Ideal Model: New Architecture for Economic Self-Governance

Prepared for UN Open Working Group on SDG’s, OWG-5, 6 in Dec 2013 Owg 7,8 in Jan & Feb 2014, solving the special “steering problems” raised there as well with: 

 This is a serious effort to describe in natural language a well thought out way for a market economy to follow organic systems principles, and decouple from conquering the earth to reorient its development toward finding its secure place on earth.   It would be driven by our goal seeking social and economic communities developing new markets and partnerships for mutual benefit as markets always serve to steer the economy, but having much better information on what’s profitable, and recognizing the true cost of inaction.   As we find how to do it the economy would also  change from building itself up internally to making itself at home externally.  

By redirecting our resources from pressing ever harder on the limits of the earth, and instead aim for relieving the strain on ourselves and the earth, the economy would become relatively more profitable than before as it heals.   A great many of the key goals of sustainability (SDG’s) being stated again and again at the UN, would be achieved naturally this way.    Other critical goals would still take concerted planning and government action, but would become more practical to accomplish.

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Incentives to Sustainably Lower Our Global Footprint 

  • Holistic and accurate measures of  ESG costs of production and consumption
  • An Information System Everyone can understand, for a Self-managing World 
  • Turning the economic pursuit from “conquest” to “homemaking”
  • “Nature’s Capitalism”, first profiting from building things, then by caring for them

Steering Capitalism with a purpose: giving us a good home on Earth

A.            The idea

The natural way economies determine their futures is by “market choices”, as financial, business and consumer markets look for how to get what they want from each other and the earth. Then governments, the press, professions and open societies watch out for the common interest.   That’s what designs of the economy of our future, telling developers what new parts to add or old ones replace.

Those market choices often don’t reflect common interests just for our natural lack of information.  What was done around the world to deliver goods or services is not collected and passed along as they are paid for,   What’s becoming possible is like that, ways to identify future societal costs that business may be held responsible for in the future, practices like adding to global inequities or harming our economic future.

Comparing comprehensive sustainability balance sheets, for finding development proposals with financially and culturally acceptable risks and benefits. Global benefits/People centered, Homemaking

Just one new fact about money can release a great wealth of information on that.  It’s that the “hidden consequences” of using money we don’t immediately see have been scientifically shown to most often be close to “average”[1].  In information terms, that serves to “internalize all externalities”, opening the door to what has eluded us, a way to make sound decisions for the world as a whole.

It would let us build an information system making the choices responsible for impacts transparent for all to see.  For example, spending one dollar generally adds about 1 pound of CO2 to the atmosphere.  We might select the least cost engineering option for ending our addition of CO2 to the atmosphere as a standard measure, possibly bio-char, estimated to cost $.20 per pound of CO2.  That would be equal to an impressive “tax” on GDP, of $.20/$1, an indicator of how poorly the earth’s profits are being used.

People would then clearly see, for example, that as we build more and more for the future economy to take care of, a natural turning point approaches for investors and everyone else, of diminishing total returns.  So as growth becomes seen as a drain on future profits, the most profitable use of profits becomes caring for the environments creating the profits, not compounding our demands on them.


[1]Henshaw, J. 2011 Systems Energy Assessment. Sustainability MDPI. http://synapse9.com/SEA – People are “end users” of the consumption economy AND “end servers” of the production economy.  The “end producers” for any dollar of goods or services are SO wide spread one must first assume, every dollar is distributed as an average share of GDP and reflects the average impacts of the whole, good and bad.

D R A F T- 8 Dec 13  (some cut & paste not fully resolved)

B.            The working elements of the proposal

The working are the natural systems of the economy, the communities of people who actively search their environments for what’s profitable to them.   They’d be assisted by developments guided by the UN and technology community in organizing the world’s information system on economic choices, to display the real global impacts involved.   The type of information services needed would be different at each stage of developing SDG goals and implementing SDI solutions, roughly starting as the UN has already done, stirring the world to think about The World We Want.

Large complex design processes all have a similar “ladder of development phases”, as a series of expanding learning challenges, as any small design process.  Those are usually given as the: conceptual, schematic, development, specification and implementation design phases.  Each one is a bit like a “graduation” exercise from one kind of expanding thinking to the next.   Mature SDG’s ideas would emerge from small conceptual beginnings.  Their real meaning would appear only emerge as they develop and mature, in response to local and global needs, with everyone involved.

  • The big ideas period

Dreaming ->

  • Science & Finance collaborate

Setting Standards & Measures –>

  • Business plans are proposed

Project Proposals –>

  • Communities & Investors decide

Evaluating and Implementation

C.            The catch…

The catch is that it would only “work” if understood as a way to enhance what the economy and societies already do, by natural design, shaping our world we live in by the choices they make.   That’s what would guide the design for enhancing our information for making those choices, to help us understand the local and global consequences.

D.           The chain of information flow

1)      world’s communities create visionary conceptual designs responding to the problem we face

2)      scientists and economists learn to work together on common measures of

a)      financial profitability

b)      cultural compatibility

3)      Entrepreneurs and Policy makers and Regulators propose business models for development concepts

a)      responding to the visions of the world from #1

b)      showing short term and long term profitability using #1

4)      Financial investors, cultural communities and regulators would then evaluate them

a)      For economic viability

b)      For ESG viability

5)      Leading to the coordination of efforts by all involved in the implementation involved

The basic challenge is for people to begin thinking about how self-motivated learning systems work, looking for pathways to follow rather than deciding on “policies” as outcomes someone hopes someone else till accomplish.

E.            The basic theory of self-governance

          1. The societal value of investments
          2. Financial profitability to the investor,
          3. Environ Social and Governance  costs to society and
          4. cultural compatibility for the communities involved,
          5. The natural fiduciary duties of investors, when making choices for others
          6. To act in open and transparent ways
          7. To not be misleading in speech or action
          8. to use their profits in the interests of environments they are profiting from
          9. The wide recognition that the world has become structurally unmanageable in many ways, with uncontrolled change in large communities with conflicting interests, and
          10. Mankind facing the greatest and least understood threats to its future well-being ever, requiring the many networks of independent actors to find their own ways to assure we all keep our commitments to limit climate change and improve human well-being.

F.            The idea for a “new architecture” for world self-governance comes from

Given ideal choices, people wouldn’t take on bigger and more complex problems to solve when they already have more than they can handle.   That point in one’s affairs, when you choose not to take on bigger tasks, is a very common marker of “enough” for any kind of design or developing project.    Here it is also referred to as an essential economic “paradigm shift” for making the earth livable for our future.

It’s a shift from the economics of “growth” to “homemaking”.   There’s a clear common thread connecting the “wicked” swelling crises of our environment, world governance and finance, combined with the clear unsustainability of our built environment.   It’s that we don’t have another earth to move to, and we’re making this one unlivable.   So we need our focus on making the earth a good home, not on the thrill of expanding the complexity of our conquests and challenges.

The “Ideal Model” would be to just give our professional and civil society networks a way to connect, that gives them all much better information on 1) how our global systems are working, so everyone can better understand each other’s choices and the common interests, so 2) everyone can then find where their own special abilities can fit, for working together to make the earth a good place to live.

G.            The ideal

It would be ideal if the UN, mandated by the world governments, facilitated the creation of communication networks so everyone would get good information on their choices for making the earth sustainable.  Stakeholder communities would work together following global principles to create value by finding their own sustainability solutions, helped by “Information Dashboards” with coordinated scientific, economic, cultural and strategic screens, showing benefits and liabilities for all to see.   It would bring funding to all levels of sustainability, as the best source of information on which governments, individuals and institutions could base their investment policies and decisions.

That approach would “put the ball in the right court” and let the UN do more of what it does best, as host and facilitator for the stakeholders of the world solving their own problems.    Perhaps the world’s governments would give the UN that mandate, to facilitate stakeholder collaboration involving all of civil society.   For the SDG’s it favors 1) goals that fit local talents and problems 2) solutions that can be implemented efficiently in the self-interest of the participants, 3) coordinated with the needs of of society, 4) avoiding intractable wrangling between people with different ideas, and 5) as only possible when keeping the focus on everyone’s common interests.

SDG’s for transforming how we use the earth could start, as they have, with the UN leading a world dialog seeking “great global principles” to follow.   Regional “learning commons” for stakeholders would be assured access to solid information and be assisted in using it, as the nations of the world are assisted in following the communal societal process.   Formally organized stakeholder communities might only be organized by region, developing regional SDG’s within the global principles for local conditions.

Other learning commons would emerge “top-down” and “bottom-up” from today’s wide variety of knowledge sharing networks.   The networks of both formal and informal commons would have access to high quality global information resources, and so be in a position to call for prompt action when clear solutions are found, as publics that are both efficient and able in decision making, with little old style politics involved.

The real motivation seems to be in many places at once.   The bottom line, from every perspective, is still how extraordinarily costly it would be not to act and succeed.   What works in the end might not be this “ideal commons approach” but whatever works in the end will need to operate somewhat like it.

H.           The plan

Many pieces of the new kind of professional combined scientific, business and financial information are already beginning to come together.  As they compare notes how unsustainable it is to keep using wealth to multiply our uses of the earth, and multiply unmanageable liabilities too, will become self-evident.   That would lead to consensus on providing sufficient funding for investments in real sustainable development to keep the earth economically viable.

The more successful stakeholder commons would set the example and demonstrate how diverse stakeholder groups can focus on their common interests to work together solving big problems.   The other formal and informal learning commons would follow the leaders in finding collaboration with others having different ways of understanding the world is the solution not the problem.

How this new transparency of the earth would take lasting effect is through consumer, investor, financial and business market choices, reflecting the new quality of information on the true impacts of their choices, so the actual decision making at every scale would come from its grass roots.

 

II.    Brief Appendix of Technical Notes:

1.     Special Studies

In the appendix there are (or will be) brief discussions of some of the special issues expected to come up.   Design is *a learning process* particularly for something unusual like a “new architecture” for world governance.   It would rely heavily on using the emerging global information networks to facilitate communication and hold people to their commitments, so there would be lots and lots of special experiments.   Parts would be changing everywhere at once, finding their own way to fit, just as in a natural growth process.

They’d be master plans of various kinds and direct collaborations between leading players, like the UN and the finance community, and the sciences.   There would be lots of experiments with how IT can facilitate communication between different cultures and disciplines, with how people can engage in learning how nature works, as well as how the organized parts of our economies work and interact.  Everyone looking for their own best place to engage in the common task of finding a better way to live on earth would be experimenting too.

There would also be explorations of what this unprecedented change would change us.  A more honest way to relate to the earth might require finding a more honest way to relate to each other, for example.   It might rely on our learning real cross cultural communication on some higher level, like ecologies work with different species both working closely and quite separately.    Those explorations might include:

2.     The strategy

From a natural system design view, this approach alters the “push” and a “pull” balance for institutional designs.    You need both controls (pushes) with openings (pulls) when working with self-motivated people, and have the right balance.    Providing better information, and facilitating its exchange, aims at allowing self-interests to again make the economy more self-regulating than now, or ever before.

An SDG choice between two paradigms, pushes and pulls for societal decision making

1. Science
informs
-> Government imposes -> Laws and Regulation
2. Government supports -> Science
enables
-> Self-Organization

It would provide a way for the world economy to steer itself toward the kinds of farseeing objectives discussed in many sustainability communities these days.   Good examples are found in the recent report of the UN’s Independent Research Forum (IRF), Post2015 – Framing a new approach to SD[2]

3.     Global principles

The global SDG’s could be simple; defining minimum standards for human life, respect for nature and the places of the earth.   That could be paired with simple obligations to respond to unsustainable change in our natural, social and economic environments.

Global minimum standards for human life would include access to knowledge and equitable treatment, with standards of accountability, living sustainably and forming cultures of responsibility, for things such as having children with the intent to care for and teach them to live well too.

4.     Advantageous General Properties of the ideal model

          • it would be flexibly responsive to new and emerging issues
          • It uses the natural organization of human society as its main steering mechanism
          • it integrates environmental, social and economic dimensions
          • it is systemic by nature and enables mutual reinforcement of initiatives
          • it operates at multiple levels and scales, in awareness of interrelations and dependencies
          • it is based on multi-stakeholder dialogue, that is coordinated and participatory
          • it builds lasting capacity & resilience, responsive to the insight of its close observers
          • it would grow directly from prior SDGs and Agenda 21 items according to place
          • it would greatly aid the financial markets in finding new ways to invest

5.     A higher standard of public honesty

Nearly everyone agrees that good governance is essential, and sorely lacking.   Ideally freedom of speech is to allow people to express constructive ideas, not misleading ones.    When the standard of truth becomes “maximum deception”, as often seen in public debates as well in advertising and even in the courts, the greatest deception gets the highest reward.   Reward for that violates the principles of “speech” itself, leading to making deception our most prominent language.   Perhaps we should experiment with a higher standard.   Instead of “not dishonest” we might try “not misleading”, the test of which would only depend on the listener was misled, not whether the speaker lied.

6.     Learning across silos

We actually change our assumptions and the meanings of the words we use every time we change the group of people we are speaking with.  One part of the problem with global networking is needing to go back and forth between groups of people who have agreed to different meaning for their words we’ve never known about before.

Perhaps the most challenging common problem may not be between people with differing religious beliefs.   It may be with people who understand their words conceptually, in relation to other words, rules or theories, and people who understand the world experientially.   There’s some gender separation between them, with women spending more of their time with caring for things that are experienced rather than defined, and often understood non-verbally and men spend more time with things understood conceptually.   People who are better at crossing that divide, like women in business, may see their

7.     Keeping Commitments

I think it’s central to finding a “new architecture”  that would actually work, using a self-governing open network.    The critical issue is how to give the investment markets meaningful information on what is good for the earth.   It won’t be meaningful to them unless the indicators show them as  “being responsible for” the impacts, not just “embarrassed by” them.   “Being responsible” forces everyone to keep their commitments, and if that’s the case only the rare case needs to go to court.     Being responsible is also key to getting the science right, as everyone then wants to “get the numbers right”.

What I’ve proposed elsewhere as well is a way to expand business annual financial reporting requirements to include “ESG balance sheets”[3] (eco-balance) to make it clear what the financial liabilities for society are from how a business delivers its products or services, and that the business’s investors may be held responsible for.

It’s a kind of hidden scientific problem with enormous impacts itself.   The externalities have been measured by tracing them to the source, but ignoring what was going untraced.   My physics paper on correcting it is calledSystems Energy Assessment”.  The finding is that of the total energy use paid for to operate a business, quite often 80-90% won’t get counted.   The reason is economists were not in the habit of thinking that the service chains that businesses employ have any impacts…, and they actually turn out to be the great majority most of the time!    Quite something no!?

8.     An organization chart

The United Nations

Develops General Principles Facilitates Information flow and processes
Minimum standards of human welfare and accountability Standards for reaching lasting resolution to unsustainable trends Coordinating sources of  knowledge Facilitating stakeholder partnerships Monitoring
the process  and adherence

The Stakeholders

Institutional Communities
learn to speak in common languages to share their knowledge
 Natural Cultures and Communities
learn to speak to each other about their common interests
Financial CommunityBusiness CommunityNatural SciencesManagement Sciences

(among others)The Global commonsRegional CommonsNational CommonsSub-regional and Demographic Commons
(among others)

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The author of this proposal growing out of discussions in Commons Action for the UN (CAUN)[4] is Jessie Henshaw.  Jessie is a natural systems design scientist who since the 1970’s has used her physics research[5] on the natural successions of design in nature to studying local emergence of organization and its developmental processes in human and natural systems.

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