What do cats and the economy have in common?
They are both the result of a complex evolutionary process. Our current economic situation is the result of a long evolutionary process, rapidly changing multiple times throughout history, always strongly impacted by the happenings of the time being.
Around 12.000 years ago humanity shifted hunters & gatherers to settlers, following the “invention” of agriculture. The moment humans settled one crucial element massively changed. The concept of ownership. After sitting long enough on one piece of land people claimed it as theirs, with the ownership of land the ownership of other products and accumulation of wealth (not yet money) came to existence.
The concept of ownership led to trade and trade led to the invention of money. This era also marked the end of the time of economic equality. And we kept going, the invention of writing launched us to the creation of written laws and knowledge that now could be shared past the end of someone’s life. The invention of wheels allowed us to expand our trade routes and connected us to a growing area of other settlements and cities. Eventually, all these elements together, the accumulation of knowledge, the increased connectivity and the written word led to exponential progress (and exponential complexity). We jumped from the agriculture era into the industrial era and then onwards to the time in which we are living right now the data-driven economy or as others call it, the connectivity era. Somewhere down the line, we transitioned from a circular, by nature zero-waste society to a destructive and wasteful economical situation.
Cats didn’t have the option to choose in which direction they wanted to evolve. But we do. We are at a point in history where we can choose if we want to pursue this destructive path, this lose-lose situation in which we both destroy the planetary systems on which we depend and are stuck in a rat race that brings them neither joy nor happiness.
Luckily, many concerned brains around the world have been working hard on imaging and creating new economic theories that can help us switch the paradigm from destructive to regenerative. In our previous Jargon Buster, we explored the Blue Economy. In this buster, we will dive into three of these ‘newly’ developed economic concepts: The New Economy, Purpose Economy and Doughnut Economy.
Let’s start with the tricky one, as you can ask ten people how to explain the ‘new economy’ and you might end up with ten different answers. When you would ask Pamela or me you will get an answer sounding somewhat like “Wow, that is a gigantic question! The New Economy is an economic system that is embedded into society and the earth (instead of the other way around, right now it seems the earth and society are embedded in the economic paradigm). It is a system that works with nature, in which money and growth aren’t priority number one, where businesses create value for all stakeholders, not just shareholders, and which is eventually regenerative by design, a place where all animals, including humans, can live a peaceful and fulfilling life. An inclusive, regenerative and fair future.” Something like that!?
Yes, we know, this to some may sound a bit unrealistic. But keep in mind, we (step by step, era by era) designed the socio-economic situation we are living in, and we can choose to redesign. All we need to do is embrace change (unfortunately that is exactly the thing humans aren’t really keen on).
Another way people might explain the “New Economy” is based on Kevin Kelly’s work published in 1998, the “New Rules For A New Economy”. He speaks for the first time about the concept of a new economy that will be deepened and developed in the early 2000s. It refers to activities based on knowledge and information rather than traditional industries such as manufacturing. This idea is undoubtedly the direct consequence of the economic change and expansion that occurred in the last decades of the 1900s, which modified the economic principles of the industrial economy, shifting to a technological-based economy. This new economy can be defined as an economic situation driven by activities based on knowledge and information rather, than traditional industries such as manufacturing?
The New economy differed from the industrial economy by offering the possibility of operating in a global market, reducing management costs and allowing companies not to be tied to a defined space such as the physical location. It has led to the computerization of production and exchange processes and the recruitment of highly qualified workers. The New Economy has had a far-reaching impact on the functioning of financial markets and, in addition, has enabled information and knowledge to be spread without significant obstacles across international borders, this contributed significantly to the process of economic, financial and cultural globalization. Furthermore, it has led to the shift from selling products to selling services. We lease, rent or share instead of buying. It is a step in the right direction, but we are surely not there yet.
In 2014 Aaron Hurst published his book titled “The Purpose Economy”. He suggests that we indeed moved from an industrial economy to a technological one, but that we are now shifting to something else: an economy where people are looking for purpose and personal growth, where purpose is the primary driver of economic output.
Hurst explains that “The Purpose Economy describes the new context and set of ways in which people and organisations are focused on creating value and defines the principle for innovation and growth; the quest for people to find more purpose in their lives.”
The Purpose Economy is characterized by three main elements; impact, personal growth, community and connection. Aaron Explains that it is a complex concept that still needs to be defined, but there are some common threads.
Firstly, the idea of leading organization as purpose-driven connected communities. Grassroots initiatives around the world are popping up like mushrooms, once people have a common cause they have immense self-organisation capabilities.
Secondly, we are moving slowly away from consumption to experience and creation, people are increasingly prioritizing experiences over materials. Reconnecting with purpose, creativity, skill and meaning. We are looking for new and deeper connections, to our purpose, ourselves and each other. Lastly, developing a sense of purpose allows you to pursue personal growth and true, authentic self-expression.
In short, the purpose economy cause beyond financial growth and the GDP. “Our Gross National Product does not measure the health of our children, the quality of their education, or the joy of their play. It does not measure the beauty of poetry or the strength of our relationships, the intelligence of debates or the integrity of our public officials. The GDP measures everything, in short, except that which makes life worthwhile.” – Robert F Kennedy.
The purpose economy challenges us to go beyond the GDP and focus on the things that make our life worthwhile, the things that give us purpose.
And then last but not least for today, the yummiest one of them all, the “Doughnut Economy” baked based on a recipe by Kate Raworth. In 2017 she published her book “Doughnut Economics’ in which she aims to find the answers to many of the 21st-century challenges.
She describes the doughnut economy as “a radically new compass for guiding humanity this century”. The name refers to the shape of the theory. It kinda looks like a doughnut.
The inner ring of the Doughnut represents twelve basics elements that everyone needs, such as housing, education, sufficient food, access to water and energy, gender and social equity. The outer ring is an ecological ceiling under which humanity should stay. The outside of the Doughnut is composed of the consequences over nine life-supporting systems of overexploitation of the resources, the so-called planetary boundaries.
The aim of the game is that no one will live in the doughnut hole and that we as humans don’t shoot through the outer ceiling. Kate realized, like luckily many others around the globe, that the GDP doesn’t actually function as an indicator to reflect well-being. We need new ways to measure well being, like the WEGO countries, who are focussed on human and ecological well being instead of economical growth. The strength of this economic model is that it can be applied anywhere, and the first city to embrace the concept is the city of Amsterdam in The Netherlands.
Indeed, these three models are very different from each other, but they have in common the fact that they go beyond the classic economic models, which are based only on the market and the exponential growth of financial capital. These new models go beyond only financial gains, they take the complexity and needs of the planet and nature into considerations. They look for ways in which nature and other animals can thrive just as humans do, where we stay within the planetary boundaries and create a liveable future for the humans who walk the planet right now and the generations still to come. It is time for an economic theory that takes social and environmental challenges into consideration, like high inequality, climate change or ocean acidification. Luckily, we don’t have to pick one of these new economic theories, we can mix and match, cherry-pick and combine until we find the ‘blend’ that allows us to create a regenerative, inclusive and healthy future.
Before I leave you to it, I just wanted to circle back to the cat thing for a bit. Because the way they evolved is actually not what you think it is…
Minou & Pamela