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#2
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SOCIO-ENVIRO-ECONOMIC SYSTEM
HOW IT ALL WORKS
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IT'S A COMPLEX WORLD!
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Managing complexity is difficult. In modern times, the system has been managed for the benefit of those who own financial capital. The dominant economic metrics have been GDP growth, corporate profit growth and stock market wealth. Management metrics have been aligned to these same goals, and have been very effective.
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THESE METRICS DOMINATE DECISION MAKING
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GDP GROWTH
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CORPORATE PROFITS
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CAPITAL MARKETS
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For the past 40 years since the early 1980s there has been robust global growth according to these measures, but other measures show the majority of the world's people have not progressed very much. This is more than disappointing, it is dangerous.
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AND THE RESULTS ARE FAR FROM SATISFACTORY
IN FACT, THE RESULTS ARE CATASTROPHIC
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ECONOMIC INEQUALITY
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ENVIRONMENTAL DEGRADATION
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EXTREME WEATHER
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Luxury Yachts
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Homeless camp
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Deforestation
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Ocean plastic
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Eye of storm
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Hurricane
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While there has been impressive financial performance, it has come at the expense of catastrophic inequality with far too many left behind, degradation of the environment and climate instability with extreme weather events.
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TAKE INTO ACCOUNT
ALL
THE CAPITALS
GOING BEYOND FINANCIAL CAPITAL AND MONEY WEALTH
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SOCIAL
CAPITAL
SOCIO
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NATURAL
CAPITAL
ENVIRO
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ECONOMIC
CAPITAL
ECONOMIC
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Social and economic progress has been achieved over the past 200+ years by expoiting natural capital. All value originates with nature and everything depends on nature. This is unsustainable, but technological innovation can (must) be used to change things for the better.
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ACTIVITIES have IMPACT on ALL the CAPITALS
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SOCIAL IMPACT
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ENVIRONMENTAL IMPACT
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ECONOMIC IMPACT
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There is a cost of living to support quality of life
There are contributions that people make
There is net benefit AND change to capitals (hopefully positive)
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There are storms, earthquakes and natural disasters
Ecosystem services are a source of all value
There is net benefit AND change to capitals (mostly negative)
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There are operating costs for all oconomic activities
There are benefits from economic activity
There is net benefit AND change to capitals (hopefully positive)
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MANAGE
ALL
THE ACTIVITIES AND ACTORS
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CONSUMPTION DRIVING THE MODERN ECONOMY
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CONSUMPTION
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IMPACTS OF PRODUCTION
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Quality of Life
SOCIO
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Pollution
ENVIRO
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Profit
ECONOMIC
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Consumption is driving the modern economy. It looks like success as long as the depletion of natural resourcs and the degradation of the environment is ignored.There is strong correlation between better quality of life and more consumption in poor economies, but less so in mature rich economies. Rich economies are increasingly associated with catastrophic pollution, waste, inequality and inefficiency.
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MOST ACTORS ARE PEOPLE ... WHO SHOULD BE HELD ACCOUNTABLE
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PEOPLE HAVE A VARIETY OF DIFFERENT ROLES
MANAGE SO THAT EVERYONE IS ACCOUNTABLE
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AS INDIVIDUALS
Live life ... work & family
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IN ORGANIZATIONS
Do the work ... make the decisions
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AS INVESTORS
Allocate financial resources
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Prevailing metrics and financialization have had mixed results ... very good economic ouitcomes for an elite few, but extremely disappointing for everyone else. The concentration of wealth and power is fueling global discontent in very destabilizing ways, including social discontent and anger at the establishment elites and increasingly out-of-control climate instability.
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NATURE IS AN ACTOR ... AND MUST BE RESPECTED
NATURE PREDATES PEOPLE BY BILLIONS OF YEARS
AND IS THE SOURCE OF ALL VALUE
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FOR EXAMPLE NATURE MAKES A FISHERY SUSTAINABLE
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JUVENILE NURSERY
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INDUSTRIAL FISHERY
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SEAFOOD MARKET
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- Natural Capital is foundation for this fish and food flow
- Economic Activity captures fish, employs fisherfolk and earns profit.
- Social Capital benefits from employment and food
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CONSIDER ALL THE PERSPECTIVES ... NOT ONLY PROFIT
BUT ALSO THE IMPACT FROM PROCESS ON PEOPLE, PLACE & PRODUCT
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PROFIT
Economic goal
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PROCESS
Engineering
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PEOPLE
Families
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PLACE
Where people live
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PRODUCTS
Quality of Life
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There is valueadd when there is a positive balance from every perspective. Process is constrained by technology and engineering. Optimizing for profit alone is not enough, people should also progress. And the progress of people is enhanced by the characteristics of the place. Products impact everything. The production of products is a factor in the generation of profits. The consumption of products is a factor in quality of life. Optimizing for all of this is not a simple exercise ... but optimizing simply for profit is not enough.
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IMPERATIVE FOR RADICAL ACCOUNTABILITY
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EVERYTHING FOCUSED ON PROFIT PERFORMANCE MAKES NO SENSE
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We talk about profit and money and wealth
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But not about low wages, poverty and deprivation
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And how the system is rigged in favor of the wealthy
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And all sorts of abysmal hidden corporate behavior
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The only group that are protected systemically are investors ... everyone else may be lied to with impunity. In the USA it is called the First Amendment. But there is nothing to stop society from doing RADICAL ACCOUNTABILITY so that misfeasance in every aspect of society is exposed.
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