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 back to the pond.

Fig 1. Finance works by taking profits from the commons to use for taking more, an escalating drain on freely circulating funds. In times like these, the FAIR rules ask investors to spend 10% a year of accumulated profits on societal needs, giving back while and doing good, and sustaining the profitability of a world in trouble. Spending accumulated profits on good works both relieve the increasing drain of profit-taking from the commons helps forestall our fast-growing tragedy of the commons.

[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 present worldwide tragedy of the commons.

Topic                Compound investment (adding profits to investments) is required to get any enterprise going, but if overextended multiplies the investors power over others and extraction of wealth from the commons, turning the gift of innovation into a profound tragedy.

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

Image             

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 natural long term imbalance between steady earnings from work and the compound growth of earnings from finance generated by adding investment profits to investments. FAIR calls for limiting not eliminating that imbalance, not to stifel individual financial creativity but limit the global scale of its demands on nature and society. Spending a fixed annual share of accumulated savings from profits in times of need, like today, would in effect use global indicators to internalize harmful global societal and environmental economic externalities.

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 compound investment. It’s actually a strategy that originates with the suggestion of JM Keynes in Chapter 16 of his General Theory. Interpreting it as an “overflow valve” to relieve burdens on the anthropic earth system was devised to make the macro-economic effect understandable, reducing or slowing the growth to relive the whole economy’s pressure on all its planetary bounds.

The level of relief from increasing demands on the system would be based 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. In the end, finance would stabilize and generate steady profit for priority needs, as a kind of continually 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 a FAIR spending of accumulated profits is not just the natural relief of systemic pressures on the global commons that would bring. What matters is whether the money is spent well, and delivers “good works” of systemic value. The expectation is that people with accumulated profits to distribute would have an “eye for value” as to what the world needs to be successful comparable to the “eye for value” that made them successful. It’s the same kind of creative problem looked at in a new way. FAIR spending is an investment decision for the system as a whole, that will be returned with new value you couldn’t buy if successful, the same way a family benefits from educating its children. It is money well spent. In the same way FAIR spending to advance childhood education on patterns of growth in nature and in life might be returned many fold. It’s a question of “feeding” something, not “controlling” something.

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.

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.

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

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

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
__________________

…. 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.

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

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

__________________

JLH

I’m pleased to announce long work now completed….

Apr 10 2018 a Springer journal, Systems Practice and Action Research, published:

Systems Thinking for Systems Making: Joining systems of thought and action
J L Henshaw  [Springer PDF here or Author’s here]

 

An exploration of what appears to be a new dimension and understanding of systems thinking; the stepwise learning and improvisation that evolves our thinking in the individual and collaborative processes of discovering how to make and do things in nature.  The paper provides an overview covering basics, some history, and advanced subjects.

A review of the new systems sciences that developed since 1940 displays both tremendously creative effort to better understand reality and some current stumbling blocks.  Variations on older tried and true techniques, like using models to help us study nature rather than represent nature, are suggested as perhaps pointing to a productive path forward.

 

Jessie Lydia Henshaw

Citation:
Henshaw, J. L. (2018). Systems Thinking for Systems Making: Joining Systems of Thought and Action. Systemic Practice and Action Research, 1-29. https://doi.org/10.1007/s11213-018-9450-2
pub 4/10/2018