Capitalism 2.0: How natural laws can create a more equal economy
Lions, lightning, and rivers all have one thing in common. We can use the laws of nature to build a regenerative economy and fix rampant inequality.
John Fullerton is the founder and president of Capital Institute, a non-partisan organization working to create a more just and sustainable way of living on earth through the implementation of a Regenerative Economy.
After spending years immersed in the sustainability challenge of our age following his Wall Street career, John is now a globally-recognized thought leader in the New Economy space. The architect of the concept of Regenerative Capitalism, John is the author of Regenerative Capitalism: How Universal Principles and Patterns Will Shape the New Economy and the Future of Finance blog.
JOHN FULLERTON: So living systems have—one of my teachers is Sally Goerner. She was our science advisor until she retired and we still draw on her work extensively. She taught us that living systems have what are called healthy hierarchies. So it's not that hierarchy is bad; it's that hierarchy where the top extracts from below is definitely bad and unsustainable.
So, take the lion in the forest or in the jungle; the lion is at the top of the food chain, but the lion sits around sleeping most the day rather than eating and killing all day, and the lion, therefore, serves a very healthy purpose, hierarchical purpose, in the food chain, keeping the balance between smaller animals and large animals. But when the king of the jungle decides to extract as much as possible for its own benefit you have a very unhealthy system, and unfortunately that pretty well describes how the modern capitalist system works where there are benefits of scale, the bigger get bigger, they get more powerful, they get more political influence, but their intention is to maximize shareholder value because that's what we do. So the cycle of growing inequality is sort of locked into the system design.
Now how we deal with that in a human economy is not trivial: the oak tree "knows" in a forest that it serves to support a lot of life. I suspect the only answer in the short-term we have in a human economy is an enlightened regulatory regime that understands these principles and has incentives and disincentives that cause the market players to move toward a more healthy hierarchy. So, for example, in the banking sector—and this actually exists post-financial crisis, it's just not extreme enough—there are disincentives to becoming big and complex, they're just not strong enough. They should, in my opinion, be strong enough that it would force the J.P. Morgans and the Goldman Sachs' of the world to, of their own the volition, become smaller and less complex and become more in alignment in service of the economy. So things they do that are extractive should get penalized and the things they do that are in service of the real economy, which they do do, should get incentivized. So you don't need to "break up the banks", you need to create an incentive system that causes them to behave in such a way that they would be aligned with the principles of living systems—which by the way are fractal.
Every living system, again going back to your body, your cardiovascular system is fractal. You have a few large veins, a lot of medium-sized veins and tons and tons of the capillaries. That fractal system exists in oak trees and in humans and in river systems and in lightning bolts. So it's a strong argument in favor of not allowing the banking system or any sector of the economy to be so concentrated with a few massive firms that then end up undermining the health of the small ones, which is essentially what's happened across our entire economy.
So, my work around this idea of regenerative economics started through this journey of discovery, trying to wrestle with what's actually at the root cause of our modern economic system. And that's a bit of a long story, but I can't really jump to the conclusion without giving a little bit of context. So I think we're in a much bigger shift than most of us yet realize. We're in a shift in an understanding of how our economies actually have to work. And we've been in what is called the modern age since the scientific revolution, and the secret to the modern age or the magic of the modern age was the scientific method and reducing what's complicated into buckets that can be understood. And that reductionist method has been the driver of great progress in many, many areas. An iPhone or a bicycle or a car are all products of a reductionist mindset, and since we've been in that mode for 400 years it's literally baked into our DNA at this point.
The only problem with a reductionist method is that it's not the way the universe actually works. You, as an individual, are not the sum of the parts of your body and you know that you're only healthy if those parts are all working symbiotically together as a whole. The reductionist method, what people refer to as the mechanistic age, doesn't allow us to keep track of the whole. And many of the problems that are manifesting in our economy I believe have a root cause in the limitation of the reductionist method.
So, for example, we discover oil, we burn oil, we have all this great growth and all this great progress, but we didn't know burning oil would release gases to the point that we would heat the climate, so it's an unintended consequence that only with a holistic understanding of how gases in the atmosphere affect the weather systems that are linked to our energy use could one have seen that problem.
So now we're trapped in a system that is burning fossil fuels at greater and greater rates, and yet we already have the consequences of climate change with predictions that are literally dire for humanity and other living species on the planet. So, to get to a regenerative economy you first have to say, well, that system is fundamentally unsustainable, it cannot go on forever. And we will either burn up the planet or on the social side, we will increase inequality to the point that we have civil strife and civil wars.
And so my search was really for how could one design an economic system that didn't have those outcomes? And I know I'm not smart enough to figure those out so the idea is really very simple: living systems that sustain themselves in the natural world work in accordance with certain patterns and principles. Your body does, an entire rainforest does. And so the work we're doing at Capital Institute, which is building on the shoulders of many, many people that have been thinking this way for literally centuries, this holistic approach to understanding systems is really the root or the source of what this idea is that we call regenerative economies.
So, think of a regenerative economy as the design principles that work in sustainable living systems, it's the process that allows a system to be sustainable. As opposed to sustainability, which is kind of a goal, which is—boy if we could just reduce these problems we can get to sustainability. We believe you only have a sustainable system—whether it's a human person or an entire ecosystem or a business or an entire economy—if it follows the same patterns and principles that living systems work in accordance with. And what's magical about it is that it turns out those principles and patterns are very aligned with the wisdom traditions, eastern, western, but eastern in particular, and indigenous that have been around for many, many thousands of years.
So, at the end of the day, my argument is: either make the case that the human economy is the only example of a system that doesn't need to obey the same patterns and principles that all other living systems—that sustain themselves—follow, or we better figure out how to get the human economy in alignment with those principles. And regenerative economics is the beginning of an inquiry into what that looks like and how one might actually manifest that in the world.
- The modern economy is an example of an unhealthy hierarchy, says John Fullerton, founder and president of Capital Institute. Unlike all other living systems, its design is not sustainable.
- The laws of nature show how hierarchies can be healthy: "The lion is at the top of the food chain, but the lion sits around sleeping most the day rather than eating and killing all day," says Fullerton. All nature is hierarchical, but sustainable; look at the similar branching patterns of tree roots, river systems, lightning bolts, and our own cardiovascular system.
- How can we modify capitalism to become self-sustaining? Financial incentives and disincentives could create a regenerative economy that reduces inequality. If we do not design a better kind of capitalism, "we will increase inequality to the point that we have civil strife and civil wars."
"They" has taken on a not-so-new meaning lately. This earned it the scrutiny it needed to win.
- Merriam-Webster has announced "they" as the word of the year.
- The selection was based on a marked increase in traffic to the online dictionary page.
- Runners up included "quid pro quo" and "crawdad."
A review of the global "wall" that divides rich from poor.
- Trump's border wall is only one puzzle piece of a global picture.
- Similar anxieties are raising similar border defenses elsewhere.
- This map shows how, as a result, "the West" is in fact one large gated community.
Facebook's misinformation isn't just a threat to democracy. It's endangering lives.
- Facebook and Instagram users have been inundated with misleading ads about medication that prevents the transmission of HIV (PrEP), such as Truvada.
- Over the years, Facebook's hands-off ad policy has faced scrutiny when it comes to false or ambiguous information in its political ads.
- Unregulated "surveillance capitalism" commodifies people's personal information and makes them vulnerable to sometimes misleading ads.
LGBT groups are saying that Facebook is endangering lives by advertising misleading medical information pertaining to HIV patients.
The tech giant's laissez-faire ad policy has already been accused of threatening democracy by providing a platform for false political ads, and now policy could be fostering a major public-health concern.
LGBT groups take on Facebook’s ad policy
According to LGBT advocates, for the past six months Facebook and Instagram users have been inundated with misleading ads about medication that prevents the transmission of HIV (PrEP), such as Truvada. The ads, which The Washington Post reports appear to have been purchased by personal-injury lawyers, claim that these medications threaten patients with serious side effects. According to LGBT organizations led by GLAAD, the ads have left some patients who are potentially at risk of contracting HIV scared to take preventative drugs, even though health officials and federal regulators say the drugs are safe.
LGBT groups like GLAAD, which regularly advises Facebook on LGBT issues, reached out to the company to have the ads taken down, saying they are false. Yet, the tech titan has refused to remove the content claiming that the ads fall within the parameters of its policy. Facebook spokeswoman Devon Kearns told The Post that the ads had not been rated false by independent fact-checkers, which include the Associated Press. But others are saying that Facebook's controversial approach to ads is creating a public-health crisis.
In an open letter to Facebook sent on Monday, GLAAD joined over 50 well-known LGBTQ groups including the Human Rights Campaign, the American Academy of HIV Medicine and the National Coalition for LGBT Health to publicly condemn the company for putting "real people's lives in imminent danger" by "convincing at-risk individuals to avoid PrEP, invariably leading to avoidable HIV infections."
What Facebook’s policy risks
Of course, this is not the first time Facebook's policy has faced scrutiny when it comes to false or ambiguous information in its ads. Social media has been both a catalyst and conduit for the rapid-fire spread of misinformation to the world wide web. As lawmakers struggle to enforce order to cyberspace and its creations, Facebook has become a symbol of the threat the internet poses to our institutions and to public safety. For example, the company has refused to take down 2020 election ads, largely funded by the Trump campaign, that spew false information. For this reason, Facebook and other social media platforms present a serious risk to a fundamental necessity of American democracy, public access to truth.
But this latest scandal underlines how the misconstrued information that plagues the web can infect other, more intimate aspects of American lives. Facebook's handling of paid-for claims about the potential health risks of taking Truvada and other HIV medications threatens lives.
"Almost immediately we started hearing reports from front-line PrEP prescribers, clinics and public health officials around the country, saying we're beginning to hear from potential clients that they're scared of trying Truvada because they're seeing all these ads on their Facebook and Instagram feeds," said Peter Staley, a long-time AIDS activist who works with the PrEP4All Collaboration, to The Post.
Unregulated Surveillance Capitalism
To be fair, the distinction between true and false information can be muddy territory. Personal injury lawyers who represent HIV patients claim that the numbers show that the potential risks of medications such as Turvada and others that contain the ingredient antiretroviral tenofovir may exist. This is particularly of note when the medication is used as a treatment for those that already have HIV rather than prevention for those that do not. But the life-saving potential of the HIV medications are unequivocally real. The problem, as some LGBT advocates are claiming, is that the ads lacked vital nuance.
It also should be pointed out that Facebook has taken action against anti-vaccine content and other ads that pose threats to users. Still, the company's dubious policies clearly pose a big problem, and it has shown no signs of adjusting. But perhaps the underlying issue is the failure to regulate what social psychologist Shoshana Zuboff calls "surveillance capitalism" by which people's experiences, personal information, and characteristics become commodities. In this case, paid-for personal-injury legal ads that target users with certain, undisclosed characteristics. It's been said that you should be wary of what you get for free, because it means you've become the product. Facebook, after all, is a business with an end goal to maximize profits.
But why does a company have this kind of power over our lives? Americans and their legislators are ensnared in an existential predicament. Figure out how to regulate Facebook and be accused with endangering free speech, or leave the cyber business alone and risk the public's health going up for sale along with its government.