Macro-Econ - Worldviews, Thresholds & Success

As I’ve touched on before, the prime drivers of our economic system have become growth and efficiency, usually represented by GDP / GNP growth. The logic seems to make sense on the surface – more growth and more efficiency leads to more stuff being produced, more jobs, cheaper stuff all of which should lead to improved welfare, eventually, for all people on the planet. Unfortunately, it is becoming increasingly clear that this is not the case.

Some foresighted thinkers realized this as early as the ‘70s, when these global trends started to become clear. With the development of Systems Thinking techniques, pioneered by Jay Forrester at MIT, it became easier (though still very difficult) to better identify causal relationships in complex systems – such as the global macro-economy.

As a result, one of Forrester’s students, Donella Meadows co-authored Limits to Growth – a landmark work that unfortunately has so far failed to have a major impact on mainstream economic thinking – I’ll get to my thoughts on why in a minute.

Closely related is Herman Daly’s concept of a “steady state economy" – where progress, development, growth of value continue to drive the human endeavor, but physical growth of the economy – extracting more stuff and moving it around – reaches an optimum scale, an appropriate balance, a steady state… sustainability.

Central to this concept is a very simple differentiation between economic world views. The steady state world view can be represented as such:

The system boundaries are set by the biosphere, and the harsh reality that we only have one planet, which is a closed system – meaning there is transfer of energy across the boundary (sunlight in, and radiant heat out) but no movement of matter across the boundary (with the exception of insignificant movement in the form of satellites/spaceships out and asteroids in). Within that system of the biosphere, we’ve got society cranking along with all of its economic activity that takes resources from the earth’s crust and the biosphere and releases waste back into the biosphere.

These concepts are very closely related to understanding the System (Level 1) that we talk about in the 5-level framework, and the 4 Sustainability Principles (Level 2).

The old, yet still dominant world view is radically different. The economy is not considered in relation other realities – it is considered on its own with growth defining success. Natural resources are seen as inputs and outputs that drive the economy, and boundless growth is assumed to be possible and desirable:

When these economics models were developed they made perfect sense. For all intents and purposes, there were no limits to growth. The “economy” was so small in relation to abundant natural resources that any impact the ‘inputs and outputs’ had on natural systems was negligible to the point of insignificant.

One hundred years of growth and development has changed that. As we know, to say the impacts are now very significant is a gross understatement. So, what’s needed is a change in outlook and a revaluation of what our real goals are as a species. I think we can all agree that first and foremost, we’d like to survive – sustainability. That’s the baseline and to do it we need to shift the sum of our actions so that as a society we don’t violate the Sustainability Principles.

A good place to start is to re-evaluate the indicators we use to measure success. Right now that essentially means one very crude indicator – GDP / GNP. The basic components break down as follows: GDP = consumption (public & private) + investment + exports − imports

It’s very basic and simplistic, and I think if we were to ask most economists they’d concede that. Nevertheless it has become the definition of success for nations, due to the speed and complexity of our global economic system, which demands a simple gauge to measure “success”. The problem is that it measures physical growth (a huge problem in terms of sustainability as we saw through the world-view diagrams), it does not differentiate between desirable and destructive economic activity, and it only measures what is measurable. 

Robert Kennedy (please suspend any political pre-conceptions you may have here) put it much more eloquently than I could:

The Gross National Product includes air pollution and advertising for cigarettes and ambulance to clear our highways of carnage. It counts special locks for our doors and jails for the people who break them. GNP includes the destruction of the redwoods and the death of Lake Superior. It grows with the production of napalm, missiles and nuclear warheads. And if GNP includes all this, there is much that it does not comprehend. It does not allow for the health of our families, the quality of their education or the joy of their play. It is indifferent to the decency of our factories and the safety of our streets alike. It does not include the beauty of our poetry, the strength of our marriages, the intelligence of our public debate or the integrity of our public officials. GNP measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country…”

Beyond that, a better understanding of Human Needs should help us evaluate what the aims of our economic endeavors and our resulting economic policy should look like.

So where does that leave us? Well, in addition to an understanding that our true goals are to ensure sustainability and meet human needs so we can live fulfilling lives without undermining future generations’ ability to do so, we should probably develop some better indicators. This has been done, and the results have been fascinating.

The Genuine Progress Indicator and the Index of Sustainable Economic Welfare are two of the better known attempts at developing more appropriate tools for measuring economic success. While their methodologies are different, they essentially work to subtract some of the negative economic endeavors we’re forced to engage in, instead of adding them on as if they were positive attributes to society. The concept is that there are costs as well as benefits and the costs should be subtracted, not added. The costs are things like costs of air, water and noise pollution, loss of wetlands and farmlands, cost of resource depletion, cost of family breakdown, cost of crime, etc.

When compared to GDP, some interesting conclusions can be drawn. The results may or may not be surprising to you depending on how you see the world. In most cases, these indicators clearly show that while GDP and a growth-focused model is an effective approach to development initially, there is a threshold point, where continued growth actually starts to result in a decrease in welfare.

THRESHOLD HYPOTHESIS:

“For every society there seems to be a period in which economic growth–conventionally understood and measured-brings about an improvement in the quality of life, but only up to a point-the threshold point-beyond which, if there is more economic growth, quality of life may begin to deteriorate.” (Max-Neef, Ecological Economics, 1995).

In the US that threshold was crossed somewhere in the early- to mid-‘70s…

_

In most other industrialized nations the threshold appears to have been crossed a bit later – the in the late-‘70s or early-‘80s.

In addition to highlighting that GDP should not be the end-all-be-all that it has become, this threshold-hypothesis could illuminate some key aspects of our macro-economic system.

At the top of the list, it helps explain why the dominant growth oriented neo-classic economic model is so deeply entrenched, and why economists hold on to it so desperately - it worked. 

This hypothesis seems to show that welfare increased right along with GDP before the threshold. In addition to the fact that it worked, economists have been hard at work to gain prominence in academia, to prove that the discipline is a science, with concrete laws, and ‘proven’ models to support them. There are slews of jokes about economists working hard to make reality fit the model instead of the other way around – but the consequences of this misguided perception of reality and the policy that springs from it is no laughing matter.

It’s important to remember the obvious here - that most economists are very smart people, and it’s not surprising that after spending huge chunks of their lives (and usually a lot of cash) learning and understanding the nitty gritty details of economic theory and how these models work (with plenty of historic proof that they do work well under certain circumstances) that there is a tendency to hold on to them. Because we’re dealing with complex systems it’s very easy to get lost in the leaves of blame, to write off negative impacts as unfortunate side-effects that are necessary to improve overall welfare, which will happen eventually if we just stick to the model.

Due to the over-specialization in universities and society as a whole, communication and understanding across disciplines is in rapid decline, and that is very dangerous when we get to dealing with the complex, interrelated ecological and social systems upon which our survival depends. I’m over-due for a post on transdisciplinarity on the subject…

But this post has already gotten way too long – it’s because exams are over, and break has begun – the joys of student living, we’re looking at 3 solid weeks of time for idleness and reflection. Hopefully I’ll get a lot of the reflections up on the blog, so stay tuned, and stay going…

WTO Meeting, US Subsidies & Efficiency

Just a quick post, as I’m in the middle of exam madness, but wanted to point out that the WTO talks just started in Hong Kong. A group in our program just did a presentation on how the WTO might go about creating a sustainable vision and implementing an action plan to move towards that vision – it was a very impressive and informative project, and it will be very interesting to see if the WTO comes through this ministerial meeting – the vast majority of the world’s poor countries are apparently finally beginning to stand in solidarity against the FIPS (Five Interested Parties – the US,EU, Brazil, India, and Australia), and the closed-door decisions they make that create gross imbalances in subsidy and dumping rules.

This video clip gives a very brief, clear picture of one huge element of the current global trade model that has disastrous effects in terms of social and ecological sustainability…

Warning: if you are like me, and believe that free markets can be hugely effective in meeting peoples needs (if the whole system is considered) than you will probably find this video disturbing, maybe even infuriating, but hopefully also insightful.

Cotton Farmer Subsidies Video

…(also – keep an eye on that slippery word “efficient” – how ‘efficient’ is it for us tax-payers to subsidize farmers so that trade undermines Africans’ ability to meet their needs, so we tax-payers can then turn around and pay for aid money to try to ‘help’ them – usually in a way that further undermines their ability to meet their own needs – a vicious positive feedback loop, and we know from studying systems that positive feedback loops inevitably at some point cross a threshold if they are not checked or balanced. The results are usually very fast, dramatic and unpredictable)

It's not all bad though - when I have some time I'll get some info up from that group's presentation on how the WTO might look in a sustainable society.

I’m finishing up exams this week, and have a few days of down-time here in Karlskrona, so I hope to catch up on a bunch of posts that I’ve been meaning to get to. Hope everyone’s getting stoked for the holidays – I will be missing you all – Stay going…

The Importance of Vision and Sustainability at Ford...

Just a copy of a recent assignment - Part I is more or less just a synthesis of some recent readings and lectures on organizational vision. Part II is probably a little more interesting looking at what Ford Motor is doing in terms of Sustainability.

Part I – The Organizational Vision: Composition, Creation and Uses

According to Peter Senge, the vision is “a force in people’s hearts, a force of impressive power.”[1] This force is the result of a gap between the vision and the current situation within the organization, which provokes a creative tension within people, and drives them to get from “here” to “there”. The organizational vision is an articulation of the soul and character of an organization. As such, it acts as a guiding force and a shared point of reference for the organization and the individuals that make up the organization. A powerful vision will motivate, energize and inspire people in a certain direction by providing a shared goal and a “common caring”[2] for all members of the organization. The vision encapsulates the duality of any organization that creates meaning and strength through a strong, core identity, while at the same time constantly strives to innovate, improve and move towards a desired future. The vision is something that can never be ‘achieved,’ but always provokes progress.

It is difficult to pin down a specific definition of what an organizational vision is, so a description of the common components of visions is helpful. According to Collin and Porras in Built to Last the vision encompasses both the Core Ideology (including core values and core purpose) and the envisioned future (ambitious long term goals and inspiring descriptions of the future).

Core ideology speaks to the strong, steady identity of the organization. It is partly made up of core values, which are akin to the organization’s character or personality. These are intrinsic values to which the company holds fast regardless of market conditions or demands, and they should stand up to the question: would you still hold these values if they acted as a disadvantage to you, if you could make more money by abandoning them?

The other key aspect of core ideology is core purpose, which justifies an organization’s existence. It identifies why the organization is important to society and what needs the organization aims to satisfy and for whom. While the core purpose does not change (Collin and Porras suggest it should last at least 100 years) it does inspire change. As it is not meant to be something that can ever fully be realized, the organization must constantly change in its pursuit.

Complementing the core ideology is the envisioned future of an organization, which consists of some combination of strategic goals and/or vivid descriptions of the future. Strategic goals respond to what customers and other stakeholders value and set ambitious targets for the organization to achieve. While achievable, they should be challenging enough that success is not guaranteed. Collin and Porras put them into four categories: target (become a $1 billion company by 2010); common enemy (overtake the market leader); role model (emulate the market leader of another industry); and internal transformation (focus on a revitalization or dramatic shift in the model within the organization).[3] Leaders can transform these strategic goals into vivid descriptions of future success to excite and energize members of the organization.

Just as a vision can take many forms, it can be created in a variety of ways. In The Fifth Discipline Fieldbook Bryan Smith outlines five methods for building a shared vision: telling (the boss creates a vision and tells members that they must get excited about it); selling (management creates a vision and brings it to the members hoping for buy-in); testing (a vision is brought to members and if they’re not enthusiastic, it is revised); consulting (members are asked to provide input for the vision); and co-creating (members work in teams to create and revise a shared vision).[4]

The most effective method depends on the size and nature of the organization. Ideally co-creating is possible because the process allows for people to create personal meaning in their work, it promotes teamwork, and results in a truly shared vision. However, it takes skillful leadership and a lot of time to teach dialogue skills, and allow trust and interdependence to develop. Although the process can potentially be long and costly, the process is beneficial regardless of the outcome. Allowing people to align their personal values with their work will prove to be a competitive advantage for companies as employees increasingly demand a fulfilling work experience.

A vision – and particularly a co-created vision – is important in regards to strategic sustainable development because the task is monumental. Thus, it requires the personal commitment of many people that a powerful vision inspires. It also requires the cooperation of many people that co-creation enables. A vision is also necessary in terms of defining success for sustainability with the four sustainability principles because if we don’t know where we are aiming to go, it is very unlikely that we will get there.

In terms of strategic management, a vision is helpful because it (1) provides an effective way to frame action plans and it (2) promotes integration throughout the organization. In terms of framing the action plan, an organization can better assess its strengths, weaknesses, threats and opportunities as they relate to moving towards the vision. The organization can then identify and prioritize measures in such a way that they create strategic movement towards the vision. In terms of integration, the shared mental model that the vision embodies enables the members of the organization to better communicate and cooperate in order to more effectively implement and carry out the action plan

Part 2: Ford Motor Company – The Challenge of Re-Visioning the Road to

Sustainability

Henry Ford had a highly compelling vision for the Ford Motor Company in the early 1900’s to “democratize the automobile.”[5] This vision was central in sparking the explosion in automobile transportation and infrastructure over the past century and in keeping Ford aligned as a leading company throughout the changes and competition of that explosion period. Today the company’s vision is a bit less inspirational: “To become the world's leading consumer company for automotive products and services.”[6] However, in terms of strategic sustainability, the company is very close to tipping from a reactive ‘market chaser’ back to the inspirational visionary kind of company it was at its inception 100 years ago. In a speech at the Greenpeace Business Conference in 2000, Bill Ford said: “Ford Motor Company once provided the world with mobility by making it affordable. In the 21st century, we want to continue to provide the world with mobility by making it sustainable.”[7]

Currently, Ford touches on sustainability in its statement of values, a sub-set to its vision, saying, “We are a leader in environmental responsibility. Our integrity is never compromised and we make a positive contribution to society.”[8] While this is a rather vague statement and a small component of the vision, the company has also published an extensive Annual Sustainability Report since 1999. In the 2004/05 Report, Bill Ford wrote an introduction, titled “Setting the Vision,” in which he stated:

At Ford Motor Company, we have made sustainability a long-term strategic business priority… Sustainability is about ensuring that our business is innovative, competitive and profitable in a world that is facing major environmental and social changes.[9]

I would argue that Bill Ford is working strategically to bring a vision of sustainability to the company, using the Sustainability Report as a flexible platform to do so.

He has faced a lot of resistance in his attempts to integrate a sustainable vision into the company that his great-grandfather founded. In 2000, he articulated this frustration, saying, "everyday I would push environmental ethics and the top executives hated me for it. It's been a ten year struggle to get where we are now, which is to acknowledge that environmental leadership is central to our strategy.”[10]

And the struggle continues. In 1999/’00 Ford was faced with a myriad of challenges. The first Sustainability Report, Bill’s vocal, public stance on sustainability, and the company’s withdrawal from the Global Climate Coalition (an industry association designed to discredit climate change science) all spooked Wall St. In addition, the Bridgestone/Firestone recall and the bursting technology ‘bubble’ created a ‘perfect storm’ that made sustainability initiatives very difficult. When Bill was appointed Chairman in 1999, Ford’s stock was trading over $35, in March of 2000 it was below $25, after September 11^th it broke below $20, and today it is below $10. This has proven to be a difficult environment in which to push sustainability because of the existing context where the vast majority of players in power (within the organization, the investment community, and government) are stuck in the mindset that social and ecological initiatives come necessarily at the sacrifice of economic performance.

As a result, Ford has not lived up to his promise to reduce SUV fuel consumption by 25% by 2005, and in fact CO₂ emissions per vehicle and fuel economy are essentially unchanged over the past 5 years. Still, Ford has worked to push sustainability initiatives. In 2000, William McDonough was hired to redesign the company’s Rouge River manufacturing facility and construction is underway. Bill Ford, who said, "we want this manufacturing facility to be what it was 80 years ago, the most copied industrial site in the world-but this time for sustainability,"[11]

The company has eliminated mercury switches in all models as of 2002, installed a large solar array in its Wales plant, and was a founding member in the Chicago Climate Exchange and the UK Trading Scheme. As of September, the company committed to increasing hybrid production 10-fold by 2010, introducing 4 new Flexible Fuel (ethanol) vehicles in ’06, and initiating projects to offset greenhouse gas emissions from manufacturing hybrids.[12] Also, and of utmost importance the company has acknowledged that the future of sustainable mobility will include a combination of better vehicles, fuels, city planning, and conceptualizations about transportation.[13] Regardless, environmentalists are still largely critical of Ford’s initiatives and accuse the company of “green-washing” with the aggressive rhetoric in 2000.

At the recent Clean Vehicles and Fuels Conference in Stockholm, Ford representative Nils Lekeberg said that after pulling back from sustainability initiatives Bill Ford is “officially” back on his environmental crusade.[14] In this year’s Sustainability Report, Ford says “our responsibility to our customers, shareholders, employees and communities includes preparing for the future without delay.”[15] This statement shows that he understands the importance of vision that includes sustainability. The fact that it has proven so difficult to make that change demonstrates that top-management commitment to sustainability is not necessarily enough to integrate those values and that sense of purpose into the company – without a lot of work – particularly in a publicly-traded company.

In addition to the difficulties discussed above surrounding integrating sustainability into the ‘mainstream’ culture at Ford, the company also has some obvious weaknesses within its Sustainable Business Strategies Team. First of all, its definition of sustainability is flawed: “At Ford, we have defined sustainability as a business model that seeks to create value for stakeholders by preserving or enhancing environmental, social and economic capital.”[16] While these are important and admirable aims, they are unclear and could be ineffective in steering the company towards sustainability – how much “preserving or enhancing” is enough? Is sustainability a “business model” or a dynamic state of being? Is an organization sustainable if it only “seeks to create value…”? The group does acknowledge that this is a “working definition,”[17] but it doesn’t provide a clear definition of success in terms of sustainability.

If Ford hopes to be more effective in its approach to sustainable development, sustainability needs to be incorporated into their overarching vision. The existing vision “to become the world's leading consumer company for automotive products and services” does not align with the sentiments expressed in the Sustainability Report, which implies a vision along the lines of “to become the world’s first sustainable mobility company.” In order to establish that they are moving in the right direction towards that goal, they will also need a more concrete, scientific definition of success in terms of sustainability, which the four Sustainability Principles provide.

*************

Still busy here in Karlskrona - just finished a presentation on state of Europe in terms of sustainability, focusing on climate change, which is quite interesting to do with CoP 11 happening in Montreal right now - hopefully some strong news will come from it.

We've gotten some snow and the Christmas decorations are up all over town, so things are good. Hope you're all well as we slide into the holidays - take care and stay going...

Quantum Clarification from a Pro, and a Visit from a Visionary....

Hej all - a quick follow up on my earlier post regarding quantum physics. My dear friend Louisa Gilder is busy battling through the last rounds of editing her book on the subject and offered the following clarification on my amateurish attempt to broach the subject:

ON THE DUALITY OF LIGHT: It is true that matter + antimatter can cancel out and produce photons (gamma rays)... but since photons themselves have no mass (only energy), and are not conserved (in a single ray of light the number of photons is always changing), they don't seem to really count as "matter." But light certainly has a dual nature in that it sometimes acts like a particle and sometimes acts like a wave.

As for her book – it looks like we may have to wait a bit, but I’m sure it will be well worth it…

maybe fall 2006. i hope. the title is "the age of entanglement", and it's a (non-technical) history of quantum mechanical entanglement -- which may have already come up in your classes; at any rate, it's closely related to some of the things you talked about on your quantum physics blog entry -- it's when two particles act as if they are intimately connected even when they are infinitely separated. discovered by einstein and schroedinger and ignored by almost all physicists for fifty years.

In a way it’s hard to imagine that this ground breaking science has been ignored for so long, but on the other hand it can be very scary to start to think about how our most basic assumptions about how our universe operates can be turned upside down. I can't wait to read the book!!

In related news, we just had an unbelievable day of lectures from Göran Carstedt – former President of Volvo France, Volvo Sweden, IKEA North America, and currently sitting on a number of boards, and working closely with Peter Senge at the Society for Organizational Learning (SoL) out of MIT. He was fresh off a trip from China where things are really starting to happen – while deeply entwined in the global economy, and a huge lynch pin for the system, with it’s ~9.5% GDP growth, huge market and labor pool – the government and people of China seem to be very aware of their influence and capacity to really push sustainable development and a brighter future. We saw the article on what McDonough is working on there, and according to Carstedt there is plenty of awareness about the need to develop a circular economy. A lot of hope rests there.

His lectures were full of great stories about the power of shared vision, meaningful, purposeful and learningful work, and the need to really embrace a new way of thinking. As Louisa alluded to – these ideas have been around for 50 years now, and ignored too long – but everyone who comes to talk to us has commented on how things have really started to tip over just the last couple of years. And these are people who have been engaged in this stuff for decades. Exciting times lie ahead.

Göran brought up a rather famous quote that we’ve looked at a lot here, and is worth another mention:

I think that there are good reasons to suggest that the modern age, the industrial era has ended. Today many things indicate that we are going through a transitional period, when something is on the way out and something else is painfully being born. It is as if something is crumbling, decaying and exhausting itself while something else still indistinct, is arising from the rubble

- Vaclav Havel, Philadelphia 1994.

(former President of the Czech Republic)

Another topic we touched on today that got me thinking was about how the first Industrial Revolution did not start on a set date. There was no plan, no headquarters, no tracking its progress. It was thousands of small events, growing, evolving and taking shape. It was about people with vision creating the future. It was also quite unsettling for many – it required transformational change. I remember studying American History stories about farmers in the west violently protesting the railroads – these strange machines entering and drastically altering their lives. The shift to a sustainable future will likely be greater. Exciting times indeed.

It’s going to be quite a rush into the holiday break with projects starting to pile up, but so much exciting material to share – I’ll try to keep getting it out. Hope all is well with you all. Stay going…

Herman Daly tells it like it is...

The following is an excerpt from a 1995 interview with Herman Daly conducted by the Developing Ideas Digest, put on by the International Institute for Sustainable Development. A little outdated, but the fundamental structure is what is in question here, and that has only gotten worse…

DI: Why is free trade necessarily bad for the environment? ...

Daly: My problem with free trade is partly due to the environment - but it's larger than that. I think it's a bad social policy and bad environmental policy. By free trade, what I mean is deregulated international commerce. So the opposite of free trade is not autarky or no trade. The opposite is not state trade or total monopolization of trade. The opposite of free trade, which is deregulatory, is regulated trade. Trade which is regulated in the national interest by governments involved. And the notion that there should be no national interest [in] this trade across national boundaries, that the state has no interest in this, that this should be left entirely to the mutual benefit of the trading parties ... I mean imagine if this logic were applied say to corporations - individuals within corporations just trade with each for their own mutual advantage - nonsense! ... Every deal that corporation people make has to be vetted up through higher authorities to make sure that it's really in the interest of the larger entity. And so I think the same thing is the case with trade across national boundaries. The reason again goes back to community because if you have the free flow of goods and capital and, increasingly, labour across national boundaries, then you really lose any possibility of policy at the national level. You can't have an interest rate policy that's different from your neighbour because capital is mobile. You can't have environmental cost internalization standards that are different from other people because if you have higher standards that'll raise your prices higher than your trading partners', and you put your own people at a disadvantage. So you have to have some equalizing kind of tariff.

So the argument is not that there should be no trade. Trade can be very beneficial. But the argument is that trade should not be based on standards-lowering competition. You have to maintain certain standards. And standards-lowering competition can be weakening the environmental standards to give cheapness, weakening social insurance standards and safety standards to get cheapness. Weakening standards of child labour ... throwing in prison labour even, [about] which even GATT says, 'Prison labour is too much, we'll retaliate against that.' So I think maintaining these social standards which have been actually hard-won over many years - I mean the length of working day, that's been limited; child labour, these sorts of things. You can make products cheaper if you lengthen the working day, if you employ children ... and so I think there has to be this national community protection of basic standards. We can't allow that to be competed away in the name of free trade.

Interestingly, the classical doctrine of free trade as it came from David Ricardo is much more in line with what I've just been saying because in that system, capital did not cross national boundaries. Capital stayed at home and labour stayed at home. The only things that were traded were goods. So you really did have a much more community/national orientation. You have national capital cooperated with national labour - albeit with class conflict, the national community was able to contain that class conflict. You had national labour and national capital cooperating to make national goods, and those goods that competed internationally with other countries and their teams.

Nowadays that's all gone, nowadays you have free capital mobility and so you have a capitalist of one nation [saying] to the labourers of that nation, 'Sorry guys, we live in a global economy, I can employ labour at one-fifth of what you want and I can bring the product right back here and sell it, so you guys are out of line, too bad.' And the labour comes back and says, 'Well gee you know, there are bonds of national community.' 'I just told you we live in a global community. All that stuff is over with. All that old national stuff that caused wars. We live in a global economy. Everything is going to be peace now. Don't you want the Chinese labourer to be as rich as you are - are you a racist?', and on and on. So this idea of mutual responsibilities in a national community [is] being dissolved by this idea of the global world economy. We have a global community now superseding the national community - that's passé, now it's global community. That sounds good if you say it fast enough and don't stop to think about. But it's empty. There is no global community. Where community really exists is at the national and subnational level where people take on mutual responsibilities for each other. Not at the global. Now maybe someday there will be a global community. But our view - of John Cobb and I - is we're all in favour of global community, but it would have to be a federation of strong national communities - a community of national communities. And the present vision is not of a federated community of communities, the present vision is of a cosmopolitan world without borders in which you erase national community and replace it with this globalized single sort of tightly integrated world community.

So the vision of a globally integrated economy is really a single system. You have one tightly integrated system that's mutually dependent across the globe. That's a very dangerous kind of system - something goes wrong, you're in big trouble. We prefer nations to be much more fundamentally self-sufficient, not totally self-sufficient, that's too expensive. But to the degree possible, strive for self-sufficiency and maintain loose international trading relations to make up for where it's hard to be self-sufficient. I mean everyone can make their own aspirin and matches, you don't need to trade multinationally for that. But there are some things that you do need to trade for. That's kind of the vision that we put forward, and you maintain more local control over you economic life. If you don't, then control is shifted far away and the foreigners who control the capital investment in your country may be lovely decent people, they may even be nicer than the local people, but they're far away and they don't really know or have an interest and a feel for what happens there. This is a vision that John Maynard Keynes expressed very similar kinds of notions [to] when he wrote on national self-sufficiency, and his views along with the others have kind of been swept aside in this globalization mania, which really serves the interests of the global multinational corporations because what holds them in check is the nation state - the rules of the nation. So if they can sort of weaken the nation and play off one against the other, then they don't have any real restraints. ...

The other way of controlling international capital would be to have international government and some people advocate that. I see that as frightening. International government. Some things have to be international, for example, we have to deal with global CO2 and things [like that] at a global level. But again that has to be a federation of national governments because once you have a treaty for global CO2 or something, who's going to enforce it? It has to be the national governments who signed the treaties. They have to be strong enough to enforce within their own boundaries the conditions that they agreed to in the international treaty. And if capital, labour and goods flow freely across their borders they don't have any basis for exercising the control that they agreed to. Long-winded answer, I'm sorry.

No problem, Herman – for the full interview click here.

And apologies to the anonymous commenter who finds the sign off a bit cheesy – I hear ya – but it stems from a phrase big-wave surfers use to encourage focus when things get hairy, and seeing as the ride to sustainability is the biggest wave humanity has ever faced, I think it’s appropriate. So – Stay going…

New Courses, New Routes...

It’s been a crazy couple of weeks, and the blog has suffered, I apologize. After wrapping up the introductory course over two weeks ago now, with presentations and exams, we had a couple of days off (checked out Copenhagen, a beautiful and very fun city), and then had half a week of introductory lectures to the three courses for the second half of this term – Strategic Management for Sustainability, Advanced Societal Leadership, and Engineering for a Sustainable Technosphere.

The material for all three promises to be very inspirational once again. The engineering course will be focused on the “double explosion” of population and energy consumption. There is a common misconception that as populations grow in “developing” countries, energy use will ramp up in correlation. But the mind-boggling reality is that as these populations grow exponentially (with the exception of China – should stay around a cool billion) their demand for energy will also be growing at an exponential rate – not because of the population growth, but in addition to it. This leaves a lot of tough challenges for the engineers of the world to come up with means for supplying that energy, to say the least. So far the groups are looking at the big energy use sectors like agriculture, buildings and transportation, as well as a the whole array of alternative, renewable technologies. In each case it becomes clear that organizational efficiencies (designing upstream for less demand, ala McDonough’s China project) will be imperative – but even so, sustainable alternatives to fossil-based energy production will be required.

Advanced Leadership will look more in depth into the concepts of Organizational Learning, Transformational Change, Linked Networks, Systems Dynamics, Tipping Points, and Engagement. Facilitation, communication and presentation skills will also continue to be in focus. The Strategic Management course will give an overview of what’s out there in the field of strategic management, and how the various schools of thought can best be related to Sustainable Development. The reading lists for all of the courses are great – with the likes of The Fifth Discipline, Tipping Point, Mid-Course Correction, Built to Last, and Strategy Safari to name a few – I’ll try to get some better recaps of the readings up when there is time.

Last week we had an excellent field trip to Lund for a meeting with Tetra Pak (a huge global packaging company) where some members of our group presented to a selection of representatives from their various environmental departments. Not the most hostile crowd, as you can imagine, but it was really exciting to see some classmates run through some of the things we had been learning in the setting of a large corporation. They did a great job, and took a great approach – and I think got some of the Tetra Pak people thinking about how they can better frame their existing environmental and social initiatives and management systems.

The next day we took off for Stockholm with a stop at an Eco-Municipality on the way. It was cool to see one in person, and get a tour. It was essentially just a cluster of houses – so not a true, mixed use development. But the houses were very nice, each had a garden and a yard and solar panels on the roof. The materials and design were all chosen with regards to their environmental impact, and the houses were heavily insulated with heat-exchangers for air circulation. The site had an integrated sewage treatment system through a series of ponds and wetlands that acted as a “living machine” to purify the waste water before it was reintroduced into the watershed. All in all, there wasn’t much above and beyond, or even to the level of what my boys out in Colorado at Steeprock have been doing for years, but it was cool to see the integrated cluster, and the Swedish take on residential green building.

Finally we arrived in Stockholm, and I just can’t say enough about the beauty of that city. We stayed in a great hostel, very nice and clean and Swedish with big rooms and easy access to the city. On Tuesday and Wednesday we had the huge treat of all attending a big upscale Clean Vehicles and Clean Fuels conference, which I’ll go into in more detail in another post. As a side note though, we also scored some left over tickets to the Tuesday night reception at the City Hall, where they hand out the Nobel Prize. This was one of the craziest buildings I’ve ever been in with an eclectic intermixing of architectural styles from a broad range of history and geography. We got a full tour, including the Blue Hall where the award banquet happens, but ate a gourmet spread and guzzled some free wine in the Gold Hall (literally covered in gold, from the floor to the 40 foot high ceilings) – who said sustainability was about sacrifice??

On Friday we checked out some museums and went to the offices of the Stockholm Environmental Institute (SEI), which again deserves its own post. We also hooked up with some students in other sustainability / environmental masters programs in Lund and Stockholm, which was cool, got to see some more student pubs, and checked out a bit of the night life around the city. I got a huge kick out of the name of the city’s hip / funky neighborhood – SoFo, as it is south of some street that starts with “Fo” and clearly is no SoHo… but still a really cool area, with a great vibe and some great people.

All in all a pretty hectic and exhausting couple of weeks. The time has changed and the darkness comes early – especially in Stockholm where our shadows were 12 feet long at high noon. But we’ll push through. I hope you are all doing well. Stay going…

Systems Thinking, Who’s to Blame and Jack Johnson…

I’ve danced around the concept of Systems Thinking before, but it really is a central thread to Strategic Sustainable Development, and a vital aspect to dealing with complex systems (as the name implies) like ecosystems and societies.

(I’ve also been neglecting too much to put some of these things I’m writing about into the context of the 5-level framework – it’s very helpful in framing a holistic, strategic approach – so I’ll try to get in the habit. Anyway, this relates to Level 1 (System) and Level 5 (Tools)).

In general Systems Thinking involves taking a holistic view, setting boundaries for the system you’re analyzing, identifying the components of the system and the interactions between them. It looks at causal relationships and feedbacks between components over time and space.

The discipline, which is inherently trans-disciplinary, works against reductionism and is meant to help us understand and communicate complex problems. In order to do so, the most basic tool is the Causal Loop Diagram. A simple one looks like this:

Clearly, this is a very generalized and simplified model, but that’s the point to some extent, and it starts to give perspective on how various components of a system interact and influence each other. The plus signs indicate a reinforcing action (positive feedback loop – the poorer you are, the more you over-harvest, the more you over-harvest, the scarcer your resources, and the poorer you are), while the minus sign indicates a stabilizing action (negative feedback loop – the scarcer your resources, the less people they can support).

CLD’s a key part of Systems Analysis – one can then move on to Systems Dynamics and start modeling how outside affects impact the system, create mathematical and computer models to try to get a sense of how the system will react to various situations.

This type of Systems Thinking is non-linear, and usually difficult for us to think about when we get more than 3 or 4 components involved, without the help of such models and computers. The non-linear nature of systems brings up an interesting point about blame and guilt. In his book The Fifth Discipline Peter Senge describes it in the following way:

“A linear view always suggests a simple locus of responsibility. When things go wrong, this is seen as blame – “he, she, it did it” – or guilt – “I did it.” At a deeper level, there is no difference between blame or guilt, for both spring from linear perceptions. From linear view, we are always looking for something that must be responsible.”

Systems Thinking allows you to move on from that view, and realize that “feedback” is responsible for changes in the system, and that everyone shares responsibility for problems generated by a system. Through Systems Analysis, the interactions become clearer, and you can start to identify leverage points within the system that can mitigate the undesirable effects and enhance the desired.

I couldn’t help but think of Jack Johnson’s song Cookie Jar when getting into this stuff… An excerpt:

well "it wasn't me" says the boy with the gun
sure I pulled the trigger, but it needed to be done
because life’s been killing me ever since it begun
you can't blame me because I'm too young

well you can't blame me, sure the killer was my son
but I didn't teach him to pull the trigger of a gun
it’s those video games and his TV screen
you can't blame me, it’s those images he sees

you can't blame me says the media man
I wasn't the one who came up with the plan
I just point my camera at what the people wanna see
it’s a two way mirror man, you can't blame me

you can't blame me says the singer of the song
and the maker of the movie which he based his life on
it's only entertainment as anyone can see
it's smoke machines and makeup man
you can't blame me

it was you, it was me, and it was every man
we've all got the blood on our hands
we only receive what we demand
if we want hell then hells what we'll have

The song goes on to suggest that TV is the main problem and we should all just turn it off. That might be a simplistic view – I don’t think the problem’s solved that easily – but he’s probably right to some extent that TV and media is a big leverage point for a variety of problems.

Anyway, if you were to look at school shootings, from this approach, you could start to get a sense of what feedbacks were involved. I think we’d find it has a lot to do with violations of SP IV – systematic undermining of people’s capacity to meet their fundamental needs. Certainly no easy answers there, but hopefully that gives a sense from a different angle how framing these problems in the context of the whole system of individuals within organizations within society within the biosphere (Level 1) and define success with the Sustainability Principles (Level 2) we can approach them strategically, using Backcasting (Level 3) and determine what Actions to take (Level 4) and what Tools can help us (Level 5)…

Happy Halloween to everyone – not really such a big deal over here, apparently, but I’m heading to Copenhagen to check that scene out and finally get out of Karlskrona for the first time since I got here, as we’ve got a couple days off before starting our new courses on Wednesday…. Also, a big shout to Bruschi, back starting and helping the Pats seal a close win yesterday – wish I coulda seen it. Hope everyone’s doing well. Stay going…

“I knew I had to say something to strike him kinda weird, so I shouted – ‘I like Manfred Max-Neef, and his beard'…”

A bit more on Max-Neef. Aside from being a great guy and interesting character, he’s done some incredible work in the broad areas of development, social sustainability and economics.

Two of his major focal points during his lectures here were around the concept of Transdisciplinarity (essentially a way of avoiding reductionism, or ‘over-specialization’ and promoting whole systems thinking, much more on all of this later) and the “Needs Matrix” that he has developed.

The Needs Matrix is based on identifying the 9 fundamental human needs and separating them from the satisfiers of those needs. The needs he identifies are…

… in no particular order and with none more important than the other (it is difficult to see how Subsistence wouldn’t take some sort of priority, seeing as without it none of the others would be possible – but his argument is that if any aren’t met, you aren’t really alive anyway).

In terms of keeping needs distinct from satisfiers, it’s easiest to use some examples – food, shelter, clothing aren’t needs, they are satisfiers of the need Subsistence. He also goes further to distinguish between certain types of satisfiers:

Destroyers: paradoxical satisfiers that are supposed to satisfy one need, but end up destroying one’s ability to meet many other needs – these are almost always meant to meet the need for protection and include things like censorship, authoritarianism, and arms races – which in various ways inhibit people from meeting their needs of freedom, participation, creation, etc.

Pseudo-satisfiers: these generally create a false sense of satisfaction, and can overtime making harder to meet the need they were originally intended to satisfy. They include things like status symbols (identity), stereotypes (understanding), prostitution (affection), and fashion/fads (identity).

Inhibiting satisfiers: usually associated with habits and customs these ones can over-satisfy one need while making it difficult / impossible to meet other needs – an overprotective family is an example, in obsessing on meeting the need for protection, it can inhibit affection, understanding, participation, idleness, identity and freedom. Commercial TV probably falls under this category too, in satisfying idleness, understanding, creation and identity can be inhibited.

Singular satisfiers: these ones satisfy one need and are largely neutral to others and include things like many social programs (i.e. soup kitchens satisfy subsistence), and curative medicine (as opposed to preventative, satisfying subsistence). Max-Neef suggests sports spectacles satisfy idleness, I would argue you could also tack on participation and identity, maybe even affection, understanding and freedom (Go Pats!!).

Synergic satisfiers: satisfy one need, and as a result satisfy many other needs simultaneously. Examples include preventative medicine (protection, understanding, participation, subsistence), cultural TV (idleness, understanding), breast-feeding (subsistence, affection, protection, identity), and growing your own food (subsistence, understanding, participation, creation, identity, freedom).

Max-Neef has also developed a process for communities to go through these needs and identify in what ways their cultural traditions, institutions, etc. inhibit them from meeting their needs, so they can get some perspective and start to deal with how to improve things. This approach is a good fit with the sustainability principles, in that in a way they give a definition for success for social sustainability (building on the 4^th Principle). The idea is that these are fundamental needs that don’t change between cultures or over time (except maybe the very long-term). It is just the satisfiers that vary greatly between cultures and generations.

Given the complexity and subjectivity of social systems, this isn’t easy stuff to wrap your head around – but I think it’s helpful in getting a bigger picture view, and starting to make sense of a lot of those vague, difficult to articulate ideas about societal problems. In thinking about all the strange pathologies we see in our society in the US, as well as those all around the globe, it starts to make some sense when viewed through this lens, where needs are more than food, shelter, clothes. Things like school shootings, anorexia, Ritalin for the kids, alcoholism, racism, depression, consumerism, gangs, etc can arguably be traced back to some fundamental needs not being met. Then we can look upstream and see how to ensure that they do get met.

Not to suggest that that’s an easy undertaking, by any means, but at least the ground work can be laid for a strategic approach to solving some of these problems.

Stay going…

Social Sustainability and the Economic Model...

First things first, a warm welcome to Bruschi back in the Pats practice rotation! An impressive feat and welcome piece of news... So, I've been getting a lot of heat for not posting in a while, my apologies, but as expected things continue to get busier. We have group presentations (on various tools or concepts related to Sustainable Development - my group's doing EMS (Environmental Management Systems)) and exams next week, so time to buckle down a bit. But here is my last essay from our module on Social Sustainability. Read it with a caveat: the assignment was structured as a way for us to just think things through and play with some ideas, it certainly isn't meant to be an academic paper in the traditional sense - we were limited to 5 pages on a monstrous topic, so generalizations are broad, thoughts incomplete, many of the statements made have volumes of evidence and reasoning behind them that aren't stated, and some knowledge is assumed to be known by the readers (our profs). We were asked to write on the 4th principle and what more could be said on it. I took the liberty of focusing on the current global economic system and its integral role in Social Sustainability.... enjoy:

Number IV In Your Programs, But Number 1 In Your Hearts…. Social Sustainability!

At present, global society is unsustainable. This fact is evidenced through the effects of this unsustainability, including systemic starvation (1 billion people), global warfare (“on terror”, Israel, Palestine, Iraq, Afghanistan, Korea, Kashmir, Sudan), loss of cultural diversity (Westernization / Americanization), and political and economic tyranny (WTO, IMF, Unilateralism) on the global level. We are witnessing the paradox of globalization – while the world is becoming ‘smaller’ with increased international interaction, communication, and trade, there is an undeniable loss of cultural diversity and a breaking down of the social fabric on the global scale.

A key component to this social disarray is a lack of understanding about what constitutes success in terms of social sustainability. The fourth sustainability principle outlines the conditions for success, and Max-Neef’s nine categories of need provide a useful compliment by defining human needs. However, the current dominant model for success is drastically different. It focuses primarily on the growth of material wealth and the assumption (or faith) that that will result in the fairest and most efficient allocation of resources, hence maximizing social welfare. Implicit is the assumption that meeting the need of subsistence, followed by further growth in material consumption will necessarily eventually lead to the satisfaction of other needs. Convincing enough of the key actors in the global socio-political-economic system that there are other criteria for success is a huge challenge, as it requires a drastic shift in thinking and a breaking away from strong, entrenched models.

During my first semester of college I took Econ 1: The Price System. Early on, Professor Anderson explained about assumptions that must be made so we could analyze economic systems scientifically. The basic assumptions include:

1. People have rational preferences among outcomes that can be identified and associated with a value.

2. Individuals maximize utility and firms maximize profits.

3. People act independently on the basis of full and relevant information.[1]

I was shocked. It didn’t make sense that an entire discipline could be founded on assumptions that were so obviously, intuitively flawed. There was an implication that if you could not make that leap in your mind to accept these assumptions, you weren’t cut out for this high-powered discipline, and because of the speed of the course, most easily internalized them and moved on without looking back.

The neoclassic economic model has brought societies very far, very fast. The feats of humankind in the past 150 years are obvious and many, which works to reinforce faith that the model is successful. However, it has become increasingly clear since the 1970s that the model is outdated. Aside from the limits to growth imposed by the biosphere, the model is failing in its aim to improve social welfare. In order to address the challenge of changing such a massive, complex system, it is necessary to have some strategic guidelines.

Donella Meadows’ identification of ‘leverage points’ in a system provides a helpful starting point. What she deemed the most effective point of intervention – the power to transcend paradigms – relates directly to Max-Neef’s lecture discussion on quantum physics and the existence of alternate realities. While we all have the capacity to at least intuitively understand this on some level, there is great difficulty in abandoning our constructed realities, and letting go into what Meadows’ refers to as ‘Not Knowing’. Furthermore, there is little one can do outside of themselves to create such a transcendence in others. So while it may be the most effective, it is probably not the most realistic, at least at this time.

Her second leverage point is to change the paradigm, or mindset of the system. As discussed, the neoclassic economic model is deeply entrenched, and due to its past success has the ardent faith of most of the key actors in power. With regards to how one could possibly change such an ingrained model, Meadows summarizes Thomas Kuhn:

In a nutshell, you keep pointing at the anomalies and failures in the old paradigm, you keep speaking louder and with assurance from the new one, you insert people with the new paradigm in places of public visibility and power. You don’t waste time with reactionaries; rather you work with active change agents and with the vast middle ground of people who are open-minded.[2]

In the case of our global economic system and its impact on social sustainability, one does not have to look far to find the ‘anomalies and failures.’ Exploitation of labor, unfair Free Trade, and the un-reigned power of multi-national corporations are a few far-reaching failures of the system with devastating effects global society. All over the globe, peoples’ capacity to meet their needs is being systematically undermined.

A more concerted, organized and credible effort – beyond the reactionary, theatrical protesting of WTO meetings – needs to be made, working with those change agents and the vast middle ground of the open-minded to illustrate that the current model is outdated, no longer viable, and a major threat to global social sustainability. Simultaneously, successful aspects of the emerging new model (some combination of the products of the ‘New / Second / Third Industrial Revolution’, such as ‘Ecological Economics’, ‘Sustainable Business’, ‘Natural Capitalism’, etc) must continue to be highlighted and emulated.

Closely related to changing the model, is the 3^rd point on addressing the goals of the system. Neoclassical economics are concerned with the allocation of scarce resources and the maximization of utility and profit. To those ends, the goals of the system have become growth and efficiency, or in more concrete terms higher GDP. Some perspective is needed on the absurdity of such goals for their own sake, which is again difficult because these are rather basic values of the ingrained system. Still, the advent of more relevant indicators of progress (ISEW, GPI, GNH) has provided us with the basis for more effective evaluation of the system’s success and highlights the flaws of the model.

Such modifications in the system’s framework relate to the 4^th point, concerning a system’s ability to self-organize. What’s needed is a more specific re-articulation of the existing goal of the system – of what we mean by maximizing utility – along with some other key terms. The system must shift from seeking physical growth for its own sake to development, or ‘growth of value’ and from valuing efficiency for its sake to effectiveness or ‘efficiency with purpose’. The chances for success at this leverage point are greater, as it does not require transcending paradigms, abandoning the existing model, or even changing its goals. The familiar components are still there, just approached in more honest and effective ways. Markets (that are fair), growth (of value), efficiency (with purpose), and self-interest (that is enlightened) will remain integral parts of an evolved, sustainable, capitalist economic system. Ideally, the adaptation and evolution of the current system result in a smooth and peaceful transition to the new sustainable economic model.

We are starting to see some very exciting, concrete (though preliminary) changes take place as the system slowly begins to become aware of the “new” realities it faces in terms of the ecological sustainability. A shift from goods-based to services-based business models along with mechanisms for internalizing externalities (i.e. Kyoto) are starting to prompt businesses rethink the existing structure of the model.

This shift will likely be more difficult in terms of social sustainability. Cross-cultural understanding is a challenge, as is quantifying happiness and identifying needs. Since the invention of the “under-developed” nation by Truman in 1949, the imposition of various elements of the dominant American culture – both explicit and implicit (mass media, consumerism, Western democracy, industrial agriculture, etc) – on others has been seen as a noble cause. Regardless of intentions, this approach has proven to be destructive and open to manipulation by multi-nationals aiming to open up new markets and exploit inexpensive labor. The political story of good intentions and the corporate vested interest, make the structural changes needed for social sustainability harder to achieve. It is easier to conceptualize how systematic increases of pollutants and physical degradation of natural systems is unsustainable, than it is to see that selling goods and providing jobs to ‘developing’ economies in an unregulated global economy with an imbalance of power is systematically undermining peoples’ capacity to meet their needs.

One way or another, the system will change. Hopefully, through continued pressure on lower-level leverage points (the rules, information flows, positive and negative feedback loops, time delays, etc.), the structure, goals, and the shared model of the system will change at an appropriate pace. Only then will we be able to realize a socially sustainable future.

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[1] Wikipedia. “Neoclassical Economics.” On the World Wide Web at: http://en.wikipedia.org/wiki/Neoclassical_economics.

[2] Meadows, Donella. 1999. “Leverage Points: Places to Intervene in a System.” The Sustainability Institute. Hartland, VT, USA.