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We can structure our economies differently: the potential of not-for-profit models

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By Jennifer Hinton

My journey of working in the area of sustainable economy began when I wrote my MSc thesis on the circular economy plan in China back in 2007- 2008. The circular economy seemed like an ideal response to the sustainability conundrum. Economic activity could carry on, but with less resource use and pollution. However, I bumped into the inevitable contradictions between efforts to increase material circularity in order to reduce environmental impacts, on the one hand, and an ongoing commitment to endless economic growth, on the other. Shortly thereafter, I read an early version of Tim Jackson’s Prosperity Without Growth. His main message, that humans can prosper without constantly growing their economic activity, resonated with me. I had experienced the erosion of social cohesion in the United States related to increasing materialism (the work-shop-drop treadmill) and I had also experienced the same trend in rural China. In both cases, economic growth seemed to be doing more harm than good, as far as the environment and community cohesion went. The health of people and planet were being sacrificed for money.

I began looking for ideas and practices that could help societies transition away from the growth-driven economic system. Since then, I have been working on the development of a new way of understanding the economy through the lens of “relationship-to-profit”. Relationship-to-profit theory explains that the global sustainability crises which on the surface might seem disparate and disconnected, such as inequality and climate change, are actually very much interconnected, because they are driven by the same thing: the pursuit of private financial gain. Capitalist societies relate to financial gain (such as Gross Domestic Product and profit) as a measurement of success and progress and, thus, as an end in itself. This is embodied in economic institutions like for-profit forms of business, which allow for a financial gain purpose and the private distribution of profit to enrich owners. The dynamics of the for-profit economic system are strong and, contrary to narratives of “market failures”, it is accomplishing what it is designed to: private financial gain. But it is doing so at an enormous social and ecological cost.

Today, most people live in a for-profit type of economy. However, history shows us this is not the only way that economies and societies can be structured. 

If we are to move in a more sustainable direction, societies need to change their relationship to profit and money. A promising building block for this is the phenomenon of not-for-profit forms of business, which are already operating around the world and in all sectors of the economy. An economy primarily composed of not-for-profit types of business would differ from the for-profit economy in many important ways. In the absence of private financial gain from business ownership, and with all businesses geared towards a social benefit purpose instead, there would be a lot more financial equality in a not-for-profit market economy. It would also be less prone to speculation, consumerism, environmental degradation, and political capture (a situation in which private interests have undue influence on policy-making). The not-for-profit way of organizing the economy is not a silver bullet – it won’t solve all of our problems – but it provides a sturdy foundation for solving them. Whereas trying to solve the issues of inequality, climate change, and biodiversity loss in the context of a for-profit economy is like swimming against a tsunami.

Relationship-to-profit theory does three important things for efforts to transform the economy. First, it explains why and how the current system is dysfunctional in clear and straightforward terms. Second, it lays out a concrete vision and pathway for a sustainable future that is more just and safe for all life on Earth. Lastly, the not-for-profit market economy model broadens the horizon of possibilities beyond the false dichotomy of capitalism versus the state-planned economy; a dichotomy that has contributed to high levels of political polarization over how societies should address the crises of the 21st century. This is why I felt the need to bring this work to the 36×36 project, through a peer learning exchange with my fellow participants. I am hopeful that the discussion of these ideas will contribute to real transformation on the ground.

Want to find out more about relationship-to-profit theory and not-for-profit models? Here are a few resources to check out:

Envisioning a Not-for-Profit World for a Sustainable Future (a short non-academic article)

A Not-for-Profit World beyond Capitalism and Economic Growth? (a semi-academic article describing how a not-for-profit market economy could take us beyond capitalism and economic growth)

A Circular Economy for Sustainability, not for Profit (a short non-academic article framing the circular economy from a post-growth perspective)

Fit for Purpose? Clarifying the critical role of profit for sustainability (an academic article outlining the system-wide sustainability dynamics of the for-profit and not-for-profit economies)

Relationship-to-Profit: A Theory of Business, Markets, and Profit for Social Ecological Economics (doctoral thesis putting forth relationship-to-profit theory)

How on Earth: Flourishing in a Not-for-Profit World by 2050 (a non-academic book putting forth a vision of a not-for-profit market economy)

Five Dimensions of Post-Growth Business (an academic article outlining the different dimensions of business that are important for a post-growth economy)

 

If you prefer videos, here’s a recorded presentation I gave on the Not-for-Profit World model for a general audience:

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A new green learning agenda for a new economy

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By Christina Kwauk

As the world continues to respond to a second, third, and potentially fourth wave of COVID19, global leaders targeting the ever-elusive “end” of the pandemic have been focused on plans to rebuild the economy. But surely we cannot build back better post-COVID economies using the same pre-COVID economic thinking. Such thinking is rooted in values of human exceptionalism, resource extraction, and unfettered economic growth—values driving the very social, economic, and ecological crises we are trying to fix.

It goes without saying that we cannot expect to create new economic thinking with the same education systems that have raised generation upon generation of economic thinkers with these unsustainable values and assumptions about the economy. To manifest and sustain a new economy, we need education systems to challenge these long-held values by transforming our ways of seeing, being, doing, and becoming in the world in balance. But, as my fellow 36×36 femxle protagonists reminded me during a peer-learning session earlier this month, education-as-usual is often missing foundational lessons on economic topics like personal finance let alone getting into the thornier topics of how colonialism, racism, and patriarchy have deeply influenced our economic values and dominant economic lenses.

This is where I believe a new green learning agenda informed by feminist principles, social justice, and climate action becomes the linchpin to the social transformation necessary for new economic thinking.

What is a new green learning agenda for a new economy? It is essentially a new way of educating children, youth, and adults aimed at building the knowledge, skills, and mindsets for three economic shifts: 1) a just transition to a greener economy that values care work, 2) the reorientation of mindsets and behaviours toward social, economic, and ecological sustainability, and 3) the transformation of underlying systems of oppression exploiting our life-giving systems.

Core to a new green learning agenda is the goal of nurturing in learners of all ages a feminist planetary consciousness—an awareness that our social challenges are intricately tied to our planetary challenges. Such a consciousness promises to confront the problems of education, including its colonial, racist, and patriarchal legacies, and its complicit role in perpetuating neoliberal mindsets that drive our present models of consumption and production.

While some cities, states, and countries are beginning to propose new visions for their economic systems that attempt to break free of these legacies, many are lagging behind when it comes to proposing new visions for their education systems to foster new forms of economic thinking.

As of May 2021, according to Climate Interactive’s Green, Resilient, and Equitable Actions for Transformation (GREAT) Database, there are only 49 examples of COVID recovery policies and actions at the city-; territory, state, or province-; or national or regional-level that address economic recovery with an eye toward multi-solving for climate mitigation and adaptation that could produce co-benefits in racial, gender, and economic equity. For example, Spain’s Recovery, Transformation, and Resilience Plan describes a new vision for the Spanish economy as a circular economy, a green (and blue) economy, a digital economy, a decarbonized economy, and a care economy. Notably, Spain is also one of nine examples in the database that have a focus on gender equality.

But of these 49 examples, only eight allude to education and training. Even more disappointing, these eight references to education can be described in two ways: one, as passive references, suggesting educational access is a positive secondary outcome that comes from taking action in other sectors like shifting to clean energy (e.g. Afghanistan), or it becomes collateral damage if climate action is not pursued (e.g. San Jose, California). Second, education is referenced as an investment pathway for re-skilling and/or training a workforce to support the jobs necessary to fuel a transition to a greener economy—defined as digital- and technology-based, rather than care-based. Only one example (again Spain) talked about education and training as a sector of investment to support an ecological transition that reduces gender gaps and meets the needs of the vulnerable. Such re-skilling efforts echo traces of one approach to a new green learning agenda. However, the Plan’s intersectional ambition is confined to training in digital skills, does not address education beyond workforce training, and lacks what I and my co-author Olivia Casey have defined elsewhere as a breadth of “green skills” needed for broader social transformation.

Indeed, what we need global leaders to focus on is not building back better, but what environmental educationalist Stephen Sterling might describe as building back differently—a semantic refinement to help us break free from the temptation to merely reform our existing systems but rather to transform them entirely. COVID should have been the wakeup call urging global leaders to focus COVID recovery strategies on balancing our social, economic, and ecological relationships within what Kate Raworth calls the “sweet spot” of doughnut economies: the safe and just space for humanity nestled between our ecological ceiling and social foundation. But unsurprisingly, discussions around new economic models seem to stop short of discussing the new economic thinking behind those models and the new education systems needed to generate this.

So, as the 36×36 protagonists work together to co-create a new feminist manifesto for economic system transformation, it is vital that we include a vision for the education system, too. After all, education is the intergenerational bridge from the present to the future.

 

Photo by Ar//sh Mohammed on Unsplash 

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i was born on a waxing moon – A poem by Sarah Gamrani

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In last week’s expertise building module, 36×36 participants explored their visions for the future of the network in creative and inspiring ways. Sarah Gamrani was moved to write this beautiful poem, which she shared with the group in a performance.

 

i was born on a waxing moon

 

i was born on a waxing moon

which means my life will only be

more beautiful 

 

i started doubting about this 

when, growing up, 

i have noticed 

that all we can do is destroy 

what surrounds us 

and any kind of joy 

 

i am an emotional being

whose emotions have been buried

in the soil of a society 

that has decided 

to value everything that is wrong

 

it took us courage and time

to realize that other

emotional beings

needed a space to shine

 

a new space, we did create,

care and tolerance

have made it possible

to forge powerful links

 

and like the waxing moon 

on the day I was born 

these links continued to grow

until they reached a full wisdom.

 

sarah gamrani

 

 

 

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A Crisis of Values

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Previously published by Capitals Coalition hereBy Natalie Nicholles, Senior Director at the Capitals Coalition.

The pandemic is hard to sum up. It is full of tragedy and heartbreak, of resilience and courage, and of humanity and solidarity. Things that were deemed impossible have become reality – social distancing is the new norm, vaccines are developing at breakneck speeds and some elected officials transformed into bold leaders by choosing to prioritize health over the economy. But what stands out most prominently to me amongst the terrible and incredible moments is that we have sleepwalked into a crisis of values.

In this crisis, market values have steadily infiltrated societal values so much so that our understanding of value has come to mean success and prosperity through wealth maximization, commodification and externalization of social and environmental impacts. To be considered valuable, an asset or activity must be captured in the market, and anything that sits beyond the economy’s reach is essentially worthless. We’ve been steadily moving from a market economy to a market society.

Despite the warnings from climate change and the loss of our natural world growing louder and mounting demands from scientists and civil society for urgent action, policymakers and capitalism have trundled along, unwilling to admit – or face – necessary radical change. It’s taken the human tragedy of a global pandemic and its deep impacts on our friends, families and communities to realize that the values underpinning current economic thinking are, at worst, responsible for gross inequalities, massive biodiversity loss and the destabilization of climate and, at best, poorly designed to solve them.

Signs of change

The calls to Build Back Better for our people and planet continued to grow throughout 2020 and beyond. CEOs and civil society groups authored letters to political leaders, campaigns to RESET the economy went global and more articles than I can cite called out the failures of contemporary capitalism in search of a more meaningful, holistic and people-centric approach. Whether it’s donuts or missions or pathways to a resilient economy, the work of economists such as Kate Raworth and Mariana Mazzucato, think tanks like New Economics Foundation and global movements such as the Wellbeing Economy Alliance are being increasingly recognized as possible alternatives to common economic thought.

As Mark Carney stated in his 2020 Reith lectures, we need our economic system to find a new equilibrium where the market is organized in pursuit of what society values. 2020 has demonstrated that what is truly valued and valuable are our relationships, solidarity, fairness, responsibility and our connection to the planet. Such intangibles are invisible in this economy and yet fundamental to human prosperity.

These societal values are needed to determine how we develop and appraise policies for our public resources, where we invest our savings and investments, how we run our businesses and deliver public good. Rebalancing the system and redefining value has the potential to transform the economy from exacerbating our most pressing challenges to becoming a problem-solving mechanism for them.

To make this reality, we must reframe the roles, structures, and social contracts within and between business, finance and government, ensuring that the information used to make decisions represents what we value.

Accounting for nature, people and society – our natural, social and human capital – as Capitals Coalition organizations know well, transforms decision-making.

A way forward

I believe the capitals approach can help us to realign market values and reform capitalism. The Coalition’s vast community of business, finance, government, accounting and standards, civil society and science and academic organizations have been applying and championing a capitals approach across the world for over a decade.

Today, there are initiatives to ensure that financial accounts and accounting reflect a company’s financial, social and environmental performance (see European Union’s Transparent Project and Harvard’s Impact Weighted Accounts Initiative). There’s  innovation in financial products to account for natural, social and human capitals and there are leading companies, such as Olam and Kering, who have been working to internalize their externalities. How we integrate the value provided by nature, people and society in our economic decisions has been the focus of many.

We’re seeing movement at the national level, too. “We cannot recover better without better information to guide us,” says Elliot Harris, United Nations Chief Economist when explaining the new Ecosystem Accounting standard. “It is high time we moved beyond GDP and measured our wealth and success with tools that recognize the value of nature and people.” This was echoed by the UK Treasury’s Dasgupta Review which called for the adoption of an inclusive wealth approach to economic planning and decision making by measuring a country’s wealth in terms of all assets, including natural, social and human capital.

What we need now

While the capitals approach has captured the minds of so many, there remains a momentous shift needed in the mainstream if we are to remedy the crisis of values.

We need deep cultural change to drive recovery packages and commitments. We need to boldly evolve our understanding of capitalism as, not an end to itself but, a means to deliver public good. We need adaptive accounting processes that include our impacts and dependencies on natural, social and human capital. We need an enabling environment that promotes a culture of ethical business, greater connection to communities and a sense of accountability for successes and failures. We need deeper collaboration between business, finance, government and civic actors to develop new rules, provide clear incentives and accountability and be good stewards of our planet and of one another.

I feel that we’re at an inflection point in our crisis of values. To be more resilient, more inclusive and more sustainable, we must power a shift in values if we are to recover from the COVID crisis and shape the economy of the future.

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