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FAIR_Money (Principles of Fiduciary Asset Investment Restraint)

A concept in development with the
r3-0.org Sustainable Finance Blueprint

The FAIR rules act as an overflow valve, to redirect excess accumulation of unearned income, used by investors to extract more, back to the pond instead, relieving pressure as if investors collectively showing self-restraint rules safe investment practice for the earth.

Similar to a UBI that provides a Universal Basic Income to every person, FAIR_Money sets a UBD, Universal Basic Distribution, a standard rate at which investors need to distribute their wealth.

Fig 1. Finance works by taking profits from the commons to use for taking more, escalating the financial drain on freely circulating funds. In times like these, the FAIR rules ask investors to spend a share accumulated profits on qualifying long term societal needs, an intervention at scale a bit like a world “Marshal Plan”, doing great good while sustaining the profitability and relieving the growing drain of finance on the producing economy. The rate of asset spending might start low and increase as needed to bring about balance.

[See also the Medium article on FAIR, “Call it a great act of Love“]

Date                 2020 – 5/25/, 6/30, 7/26

Title                 Principles of Fiduciary Asset Investment Restraint (FAIR), simple rules to restrain the compounding of unearned income to reverse the present worldwide continued overproduction of demands on nature and society, our great tragedy of the commons. Ownership comes with natural responsibilities.

Topic                Compound investment (adding profits to investments) is required to get any enterprise going, but as seen throughout nature is only what starts things, not what makes them sustainabnle. If overextended what it does is globally multiplies the power of the owners of the world over all others, creating the great array of world crises of neglect disrupting global society and nature we see today.

Asking investors to take responsibility for bringing growth to a climax peacefully, tempering their greed for the common good, appears quite necessary for long term peace and prosperity, even if it still seems quite impossible socially. It seems to conflict with the absolute rights of blind ownership. Now lots of owners are beginning to see the grand catastrophy their habits are causing, and that society’s rules should reflect how people would like to live without looming threats in every direction.

Pitch                Flatten the curve of growing environmental and cultural exploitation, to reach a thriving peaceful economic climax.

Image             

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Fig 2 The universal pattern of emerging systems that sustain their climax

Draft Simple Excel Model: FAIRtestModel.xlsx

Statement The world financial system has but one value, to use the earth and human societies to use for maximizing the growing concentration if financial wealth, without any primary concern for the resulting depletion of natural capitals or disruption of human societies. To secure the wealth of nature and humanity we must then have fair Fiduciary Asset Investment Restraints to prevent the rapid decline of whole system value.    

FAIR is an appealing, comprehensive, and eminently fair way to rebalance the compounding of profits with the long term needs of the rest of the earth and humanity. As part of everyone’s shared duty to serve common interests. That would include correcting the inevitable imbalance between steady earnings from work and exponentially growing earnings for investors who add investment profits to grow their investments. FAIR calls for gradually reducing, not eliminating that imbalance, toward new balance, to not stifle individual financial creativity but to limit its otherwise punishing demands on nature and society. Spending a fixed annual share of accumulated profits from investments in times of need, like today, guided by indicators of harmful societal and environmental economic externalities, would guide investors to value the gift of rich environments and societies.

A portion of business or individual investment assets accumulated from profits (the part that grows exponentially) would be annually spent on qualified impact investments for relieving the excess burdens of compound investment. It’s actually a strategy first discussed by JM Keynes in Chapter 16 iii & iv of his General Theory. I’ve interpreted it as an “overflow valve” to relieve unhealthy burdens on the anthropic earth system to make the macro-economic effect understandable, dialing back extractive investment to relieve the whole economy’s pressure on all our cultural and planetary bounds.

The level of relief from increasing demands on the system would be adjusted with on experience, for argument sake starting at 10% of accumulated profits a year. That would be adjusted to gradually stabilize the economy’s impacts on earth and society at a comfortable level, both for long term profit and to treat a living world with respect. In the end, finance would stabilize and generate steady profit for priority needs, as an ecology and creative cash-cow business. In Hardin’s Tragedy of the Commons, the equivalent would be for the rich farmer to see the error and use the excess cattle to relieve community suffering, such as using the surplus for periodic feasts to save the community and the commons, becoming a welcomed hero rather than the devil himself.

Need       Even ignoring the COVID pandemic, the world faces a considerable growing plague of plagues from centuries of growth putting excessive demands on societies and the environment. A sobering list of The Top 100 World Crises Growing with Growth illustrates the problem. While mainstream finance is starting to recognize the need to not just maximize profits at any cost, so far that has largely been only to factoring the risks to ever-growing profits, not harm to our future. Since maximizing the compounding of profits seems to be the real problem, a new way to do it doesn’t really solve the core problem. It also ignores the very numerous other global crises threatening our future, exposing the grand “tragedy of the commons” of global overinvestment for which we are responsible.

Is that partly a matter of the kind of investment we built civilization with? Of course. A tree can’t change its own trunk, roots, and branches though, only potentially reinforce some and shed others to halt destabilizing overgrowth. So we should expect a version of Fiduciary Duty for investors and businesses to make decisions to the best of their ability in both the near and distant common interests. That is a way for responsible investing to become universal without expecting investors and businesses making their decisions to understand all the up and downstream impacts on others or the system’s pressures on its whole range of planetary boundaries. In a way both forgiving and frustrating, the research (Henshaw 2011 Systems Energy Assessment) strongly suggests that causation for whole system impacts is so widely distributed it’s generally necessary to consider them as equally distributed per share of the economy, like today’s nominal world CO2 Emissions of 0.26 kg (0.6 lb) per $ GDP PPP, the global average.

The main determinant of success for FAIR spending of accumulated profits is not just the relief of systemic pressures on the global commons it would bring. What matters matter as much is whether the money is well spent, and delivers “good works” of long term value. The expectation is that people with accumulated profits to distribute would have an “eye for value” and see what the world needs to be successful, having demonstrated a comparable “eye for value” to make themselves successful. Spending to serve the common interest the same kind of creative investment problem only looked at in a new way. FAIR spending is an investment decision for using the profits of the system as a whole, that will be returned with profits of other kinds you couldn’t buy, the same way a family benefits from educating its children. That is profits well spent. In the same way, FAIR spending to teach both children and adults about the patterns of growth in nature and in their lives might be returned manyfold. It’s a question of “feeding” the world something nourishing, not “controlling” it.

Because the FAIR spending of assets is something of a new investment field it would need guidance and support from economic research and modeling along with social networking of practice communities, as a guide to creating lasting value. Initially, it would be a voluntary adherence to a community principle, and then later formalized to be more widely applied. With new proposals for expansive strategies the devil is generally in the details so serious economic modeling and rulemaking study to explore options, the scientific study of the coupling of growth and its planetary impacts, and reliable sponsorship and teamwork to start building the social movement are all critical. The hope is that the principles are practical and clear enough that they could spread naturally and become socially expected. Given that even the idea that growth is responsible for our problems continually racing out ahead of solutions there would need to be a global IPCC-like scientific network focused on systemic research, perhaps called the IFIC (International Fiduciary Investment Council), to guide national organizations on rating impact investments for the commons. Someone will need to attempt to “qualify” the likely impacts of different kinds of for-profit and non-profit grants and investments.  That coupled with each investor’s eye for value is what would be relied on to steer the economy through its many present crises, including COVID, to a thriving and lasting climax.

That said, the first conference presentation of the FAIR principles is expected to be Sept 9 2020, so there is much to learn about how it will be best received. If it is well received, a globally circulated statement of principles for endorsement and a network of people experimentally learning how to follow it might follow. Real work would begin with either a spontaneous or sponsored team forming.

Challenge: This proposed “human duty” (to go along with our “human rights”) for investors to devote a share of their unearned assets to serving the common interest seems simple enough to define and discuss in principle. What’s harder to define is how much time we have to avoid the next wave of crises as unimaginable to us now as the present ones were before. We should “Build Back Better,” and with an eye to economic, planetary, and environmental justice. Restoring the economy to maximize its long term growth is the most dangerous course of all, inviting a crippling systemic response like the delayed responses to COVID-19 caused many nations. For restarting the growth economy already severely weakened you might expect the kind of failure at the limit shown by the light blue upper curve (Fig 3). That choice amounts to no response in the end and leads to system failure. We seem already well beyond the sustainable limit and only have a last-chance response to turn toward the sustainable limit, the purple curve.

Once the world realizes that businesses and investors do really have a natural duty to steer the world economy in the common interest we’ll find more ways to do it. The physics of responding to natural limits (Fig 3) shows that early responses to natural growth limits don’t significantly delay the approach to the limit. It is mainly delayed responses you need to worry about. FAIR principles are likely to be the only option for making that transition without major disruption.

Fig 3, The high risk of delay in responding to exponential threats. From Models Learning Change (Henshaw 2010)

Origin of the FAIR Concept: A series of tweets 05/24/20 … and historically, from the work of JM Keynes, 1935 General Theory, Chapter on Sundry Observations on the Nature of Capital” Chapter – 16 III & IV, describing why the natural financial climax of the economy requires financial savings to climax to prevent the very worst effects of capitalism, implying that the wealthy need to learn to spend rather than save their profits to make the system as a whole sustainably profitable.

The Ecological Economics of Growth – When to turn

This is a preview of my new submission to Ecological Economics
Please have a look at and comment on the review copy FYI
Some of the figures and captions are below

Jessie Henshaw sy@synapse9.com

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Abstract: Organized human and natural systems generally develop by an observable process of growth, with a beginning, middle, and end. Examples range from the growth of organisms, cultures, and ecologies to that of businesses, social movements, weather systems, even personal and social relationships, and many more. Close observation reveals organizational growth to be a progressive building process of self-organization. Most recognizable are its recurring three shifts in direction, each followed by a development period. That six-stage pattern can guide the study of a growth system’s internal and external designs, recognizable as a series of milestones along an “S” curve assembly line. That common model allows useful comparison of all kinds of natural and human-designed growth systems, using a diagnostic as opposed to a deterministic research method, keeping what “ought to be” in close association with “what is.” Discussed are the historical roots of the field, a set of pattern recognition tools, three brief pedagogical case studies, and an eco-economy view of our global growth and its natural time to turn.

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ow living systems develop their complex organizational designs by rapidly evolving self-guided growth processes has fascinated scientific observers for millennia. Natural growth also still resists scientific definition though. Perhaps the delay comes from scientists asking the wrong questions, looking for deterministic rules for nature’s creative processes, rather than generative patterns of natural design.

Here we start from the broadest patterns, like how growth processes are evident throughout nature, even in every kind of work people do. Growth generally displays a three-part development cycle of beginning, middle, and end, but like a tree expands on opportunistic rather than deterministic pathways. Our problem with understanding it, then, might come from having so singularly studied nature for the deterministic patterns we can rely on, pushing aside the study of nature’s indeterminate building processes.

Another commonality is that whether it’s the growth of a mammal, a business, or a snowflake, the ultimate end is a state of complex perfection of design. On close inspection, that highly organized end-state seems to come from having alternating periods of diverging then converging (positive and negative) development feedback, first getting growth to start-up to then turn to perfect the design as growth finishes-up, as if generating a framework then filling it in.

fig 1 – A Snowflake and its Central Kernel: Look at the layers of its kernel that built up around central dot. The first hexagonally differentiated shape you can easily see is still quite simple, but the next layers become quite complex. The six spines that emerge develop nearly identical filigree as if originating from an organizationally “entangled” first crystal core.
fig 4 – Three stages and three turning points of natural growth.
1) the seed event, Image, and following start-up growth period (red) – Individuation
2) the turn forward event, Image, and finish-up growth period (blue) – Maturation
3) the arrival event, Image, and Climax life period (green) – Fulfillment
fig 5 – Economic systems need to use energy to harvest more energy. The ratio is called EROI, a ratio of returns to costs and has to stay greater than one for the system not to shrink or collapse. Usually, a new system’s first energy source, EROI-1, is consumed as the system develops a more lasting resource, EROI-2. Succession from one resource to another can also be repeated (not shown), like climbing a ladder, or it may fail.
fig 9 – In a finance-driven eco-economy, choices by businesses and investors determine the directions of future development, predominantly based on what will be most profitable in the short term, whether by serving of quietly manipulating the markets.

Every economy is also an ecology, both a self-organizing system of mutual benefits which also relies on having positive net resource flows; both beneficial design and net material profits. Together these two faces of natural systems make a complex whole one can study from many points of view, but rely critically on all its parts.

Networks of mutual benefits are mostly composed of organizational, design, and qualitative relations, like that a cup holds water, or that a fish swims, or whether someone knows how to work with you, or whether a shop serves its local culture. Those aspects of design, organization, and qualities have no numerical definition but create the systems of mutual relations on which the designs of life rely, Some may be products of nature and others of fine arts and crafts: a fine meal, a delightful garment, or a meaningful film as inherent benefits of life.

Those benefits of life are also needed for the systems that deliver the physical resource flows that market price and investment returns determine the investment in, letting one calculate the budgets by which our world economy is managed. So to understand any particular living system, one needs a clear-headed understanding of how those two sides work together.

JLH

Growth Constant Fingerprints of Economically Driven Climate Change

A tour of the evidence, from the 1780 origin of the greenhouse effect through its the major post-WWII acceleration

A preprint of a pending journal article of the same name is here. It’s a fairly short but thorough study, a data story, using the climate science we all know, to trace how humans have long organized our use of the earth to maximize the growth rate of our economic intervention in the climate. That exposes the fatal flaw of nearly all promoted solutions, the boundless plan for doubling our total energy use about every 33 years. Every kind of energy use for replacing fossil fuels would still then need to repeatedly double its disruption of earth systems, overshooting all planetary limits. That was actually the problem with fossil fuels, that if we had stabilized our energy use by about 1960 we would not have exceeded the earth’s long term buffering capacity and there would have been no climate crisis.

In the following figure you can see it quite directly from the long periods of constant compound growth in atmospheric CO2, before WWII and after. The ancient CO2 data comes from from ice-core air samples, until 1958, and the modern data from mountain top air sampling after that. WWII is seen as halting the accumulation of CO2, and the period after when we globally reorganized the economy using advanced science, technology, institutional and government cooperation to maximize the economy’s exponential rate of expansion.

What this implies is that climate change is not really caused by CO2.

Rather the climate crisis is being driven by our constant haste to reorganize the economy again and again to expand its conversion of resources into dollars as fast as possible. That we are not changing that organizational design of the economy would then seem to be the reason we are unsuccessful in getting agreement on how to reduce the quantitative reductions in CO2.

What is needed is to include in the economy’s equation for profits the value of the material, ecological, environmental, and cultural resources of the earth. The trick is to start with what you can measure, make the units “shares of the total,” and work to measure more. That would lead to a fuzzy but holistic and complete map of where we are really going economically. For reference, a model for that was proposed for inclusion in the UN’s SDGs in 2014, called “the World SDG.”

JLH

New Book Notice!

Guiding Patterns
of Naturally Occurring Design

A new window on Pattern Languages
A new window on the working design patterns of nature.

1st Release Oct 1
from Amazon and MoreBooks

Blurb: The leading sciences offer a pattern language for nature in the form of interrelated mathematical equations. Scientifically undefined natural language remains needed for referring to and discussing the rich self-defined patterns of organization found in nature and discovering their roles in our lives.  Those include general multi-scale patterns of ‘cellular organization,’ ‘mediums,’ ‘homes,’ ‘growth,’ and ‘cultures,’ and are among the guiding patterns of naturally occurring design this pair of revised 2015 papers explore. 

The author’s effort is to bring together her long studied natural science pattern language of emergent organizational growth and climax transformations with Christopher Alexander’s pattern language of holistic architectural design, to be a resource for a combined design-science point of view.  The discussion does not rely on a detailed study of either precedent.  It relies instead on the reader’s own experience with and ability to recognize naturally occurring patterns of design.   The text is arranged as a series of short essays, combining introductory and advanced issues, that one may read through or pick up to read and reread a piece at a time.

Vita: – BS in physics – St. Lawrence Univ., post-graduate math courses – Stony Brook & Columbia, architecture & landscape design MFA – Univ. of PA. A mix of rich experience and field study of energetic patterns of organization in emergent microclimate & other growth systems, showing how after growth the vitality of systems is sustained to make life so lively.

Press contact – Rose@synapse9.com
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…. One of the more curious things about nature is how obvious it is that every natural design develops by its own individual growth process, building up from an initial design pattern and emerging as a whole as it runs its course. That applies to a storm, a volcanic eruption, a lightning strike. It also applies to smaller scale life systems, such as for personal relationships or conversations, human or other plant or animal lives, civilizations, ecologies, and of course businesses and economies. The living systems for which growth is a holistic building process, preparing them for long lives after growth, all start by organizing and expanding faster and faster at first, and then shift gears to develop slower and slower, refining and coordinating their designs to climax when ready to begin their long lives ahead. It’s a switch from scaling up the starting patterns to then take a sustaining role their environment.

… If that understanding, of how to succeed in life after growth, were to spread around the world, it could dramatically change our now doubtful future. Today our chances are compromised by our global inability to stop our ever growing our consumption, disruption, and confusion of life on earth, not knowing how to smoothly switch from the red to the blue curve, to get ready for a long life.

The natural arc of successful life stories, 1) building, 2) refining, 3) life.
the universal pattern of: Innovation – Refinement – Enjoyment

How ‘Natural Growth’ can save the world.

Without thinking we use natural growth for many common tasks already, simply by starting things to finishing them with a minimum of waste. In each case you “save the world” from needless excess consumptive growth in getting things started, wasting your efforts and the earth’s other natural and human resources.

Every kind of life, and kind of effort too, begins with building up a system of demands for available resources,
to further expand on what built up before.

That expansion by building on what was built is the universal start-up process of nature, also sometimes called “extractive growth.” You see it very clearly in every kind of start-up, of a new friendship, a business, a career, a seedling or a life from a fertilized egg. The all start with steps that build up from what was built before. The build up that making breakfast starts with, for example, begins with the idea of food that makes you hungry, that then gets you to reach into the cupboard, and refrigerator for supplies, and the drawer or shelf for utensils, building a customized system and supplies for making your meal.

Nature’s integral; chaining start-up growth & refinement growth in preparing for a good life.

That process could go wrong, the way mankind’s way of using technology to multiply our making of things on earth exploded, and we now don’t seem to know how to stop. In making breakfast it might similarly go wrong if you got carried away taking out provisions. You might start with a small idea of what you need from the fridge, and add to that bigger ideas as you explore what there is to take out, repeating it to exhaustion perhaps, till the fridge and cupboards, pantry, and cellar, are emptied and all the family’s provisions in reach are mounded on the kitchen and dining-area floor, as you get hungrier and hungrier and your eyes expand way beyond the limit of your stomach, putting nearly all the family’s provisions to waste. The particular outcome is rare, but it is very true that once you get going with growing a process of growing, the process itself can become addictive. Today we clearly see in how we are wasting the earth in somewhat the same way, and love to be moved to tears and laughter by watching Disney’s Fantasia when Mickey Mouse learns turn his chores over to his broom with a magic spell, which gets tragically carried away carrying water.

starting things to finish them with a minimum of waste

Of course, we don’t usually behave that way at all, but at some point near the beginning of taking out provisions to use, switch to thinking about how to get to end of having a satisfying meal. We almost never have the exact end in mind either, but perhaps initially take out eggs and cheese to perhaps put them back and take out bread for toast and milk for cereal if you’re in a hurry. As you put things together you also do various smaller and smaller things you discover to do, to perfect the end result while also arranging the timing to get all the parts to come together at once, with excess provisions put away, all part of getting ready to sit down, perhaps with together with others in the family.

In doing that, rather than letting the initial provisioning of breakfast get carried away, we have “USED NATURAL GROWTH TO SAVE THE WORLD,” most often without really realizing what an enormous contribution to the community and your family was done by simply not maximizing the waste of all available provisions in the process of making breakfast. Of course, it’s also important to do and to watch for in other circumstances, a natural duty for living in a commons.

It seems like a little thing but is actually a very big thing,
that we casually do for ourselves and others
many times every day

that we casually do for ourselves and others many times every day

People are plenty smart enough to see that this “RULE OF NATURAL GROWTH” (also called “nature’s integral“), to finish up what you’ve started up doing before you make a mess for yourself and others, should also apply to civilization as a whole, and at every scale in-between. People do see that ALL development creates disaster risks, for example, and that boundless development would always creates an all-consuming disaster. Our minds still “get in the way” somehow, transfixed by fantasies it seems, and we just trundle along on the clear path to that all consuming disaster not knowing what else to do.

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How this would save the world is really something quite plausible. We already see in progress a great “change of heart” by businesses and investors around the world to join in on averting the clearly disastrous future now directly ahead of us. If that initiates a wave of common sense, with business and investors choosing to follow the wave of the “impact investing” community, averting the looming crises in the most direct way possible, and with much less government involvement. Following that wave of necessity to avert disaster would also turn our world onto the natural growth path for perfecting how we use the earth. You could ask yourself and others to join the wave! The choices of higher purposes include the Green Climate Fund, supporting various SDG goals. The real, macro-economic effect is to distribute wealth in the service of higher purposes while directing profits away from concentrating wealth and raising the economy’s ever growing demands on nature and humanity.

Various other journal entries here discuss more about “what to do”, there’s a whole category with dozens of good little articles and discussions of it. Still, the best way to learn about it is for yourself, from watching how all of life revolves around the variations in nature’s integral, seeing for yourself how ‘start-up’ processes yield to ‘end-up’ processes in taking things to the natural climax of releasing them for their useful life.

SDG8 side event: Recoupling

2019 UN HLPF side event scheduled Tuesday July 10 2019 1:15 to 2:45 at the UN Millennium Hilton, 3min statement. Further links to natural growth strategy below. – Jessie Henshaw

Thank you for coming.  
Find more of my statement and links at www.synapse9.com/signals

My name is Jessie Henshaw.  I’m a natural systems scientist who developed a fascination with how living systems transform as they develop, such as how our economy once changed by small accumulating steps that got bigger and bigger.  Those ever-increasing rates and kinds of change are the key reason there are natural limits to growth.  Growth is itself an organizational process that pushes economies and their organizations in the direction of increasingly disruptive limits.  

For example, walking down the street by bigger and bigger steps, making more and more progress at first and would lead to losing control, and a painful fall.   Similarly, in the last 250 years, the world economy doubled its annual expansion about 12 times, so our annual expansions today are about the size of the entire world economy of 1920, truly enormous.  

In part, we experience that as universal pressure, for increased economic performance from all people, all organizations, all societies, and of course, all of nature too.  We are also feel surrounded by systems failing to keep up, and in crisis, crying for help, that we find hard to deliver.  So today the true location of the most “vulnerable people” and most “vulnerable regions,” struggling with unmanageable demands, is now truly the whole earth. (to cut for time)

At first, the economy’s growing demands were not overwhelming, and seemed very rewarding for large sectors, having a negligible impact on the earth as a whole too.  Continually multiplying them changed all that.  Now they disrupt every environment and are breaking through all silos of discussion.  Now we see there was no “economic decoupling,” but just detachment from our responsibility.  Now we look around and see an enormous diversity of crises that were not supposed to materialize, and need to decide what to do.  

We need an “economic recoupling” with our responsibilities for the earth and humankind.   An easy first step is to think of your responsibility for steering the economy as equal to your share of the economy.  It may seem small, but in a global economy where it takes the whole world to deliver every product or service, we are similarly responsible for a share of every harm caused too.  

Nature’s integral: joining the multiplication of parts (red) with the refinement of their designs and uses (blue) to prepare for LIFE (green) as the reward in the end

The path ahead I see, for transforming the economy is to change from compound growth to natural growth,  climaxing growth at a peak of resilience and vitality, ready for a secure, enduring and creative life on earth.

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The Economic Path to Natural Growth

PDF slides: https://synapse9.com/_SDinteg/PathToNatGrowth.pdf
2019 Jul 2 Talk 30 min: https://www.youtube.com/watch?v=w5Cz7vc0-c4

Finance serving Life

“Finance Serving Life” introduces an updated version of the transformation journey for global capitalism envisioned by J.M. Keynes. He first described it with a biblical fable he called “The widows cruse” (or “Widow’s cup”) based on the 1 Kings 17 story of Elijah asking for food from a poor widow with scarcely any, just a last bowl of flour and flask of oil. To relieve the poor widow of doubt Elijah tells her that if she shares her scarce provisions it will provide generously for both of them, becoming inexhaustible as long as she is in need.

Keynes’ use of the fable was meant illustrate to the wealthy that if growth ever became unprofitable, they could sustain a healthy economy by spending rather than compounding their profits, and have their profits forever be return to them. It illustrates a true natural economic principle of sustainability, that at natural limits to growth spending the profits from investments will become necessary to keep them profitable. That principle is also observed in living systems that repurpose their surpluses at their limits to growth, from being used for multiplying their parts to perfecting their uses and designs in order to thrive at maturity.

Today we can observe that using profits to continue to multiply the parts and demands of the economy on the earth and humanity have become excessive, in total effect impoverishing rather than enriching the both the human and natural world. In principle, though also depending on how it is done, relieving nature and humanity of escalating demands for increased productivity by wisely spending, rather than reinvesting profits would assure that the same level of profits would become everlasting.

Philanthropy and sustainability are among many such good purposes that those with a “good eye for value” might choose at a time such as the present when compounding profits to multiply the parts and scale of the world economy has become increasingly unsustainable. In macro-economic terms, spending the profits of the economy as it approaches the natural limits of healthy development relieves the natural world from endlessly increasing extractive depletion and disruption, while repurposing the use of profits for perfecting the economy’s systems and their relationships with the natural world, potentially bringing endless vitality to the whole.

One of the fine points observers often miss is that a non-growing world economy, using its profits for perfecting its designs for thriving and caring for the planet, would not become a stagnant “cash-cow.” Like a natural ecosystem it could be a thriving and stable system for continual self-reinvention, maintaining as much creative change, i.e. “creative destruction,” as is comfortable. Maintaining that balance of healthy creativity, avoiding both rapacious growth and stagnation, is then the steering job of the transformed economic system.

People are such wonderful designers of systems they put their minds to, and life offers so very many wonderful examples of successful transitions of this kind, from compound extractive growth to long lived creative stability, it is hoped that now that we are faced with the challenge, we could put our minds to it and figure it out.

The current slide set for presenting the concept more fully as a talk or webinar has the same name “Finance serving Life.”

jlh

Only Healthy Cultures make Healthy Economies

Announcing the publication of
6/28/18

Culture, Finance-for-Development & tPPPs

Jessie Henshaw*

A less technical synopsis,
7/12/18

I’ve been observing the UN SDGs as a natural systems scientist since 2013 when I saw with some surprise that the one topic both Country delegates and Civil Society groups could agree on was the wording of the ideals for global development.  Even when the Co-Chairs, Ambassadors Korosi, and Kamu, began persistently asking for the discussion to turn to means and methods it never did.  Ideals are wonderful, but the strains the SDGs are responding to are still growing, as the global disruption of human cultures by the growing intrusions of the economies of the world powers continues.  That’s a problem not yet to be studied and discussed.  Why?  Partly to be “diplomatic” and partly not having a model for human cultures as living social organisms that carry all our shared ways of knowing living.   Still we need a way to discuss the rapidly growing strains on human and ecological cultures caused by accelerating economic growth, a global cultural sickness.

As growth presses the limits of the earth and challenges the world to ever faster rates of change, the damage to nature and human society is more and more lasting.   That’s a conclusion you can reach from many directions I think.  The communities the SDGs aim to help seem mainly deeply rooted old cultures that are now “failing to thrive.”  That is a living systems problem, not a numbers problem, as the SDGs were designed to solve.  Failing to thrive is more like a “lack of meaning in life” dilemma, requiring a different approach.  It’s also a symptom that one can use to map the problem worldwide and begin to look at its real dimensions.

Our accumulated ways of knowing and living  are stored only in our cultures

Failure to thrive seems to hit both indigenous cultures worldwide and communities within economies where “creative destruction” is leaving lasting scars, like rural flight or outsourcing that hollows out a region.  One example is the deeply alienated culture giving support to Donald Trump in the US, distressed by the world changing so much around them.  There are also non-thriving local cultures in North, Central, and South Africa, as well as in the Middle East and North, Central, Southern and Eastern Asia, as well as in Oceana, Australia, North and South America.  It’s not “the same old thing,” but a truly accelerating global plight, seeming to be of all the cultures that didn’t welcome or were disrupted by the intrusive growth of the world powers.

Human cultures are truly the crown jewels of humanity, though, where most of our gifts come from and are on display.  They are the unique individual species of the human ecology.  If you think about it, there is no other place on earth for the safekeeping of all our ancient accumulated ways of knowing and living. Each culture either crafts its separate way of knowing and living or branches off from another.   They are our most important gift, evidently now absorbing a great deal of abuse.

With each culture being its own “knowledge system” it keeps people from making sense of any other culture, or even our own.   If you trace the evidence, it does check out.  We get the large part of our ways of understanding things during early childhood, by what you might call ‘osmosis’.  Some say it’s “too close for us to see,” or that our mental way of seeing is functionally like a camera and its lens, that are never visible in the pictures they take.  Cultures also have a deceptive “cellular design.”  Their ways of knowing and living are internally shared, and not experienced from the outside.   Even with extended immersion, an outsider does not develop a native feeling for another culture’s roots.

The great challenge we face today is that growth is an ever faster process of expansion and change, *doubling* its demands on the earth and humanity every 20-30 years.   That radical rate of increasing demands is what eventually overwhelms the adaptability and resilience of people and the earth.  Living things are being pushed to keep mechanically doubling numerical returns for culture-blind investors, as if the earth was unoccupied.

That’s how the English occupied North America, a hundred years after the first settlements rapid expansion began with importing slave labor then a wave of settlers swept across the rest of the continent, as if it were unoccupied.  Elsewhere the economic powers built systems for globally harvesting resources, placing overseers where needed to manage their access, as if there was no one else there.  Today it continues with how global capitalism still relates to the world, measuring its success in rates of accelerating expansion alone, as if no one is here.  What’s most surprising perhaps, is how very effective our cultural blinders are in hiding our blindness to our own and other cultures from us.  That is, hidden until you have an indicator like the glaring disruptiveness of ever more sudden change.

So what would relieve our fast growing societal distress?    There’s a new business model expressly for responding to it, to use biomimicry for how nature builds thriving ecologies.   If interested there’s a longer discussion article on how healthy cultures are the foundations of healthy economies and the business model for nourishing our cultures, that I refer to as “True Public-Private Partnerships” (tPPPs) discussed more in the essay  Culture, Financing for Development and tPPPs.

The new business model begins like any business, organism, or culture does, with a period of innovating and vigorous growth, making profits to expand its systems.  When the environment responds with increasing resistance or stiffening competition, the new strategy is to choose when and how to switch from maximizing profits for growth to maximizing long-term profitability to pay it forward.  That’s done by refining systems to operate in smooth harmony with each other and their world.  It’s a more gradual process but would produce more integrated development and be more profitable in the end, to combine human ingenuity and natural design.

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Do comment if this gives you questions or ideas!

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[*] Jessie Henshaw consults as HDS natural systems design science, sy@synapse9.com, offering insight into nature’s processes of negotiating change.  She uses natural systems thinking strategies (NST) with “action research” (AR) and architectural “pattern language” (PL) methods of collaborative developmental design.  The start is from recognizing that organizational processes in nature follow a familiar arc, beginning with bursts of innovation, and then refinement, leading to a final release (IRR).  That is not unlike how we all do home or office projects, in stages of immature then maturing growth then release, also seen in reproduction.  The system produced is first “framed out” with innovations then “filled in” with refinements and “delivered” as the release when ready.  Her current related research article is on how our Systems Thinking co-evolvolves with our Systems Making.

 

JLH

Evidence of Decoupling Still Zero.

The Growing Effort to Decouple GDP from Energy use and CO2,
is having no apparent effect,
raising serious questions about the nature of our plan.

The graph below (Figure 1) shows the 46-year record of world GDP PPP, Energy, and CO2, during which their growth rates have been in constant proportion to each other, called their “coupling.” The things to read are 1) the lack of accumulative departure from the steady trends, and 2) how closely the exponential trend lines (dotted) follow the data.

It shows that the long trend still holds despite both big efforts and bigger promises that accelerating growth using more efficient processes would separate the expanding economy from its impacts.  Focusing so much on the “positive” completely disguised the big picture, though, that in 46 years there has been no accumulative effect at all.  So there’s a lot to explain, yes, but the graphs below show persistent regular behaviors of the economy as a whole resilient system, a problem not yet faced at all.

Figure 1. Coupled Growth Trends of World GDP, Energy & CO2, showing how the three move together at proportional growth rates, as parts of a whole system.

That energy use and CO2 emissions are now still growing at the same rate as 40 years ago is strong evidence that none of the sustainability measures such as exceptional efficiency gains said to decouple the economy from its impacts, have had any effect at all.

The irregularly fluctuating curves below (Figure 2) show the annual rates of coupling if world Energy and CO2 growth rates to World GDP (PPP).  The scale at the left shows their locally averaged growth rates as a fraction of the locally averaged GDP growth rates (to somewhat smooth the curves) going below zero once.  The important thing is to notice is that the fluctuations vary around nearly horizontal trendlines.

It’s as if the economy is guided by an “invisible hand” keeping the fluctuations symmetric to the near constant trend.  It says the fluctuations have been adding up to no effect.  The likely cause of this is how a competitive economy naturally works.  Technology and resources are supposed to be treated as being fungible assets, to be constantly reallocated to maximize profits.  In the data, that functional coupling between the physical and financial systems of the economy is shown working rather smoothly, replacing less with more profitable assets to maximize the growth of profits for the whole.  That stable coupling of managed assets to growth is then an apparent natural emergent property of the system as a whole, as a partnership between human cultures and the financial world’s effort to maximize growing profits.

Figure 2. Regular fluctuations of Energy and CO2 coupling with GDP, have repeatedly been claimed to be evidence of rapid decoupling… ignoring how very regularly the periods of apparent decline were followed promptly by reversals, as if irregular waves of water seeking the average level. 

 How the world community came to say that “sustainable development” would reverse this stable natural relationship between the economy and its resource uses is described in more detail in April 2014 in The Decoupling Puzzle. Small fluctuations do keep causing excitement for both devoted climate deniers and sustainability advocates, though, each picking out brief trends seeming to affirm their hopes, like the five periods of apparent rapid decline in CO2 to GDP coupling shown here.  The real evidence is that the local fluctuations never seem to result in a change in the direction of the whole, like ripples on a pond that always level out.  The latest dip in the CO2 coupling trend has been claimed as a sign of turning the corner by the IEA, clearly unaware of the consistent pattern of that metric repeatedly fluctuating around a near-zero trend.

Added perspective on the global data is gained by plotting the ratio of GDP to Economic Energy energy, the amount of wealth produced with a unit of energy.  We call that variable “Economic Energy Efficiency,” the amount of economic wealth generated per unit of energy.  Having its growth rate = 1/3 the GDP rate implying that improving efficiency contributes 1/3 of the value of energy to the world economy, growing Energy use contributing 2/3 if the value.  That ratio demonstrates a general case of Jevons famous observation that in a growth economy efficiency results in growing rather than declining resource use and impacts.  Any way one reasons it, what is crystal clear is that in the last 46 years strenuous effort to use efficiency for sustainability have had the opposite of the intended effect, recreating the original problem rather than solving it.

Figure 3 The share of GDP growth contributed by Economic Energy Efficiency proves Jevons principle that in a growth economy efficiency multiplies energy use and all its accumulative earth impacts.


So we need to be suspicious of the world policy to maximize growth at any cost.  The costs are rapidly swelling not shrinking.  The other coupled impacts of growth also causing how people live being forced to change ever faster creating major disruptions and dissension all over the world is one of the biggest, though even the NGOs are very slow in recognizing.  In nature, growth is how all kinds of natural systems begin, but those we admire for their perfection turn to refining their designs before they climax rather than, driving their growth to the point of being torn apart of being exhausted.

That’s the trick.  Maximizing growth might seem logical as a way for societies to keep up with social distress and debts, but now it’s accelerating them.  So now we need to balance the attraction of short-term profits and connect them all the unbalanced disruptive changes that now surround us.  We talk lightly about replacing people with robots, for example, overlooking that the robots only work for the banks.  That’ll make people and governments ever more indebted and incapable of responding to climate change, for one problem.  And that chain of consequences goes on and on, that is as long as we keep ignoring how natural growth systems that avoid the problem work.  More disruption is not the solution, only moderation.

There’s an alternative business model that could serve as a general design for growth without disruption, one that switches to paying the profits forward once any debts have been paid back.  Once understood, that is what would achieve truly integrated, thriving and self-limiting development, as biomimicry of ecosystem designs.  It is discussed in more detail in the article linked from my next post, Culture, Finance-for-Development, and tPPPs.

Use biomimicry for how nature uses growth to build thriving and enduring systems.

It would be a way for businesses large or small to begin to experiment with how nature succeeds in creating beautiful, thriving, and purposeful systems.  It’s a fairly simple formula.  It’s also a practice we all know well for how to successfully relate to other people and how to successfully complete business or home projects.  It starts with building up innovations to then select what to refine for making the result resilient and purposeful in its environment.  If we approached every new relation or project by piling on new experiments with no turn toward refining something to last in the end, all the effort would go to waste in the end.

To start you study the similarity between nature’s way of building things to perfection and how we do our own home or office projects! They all take place in “three acts.” The first act is for “innovating, the second for “refining, and the third act the “release” of the finished product into its waiting environment (IRR).  You see the same three acts in the birth cycle, and in the start-up of new businesses too, as well as the formation of new cultures and most every other kind of individual development.  The trick is really to pay attention to the inspiration that starts it off, as something to fulfill.  That lets you anticipate and move smoothly between the stages of emerging development, first adding up more innovations, then refining the ones worth keeping to the end.  It’s what comes most naturally when we can see the whole effect.

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When you can see the whole it’s easy to recognize the point when adding more innovations begins to work against getting something finished, called a “point of diminishing marginal returns.” Of course on a home or office project what tells you it’s time to shift to finishing what you started is just sensing what can you finish while you have time and resources.  For anything measurable, like wealth, the point of diminishing marginal returns is when it becomes more profitable to put efforts into getting things to market rather than try more experiments.  To apply it to the world all you do is ask: “What is our real plan here?” and look around for how to perfect what we started, and at the right time stop taking on more and more that we probably won’t be able to finish.  It’s a matter of shifting to pursuing achievable goals rather than hanging on to thinking ever bigger with no end in sight.  Reaching for the right goal doesn’t necessarily make the work easy, of course, particularly for big personal, community or business projects.  It just makes the work a lot better, and the end something fulfilling and rewarding.

I discuss that as a way to measure truly lasting success for the UN’s 2030 Agenda and its Sustainable Development Goals, instead of just “more, faster” the ways the UN’s goals are like the goals of business-as-usual, discussed in more detail in Culture, Finance-for-Development and PPPs.

JLH


Analysis Notes:

  • The global GDP PPP curves show IEA data from 1971 to 2008 spliced to overlapping World Bank Data from 1990 to 2016.  The curves for global Energy are from BP statistics, and the Global CO2 curves show data from WRI.
  • The Energy and CO2 curves were each scaled to the GDP curves in proportion to their average growth rates for a graphically clear and honest comparison.
  • dy/Y is the ratio of the change in a measure over the total, like an interest rate or growth rate measures.  I get smoother curves by blending a bit, using a center-weighted 5 point bracket.

Data Sources:

  1. The world bank was my source for GDP PPP and for from 1990 to 2016
    https://data.worldbank.org/indicator/NY.GDP.MKTP.PP.CD?end=2016&start=1990
  2. World Meat Production – 1961-2016 Rosner – OurWorldInData: https://ourworldindata.org/meat-and-seafood-production-consumption
  3. World Food Production – 1961-2016 FAO: http://www.fao.org/faostat/en/#data/QI
  4. WRI has a very nice set of data on CO2 “Total GHG Emissions Including Land-Use Change and Forestry – 1990-2014” from the CAIT Climate Data Explorer – http://cait.wri.org/historical.
    – Because the latest economic CO2 emissions data is 2014 not 2016 as for other data, the trend of atmospheric CO2 from CO2.earth was used to project the economic emissions data for the last two missing data points, showing no anomalous direction. https://www.co2.earth/annual-co2
  5. Atmospheric CO2 PPM 1501-2015                    
    OurWorldInData.org:
    https://ourworldindata.org/co2-and-other-greenhouse-gas-emissions
    From Scripps source directly: (Scripps, 1958 to present)(Macfarling Meur 2006)
     http://scrippsco2.ucsd.edu/data/atmospheric_co2/icecore_merged_products
    Record based on ice core data before 1958, and yearly averages of direct observations from Mauna Loa and the South Pole after and including 1958.”
  6. BP offered energy data in MtOe in its “Statistical Review of World Energy – all data 1965-2017”
    https://www.bp.com/en/global/corporate/energy-economics/statistical-review-of-world-energy/downloads.html
  7. The IEA news item statement that CO2 flattened for 2016 and 2017 was used, just to show how little effect it would have if true
    https://www.iea.org/newsroom/energysnapshots/global-carbon-dioxide-emissions-1980-2016.html

Second Acts – birth first then something else

from a conversation on FB group Global Challenges Collaboration
link to FB post

No we shouldn’t condemn humankind for being out of control

Sam Hahn  April 23 at 11:05am

We must not condemn man because his inventiveness and patient conquest of the forces of nature are exploited for false and destructive purposes. – Albert Einstein

explosive growth as if out of control is what first began it,  …. a great second act to follow

Jessie Henshaw

 Sam, No we shouldn’t condemn humankind for being out of control, not even for betraying ourselves in failing to study it carefully. It’s sort of “over the top,” in all dimensions. What most matters may be just moving people to recognize that we truly need to gain some control of our future, that we have a future worth protecting, that if we study we can discover the error.

I’ve noticed a curiously deep problem with our remarkable talent for conceptual thinking.  Our great talent for recognizing patterns of control also comes with great ignorance of what we’re trying to control, as nature’s designs are actually beyond our understanding. So we regularly fail to see how our efforts to control things cause disruptions too, also leaving us relatively helpless in trying to heal them as well.  That our minds so often falsely label our opportunities this way is a serious handicap, making it dangerous to rush into what seem to be our greatest doors to success.  Recognizing that hazard is a useful pattern though, one I think you can see reflected in the great disaster prone themes of our culture, which seem associated with the bias of seeing the world through rules for control enabled by our talent for conceptual thinking.

There’s also a glowing opportunity to study it that people seem to shy away from, by looking closely at the natural creative processes by which things begin, the growth periods that bring about the transformation of natural systems in our everyday experience. How visible they are has been hidden from us, by how our whole society became organized around thinking about patterns of control, creating an economy using them to multiplying our control of anything profitable. Perhaps the most consequential problem with that way of life is just not having any second act.

Nature and our own experience are full of creative second acts for growth systems. Finding a second act for our economy is also rather necessary for our survival.  It would also go a long way to absolving us of our feelings of helplessness and guilt about it. That nature is full of second acts for growth, of course, means there are innumerable examples of natural systems that began much like our fateful world economy behaves.

From the view of a fertilized cell in the womb, the world seems like a limitless resource at first, as it multiplies furiously,

From the view of a fertilized cell in the womb, the world seems like a limitless resource at first, as it multiplies furiously, going from one cell to a trillion in the nine months. That is the work of a systematic process of a growing system taking ever greater control of its environment.  It has a surprise ending, though, that despite all the pain and danger involved often turns out magically well. That all successful lives seem to begin this general way, with a limited but highly creative burst of self-organization, followed by a period of developing successful roles in the world, is the general pattern, of successful growth in nature having a first and second act.

Our world economy seems to have gone through its great burst of self-organization, its first act.  It remains designed to multiply ever further its control of human and natural resources, though. I see that as a clear symptom of our blindness for what could come next. That’s where the close study of nature’s way of creating second acts, transforming initial growth processes into final ones to create new forms of life, could help.

Where it would start is with subjects we know very intimately, such as how good personal relationships begin. New relationships seem to always start with a period of contagious development.  If they’re to succeed that spontaneous wave of new connection is also graceful enough to hesitate, as it enters unfamiliar territory. That relaxation of the contagion permits a change from fitting together bigger and bigger changes in the relationship to fitting together smaller details at a finer level of attention.  It’s a way to bring the design to completion by making it whole. So in short, for the world economy, we need a “relaxation of the contagion” to allow it to turn toward becoming whole, permitting our second act of growth.

That same kind of succession seems present in the origins of other things, as part of a universal story of “how things begin.” The turning point in the middle often involves a crisis, but is often as smooth as can be too. Either way it involves a new way of thinking, from beginning to completing a grand design, having the potential for a wonderful outcome if the emerging life is both careful enough and perhaps lucky.

a way to bring the design to completion by making it whole

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JLH