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Saturday, September 23, 2017

Circular economy in diagrams: where logic breaks down and where financial incentives can work

Posted by steve on December 3, 2013

Are your circle economy diagrams confusing your audience? This article aims to help you communicate clearly. As a staunch aficionado of reaching a resilient economy through sustainability I am all for circle economy thinking- if it ensures people get food on the table and a roof over their heads. Unclear delivery will not help our cause. We talk of circle economy from two angles: economy as a form of housekeeping and economy in terms of monetary flows. These are not always the same thing. The final section suggests a solution.

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WAIT! There is more to read… read on »

Strategic Newsletter Launches: September Edition 2013

Posted by steve on September 27, 2013

Signals of Change newsletter  monitors the news flow from a wide variety of sources from the last 30 – 60 days for developments that could inform your organization’s social and environmental strategy which in turn could affect your overall business strategy.  Signals of Change Newsletter is produced in  cooperation between the Open World Foundation, the Institute of Swedish Safety and Security and Stephen Hinton Consulting.

The newsletter is released once a month to subscribers only. (To subscribe and be fully up to date – it’s free – click here). The newsletter is released a few weeks later for public reading on partner websites. WAIT! There is more to read… read on »

Overshoot day August 20: will “economic” reality meet resource reality?

Posted by steve on September 22, 2013

Let us look at overshoot day from the point of view of economics. By economics I mean the technology of keeping track of housekeeping with resources and keeping track of material obligations to those around us.  Economics does not need to be restricted to counting with money. Other measures can be used. And it is fascinating to try it. In this case we can consider that a Nation has its own household that it needs to keep fed and housed, and has its natural resources to do it. We start with a situation however where many nations are living over their means. WAIT! There is more to read… read on »

Would you like extra IT with that, Sir?

Posted by steve on May 12, 2013

Someone has to say it: digitalising your life might not be all good.

Anyone who has checked their I-Phone whilst on the toilet will probably have an inkling that something is not going right.

The fundamental problem is that everyone working in the IT industry wants to sell more IT.  And those outside would like to get in, happily by working away at an app for free in the hope that they can sell it and make big bucks.

I wouldn’t mind if more IT meant more free time, less hungry people; but it doesn’t, not the way the basic program we call “business as usual” is configured. An unhappy mistake, putting IT together with industrial capitalism. We need to find a way out of this, and quick.

Read more in this debate article

 

Envisioning a world without work

Posted by steve on January 7, 2013

We are getting closer to 1984 and Brave New World, where people work but that has nothing to do with the cost of living, rather something they just have to do. In this article in the Guardian,   analyses the disparity between the value add workers bring, to the amount of wages they take home.

The theory has been that if companies retain a higher percentage of profits, investment will grow. Looking at the data gives another picture: as wages plummet, partly thanks to the influx of workers from Easter Europe, firms take on more staff to do menial jobs rather than automate.

And the gap between wages for workers and the top-end salaries widens.

Sadly, this is a very negative preparation for peak oil. Reduce wages as far as possible so that workers can become cheap replacements for automation.

In a related post by Guardian’s Economic Editor,  LARRY ELLIOT,  he explains why more jobs may be bad for British workers.  Low wage and falling investment are symptoms of a failing economy.

Suppose capitalism mimicked the way nature works.

Posted by steve on June 6, 2012

Article updated June 6 after consideration of all the recent comments

We are stuck. On the one hand you have people who talk about economic growth as being the objective of policy – necessary to be able to pay back debts and achieve prosperity. On the other hand, you have the sustainable camp that claims infinite growth is impossible and therefore the whole economic system is bound to fail as it relies on it. You have people who claim we need GOOD growth as opposed to BAD growth. Bad growth would be the increased economic activity due to storms, break-ins and failures of products. Either way, the term capitalism comes up as if it were a system. Perhaps if we explored the idea of developing our thinking about capital we might find some ways forward.

My aim here is to clarify the idea of using capital as a central social planning approach, using the idea of settlement  maturity. This is the idea that settlements, and the societies in them, like an eco-system, can mature.  If society can mature, then maybe its  capital profile will mature too.To be able to take this analytical line we need to understand first what ecological maturity is.

Let us look, then, at how nature grows and see if we can find some insights into how capital can grow, and what economic growth would look like through the eyes of sustainability.

Growth =net increase in mass

Growth (rapid increase in biomass)is a stage the ecosystems go through on their way to ecological maturity

There is still growth in mature eco-systems. Trees still grow, albeit slower. However, for the system as a whole there is little net increase in biomass.

Ecologists describe how all eco-systems strive to become mature.  You probably have the idea somewhere in the back of your mind, how smaller animals give way to large predators, small plants become forests, rushing water becomes a swamp, etc.

One well-known description of maturity comes from the ecologist Odum,(ref 1)  (table below)

Let’s take it bit by bit:

  • Gross production. This means the total amount of biomass that accumulates in the system. Note that as a system matures, the slower biomass increases. For example, young trees grow very fast, older trees grow much slower.
  • Biomass supported. As the system matures, more biomass is in the system – more trees grow, more animals and plants more in, and they are larger.
  • Total organic matter. As above, the more mature the system, the more in the eco-system.
  • Size of organism. In immature systems, the organisms are small. As the system matures, and there is more for predators to eat, for example, the more and larger the organisms become.
  • Niche specialism. As the system matures so does diversity. More specialized organisms move in.Mineral cycles. Eco systems need minerals to cycle in them in order to function, so to have more biomass they must retain nutrients.
  • Nutrient exchange rate organisms <> environment . Immature systems “leak” both heat and nutrients to other eco-systems.Role of detritus in nutrient cycling. As the system matures, detritus is more and more important as a source of minerals and energy for the organisms in it.Nutrient conservation. Mature systems conserve minerals and do not leak them to other systems.

We now need to explore the idea of capital.

The diagram below breaks down the categories of capital often used.
The categories should be  be self evident. But from the point of view of accounting, human capital and social capital are not normally put on the books.
Financial capital is divided into that owned by the organisation and that borrowed. In English the terms foreign capital is used for  money lent and equity is the money put into the company by its owners.

Now let us apply the idea of maturity using the idea of the built environment; a settlement.

An immature settlement might be a few tents that settlers might bring with them. They have no agriculture, there is no infrastructure, but they are surrounded by the bounty of nature and can begin to convert, for example, trees to buildings.We can envision an immature settlement, but can we envision a mature one? Surely our cities act like immature settlements: nutrients are lost to surrounding environment, metals and minerals end up in tips, and even our building reflect heat rather than gather the energy from the sun. The list below is an attempt to bring together ideas of what a more eco-mimicking city or settlement might look like.

GROSS PRODUCTION. Here we would see the production of buildings and transport infrastructure as complete, only repair and upgrade would be needed. Most production activity would be turned to food and heating and lighting.

BIOMASS SUPPORTED. The mature settlement would have a high level of biomass supported in the form of tree, and food -producing facilities.

TOTAL ORGANIC MATTER Total organic matter would be higher, to provide eco-system services like shade, energy capturing, building and clothing materials etc. A field does not represent this vision, we would expect more organic matter intensive methods, like forest agriculture, food forestry, would be used.

SIZE OF ORGANISM. It can be imagined that in this case, for a society organism means body, like an organization. As society matures, more specialized and larger organizations can provide efficiency of scale and specialization.

NICHE SPECIALIZATION. People could have more specialized jobs as society matures. Early settlers might need to master a broad range of tasks without being able to go too deeply. In the specialized society everyone could master subjects deeper.

MINERAL CYCLES. It makes sense that an immature society digs up iron and other materials to get started. But after a while, the extraction of these substances can become polluting and maybe lead to scarcity. In this case, minerals already extracted should be recycled ad not released in to the biosphere. This approach is being pioneered by the natural step and Cradle to Cradle. The mature settlement is a mineral recycling society

NUTRIENT EXCHANGE RATE WITH ENVIRONMENT. The same here as for minerals. The mature society will retain nutrients for recycling, and do the surrounding environment a favour by not putting this burden onto it, as well as minimizing the work needed to obtain nutrients. These building blocks of life can stay within the settlement. More are only needed for growth.

ROLE OF DETRITUS Early settlers could make waste without it creating a problem or being seen as a loss of valuable resources as there probably were not much of them. Not so for the mature settlement, where the amount of biomass is high. Detritus is a resource and in the mature society there may be much of it. It can also accumulate and be a pollutant. So it needs recycling. This will mean a soil to soil perceptive for food systems – from soil to plate back to soil.

NUTRIENT CONSERVATION. Gathering nutrients requires a lot of work in an immature settlement. Mature settlements recognize the energy and effort needed in obtaining nutrients is far greater than the effort and work required to cycle them.

What we are describing, then, is that the concept of economic growth is not an end in itself but the process by which economic maturity is reached. At this point, capital is accumulated, analogous to the build up of bio-mass in the mature eco-system.

The effect on capital.The diagram below illustrates how capital is converted and increased in the maturing society.

Natural capital to man-made capital (A) : For example, minerals and nutrients would be used to create housing and machines. At the same time, man-made capital should be in place to promote development of natural capital(B).  Man-made capital cannot increase at the expense of natural capital, the two must grow together. Otherwise, the services that natural systems provide (like building materials, food, clean water, etc) will be unavailable.

Conversion of human capital to man-made and natural capital(C): human capital conversion works uniquely. Taking knowledge and applying it to solve the problem of creating man-made capital and natural capital can, if applied right, increase human capital through learning.This knowledge could be institutionalized in social capital in organizations and information systems.

Social capital, the development of organizations (D), would in turn be needed to run, organize, and develop the man-made capital (E) and natural capital(B).

The role of Financial Capital. In this diagram, money represents an accounting system that has significance in that the value of the whole increases over time. (If all forms of capital can be valued using the same system of measurements.)  As the system matures it will accumulate biomass and minerals for recycling and organizations that accumulate knowledge. An accounting system could be developed that calculated in this way. Growth would slow down as the settlements matured-  I leave it to later articles to explore how such an accounting system might work.

REFERENCES

1) Odum, E. P. 1969. The strategy of ecosystem development. Science, 104:262-270.

A philosophical exploration of what “sustainable” and “technology” are

Posted by steve on April 4, 2012

What we call technology is actually a narrow practice including mechanics, electronics and computer science. This confusion is hampering human development, especially when the expectation is on not developing financial and social technology but demanding mechanical solutions when simple agreements could suffice. Modern technology is failing, we are not addressing the challenges in front of us. For some reason, our very use of language is holding us back and preventing us from thinking clearly. WAIT! There is more to read… read on »

Is corporatocracy the way you really want to go?

Posted by steve on November 15, 2011

Accenture's ad reflects a strange view of nature and its own capabilites. The hubris of the modern corporation?

What is the best way to organise society? That question has been around since we started to be able to talk. In my world I like to add “what is the best way to organise society so it develops resilience and sustainability”.
I  have pointed  to writers like Aldous Huxley who, in his book “Brave New World revisited” , argues that our urbanization brings forth the desire for “the good order” and that the desire for “the good order” gets misued and turns into some kind of dictatorship. In Huxley’s case the Brave New World he refers to is his vision of a future Britain, where every child is produced in a test-tube to ensure genetic suitability.
One aspect of “the good order” is the idea that corporations are a good way to organize our activities. The basic design is neat: shareholders take the risk and share in the rewards, the corporation contributes to society by paying tax, and the corporation provides people with what they need and with jobs. So pervasive is the the idea that corporations are the best way that they can become the standard solution for a myriad of problems. Problems with healthcare? Privatise. Fed up with looking after support staff like reception, cleaning, etc? Bring in a company to do it. Got a business problem? Bring in a consulting company. Want a job? Look for a company to work for. Need new technology developing? Give a research grant to a company. The list goes on.

All corporations get income directly from the individual pockets of citizens (nowadays called consumers) or indirectly via authorities spending on behalf of citizens (like selling arms to a nation’s defence). Now, in this system corporations line up to compete for capital  and to compete for the income from consumers. They also need to compete by pressing prices down and income up.

However, once you let this piece of societal DNA code loose – this corporate legislation – it may have unintended consequences. This is the idea of COPORATOCRACY – when corporate influence grows so large it manages in practice to side-step democracy and influence decision-making only for the good of the corporations. Corporacracy can go so far as to convince citizens that it is better to live in a corporacracy than a democracy – with arguments like “you get cooler gadgets and definitely better cars”.
Are we in that situation already? The recent US decision to allow corporations to spend limitlessly and anonymously on political campaigns would point to that we are dangerously close. And is this the situation we want? Maybe it is right, that our societal evolution should go from democracy to corporacracy.
To help you judge for yourself I list the characteristics of corporations below – against each one you can ask the question – has this gone too far out of all proportion to the point where it is actually threatening the way we live?

They need to grow. Growth brings the ability to pay equity owners a dividend, it brings economies of scale to push costs down, it makes the corporation more present and able to reach wider markets. It also means more taxes paid and a rise in popularity with local authorities.

They need to control. To ensure costs are kept down, to ensure competitors do not take their markets , to ensure consumers keep a friendly view of them – a level of control is needed.

They need to monetise. If anything is free it should not be fun. People having fun without paying is a lost business opportunity.

They need to inspire awe, to keep competitors away, to keep customers from complaining, to keep authorities from regulating them etc.

They need investors and consumers to believe in them. If you adopt the corporate model – where for example you get your milk from a corporation and not from a farmer – then you need to believe in that product is OK and that the corporation will do what it says it will do. You need to accept that the corporation has the power to deliver so you need to give the corporation the same level of trust you earlier put in the man who ran the local shop or the local farmer.

They need to standardise and repeat. Standardization means it is easier to control, and also reduces costs. The world run by corporations is one very much standardised. And they need repeat sales to keep the income flowing in to pay investors.

They need to communicate basic messages often. They will define concepts for their own benefits and convey messages as truths, regularly to keep up a profile and customers coming back for more.

They need to constantly get more money out of their system, for example by cutting input costs, raising prices or getting more out from what they put in.

For more on this topic, see my article on how Copenhagen city planning and architecture now reflects a complete sell-out to corporacracy.

Reinvent work as volunteerism – the only way to sustainability

Posted by steve on December 15, 2010

It has been striking me more and more recently how the positive developments in sustainability are coming from a spirit of volunteering. ”Going along” is a central theme of my book, ”Inventing for the Sustainable Planet”. The book was imagestreamed and insights can take a long time to sink in. I see how I have emphasized the few technical solutions that came up rather than the social ones, even though these are the central thesis of the book.

Some signs: Firstly, the Transition Movement is picking up speed. There are now Transition Movements in every US state, and other initiatives like 1 Million gardens are gathering supporters

Then there are the countless numbers of websites run by volunteers, with everything from Peak Oil to sustainable gardening.

I am getting a sense that the funnymoneyfest we have all been complicit in has brought a lot of people to their senses. The only business worth having as business as usual is the voluntary, or go along, business in a society that offers security. From the research in my book I’d suggest a number of reasons why this could be so.

One has to do with basic human nature and the need for security. If your security comes from the tribe, then you will gladly ”pay taxes” to the tribe, in the form of helping out, encouraging and teaching others.

For many years Sweden’s high rate of taxes was defended by citizens as actually giving good value for money in terms of social security and free schooling, low cost local transport, medical care, etc. Nowadays the level of service has been eroded, the burden is nearly as high, and there is much less a feeling of security. In fact, the tax authorities see it their role to ”make sure everyone does their bit” which sounds like extracting a pound of flesh with a modicum of threat.

Another reason might have to do with our genetic propensities. The reason you need to be in a group is because together the mixture of personalities, perspectives, feelings, inspiration of the moment, all combine to create an ideal pool from which to handle a situation.

In volunteering, the feeling comes from within each individual and whatever the person does is an expression of wanting to do something and feeling inspired to do it. Contrast this to the situation of work. Even work functions better when people can volunteer for jobs within their areas of responsibility.

I like the Transition Handbook’s approach of mutual planning of what could be done or needs to be done, and then asking people to consider what they would LOVE to do, would feel UNCOMFORTABLE doing and what they would be GOOD at doing.

The prospect of Peak Oil, Peak money, Peak everything in a world that seems to be running on a delusion that economic growth is the only fix-it in town, seems daunting and cause for depression.

My advice is: look at what could be done, how you feel about it, and go out and volunteer for something you’d love to do. Who knows, it might just be the small effort that helped turn the tide.

If the national economy were run as a football game…

Posted by steve on November 16, 2010

The modern economy has undoubtedly given millions better lives.

However, despite years of experience and development of macroeconomic theory, despite decades of Nobel prizes in Economics, there still doesn’t appear to be a way to run an economy without putting severe hardship on a large percentage of the population.

And this state of affairs is generally accepted.

Especially women, wives and mothers. It is women who end up suffering take from this hardship.

The other thing that I know that women particularly care about is the environment. Again, it is also generally accepted that pollution is unavoidable and depletion of natural resources the unavoidable price for economic stability. The costs of pollution and depletion are not paid for directly by the producers or consumer, but by society as a whole. They are called externalities. Externalities, it seems, are unavoidable if we want a stable economy.

But let us not just give in. Let us look at possibilities. WAIT! There is more to read… read on »