly, it is just as widely applicable as the current default model of profit maximisation. This means it can truly replace the currently dominant corporate model and in doing so improve the entire business world.
From rational economic man to responsible human
Chartered cosmolocal networks and Future Guardian companies effectively embed social and environmental responsibility into their structures. It’s equally important that people behave responsibly: if we all act as rational economic men, even within this new paradigm, we are unlikely to reach harmony.
In today’s West, after decades of ‘economic rationality’ and the associated selfishness being held up as a virtue and materially rewarded, it’s easy to be cynical of escaping the power of greed. But in reality, the ideal of acting responsibly is much more reasonable than the ideal of economic rationality. In our daily decision-making, we all take into consideration many factors, including our financial well-being but also including our relationships, our effects on society, and our environmental impact. Aiming for a society of responsible humans is simply saying we should get better at balancing such factors.
There are, however, two aspects of this that need particular development. The first is the need to foster global solidarity. The modern world is so interconnected that our choices can have consequences thousands of miles away, and there are so many of us that our individual actions combine to create global effect. The need for consideration of such distant and cumulative impacts, both on the environment and on people we will never know, is a relatively new development.
From the UN’s Universal Declaration of Human Rights to the recent movements for climate justice, there are many signs that global solidarity is becoming part of our collective consciousness. But we are a long way from everyone effectively including global considerations in their decision-making, and the current situation means we need to develop this competency rapidly.
The second is that at the moment there is a strong cultural belief that using one’s capital to increase one’s personal wealth is not just acceptable, but a good thing to do. But in our new dynamic of cosmolocal collaboration, it is important that major capital assets like factories are owned democratically, and that extractive behaviour – upon which much individual enrichment relies – is minimised. To enable this, not only do we need to create a shift in our cultural values, we also need to set up mechanisms to facilitate a movement of capital from ownership by people accustomed to acting as rational economic men to stewardship by community organisations with responsibility and accountability built into their structures.
A new trajectory
Together, these components create a system with the new trajectory of harmonisation. The goal of bounded abundance allows us to harmonise society with the natural world – through recognising bounds on how we can treat it – and to harmonise people across society – by allowing everyone to have a life of abundance. The dynamic of cosmolocal collaboration allows global society to move forward as a harmonious whole while giving individual communities the freedom to develop in their own ways. And the economic agents of Future Guardian companies and responsible humans take into account the interests of everyone they affect, so they act in harmony with their surroundings.
Many important components of this new system are already being developed – the Doughnut Economics Action Lab is doing brilliant work to put the Doughnut into action, and there are many cosmolocal networks already in existence, for example. My recently published book, Building Tomorrow: Averting Environmental Crisis With a New Economic System, describes how we can transform the current system into the new one. It includes chapters on the Doughnut and the Future Guardian model and has an extended description of how cosmolocally collaborative development could be applied to regionally circular manufacturing. The Cosmolocal Reader, edited by Jose Ramos and others, is a compendium of essays on many aspects of the theory and practice of cosmolocalism, and it includes many case studies of cosmolocal organisations.
We are still at the beginning of this journey. We need a proliferation of new cosmolocal networks, the development of new mechanisms for distributing capital fairly, and new strategies to engender a sea change in our economic development and a shift in our cultural values. And of course, there are many other areas of the new system we are yet to envision and build. We must put our time, intelligence and resources into creating this new system of harmonisation based on collaborative cosmolocalism. If we do, we will be able to not only avert the impending environmental catastrophe, but also improve the quality of life of the whole of humanity.
ABOUT THE AUTHOR
Paddy Le Flufy has had a varied career. After studying mathematics at Cambridge University and qualifying as an accountant at KPMG, he spent years living in remote places. He has travelled with economic migrants, been taught to fish by rural Mozambicans, and lived with Hadza hunter-gatherers. He was taught by traditional wisdom-keepers in the Peruvian Amazon for a year, funded by the Royal Geographical Society. In 2015, Paddy paused his travels to focus on researching how we can redesign society to avert the impending environmental catastrophe. Building Tomorrow: Averting Environmental Crisis With a New Economic System is his first output from this period, and he is now publishing a series of essays on societal transformation. To keep updated about his latest publications, sign up to Paddy’s substack.
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