THE
‘IN-BETWEEN’ OF MODERN ECONOMY: FROM COMPETITION TO COMPLEMENTARITY
Fernando Suárez Müller
University
of Humanistic Studies of Utrecht
Sjoerd Robijn
University
of Humanistic Studies of Utrecht
______________________________
Abstract
The
imperative to grow is essential to all modern societies; to maintain their
welfare infrastructures the economy of modern societies is expected to increase
at a steady pace annually. Consumerism – a steadily growing material
consumption which does not necessarily contribute to increased health or
happiness – can be seen as a socio-cultural development influencing the
ecological balance of the earth. The ethical values we treasure most within our
personal lives, such as trust, honesty, respect, empathy and cooperation, are
very different from the basic values of the free market-economy which are based
on the idea of maximizing self- interest and competition. Organizational
ethical reporting should measure moral, cultural, social and environmental
performances, thus doing justice to the double imperative of humanizing and
naturalizing the economy. The success of such ethical measurements is essential
for a process of transformation of our societies to begin.
Keywords:
Modern Economy. Competition. Humanization of the Market.
Resumo
O imperativo
de crescer é essencial para todas as sociedades modernas; para manter suas
infra-estruturas de bem-estar, a economia das sociedades modernas deverá
aumentar a um ritmo constante, anualmente. O consumismo - um consumo crescente
de material que năo necessariamente contribui para o aumento da saúde ou
felicidade - pode ser visto como um desenvolvimento sócio-cultural que
influencia o equilíbrio ecológico da terra Os valores éticos que valorizamos
mais em nossas vidas pessoais, como confiança, honestidade, respeito, empatia e
cooperaçăo, săo muito diferentes dos valores básicos da economia de mercado
livre, que săo baseados na ideia de maximizar o interesse próprio e a
competiçăo. O relato ético organizacional deve medir desempenhos morais,
culturais, sociais e ambientais, fazendo justiça ao duplo imperativo de
humanizar e naturalizar a economia. O sucesso de tais medidas éticas é
essencial para começar um processo de transformaçăo de nossas sociedades.
Palavras-chave: Economia
Moderna. Competiçăo. Humanizaçăo do Mercado.
1 INTRODUCTION
The
collision between the growth of our modern world economy and the tangible
limitations of our planetary resources seems inevitable. If all humanity rises
to the standard of living of most developed countries, the world economy will
ultimately collapse. The imperative to grow is essential to all modern
societies; to maintain their welfare infrastructures the economy of modern
societies is expected to increase at a steady pace annually. It is clear that
the relatively fragile stability of the planetary climate is at stake and a lot
of the damage to the regenerative capacity of our planet is now known to be
irreversible. Since the publication of the Limits to Growth report of the Club
of Rome (1972) several updates (RANDERS, 2012; MEADOWS et al, 2004, 1992) show that, if growth is to continue at current
rates, humanity will overshoot the planetary boundaries and collapse sometime
before 2100. In ‘Planetary Boundaries. Exploring the Safe Operating Space for
Humanity’ Johan Rockström, Will Steffen and 25 other co-authors (2009) identify
nine planetary life support systems essential for human survival. The authors
show that three of these have already been pushed too far which produces a risk
of irreversible and abrupt environmental change making the earth less habitable.
Certainly, these boundaries are still rough, first estimates surrounded by
large uncertainties and knowledge gaps that interact in complex ways. Ecosystem
services that are essential for human economy, such as raw materials
production, pollination, biological control of diseases, water supply,
pollution control, nutrient cycles, soil building and maintenance, and climate
regulation could become seriously unbalanced.
Although
the validity of the planetary boundaries model is still under debate, the
notion that our economy has exceeded the earth’s carrying capacity is also
supported by the ‘Ecological Footprint model’ (MCLELLAN, 2014). This model
suggests that we currently require 1.5 planets to provide the resources we use
and to absorb our waste. An estimate of 3 planets is expected by 2050 if
current average trends of production and consumption continue. All this
indicates that the notion of infinite economic growth is utterly flawed.
On the
theoretical level there still exists an important discrepancy between classical
economic and (relatively) new ecological views on growth. Etymologically, both
‘economy’ and ‘ecology’ are derived from the Greek word ‘Oikos’, meaning
‘household’ – and this, of course, suggests a proximity of economy and ecology that
is still lacking in many theoretical and philosophical approaches to economics
(ORELL, 2010, p. 214). Both of the suffixes ‘nomos’ and ‘logos’ suggest a
similar concern with the regulation of the household but there are divergent
opinions about what the ‘household’ actually is. Do we just mean the
multilayered domain of trade exchanges? Do we mean the domain of human social
relations and societal structures? Or do we mean the economic, social and
ecological infrastructure all at once? Holistic theories underscore the
necessity of considering all these things together. But such approaches are
still far from being mainstream in both the academic domain and everyday life
practice. The progressive depletion of resources and the additional costs of
material recycling could lead to stagnation or even to a decline of economic
growth that could end up in a recession or in a downward economic spiral with
increasing levels of unemployment and debt. The increasing amount of debt in
fact pushes the system towards further growth. The current financial system,
which generates all this debt, can therefore no longer be perceived as
independent and neutral. It is part – both as a cause and as an effect – of our
current ecological crisis (TOXOPEUS & ARKEL, 2014; LIETAER et al, 2012). Also, socio- cultural
developments, such as the growing inequality of wealth distribution, are
destabilizing factors influencing the wellbeing of the planet (PIKETTY, 2014;
LIETAER et al, 2012, 2010). And, of
course, consumerism – a steadily growing material consumption which does not
necessarily contribute to increased health or happiness – can be seen as a
socio-cultural development influencing the ecological balance of the earth
(JOSEPH, 2014; BREGMAN, 2014; SCHARMER & KAUFER, 2013; CAPRA, 2009; DALY
& COBB, 1989). It is also clear that an increase of the Gross Domestic
Product is not an adequate indicator of wellbeing. Besides these socio-cultural
economic factors, this issue also concerns the ethical values which are
dominant in our culture (MCMURTRY, 2013; SCHARMER & KAUFER, 2013; FELBER,
2010). The ethical values we treasure most within our personal lives, such as
trust, honesty, respect, empathy and cooperation, are very different from the
basic values of the free market-economy which are based on the idea of
maximizing self- interest and competition. According to Christian Felber, this
socio-cultural contradiction is splitting our inner worlds, both on the
individual and on the social level (2010, p. 21).
Summarizing,
we may say that socio-cultural contradictions contribute to an uneasiness that
mobilizes people to take action (in forms of civil unrest which are not only of
the left) and this pushes groups against each other. Fritjof Capra summarizes
the necessity of a holistic and complexity approach as follows: “The major
problems of our time – energy, the environment, climate change, population
growth, food shortages, economic and financial crises – cannot be understood in
isolation. They are systemic problems, which means that they are all
interconnected and interdependent” (2009, p. 11).
We are
now progressively discovering that the modern rules or ‘nomoi’ of the economic
household are not compatible with the ‘logos’ of ecosystems. It is, however,
possible to reconcile economic theory and ecology and we can learn from older
paradigms without looking backwards. This paper is future-oriented and it
argues that our economy can develop the balanced dynamics naturally existing in
ecosystems. In this paper we explore the structure of an economy that is truly
compatible with the ecological boundaries of our planet. It shows in what
specific ways economic theory can incorporate the logic of the sustainable
growth patterns of living networks in order to create a system that maintains
prosperity and wealth. The logic of systems theory clearly shows that in the
biological world exponential growth curves belong to a particular development
phase – called the ‘competitive phase’ – of self-organizing living beings. This
development is followed by a ‘complementary phase’ which generates a relatively
steady-state configuration and a relatively sustainable relationship between
living beings and their environment. We do not think that this analogy with
biological development holds completely for our modern society, since our
culture is not primarily steered by natural selection but by human decision
making and reflection. We will therefore defend the position that a system
theory cannot merely be based on a naturalistic paradigm – be it physical
(thermodynamics) or biological (autopoiesis). In order to understand the
transformations that lie ahead of us, we cannot just start from the idea of a
‘naturalization of the economy’, of an economy that becomes in tune with
nature; we must also introduce the idea of a ‘humanization of the economy’.
Although it is possible and even fruitful to acknowledge the complementary
phase in the economy, we also need to recognize that the new situation can best
be summarized by the idea of a ‘moralization of the economy’. And this refers
to a situation in which ethical responsibility becomes the guiding principle of
all economic transactions. Georg Wilhelm Friedrich Hegel was in fact the first
philosopher to have conceived a morally colored transformation of modern
capitalism. The moralization of the economy, as we understand it, encompasses
environmental ends (the naturalization of the economy), but also the production
of nonmaterial goods (the humanization of the economy), which will benefit the
ethical, social and cultural life of everyone.
In
order to understand this change in the way we think about modern markets we
need to look into the heart of our socio-economic system. The Aristotelian
distinction between ‘Chrematistics’ (the art of accumulation of money by means
of commerce and/or speculation) and ‘Oikonomia’ (the art of household welfare)
is still helpful in order to understand what the heart of our economic system
is (STAHEL, 2006; DALY & COBB, 1989; ARISTOTLE, 1967). Our modern economic
system originates in a historical context that can be compared to the
‘competitive development phase’ of living networks. While the current context
is rapidly changing, the competitive rules and aims of the socio-economic
system are still in place. The major problems we are facing today are systemic
in nature, taking place simultaneously at three levels: the ecological, the
economic-financial and the socio-cultural level. We can therefore speak of a
‘systemic crisis’ because all these problems are interlinked. They are a
consequence of the inherent dynamics of our modern socio-economic structures
(LIETAER, 2012; HEINBERG, 2011; BEINHOCKER, 2007; CAPRA, 2004, 1996). This
multilayered systemic crisis, however, shows that we are living in an
‘In-between’ of two development phases.
To
develop this ‘In-between’ we will draw from complex systems theory which is an
approach that emphasizes the macroscope of developments and focuses on general
patterns. This is, as we said above, holistic, focusing on nonlinear
relationships and systemic structures, emphasizing interconnectivity and
interdependency. We are not approaching nonlinear relationships
mechanistically, but organically, as an organic development (MORIN, 2008B,
1999; CAPRA, 2002; CILLIERS, 1998; GLEICK, 1988; ROSNAY, 1979). We would like
to call this approach the ‘holistic complexity’ paradigm, because on the one
hand complexity perspectives are always holistic and on the other ‘holism’
emphasizes the idea of an organic self-organized structure. ‘Holistic
complexity’ literature combining insights from both the economic and ecological
perspectives has been growing since the 1980s. Main authors in this field are
Herman Daly (2014, 2004, 1989), Nicholas Georgescu-Roegen (1971), Howard Odum
(2007) and Edgar Morin (2008b), who all incorporated thermodynamic models into
socio-economic theory. They thereby emphasize the importance of the
relationship of energy, environmental stability and economic sustainability.
These authors are still largely ignored within the traditional field of
economic scholarship. Other authors, like James Lovelock (2006, 1979), Fritjof
Capra (2007, 1996), Peter Corning (2005) and Alexei Kurakin (2011, 2009, 2007)
have been focusing on complexity theory and sustainability in order to get a
deeper understanding of the systemic features of sustainable societies. Also
starting from a ‘holistic complexity’ paradigm we find many authors who have
been deepening the critique of modern economic structures (JOSEPH, 2014;
RIFKIN, 2014; SCHARMER & KAUFER, 2013; ORREL, 2012; ROTMANS, 2012; HEINBERG,
2011; EISENSTEIN, 2009; JACKSON, 2009; BEINHOCKER, 2007; WIELINGA, 2001). This
critique has recently also been extended to the monetary system and its
relationship to forced economic growth (TOXOPEUS & ARKEL, 2014; HO, 2013;
LIETAER, 2013, 2012; ROBERTSON, 2012; EISENSTEIN, 2009).
According
to these authors sustainability is never going to be reached without changing
the monetary system. We think that all these approaches converge in the idea of
a coherent and ethical alternative for modern capitalism that has been
summarized under the concept of ‘Economy for the Common Good’ by several
authors (ARNOULD & AURENCHE, 2017; TIROLE, 2016; SUÁREZ MÜLLER &
FELBER, 2016; FELBER, 2010; SIKORA, 2001; LUTZ, 1999; DALY & COBB, 1989).
So in
this paper we will use a ‘holistic complexity’ approach to consider a wide
range of ideas about the transition from the competition phase to that of
complementarity. An analytical reductionist approach would not fit our purpose
because we want to show that this historical transition involves a complexity
of changes, although the general scope makes it possible to discern a
development that, as we have said above, can be called the ‘moralization of the
markets’ (HERZOG & HONNETH, 2014; STEHR, HENNING & WEILER, 2006; HEGEL,
1968A). As Joël de Rosnay (1979) has shown, ‘holistic complexity’ research is
never about zooming in on just one issue: its basis is the so-called
‘macroscope’. The macroscope is neither a microscope nor a telescope – which
are merely physical tools – it is, rather, a new way of approaching things:
“The macroscope filters details and amplifies that which links things together.
It is not used to make things larger or smaller but to observe what is at once
too great, too slow, and too complex for our eyes (human society, for example,
is a gigantic organism that is totally invisible to us). (…) Our glance must be
directed toward the systems which surround us in order to better understand
them before they destroy us” (1979, 6/7). We will focus on global developmental
patterns, which despite their unpredictability, may offer some guiding
principles to understand our historical situation (KURZ & SNOWDEN, 2003, p.
468). This situation requires a major change in our humanistic understanding of
the world. The traditional anthropocentric view that characterized modern
humanism since the Renaissance is clearly outdated. We need to consider
humanity as being part of a wider community (SUÁREZ MÜLLER, 2017a; MANSCHOT,
2010). The major changes of our time are mentality changes. The systemic crisis
carries us to a phenomenology of the modern spirit that discerns major changes
in the relationship between ethics on the one hand and organizational aspects
of society, specifically economic aspects, on the other. The hierarchies of
values are shifting – a transformation that Hegel describes as the transition
from bourgeois society (based on competition and self-interest) towards an
ethical civil society (based on an intrinsic commitment to the common good). No
subsystem of society – neither in its theoretical structure nor in practice –
can be allowed to continue to neutralize moral values. Thus moral values should
become the constitutive principles structuring the core economic processes.
In
order to show that we are now in an ‘In-between’ of two development phases –
the competitive and the complementary – we want to first understand what the
limits of an approach are in which our society and economy are compared to
living networks. Such an approach binds us to a ‘biological reading’ of modern
society that emphasizes naturalization, which is only one element of the
‘moralization of the markets’. In order to understand the transition to the
complementary phase, we need to understand the fact that in the competitive
stage competition is viewed as a natural structure of the economy, as something
‘objective’, existing beyond or besides ethics, whereas the complementary phase
is viewed in terms of cooperation, which implies a convergence of natural and
moral developments. We will first explore to what extent it is possible to
apply the systems theory idea of a living network to societies (1). We will
then explain what it means to say that our economic system embodies a
competitive stage of development (2) and which elements make it possible to
understand our current time as a transition to a complementary phase (3). In
the concluding section we shall briefly discuss the systemic networks paradigm
which limits us to an understanding of the ‘naturalization of the market’. We
shall integrate this paradigm into a more general concept of system theory
enabling us to understand the more fundamental change – suggested by Hegel – of
a ‘moralization of the market’. This would also encompass what we have called
the ‘humanization of the economy’ (4).
2 SOCIETY, A LIVING SYSTEM
A
systemic, and more specifically, a ‘holistic complexity’ approach makes it
possible to compare society with a living being. But in order to do this we
first have to describe living systems from a ‘holistic complexity’ perspective.
We will see how living networks create sustainable organizations. Only then it
will be possible to apply the living network model to societies and especially
to economics. This will also clarify what exactly it means to speak about a
sustainable society.
When
focusing on living networks from a ‘holistic complexity’ perspective we
conceive living beings both as organizational patterns and as configurations of
relationships to their environment. We do not only focus on what living beings
are, but also on how they are. This means that we not only describe stable
patterns, but also dynamic relationships or interactive structures.
Understanding life from a ‘holistic complexity’ perspective requires addressing
the connection with thermodynamics (RIFKIN, 2009, 27). According to Albert
Einstein the laws of nature most likely to withstand the test of time are the
first and second laws of thermodynamics. These laws are involved in the most
basic structures of life. The first law of thermodynamics refers to the
conservation of energy in the universe. It implies that the total energy
content of the universe is constant. Energy can neither be created nor
destroyed. The second law of thermodynamics states that whenever energy is
transformed, some amount of that energy is no longer available afterwards.
There is a degradation of potential energy from available to unavailable. This
energy, of course, is not destroyed (first law), but it is dispersed in an
irreversible process, and ends up going in different directions. Rudolf Clausius
called this phenomenon ‘entropy’. This unilineal process inevitably leads to a
state of thermodynamic equilibrium in which there is no potential energy left
to perform any further transformations. In time, all potential, useful and
concentrated energy will inevitably be dispersed into unusable and disorganized
forms. Although everything in the universe eventually moves from concentrated
to dispersed, and from ordered to disordered, there are forces withstanding
this linearity, one of which is life. We can define life as a natural pattern
that (temporarily and locally) resists entropy. In terms of thermodynamics,
life is a non-equilibrium network. Although this seems to contradict the second
law of thermodynamics Ludwig von Bertalanffy has shown in his famous General
Systems Theory (1968) that living organisms need to feed on a continual flux of
energy and matter in order to withstand entropy. Living beings cannot be
described as closed systems, since closed systems necessarily move towards a
thermodynamic equilibrium. Bertalanffy therefore defines living beings as open
systems which maintain themselves in a non-equilibrium steady state. These open
systems constitute, he says, a temporary break of the second law of
thermodynamics. In his famous article ‘What is Life’ (1944) Erwin Schrödinger
states that if an open system is capable of keeping its internal entropy low,
this is at the expense of increasing the entropy of the surroundings (24). Such
a description of living systems resolves the apparent contradiction between the
laws of thermodynamics and the possibility of increased complexity in the
universe.
But of
course, these laws cannot explain how living structures could arise in the
first place. Ilya Prigogine (2008) tried to describe how open systems could
emerge inside closed systems; how steady state structures could arise without
thermodynamic equilibrium. To him open systems are ‘dissipative structures’
using energy from the environment to decrease internal entropy. He describes
the emergence of stability in dissipative structures as a process of
self-organization – a term coined by William Ross Ashby in 1947. This process
is the spontaneous creation of a higher level pattern out of lower local
interactions (HEYLIGHEN, 2001). Entropy can be seen as a form of dissipation of
energy, which in classical thermodynamics is always associated with waste, that
to open systems can be a source of energy to build organized structures without
equilibrium with the surroundings (CAPRA, 1996, p. 89). Dissipative structures
thus not only maintain themselves in a stable state, they can also increase
their complexity as a response to an increasing flow of energy. Prigogine also
emphasizes that the general patterns of dissipative structures cannot be
derived from the parts. These forms of organization emerge spontaneously at the
supra-molecular level. According to François Roddier (2012), we should in fact
speak of a third law of thermodynamics based on these insights of Prigogine.
From the beginning the universe evolves by creating more and more complex
structures capable of dissipating energy in an increasingly efficient way.
Generally, structures dissipating energy more efficiently (and producing more
entropy) have a higher internal order, which makes them more likely to subsist
than less ordered structures. This does not mean that maximizing entropy
production always leads to an increase of stability. Whenever a system requires
more energy than its environment can offer – or produces more entropy than its
environment can assimilate – the system collapses into a state with reduced
entropy production. Arto Annila and Stanley Salthe indeed argue that the
principle of increasing entropy, when given as an equation of motion, reveals
that expansion, proliferation, differentiation, diversification, and catalysis
only leads to a stationary state if there is an entropy- absorbing capacity of
the surroundings (ANNILA & SALTHE, 2010).
Capra
has shown that such a description of living systems in mere terms of
thermodynamics is insufficient, because it says nothing about how living
systems reduce their own internal entropy. To understand this ability to reduce
entropy, we need to look at the internal organizational pattern and process of
living systems (CAPRA, 1996, p. 156). This organizational pattern is the
autopoietic metabolism that constitutes the essence of life. It is a specific
form of organization or configuration of relationships between components
(1996, p. 154). Living systems are connections of interdependent components (a
cell consists of organelles and a multicellular organism of organs):
“Whenever
we look at life, we look at networks” (82). What makes these networks unique is
what Humberto Maturana and Francisco Varela called their autopoietic nature.
Autopoiesis (self-making) is an organizational structure in which each
component participates in the production or transformation of the other
components in the network. Living systems are capable of maintaining their
energy by internal regulation and cooperation of the parts (Maturana &
Varela, 1980, 9). An autopoietic network is always an open system that requires
a continual flow of energy and matter. But it is also in a certain way closed,
because it is self-organizing and self-producing: “It is continually
regenerating its own productive organization” (CAPRA, 1996, p. 163). A
‘healthy’ system is a system of unaltered autopoiesis. When the rate of
entropic decay becomes faster than the autopoietic regeneration, a system falls
apart. It is then visibly taken into the never ending flow of the second law of
thermodynamics.
To
understand life, this general autopoietic pattern must be complemented by a
process of interaction, a general capacity of responsivity. Living systems have
an active interaction with the environment. They all possess a more or less
complex responsive capacity. This interaction also makes adaptation possible.
The continual structural changes within the organism (metabolism) are sensitive
to external disturbances.
Maturana
and Varela call this responsive connection of the internal structure of a
living system with its external environment a ‘structural coupling’ (MATURANA
& VARELA, 1987, p. 75). This responsive capacity is a crucial element for
the evolution of living systems. It made, for example, the neural network
possible which has increased the responsive capacity of animals. An autopoietic
metabolism needs a relatively stable internal and external environment. The
specific homeostatic range in which metabolic reactions can occur is very
narrow – think about temperature, oxygen and acidity levels – and overthrowing
this range leads to a decay of autopoietic connectivity. This homeostatic
process plays a key role in the responsive capacity of an organism. Antonio
Damasio has emphasized that the homeostatic range provides the organism with a
‘biological value-system’ which can evaluate external disturbances and generate
internal responses (2010, 33-62). Responsivity and first forms of communication
with the environment are based on a value system and a kind of cognitive
judgement necessary for learning. Valuating and cognition go hand in hand.
These
features raise questions about the extension of the concept of life. According
to James Lovelock, if we stick to these systemic features the whole earth could
be taken as a living being. He calls this living earth Gaia – after the Greek
Earth goddess. Lovelock takes this name as a metaphor – as there is no real
goddess – but the use of this name is an acknowledgement that the earth is a
biospherical network regulating its own internal environment. The earth, as a
living planet, is an autopoietic system creating the physical conditions for
the existence of large responsivity networks. The Gaia theory turns the
methodological macroscope into an interconnected real world in which the
biosphere, atmosphere, oceans and the soil are one single operating system that
creates the conditions for responsive interactions. So, life can also be seen
as a property of planets. Just by looking at the persistent state of
disequilibrium among the atmospheric gases, one can gain important indications
of life’s activity (LOVELOCK, 1979, p. 6). A living planet will tend to
establish a stable energy and a material cycle consisting of minerals (the
building blocks), primary producers (plants), consumers (herbivores and
carnivores) and decomposers (fungi and bacteria). As in all systemic processes
the relational network of the whole consists of feedback loops, contributing to
the relative stability required for life (LOVELOCK, 2006, p. 34-49). Important
neo-Darwinian biologists opposed this view, saying that such collaboration of
organisms is at odds with the notion of selfish genes (DAWKINS, 1982, p. 237),
but Lovelock and Andrew Watson (1983) showed with their computer simulation
‘Daisy-World’ that the notion of selfish units was compatible with the holistic
notion of self-organizing systems. The idea of a ‘holistic Darwinism’ is in
fact a new paradigm, incorporating Neo-Darwinism and taking systemic ‘wholes’
to be the guiding paths of evolution (Corning, 2005). In this holistic
perspective, evolution is seen as a dynamic, multilevel process in which there
is both ‘upward causation’ (from the genes to the phenotype and even higher
levels) and ‘downward causation’ (environmental and phenotypic influences on
epigenetic and genetic processes). Peter Corning also speaks of a specific
intersubjective causation proper to life’s responsivity: ‘horizontal causation’
(2005, p. 2).
Alexei
Kurakin (2007) has suggested that the development pattern of living networks
moves from a competitive phase to a complementary one. The ‘holistic
complexity’ perspective describes evolution as a path designed by the
self-organizing activity of wholes – and it incorporates in this way the
Darwinian view of natural selection. If we start from single organisms we
observe a tendency towards higher complexity. Self- organization, being a
spontaneous creation of coherent patterns of interactions, tends towards a
continual use of energy flowing through the system (HEYLIGHEN, 2001). If this
flow increases, the living system reorganizes itself towards higher complexity
which permits an increase of connections between the parts and subsequently an
increase also of task divisions and specializations, generating more feedback
loops throughout the system which in turn augment its responsive capacity. This
cycle starts with a positive feedback loop that takes up all new energy
creating structural changes like specializations which in turn amplify other
structural changes. But this growth is relative to the energy input. The
feedback cycle functions as long as there is enough energy supporting it. The
system will move towards a steady state pattern. If energy flows shrink, then a
negative feedback loop reorganizes the system towards a lower state of
complexity (HEYLIGHEN, 2001). Kurakin suggested that there are scale-invariant
developmental phases of self-organizing living networks. Eugene Odum (1969) had
already recognized recurrent patterns of competition and complementarity in the
development of ecosystems. He showed that a first innovation makes the
diversification of species possible (ODUM, 2007, p. 46). The different
varieties of plants and animals compete for the available energy, the best
adapted then being selected by natural selection (KURAKIN, 2007, p. 13). If the
amount of energy continues to support the accelerating growth of a species,
those maximizing energy consumption will outgrow the others. In this phase the
paradigm of natural selection needs no extension. The competitive structure
tends to an exponential growth of energy consumption, which, of course, cannot
continue forever because the resources are finite. In a situation of limited
resources it becomes obvious that it is not true that the fastest growing
organisms always outgrow others. In such situations natural selection is based
on the efficiency of energy usage and the capacity of organisms to function in
complementary networks.
Development
has now moved towards the complementary phase because natural selection is
based on energy efficiency which is again based on the capacity of individuals
to complement other living beings of the network. The ability to reduce the
collective entropy production of a network is the hidden selection principle
that becomes visible when energy resources are limited. An efficient reuse of
energy and matter by a certain network creates an evolutionarily stable
situation for that network and the whole cycle of producers, consumers and
decomposers belonging to the network. This complementary phase is not dominated
by diversification, competition and material growth, but by specialization,
cooperation and synergy. Specialization only makes sense if it fits into a
larger cooperative whole. According to Kurakin, the competition stage can be
characterized by growth (of both organisms and networks), whereas the
complementary phase is characterized by a relative steady-state situation:
“Where the competition phase creates and improves parts, the complementary
phase creates sustainable wholes” (KURAKIN, 2007, p. 28). So for example, in
the competitive stage the number of herbivores increases because there are
plenty of plants available and this causes an increase in the number of
carnivores. In the complementary stage, however, the components complement and stabilize
each other. Competition is still very important but it is only rewarded if it
contributes to the maintenance of the whole.
Competition
is here only of subordinated significance for natural selection,
complementarity being the dominant value. This view of evolution makes it
possible to see networks as higher order individuals. According to Capra: “Many
species have formed such tightly knit communities that the whole system
resembles a large, multi- creatured organism” (1996, p. 34). According to this
‘holistic complexity’ approach, it is not species that are the basic units of
natural selection, but eco-systems.
But to
Kurakin, evolution theory is just one example of a larger theory of
development. The self-organizing patterns described above are universal and
taking place simultaneously on different spatiotemporal scales – from
biomolecules to cells, and organisms to ecosystems. This pattern is based on an
interdependent, hierarchical, co- evolving set of complex networks of both
energy and responsivity (KURAKIN, 2007). The higher order system is the
boundary of the lower order systems and sets the criteria for successful
complementarity. The entire process can be pictured as a spiral of widening
concentric circles. Such a logic, based on a concentrically ordered totality of
circles, very much resembles Hegelian dialectics. According to Hegel, the
system of knowledge is as a circle of circles (‘Kreis von Kreisen’) – each
circle pushed forward by an inner struggle that tends towards a synthesis
(1968b, p. 60). Kurakin’s idea, however, is just a model of physical structures
and is fully based on a naturalistic restriction – also his lectures on mind
and intelligence start from a physical model..To Hegel the model of concentric
circles is not primarily a physical structure but the basic structure of reason
itself, of which the world is a manifestation. According to Kurakin, the engine
of development is not dialectics, but mathematics, especially fractal
organization. Life is a fractal expansion of self-similar patterns, and this
development can be observed on different scales in living nature, from the
formation of proteins to the creation of organisms and ecosystems, all being
parts of the planetary (Gaia) level (KURAKIN, 2011).
Since
Plato’s description of the state as a political body there have been recurrent
analogies between biology and society. Following the logic of Kurakin we could
conceive human society, like every other animal society, as belonging to the
web of life. Human society is just a part of the overarching planetary network.
According to Edward Wilson, the superorganism metaphor was an important theme
in biological literature during the first half of the 20th century (1971, p.
317). The holistic perspective has made a revival possible, and in this paper
we have seen several theoretical notions of ‘superorganisms’, such as
Lovelock’s Gaia, Corning’s holistic evolution and Kurakin’s fractal systems.
Mainstream
social and economic theory mainly considers human society to be decoupled from
the natural order. Classical economic theory deals with self-interested,
rational actors. This approach fully separates economics from biology and
ecology, and places it on the level of psychology and sociology. According to
Robert Ayres (2002), there are a couple of important differences between human
economy and the biological world, which always pop up. Properly speaking, in
the biosphere there are no – technically and intentionally created – products.
There also is no market, money nor paid labor in nature, and there are
certainly no intentional or volitional exchanges in the biological world. These
differences are, of course, undeniable, but this does not mean that it is
impossible to take society, and especially the economy, as being part of a
thermodynamic whole. As suggested by Rosnay, we definitively can take human
society to be part of a larger network. This is in fact the position of all
current ecologically inspired economics, which still has not been largely
integrated into mainstream economics. The field of ecological economics, with
authors like Alfred Lotka, Frederick Soddy, Nicholas Georgescu-Roegen, Robert
Constanza, Howard Odum and Herman Daly, has been working on an economic theory
based on thermodynamics. It has therefore emphasized that the growth model is
flawed. The defining systemic characteristics of living networks (open
dissipative structures, autopoietic metabolism and responsive capacity) can all
be used to define human economics. Important aspects of the market system are
analogous to the metabolic structure of living networks. First of all, a
continual flux of energy and matter through the system is required in order to
keep the dynamics of the system going. Rifkin sees societies as energy flows
since they are made to serve the fundamental need of life: subsistence (2009,
p. 29). In The Entropy Law and The Economic Process Georgescu-Roegen argues
that the economic process is just a transformation process of high into low
entropy (1971, p. 18). The economy is basically an energy transfer of raw
materials into artificial products or services fit for human purposes. This is
what we call ‘use value’. The process of production and consumption within the
economic system is, according to Daly, comparable to the anabolic and catabolic
properties of cells (1968, p. 395). Human labor, he says, is a kind of anabolic
production process. Odum even suggests that the phenomena of volitional
exchange and the use of money can be compared to the metabolic flows of energy
and matter inside an organism (2007, p. 253).
These analogies of course have their limitations since they cannot produce
anything similar to rational evaluations and autonomous decision making, which
are fundamental to the understanding of exchange value. According to Damasio
(2010), even autonomous decision making cannot be fully decoupled from
metabolic processes and homeostatic regulations. But this does not mean that we
can reduce human autonomy to a mere biological value. The scope of all these
analogies, however, clearly shows that human economics is much more integrated
in life cycles than mainstream economic theory – that merely focuses on
rational and autonomous behavior – likes to admit. Damasio’s concept of
socio-cultural homeostasis (2010, p. 33-66) suggests that cultural rules, laws
and morals – in fact all overarching narratives of a society – serve to
maintain a certain type of economic process. The capacity of humans to create
external order – think of houses, roadways, factories, businesses and
agriculture – does not make society or economy less dependent from nature. On
the contrary, it means that economics, biology and ecology are fully
intertwined.
We may
say that the overarching complexities of self-organizing systems also apply to
human societies. This suggestion was made by Herman Daly in 1968 and has been
restated by KurakIN: “The fields of non-equilibrium thermodynamics, biology and
economics, which appeared to be three disparate sciences, look like
descriptions of one and the same phenomenon” (2009, p. 23). This suggests that
even though economics deals with autonomous, rational, and intentional human
beings, its organizational and developmental patterns seem to express systemic
principles. Whenever there is a continual increase of energy flow the complex
system reorganizes itself, thus creating more connections between its parts,
multiplying task divisions and specializations, and corresponding feedback
loops. This assumption is common to the ecological economics developed by
authors like Yaneer Bar-Yam (1997), Odum (2007), David Christian (2011) and
Rifkin (2009, 2011, 2014). A central point in the work of the last author is
that important economic transitions only take place when new energy resources
converge with new forms of communication or transport (2009, p. 37). This leads
to a paradigm shift that changes the spatiotemporal orientation of humans,
connecting people and markets in diverse ways. According to Rifkin, we are now
living such a transformation, which will lead to a new form of connectivity
that will increase empathy in the world (2011, p. 35). According to Rifkin, the
energy-communication matrices of the First and Second Industrial Revolution
drastically increased the amount of manageable energy flow. This was followed
by an enormous increase in task divisions and specializations, and by much
larger communities. The division of labor activities carried out by different
groups of people gave rise to an interdependent network of different
compartments – a pattern very similar to the functioning of organelles inside
the cell.
Kurakin’s
insight in fractals can also be applied to these descriptions of RifkIN: the
organization of societies with continuously growing economies manifest a
fractal pattern of increasingly large organizational structures – the
organizational society – in which higher scales provide the boundaries for the
lower scale requirements. Such patterns of distributed networks representing
increasing complexity also show up if we look at modern roadway structures. The
complexity and interdependency of these networks tend to increase. This, of
course, has cultural consequences: Rifkin suggests that a positive consequence
– the extension of empathy – will bring the world together into one large
society in which different cultural narratives, values and rules will be
brought together: “There seems to be a detectable pattern to human evolution,
captured in the spotty but unmistakable transformation of human consciousness
and the accompanying extension of the empathic drive to larger fictional
families cohering in ever more complex and interdependent communication-energy
matrices and economic paradigms” (2014, p. 300).
The
‘holistic complexity’ perspective offers strong arguments for the notion that
economy and society should be perceived as a living network. If we look at the
development of human society as being part of the earth’s metabolism, it seems
obvious that the tremendous economic growth during the last centuries was made
possible mainly by the extraction of finite fossil fuels. According to Kurakin,
this type of growth is common in a phase in which competition is dominant. The
question is what the possibilities are to reorganize our societies. This
transformation is highly dependent on our ability to overcome competition and
to reorganize the economy in terms of complementarity.
3 LIVING IN A COMPETITIVE SOCIETY
The
main issue that characterizes the competition phase of living networks is
maximizing energy consumption, which leads to diversification and
specialization, and thus to further competition and selection. Maximizing
consumption also leads to exponential growth and to a high entropy production
or energy decay of the surroundings. Although it is not easy to interpret the
whole history of world economy in terms of living networks, at least the
capitalist market economy seems to fit quite well into the competitive phase.
The engine of the capitalist economy is certainly competition, but over the
years this system has developed an organizational structure that functions
pretty much like a complementary system of elements reinforcing and supporting
each other. According to Eric Beinhocker (2007), economists like Léon Walras,
William Stanley Jevons and Vilfredo Pareto attempted to describe the economy as
a closed system comparable to the motion of the planets. Impressed by the
progress of mathematical physics (Newton) the Marginalists imagined a closed
economic system that could fit into their mathematical framework. In
particular, Walras saw parallels between balancing points in the economy – such
as demand and supply – and equilibrium points within nature (BEINHOCKER, 2007,
p. 21-75). The systemic model used was completely based on the idea of
thermodynamically closed systems. However, this perspective, according to
Beinhocker, is misleading, even for well-structured modern organizational
societies, because it overlooks the fact that the economy is an open (living)
system affecting its surroundings and having a major environmental impact. An
impact that seems to be increasing regardless of the development of strong
complementary organizational structures.
Adam
Smith took the economy to be a closed system propelled by a morality of
competitiveness. Smith’s theory is based on notions that characterize the
competitive stage of living networks. Economic wealth, according to Smith, is
created when raw materials taken from the environment are used by labor to
satisfy human desires. If this conversion of natural capital into man-made
capital is what creates wealth, then an increase of wealth will be attained by
converting more natural capital through labor productivity into man-made
capital. In order to increase this productivity, specialization of labor is
necessary (1776). This dynamics of specialization leads to an increased
interdependency (complementarity) within the economy, which stimulates trading.
In such a system each individual can satisfy their specific needs and wants by
pursuing their own self-interest and by maximizing profit in a rationally
calculated way. Using resources in the most efficient way certainly helps to
maximize wealth, but, since the objective is to maximize wealth, this implies
that there are no limits to the conversion of natural capital into man-made
capital. Although man has a natural competitiveness, the economic system should
nevertheless be designed in such a way as to further enforce these competitive
qualities, thus creating a market based on competition. This then constitutes
the basis for a free pricing-mechanism guaranteeing that the best possible good
is created for the lowest possible price. According to Smith, this system is
able to create a ‘market equilibrium’ between supply and demand, preventing
shortages and surplusses. The optimal price of a commodity is the expression of
such an equilibrium between supply and demand. Besides this, in Smith’s theory
there is also an equilibrum between self-interestness and the general interest
which is made possible over time by the ‘invisible hand’ of the market. The
systemic consequences of an expanding economy for the environment are not part
of his theory. This short summary of the economic theory of Smith shows that
the economy is conceived as a closed system that focuses on exchange and
trading, and that is triggered and maintened by competition. Market equilibrium
is ultimately based on a morality and politics of competition.
This
market equilibrium is, however, dynamic in the sense that it is based on
expansion and growth. This can best be pictured if we take one of the main
elements of the complementary organizational structure of modern capitalism.
The banking system is the axis of the monetary system and due to the financial
crisis it has now been severely criticized by many authors (FELBER, 2014;
TOXOPEUS & ARKEL, 2014; SCHARMER & KAUFER, 2013; ROBERTSON, 2012;
HEINBERG, 2011; LIETAER E.A., 2010; EISENSTEIN, 2009; ODUM, 2007). The
fractional reserve policy of banks can best be clarified by looking at the
origin of the banking system. People deposited their money (gold) at the bank
to keep it safe. The receipts they received in return functioned as paper
money. Since it did not occur to everybody simultaneously to reclaim their
deposits, the bank was able to lend more receipts than the actual amount of
gold it possessed. This is where the name ‘fractional’ reserve comes from.
Borrowers would then repay the bank with an interest.
In fact
this is still standard practice. This type of money creation is also called
‘fiat currency’ – referring to the fiat lux, the creation of light by God out
of nothing (LIETAER et al, 2012, p.
26). This practice, of course, has a major impact on the economy if applied on
a large scale. An important consequence is, for example, debt creation (2012,
p. 159-160). Interest charges create a situation in which the total sum of
debts is higher than the existing money. This shortage stimulates competition
among economic instances (people, companies), stimulating specialization and
complementarity in the system. Of course, more generally it also causes
accelerating economic growth. From a systemic point of view the monetary system
creates a self-inflating closed system (DALY, 1993, p. 814).
The
inflation of the economic system is a form of imperialism that tends to
encompass the entire ecosphere by incessantly transforming natural capital into
products or services (DALY, 2014). As Odum puts it, the ‘free’ economy of
capitalism is in fact a mechanism for overgrowth (2007, p. 263). This imperialism is intrinsically
linked to the idea that the economy is a closed system – and that economics is
a closed science. This perspective makes it possible for economists to only
consider what is ‘economically relevant’ (raw materials, money exchange,
man-made capital, in fact everything that can be priced and bought). To
consider the economy as a closed system excludes important elements of
interdependence, such as ethics, rights, (non-financial) social relations,
cultural beliefs and, of course, the environment. However, these
interdependencies really exist: people have social feelings, they have notions
of right and wrong, and there is a natural environment. These systems are able
to hit back. The production of high entropy waste beyond the regenerative
capacity of the environment can destroy the very basis on which the economy
depends (HEINBERG, 2011, p. 15). As Daly puts it, the economic machine that
followed the Smithian design did not lead to major problems within an ‘empty
world’ context – empty of man-made capital and full of natural capital (2005,
p. 100). But it does lead to problems in a ‘full world’ context – full of
man-made capital and relatively empty of natural capital. In fact what we have
now is a new form of scarcity that also increasingly obscures the achieved
organizational, internal complementarity of modern societies. This outcome is a
consequence of the inner machinery of the economic system, which is ultimately
based on a morality of competition, rather than of collaboration, and therefore
it ends up being blind to its own destructiveness because it assumes that the
engine of competition has (closed system) machine-like consequences which is
not the case. In order to enter the phase of complementarity it seems necessary
to change the moral substance that constitutes the engine of the economy. A
system based on a morality focused on collaboration would view the economy as
an open system, aware of and communicating with its surroundings, and would
also be much more sensitive to the damages that the system inflicts on the
environment.
The
disruptions of an economy that still functions as a closed machine are
manifold. First of all, there can be a disruption of the umbilical connection
with nature that secures the flow of energy. The main questions are then: ‘Is
the economy too big relative to its environment; are the consuming and waste
production rates too fast, is it endangering the food chain on which it depends
for its survival?’ (ORREL, 2012, p. 214-215). The economy has to strive towards
a higher form of equilibrium in which there is an optimal scale in the relation
between economy and environment. As Daly remarks, such an optimum is still not
our general aim. The idea of an optimal scale functions in microeconomics, but
it seems to be absent within macroeconomics (DALY, 2005, p. 101- 107). Growth
beyond this optimum endangers the basis of the whole system and it leads to
progressive disruption of complementary structures of society. If these
structures collapse, the system as a whole loses its vitality and capacity of
reproduction. This in turn leads to social exclusions and to resistance of the
excluded.
Connected
to this, a second disruption concerns the disconnect between self-interest and
common interest. The promise that the pursuit of self-interest also leads to a
common interest is not convincing anymore. Within a full-world context the
common interest includes the quality of the biosphere, which is in fact
collectively being depleted. Garrett Hardin’s paper ‘The Tragedy of the
Commons’ (1968) describes a situation in which individuals behave contrary to
the group's long-term best interest by depleting their common resources. As
Hardin proposes, only strong regulation can counter this tendency. The idea of
an economy autonomously leading to the general interest breaks down. The
interdependency of the economy from an explicit will to construct the common
good, which situates the economy alongside other normative imperatives related
to the social, the environmental and the moral system, becomes a major concern.
A third
disruption concerns the idea of wealth. Within the context of an empty-world,
shortages could be met by increasing productivity. But, in a full-world context
shortages are caused by depleted resources. Wealth cannot be defined anymore by
productivity growth – as is still the case with the ‘Gross Domestic Product’
measurement. Wealth must be defined as a satisfaction based on material
sufficiency (SCHNEIDER, 2014) and cultural and spiritual richness (HÖSLE, 1994).
A
fourth disruption concerns the disconnect between economic and lifeworld values
(Habermas, 1981). Traditional economics conceives trade as a win-win situation
satisfying the self-interested shareholders. Money becomes the most important
value indicator (MCMURTRY, 2013, p. 1-21). But money is based on ‘wants’ or
‘preferences’, rather than on ‘needs’. Money has become an indicator of
‘economic demand’. Primary needs, however, are lifeworld values based on our
biological, social and intellectual (or spiritual) nature – basic values are
correspondingly: nutrition, shelter, health care, freedom, education,
communication, responsibility, self-formation, participation (SUÁREZ MÜLLER,
2009, p. 50). Money value on the contrary is a value that can mean anything, it
can meet any ‘preference’. The basic lifeworld values in the monetary context
become just a set of values among others (all possible gratuity preferences).
Money in fact becomes a value in itself, since it can indicate everything.
Today 98% of the four trillion dollars spent daily within international trade
are purely speculative and disconnected from the lifeworld (LIETAER et al, 2012, p. 75). This gives an
impression of the disconnect between money value and lifeworld value. A
reconnection with lifeworld values would, however, imply that money does not
stand for any ‘want’ (demand) anymore, but is intrinsically connected to basic
ethical values of human life. The ancient criticism of chrematistics, that we
know from Plato and Aristotle, then becomes again an important issue: the
economy cannot be centered on the value of money as the general indicator of
every possible ‘preference’, but must become the expression of a lifeworld
value serving the common good.
A final
disruption concerns the disconnect between monetary production and sovereign
control. The money creation of the banking system served its purpose in
traditional economies, within an empty-world context, but it causes damage
today, and the most important damage is an incessant contribution to the inflation
of the economy. It also causes social problems, like the devaluation of social,
ethical and cultural ‘capital’ by relentlessly encouraging economic competition
and utility. Debt contributes to an uneven distribution of wealth. Interest
charges augment the capital of the wealthy in a non-meritocratic way, which
leads to an increasing and destabilizing divide in society (DYSON, JACKSON
& HODGSON, 2014; PIKETTY, 2014; TOXOPEUS & ARKEL, 2014; LIETAER E.A.,
2012; EISENSTEIN, 2009). Money created by the banking system in fact endangers
the glue, based on trust and cooperation that keeps society together (LIETAER et al, 2012, p. 157). Fractional policy
creates a situation of expanding debt and of stronger competition between
economic members, which also creates a feeling of relentless stress in a
continuously accelerating society (ROSA, 2005). So, perceived from a ‘holistic
complexity’ perspective, economic actors (people, businesses) turn into a mode
of self-preservation that hardly leaves any room for the public interest and
the common good.
4 LIVING COMPLEMENTARITY
We have
seen that modern capitalism leads to structures of complementarity because it
follows a systemic logic, but that this logic is still based on the machinery
idea of a closed system that is highly autonomous from neighboring systems. It
constructs, so to speak, a complementarity in foro interno and abstracts from
the limitations of the external world. We want now to draw the picture of a
complementarity that is not merely internal. We have therefore also to consider
here which systemic shifts bring this complementarity forward.
Kenneth
Boulding once said that “anyone who believes exponential growth can go on
forever in a finite world is either a madman or an economist” (1973, p. 248). An
economy truly moving towards the complementary phase needs to progressively
abandon the idea of economic material growth – there may be still growth in
other senses, ethical or cultural growth (Hösle, 1994), but not material
growth. As long as energy coming into the system is not limited, those living
networks which use that energy before others will outgrow all the others. This
creates an exponential growth curve. The complementary phase, however, takes
finitude seriously: there is no infinite resource out there. Of course, there
is renewable energy, but material products are not just the energy required to
make them. And these materials are finite. Similarly, the waste absorption
capacity of the earth is finite.
In the complementary phase the economy has to
create a steady state of high complexity, such that the economy is not
autonomous, but highly dependent on the social, cultural, environmental and
moral systems. The subsequent complementary phase is therefore about optimizing
a relatively stable configuration that is capable of using the available energy
in order to maintain its level of complexity. This level of complexity can only
be maintained by a production system that keeps the internal entropy as reduced
as possible, and at the same time satisfies material sufficiency and
contributes to ethical, cultural and spiritual growth – this is what we call
‘humanizing the economy’. Contributing to the environmental stability – growth
is not intended here – is what we call ‘naturalizing the economy’ (the first
step here is to take the economy as an open living entity). Naturalization
works towards an optimal state between producers, consumers and decomposers. To
reach and maintain this steady state, the rules of the economic game must be
changed. The guiding economic law should no longer be the law of ‘maximized
growth efficiency’, but the law of ‘maximized maintenance efficiency’, which
refers to all efforts to improve the stability of energy use and to reduce
material consumption. In this system monetary growth must necessarily be
invested in environmental and nonmaterial (social, ethical, cultural) goods.
This kind of growth contributes to both the naturalization and the humanization
of the economy. Competitiveness can still subsist, but it will be aimed, as
said, at contributing to the growth of nonmaterial and environmental goods.
Competitiveness will not be part of a logic of
conquest anymore but will be part of a logic of cooperation oriented towards
the common good – ‘common’ meaning not just a ‘human common’ (of nonmaterial
transcendental goods), but also a ‘cosmic common’ (including environmental
goods).
We now
want to go through some shifts that seem necessary to arrive at a truly
complementary stage. It consists on the one hand of shifting the perspective of
human nature from the idea of the ‘homo economicus’ towards that of, as Rifkin
puts it, the ‘homo empathicus’. But it also consists in many other shifts such
as: from a monetary based economy towards a human-needs economy, from a linear
chain production towards a circular production, or from a scarcity based market
situation towards a collaborative product-use economy. Also, the measurement of
success will have to shift from the current simple financial growth measurement
towards a qualitative balancing system. A shift will be necessary from our
current system, based on a combination of heritage and meritocracy, towards a
system based on a combination of a basic income, restraint heritages and
meritocracy. All these shifts are highly intertwined and reforming these issues
separately would prove both difficult and insufficient. What is needed, is a
systemic change in which society shifts in its totality. However, changing
things all at once is impossible, so it is necessary to consider where to start.
The
first thing to do is to change the organizational orientation of institutions
and enterprises. Since modern society has already developed into an
organizational and democratic society (in which the public domain is the
‘self-reflective spirit’ of our total actions) we think that changes have to
hit at the heart of organizations and that is their ‘system of accountability’.
This system is now fully financial, based on the transparency of monetary flows
(bookkeeping accountancy) but this system should be transformed into a system
that – inspired by Hans Jonas (1979) – could be called a ‘system of
responsibility’. As a first step it is therefore crucial to involve
organizations in a measurement of their own contribution to the nonmaterial and
environmental common good. This first change encompasses major changes in
economic anthropology, which has to shift from the model of the ‘homo
economicus’ to that of the ‘homo empathicus’. This does not imply any naive
idealization of man, nor does it mean that we abstract from the fact that man
can be pretty nasty and egoistic – society will always need institutions to
protect humans from themselves. It means instead, that on the level of
organizational structures the ‘ideal figure’ (Idealbild) that organizations
should be structured upon is a non-egoistic, altruistic individual that is
highly sensitive to the common good. What really moves the hearts of people is
something we will never know but people can repeatedly give ‘proofs of
empathy’, which can be signaled and measured– whether they are actively
purifying or merely green-washing their soul or image is not of our concern.
The ideal of a ‘homo empathicus’ is, however, not just a social construct.
The
idea that human beings are isolated, narrowly self-interested individuals with
insatiable ‘desires’ and whose happiness depends on the accumulation of
material goods, does not render the full scope of what it means to be human.
Even though ‘greed’, ‘insatiability’ and ‘competitiveness’ are properties of
humans that does not render the full image of what we are; vices are not the
primary or primitive incentives. Love and cooperation have largely contributed
to man’s success and although it is true that virtuous actions do not guarantee
a positive outcome, and that bad intentions can (as Bernard Mandeville, 1723,
has shown), it is obvious that society is largely dependent on cooperation,
group solidarity and social cohesion.
The
anthropological story that grounds economic theory cannot be based on the
picture of a self-interested actor. As neuroscientist Tania Singer suggests,
self-interest is not the only nor the principal driver of human behavior
(2013). Neuro-scientific research, especially on mirror neurons, has shown that
our brain is actually hardwired for affective resonance and empathy (SINGER,
2013; DE WAAL, 2009; IACOBONI, 2008). Instead of acting as isolated individuals
we consider ourselves to be socially resonating individuals, open to – and
communicating with – other exterior networks. According to Nicholas Christakis
and James Fowler (2009), it is this high capacity to resonate, that sheds
doubts on the image of an atomistic self-centered individual. Although it is
clear that we are monads – since we can never really escape our ‘self’ – these
monads are intersubjectively attracted to each other.
There is in us a kind of longing for a harmony
of love, an ordo amoris, as Max Scheler (1973) puts it, which exists next to
our brutal nature. According to Rifkin, one positive aspect of globalization is
to bring people together; modern mobility and new means of communication (the
internet) increase empathic feelings as long as they are not perceived as
endangering our subsistence. Otto Scharmer calls this a shift from an
‘ego-system awareness’ to an ‘eco-system-awareness’, in which caring for the
wellbeing of the whole is the major incentive of action (2013).
This
new perspective will cause a shift from money defined value towards human
defined value. Neo-classical economic theory – and in fact also traditional
liberal economic theory – presuppose that sustainability can be solved by mere
price adjustment because scarcities lead to higher prices. Such a way of
thinking highly underestimates both the true value of ecosystems and the
consequences of environmental destruction. The value of insect pollination
alone, mounts up to 217 billion dollars (ORELL, 2012, p. 215). It makes no sense to regulate these
problems through price mechanisms. An alternative to this closed system
approach is the resource based economy, exemplified by ‘The Venus Project’ of
Jacques Fresco and Roxanne Meadows (2007, p. 21). A resource based economy
starts with an evaluation of the amount of resources that could annually be
consumed. If people cooperate, it is possible to distribute this quantity
equitably so as to eliminate scarcities and provide satisfying standards of
living for everyone. Their claim is that the earth is providing enough to
generate sufficiency for all of us. This, however, cannot be accomplished
within our current monetary system – money now stands for every desire
whatsoever – since it implies restrictions on consumption. If we take for
example meat consumption the difficulty becomes obvious. On the one hand we
have individual preferences, and on the other hand we have the biophysical
limits. ‘Demand’ (preference, desire, want) cannot therefore be the ultimate
guiding category of the market economy anymore. It can only function as an
economic category if it also has an ethical and environmental content.
Fresco,
Peter Diamandis and Steven Kotler (2012) claim that with this shift from a
money based economy towards a human needs economy a respectable standard of
living for everybody can be achieved even if we place limits on personal
preferences. However, in order to create wellbeing for all without destroying
the planet we need either to increase our resource productivity by a factor 5,
or reduce our resource usage by 80% (SCHARMER & KAUFER, 2013, p. 81). This
last option is only possible if we replace the linear production of the old
economy for a system of circular production. Our current system is highly
inefficient from a resource based perspective. Circular economics integrates the
ecological component of the decomposers into the economic model. In order to
decrease pressure on natural decomposing systems, we have to create decomposing
structures in foro interno. This is known as the cradle to cradle principle,
according to which the waste must be recycled as much as possible. Smart
circular production lines could decrease resource usage.
Another
important shift is to change the position of the consumer. According to
Scharmer, the consumer is now positioned at the end of the economic chain
because commercials and marketing strategies try to create artificial
preferences rather than to meet their real needs. Also according to Scharmer
and Kathrin Kaufer, we have to move towards a needs-oriented economy, which
means an economy focusing on basic human values (2013, p. 117). We therefore
prefer to speak of a lifeworld oriented economy. In our current economy
producers come up with products independently of the intervention of customers.
In a circular economy customers become ‘prosumers’ and help to co-create
products (118). This shift can only succeed if the incentive of personal
money-making becomes secondary.
In
market capitalism there is a structural incentive to reduce marginal production
costs in order to obtain or maintain profit. According to Rifkin (2014), this
reveals a deeply inherent paradox of our market capitalism. When marginal costs
approach zero, abundance could be created, making the commodity essentially
free. The paradox within market capitalism concerns the fact that this inherent
tendency towards zero marginal production costs contradicts the core dynamic of
capitalism which is oriented towards profit. According to Rifkin, due to
technological innovations zero marginal cost consumption can become real if we
restructure our economy in such a way that consumers become ‘prosumers’ – think
of the consumer as a power plant owner. Self- produced commodities will never
become fully free, but their costs will be fairly low, so that this will not
give them an exchange value. This self-productivity model is based on an
abundance model – commodities, without major exchange value, will be abundantly
produced. But, of course, production must be limited by the average optimum
usage of resources. As Rob Atkinson (2014) says, if virtually everything is
free this would inevitably lead to increased consumption and exhaustion. The
idea of an optimum usage of resources restricts abundance, which will only
revive exchange value if these resources are not equitably distributed.
Sufficiency would in fact be a better word than abundance. According to Rifkin,
the new economic platform focused on creating a zero marginal cost production
within planetary boundaries is called the ‘The Global
Collaborative
Commons’. This commons project is a cooperation platform designed to create a
collective utility value. Wikipedia serves as an example, it is the result of
over 19 million voluntary contributors. The website is free and hardly
generates any exchange value, although it has a huge use value. This kind of ‘prosumer’
production and sharing of consumption (collaborative commons) can be extended
to several fields, from renewable energy, to 3D-printing, or to the ‘internet
of things’. This creates an economic system in which the traditional separation
between producers and consumers disappears, creating instead a ‘peer to peer’
network of ‘prosumers’. The optimal efficient state is reached when marginal
cost really approaches zero (RIFKIN, 2014, p. 186).
The
collaborative commons, as pictured by Rifkin, seems to eliminate every form of
meritocracy. Support for such a system comes from the idea of a citizens’
income, since this idea also seems to annihilate meritocracy. One of the causes
of the market system’s success has certainly been the idea of remunerating the
diligent. From an ecological perspective the meritocratic value, stating that
everyone ‘should’ work, is probably causing more harm than good. Keeping
everyone employed requires far more energy and materials, than producing the
same wealth with less people. The benefit of the meritocratic value system,
however, is that it offers a fair allocation system, which seems to be at stake
when only a fraction of the population actually work. We have to think about
other forms of meritocracy. There is probably no single sector that will not be
influenced by the technological innovations of automation. The progress of
automation technologies will probably change the whole production system. An
Oxford study estimates that in less than twenty years 47% of American and 54%
of European jobs are threatened by automation (BREGMAN, 2014, p. 77). The
argument that innovations will replace jobs is flawed, since most of these new
jobs can be automated as well. The idea that everybody should contribute to
society in a traditional job structure must be abandoned. Citizens’ income and
job time reduction seem inevitable. Work time reduction, however, is more
difficult to realize in certain sectors than in others, and certainly needs
better ways of cooperation. According to Rutger Bregman, the 15 hour workweek
might solve stress reduction, climate change, unemployment and inequality
(2014, p. 41-43). But this can only be put into place if we manage to slow down
the economy, which is a key problem in a competitive world. A common ownership
of automated production, combined with a citizens’ income, could ensure a fair
distribution of income. Meritocracy, in the sense of a fair remuneration for
the best work, can still function within certain margins of remuneration.
A
crucial change is, as we said before, the new measurement of economic success.
Today there exists a one-dimensional measurement of quantitative growth of
goods and services whatever their (ethical and environmental) quality. We saw
this illustrated by the use of Gross Domestic Product as the measurement of
national economic success.
The
increase in expenditure for cleaning up toxic waste, police protection, the
expansion of prisons and medical facilities, military sales, etc., all
positively affect the GDP (RIFKIN, 2014, 20; CAPRA, 2009, p. 5). Zero marginal
cost phenomena, on the contrary, decrease the GDP. Neither can many qualitative
aspects of our lives (health, happiness, leisure, meaningfulness) be measured
in GDP. In short, measuring the sum of transactions within an economy does not
discriminate between the qualities of the transactions (SCHARMER & KAUFER,
2013, p. 119). This underscores the idea that the capitalistic market economy
tends to interpret itself as a closed system that is separated from social,
ethical, cultural and environmental values. Capra simply suggests that from now
on the terms ‘growth’ and ‘economic success’ should only refer to what enhances
the quality of life – or, as we say, ‘lifeworld’ (2009, p. 4-8). Measuring
economic success on the basis of lifeworld values – we call this ‘humanization
of the economy’ – and on ecological values – what we called ‘naturalization of
the economy’ – is a major challenge. There already exist many alternative
macro-level measurements like the Gross Happiness Index, the Index of
Sustainable Economic Welfare, the Genuine Progress Indicator and the Happy
Planet Index. The program of measuring ethical values is not an invention of
utilitarianism, it was first conceived by Plato, who considered that a
mathematical approach of the good could be possible – his lectures on the good,
Περὶ τἀγαθοῦ, were
largely about mathematics (GAVRAY, 2017, p. 103-133).
5 FINAL REMARKS
Measurement
changes, we think, should occur at the heart of the organizations which
constitute our society, especially of enterprises. The system of accountability
should be transformed, as we have said, into a system of responsibility. The
‘Global Reporting Initiative’ and the ‘Common Good Matrix’, designed by the
civil society organization ‘Economy for the Common Good’, already work towards
that end. An EU directive has already been set in place to meet this end. The
financial balance sheet of companies should be accompanied by an ethical
performance report, which can be used to obtain tax reductions or public
procurements. Nonmaterial and environmental success would then not only be
measured, but also financially remunerated (SUÁREZ MÜLLER; FELBER, 2017b, 2016;
FELBER, 2010). Organizational ethical reporting should measure moral, cultural,
social and environmental performances, thus doing justice to the double
imperative of humanizing and naturalizing the economy. The success of such
ethical measurements is essential for a process of transformation of our
societies to begin. It will hopefully trigger several of the ideas outlined in
the last section, such as the introduction of a citizens’ income, collaborative
production (prosumerism), or a basic human needs oriented circular economy.
Such forms of ‘ethical accountancy’ must be based on criteria which must be
developed by the organizations concerned as well as by think tanks
(universities, research institutes, specialists organized in guilds). These
criteria should also be ratified democratically. An upgrade of the criteria
within a fundamental commitment to core principles (such as the importance of
nonmaterial and environmental values) should also be possible. This,
ultimately, will probably also change both the banking, and the money and debt
creation system. The main challenge is to measure qualities in the light of a
unitary system that encompasses all types of organizations.
As we
mentioned above, Hegel, now some 200 years ago, described the transition from
‘bourgeois society’ which is propelled by competition and self-interest,
towards an ethical ‘civil society’ committed to the common good. He used the
same expression, ‘bürgerliche Gesellschaft’, for both situations, thereby
implying that there is a natural development from one phase to the other. In
‘civil society’ economic processes cannot be viewed separately from ethical
concerns. Hegel conceived the idea of an ‘ethical economy’ in a sense that
today we would identify as a society with a major concern for ‘responsibility’
(NESCHEN, 2008, p. 159-219). According to Hegel, such an ethical society (sittliche
Gesellschaft) would need some intermediary institutions between the state on
the one hand and organizational society on the other. He speaks about two
institutions, the ‘police’ (using the word in an earlier sense than ours) and
the corporative system – both institutions would be endorsing and enforcing
this responsibility of continuously creating and maintaining an ethical
economy. It would take too long to go into details now but the corporative
system implies a participation of the existing professions and enterprises,
which would send delegates representing them to the corporative institutions
(1986a, §231, §250). A system of ‘ethical accountancy’, focused on ‘policing’
responsibility, quite similar to that of today’s financial accountancy could be
seen as an intermediary institution between the state and the (profit and
not-for-profit) organizations. This ‘policing’ is committed to the reproduction
of a steady state situation in which there is a constant amount of material
usage. On the material side, the economy would be concerned with producing
sufficiency and environmental stability. We called this the ‘naturalization of
the economy’. Growth would only be possible on the level of nonmaterial goods
which potentiate the social, ethical and cultural dimensions of society. This
is what we have called the ‘humanization of the market’. This implies that
consumption – the consumer’s ‘preferences’ – should be primarily oriented
towards goods expressing basic lifeworld values. Such an ethical consumption would
not only be the concern of consumers (who often do not have a free choice and
do not know where products come from); the state and the intermediary
institutions should be concerned about the ‘demand’ side of the economy too.
The moralization of the economy must be developed on both sides, production and
consumption.
It
becomes clear from what has been said in the last section and the remarks that
followed that the transition from a competitive to a complementary stage cannot
only be viewed in terms of a development of living networks. A major change in
mentality, specifically in moral consciousness, will trigger the passage to a
truly complementary phase of the economy. The development of living networks
other than human is never based on moral reflexivity. That is why the
biological paradigm used in our ‘holistic complexity’ approach does not cover
the transformation that lies ahead of us. It can be used, though, as an analogy
that has an element of truth: the economy is really a system limited to the boundaries
of the ecosphere. This ecological insight is now part of our moral
consciousness. The naturalization of the economy is no fiction, but a moral
imperative. This suggests that the systemic approach inspired by thermodynamics
(physics) and living networks (biology) needs to be complemented with, and to a
certain extent integrated in, a systemic concept that finds inspiration not in
physics and biology, but in reason and morality. Some inspiration could be
found again in Hegel, according to whom the system of reason is built up as a
circle of circles integrating physical, biological, ethical and cultural
structures (the so-called ‘spirit’). It would be understandable then that
natural and moral developments can converge (ILLIES, 2006). If living beings are
complex structures with a highly developed responsive capacity, as Damasio
says, then the transition to a situation in which the ‘homo economicus’ mirrors
the ‘homo empathicus’ could be interpreted as a phenomenon of convergence.
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