Wednesday, April 25, 2012

Can we put the genie back in the bottle?

These days, I am hard at work listening to the conversations as they unfold within the large, growing and vibrant community of people concerned about Sustainability, looking for the right place where I can enter the dialogue, and make a positive contribution to this important issue.

I agree with many others that Sustainability is a critical issue, perhaps the most critical issue, for our times.  I also agree with the view that this is one of the very few truly unique experiences in human history, one that has never really been encountered before, at least not within the history of our Western traditions.

Dating back to the days of the early Greeks, and even before that, to the ancient Persians, Sumerians and Babylonians (modern day Iran and Iraq, curiously enough), there has alway been a frontier: more or less open and unoccupied space beyond our borders into which we can expand when we need to, acting as a safety valve for the excesses of our industriousness, offering the promise of more land, more resources, more of whatever it is we feel we need.

To be sure, there have always been borders, but up until now, those borders have always been limits more or less of our own making, built and maintained for our own comfort and security.  And they have always been more or less porous. People have always found ways to move through, over and around the bounds, to explore what lies beyond, and lay down those pathways that become the highways for larger-scale geopolitical expansion when the pressures inside get too great.

For the first time in history, in our time, that is no longer the case.  We have reached the limits of the Earth, and found that it closes back in upon itself.  We have ventured beyond the Earth, out into the vast expanse of Space, and found that there is nothing really out there for us.  Many still argue that Technology can conquer Space; that we still don't know what good things we may find, if we just keep looking.  That may be true, but right now, that feels more like science fiction than science fact.  At this moment, it seems that there is nothing that the Engineers can build, or that anyone is willing to finance, that can make expansion into Space a practical reality for the rest of us.

No, for the first time in the whole history of human history, I believe, with others, that we have reached a limit beyond which we cannot pass, a limit whose ontology is not a human cognitive construct, but something beyond our power to make or change.  I am reminded of a story from the Bible, where God tells Man: "be fruitful, and multiply, and fill the Earth, and subdue it".

Now, its seems, we have filled the Earth, and made it our own.  And with ownership comes responsibility.  We have to care for what we own, as if it is our own.  Otherwise, we will lose it.

To me, this is not 'end of days' stuff.  It is instead the momentous beginning of the first truly new era in human history since the invention of large scale agriculture which is the foundation of everything else we know as our prosperity today.   It is what John Fullerton of The Capital Institute,, has called The Great Emergence: an epic shift from a paradigm for prosperity built on geopolitical expansion fed by growth in resources under our dominion, to a prosperity of open-ended growth in knowledge, and the continual evolution of work and wealth, as we learn to live, and live well, within the limits of what has been given to us. (Those limits, by the way, are still vast beyond our knowing, just not so vast in a geopolitical sense).

This, to me, is what Sustainability in all its many guises, is really all about: a paradigm shift of truly epic proportions, one of the few true shifts in human history, on par with the Invention of Language, the Invention of Tools and the Invention of Agriculture which have combined to bring us to the point we are at today: living fully within the physical limits of the biosphere which is our home.

As I listen to the growing conversation about Sustainability (putting to one side those on the lunatic fringe, who really just have some personal axe to grind), it seems there are two distinct threads in the discussion.  There are those who are concerned with the physical challenges of living within the physical limits of the biosphere: climate change, population density, environmental degradation, food, health, energy, etc.  Then there are those concerned with the financial challenges arising out of the growing volatility and consequent instability of an increasingly interconnected global capital markets system.

My mission is to draw the proper connection between the two.

I start on the financial side, because investment, in our world, is de facto the way most resource allocation decisions get made.  Since Sustainability is largely an issue of resource management, it is also, unavoidably, largely an issue of investment.

As I listen to the conversation on the investment side of the Sustainability dialogue, it seems to be driven largely by people who just want to slow down the speed of trading that takes place over the increasingly global network of financial Exchanges.

Personally, I don't see how we are ever going to get that particular genie back into its bottle.

Nor do I believe that just slowing down the Exchanges (which will require, ultimately, regulation enforced by Law; people who find a way that they can make money - lots and lots of money - will not stop doing that just because someone else wags a finger at them, and calls them miscreant) is the fix that we need.  Instead of regulating the Exchanges, the paradigm shift to Sustainability really requires an equally fundamental shift in how we invest in Sustainability: we need to invent brand new solutions for sustainably financing the business of sustainability (and the governments that regulate - and in some cases own and operate - those businesses).

Competition, not regulation, is the right path forward.  And competition requires innovation.

Consider that the Exchange-traded financing solution that dominates the world of investment today - and that is showing itself increasingly to be structurally unable to detect and respond to the values of Sustainability (much the way a thermometer, for instance, is structurally unable to detect and respond to the passing of time; for that we need something that is not a thermometer, for that we need a chronometer) - is itself an invention of the 19th Century.  At that time, Sustainability was not the issue it is becoming for us today.  Growth was the issue, and expansion along America's Western Frontier, fed by the motorized machinery of mass production.  Exchange-traded finance evolved as a solution purpose-built for monetizing Growth through Economies of Scale.

It may be possible to cobble onto this Engine of Growth some sensitivity to Sustainability, as well, but that will always be, at best, a compromise.  It may slow things down, but it won't put things on a proper path.

If we want to get serious about Sustainability, we must also get serious about the need to invent, adopt and implement innovative new investment choices, choices that are built for one specific purpose: to monetize Sustainability as the new engine of our prosperity.

The demand for that kind of radical re-invention, in my view, will not come from the investment side of the debate.  It has to come from outside the world of finance.  It has to come from those who want real solutions on the physical side.

These people may think they really don't care about investment, but really, they do -- and have to.


PS - It may be important to note that I do not see Growth as antithetical to Sustainability.  Growth is still important, but Sustainability is bigger than Growth.  With growth, there is always displacement.  But where Growth is blind to that displacement, and largely ignores it, Sustainabililty sees it, embraces it, and deals with it.  That is why Sustainability is Growth, but also more than Growth.  It's evolutionary.

No comments:

Post a Comment