Regenerative Economics: Stewarding Our Common Home for Future Generations

I started my career in energy and environmental policy and was admittedly a skeptic of global warming. As part of that work, I met with some of the top scientists and policy experts on the issue, both skeptics and believers. I sat in public and private meetings with Senators debating the merits of the science and the warnings. What first put cracks in my skepticism was reading Reagan’s former Secretary of State George Schultz’s interview in the Scientific American. In the article, Schultz stated that one of his primary geopolitical worries for the United States was global warming: “You know, a new ocean is being created for the first time since the Ice Age [in the Arctic with the meltdown of sea ice]. How could that happen? It's getting warmer.” I respected Schultz as a strategic and wise long-term thinker. At 92 years old, he was concerned then that policy makers were not doing enough to steward our planet for the next generation of children being born. Then, right after this interview, I had a conversation with an Admiral in the Coast Guard responsible for the Arctic describing his new task of monitoring the safety of the first-ever arctic swimming competition in that very ocean opening up due to global warming. It was hard to ignore the Admiral’s firsthand accounts.  This set me on an intellectual journey to understand our role in warming the planet.

Years later, in 2016, I met John Fullerton through my work as a foundation advisor and ever since this meeting, his thinking has challenged my way of seeing economics and our relationship with nature. John is the founder and president of The Capital Institute, and the author of Regenerative Capitalism: How Universal Principles And Patterns Will Shape Our New Economy. As a former Managing Director at JP Morgan, John was responsible for various aspects of the company’s global capital markets and derivatives businesses, and then ran the investment arm of LabMorgan.  John was one of the pioneers in the field of impact investing. 

Confronted with the risks of global warming and the financial system’s role in degrading our biosphere, John eventually left the epicenter of the financial system to work on the system from “the outside in.”  He launched The Capital Institute as a think tank, partnered with the Yale University Center for Business and the Environment and worked “to explore and effect economic transition to a more just, regenerative, and thus sustainable way of living on this earth through the transformation of finance.” Over the last few years, John has been a keynote speaker at some of the most important philanthropic and impact investing conferences on the future of the economy.

At the same time as meeting John, I was also reading Laudato Si by His Holiness Pope Francis and working on collective efforts to put Laudato Si into practice. While Pope Francis was calling citizens of the world to understand the ethical and philosophical reasons to care for our common home planet earth, John was doing the complimentary work in thinking through the practical systemic changes that would need to be put in place to reverse the degradation of our natural environment.

Here are some of the key paradigm shifts that John helped me see:

We are embedded in natural, living systems: For most of us, we live most of our days in artificial, man-made environments and spend the remainder of our time inside the virtual reality of the digital world. In this context, it is easy to forget our dependencies on the natural world. At the core of John’s work is a relational worldview: “Humanity is an integral part of an interconnected web of life in which there is no real separation between “us” and “it.” The scale of the human economy matters in relation to the biosphere in which it is embedded. What is more, we are all connected to one another and to all locales of our global civilization. Damage to any part of that web ripples back to harm every other part as well.”

Human flourishing is interconnected with planetary flourishing: Plato said “To seek the whole is love,” asking his ancient Greek followers to seek to understand their place in the whole order and pattern of reality what he called the Logos. In this same vein, John advocates for a new holistic way of seeing wealth and prosperity: “True wealth is not merely money in the bank. It must be defined and managed in terms of the well-being of the whole, achieved through the harmonization of multiple kinds of wealth or capital, including social, cultural, living, and experiential. It must also be defined by a broadly shared prosperity across all of these varied forms of capital. The whole is only as strong as the weakest link.” His work is distinct from the traditional approaches to “sustainability” which merely focuses “on social and environmental health using traditional reductionist logic to ‘solve problems,’ [whereas John’s regenerative economics] aims directly at building healthy human networks as the objective, drawing on universal principles and patterns, with “sustainability” becoming an outcome, a natural byproduct of systemic health. It is like holistic healthcare in contrast to reductionist disease care.”

Credit: J. Lokrantz/Azote based on Steffen et al. 2015.

Earth has biological boundaries and we are living beyond them: Living within liberal democratic societies that value freedom as one our ultimate goods, it is difficult for us to conceptualize limits on our economic freedoms. John has helped me see beyond the false assumption of unlimited growth to see that our economic growth needs to be the kind of growth that regenerates our biosphere: “Economic activity is already breaching four of nine critical ‘planetary boundaries’– atmospheric carbon, nitrogen and phosphorous flows from agriculture dumped into our river systems, land use changes, and the rate of biodiversity loss. Fresh water stress in specific locations is on the rise. In the process, we are compromising the Earth’s interconnected life support systems.”

Markets are part of, not the solution: John along with other market practitioners like Joe Ritchie taught me to question market fundamentalism: “Instead of believing a laissez-faire market system can somehow magically solve long-term systemic challenges if only we can improve market efficiency and transparency, regenerative actors understand that markets, while central, are but one of a number of institutions involved in systemic health. Others key institutions include governments, community institutions, educational institutions, commons trusts, non-profits, foundations, etc. Markets address certain problems well but not others.”

A Q&A with John Fullerton, Founder of The Capital Institute

To learn more about what various types of institutions can do together to reform the economy, I asked John a few questions. Some of his ideas resonate immediately, others I am still exploring. Regardless, I appreciate how he makes me think more critically on these questions. I hope it encourages you to see our economic and ecological systems in a new way and spurs us all on to practical actions rather than change our man-made systems to support human and planetary flourishing:

• How would you describe human flourishing in the context of a regenerative economy?

“A regenerative economy would provide the essential social and ecological foundations upon which individual flourishing is possible.  By aligning our economic system design with what we understand about how all healthy living systems work in the real world, humanity, and each of us individually will be set free to realize our potential, unburdened by the present life threatening and dignity draining struggles of daily life.  As a result, our struggles will not cease, but they will become productive and life-enhancing struggles: the struggle of self-actualization and collective self-actualization.”

• Where do you see the most promise in harnessing new technological innovations in bringing about a regenerative economy?

“The most obvious area is in energy.  Not only do we need to rapidly transition off the burning of fossil fuels, we must move toward a totally renewable (in fact, not just in name) non-extractive source of energy for our human needs and desires.  This includes the rare Earth minerals currently required for our so-called “renewable energy” systems.  So our energy technology must continue to evolve radically from here, both in term of energy source (some are now talking about plasma) but critically as well, our ability to rapidly and massively deploy it without requiring an unacceptable carbon footprint to do so.

Less obvious perhaps, but equally critical is our ability to manage the landscapes and seascapes of our one planet.  Human decision-making now controls virtually the entire surface of the planet, and much of it is grounded in reductionist, short-term financial optimization with no regard to a sustainable future.  Shifting how we think and manage is therefore critical.  We must develop a relationship with our environment in which our economic activity is the engine that drives ecological regeneration, not to ecological disaster, as is now the case.  In particular, we must restore the health of our critical carbon sinks, and understand how we can mimic nature in building soil without limit by simply unlocking the most powerful technology ever “invented” – photosynthesis.   And getting our heads around this will demand highly granular and distributed information, but also the contextualized information that too often remains invisible – warm data.  Certainly, AI and blockchain technology can play perhaps an essential role in this challenge if we manage to guide our use of these technologies with genuine wisdom.  We must start with the wisdom of the only civilizations that have managed to sustain themselves over the long term, namely, indigenous wisdom.”  

• Given the model of regenerative economics, where do you see the most systemic risks for investors in the current economy?

“Investors have two massive risks that they seem unaware of.  First of course are stranded assets.  In 2011, I estimated this risk at $20 Trillion, arguing that we have a choice to take a write off of that magnitude, with all the financial and economic implications, or we fry the planet and destroy life as we know it (and destroy the economy in the process).  Al Gore just put it at $23 Trillion in his speech at the COP in Madrid. [Citigroup estimates this number at $100 trillion]. The ramifications of this are literally unimaginable. But we simply need to deal with this reality.  What I’m calling “systemic philanthropy”, combined with MMT (Modern Monetary Theory) holds the key to managing this transition without total social collapse.”

The second risk no one is thinking about is the valuation of all financial assets in a world under increasing ecological limit constraints.  This “head wind” to conventional economic growth will not be felt uniformly.  But in aggregate, future growth rates will either be under increasing pressure from real world and policy constraints (or we will destroy the planet).  So the value of stock markets and all financial assets that are leveraged to growth will need to adjust downward to this new context.  Based on this new context (and current rich valuations especially in the US) one could easily construct an argument that the broad indexes are overvalued by half or more.  The point is, in the future I think we can expect, resilient and responsible to our future cash flows (like from renewable infrastructure projects) will be valued (appreciated by investors) more, and the growth of extractive businesses (whether from natural resources or from people) will come under pressure to be valued less.”

• If you were a new CEO of a major bank, what would your top three priorities be to bring regenerative economics into the mainstream of finance?

The GABV (Global Alliance for Banking on Values) does a pretty good job already, even though they frame it as “values based banking.” But I think they are moving toward the regenerative framework soon (I gave the keynote at their 10th anniversary event and challenged them to it which was well received).  This report shows GABV banks outperform financially as well.

The three priorities for incoming bank CEO’s would be:

1.    Begin with re-imagining what regenerative leadership looks like.  Use a holistic context and first principles to do that, and to set the strategy. 

2.   Finance the real economy rather than financial speculators.

3.   Finance what needs to grow (renewables, small business in general, ‘b corp’ type businesses, etc and cut off any financing of the “bad” (fossil fuels, etc)

4.   Focus on one or a few select bioregions where there is historical and cultural fit [for regenerative economics]. 

(ok that was 4!) 

• What role do you see mayors and local leaders playing in building regenerative economics at a local level?

Bioregions are the natural and logical organizing unit of analysis for regenerative economies.  They also have the granular information necessary to make critical and contextualized decisions that affect local people and local ecosystems, the nexus of regenerative economies.   So power must shift to bioregions.  Mayors and local leaders shift from being “under” more powerful leaders to leading such national leaders by example and demanding of national leaders what they cannot accomplish on their own. 

For more information on how cities and states are building regenerative bioregions check out John’s work here.

• What role can philanthropies play in building a regenerative economy?

Philanthropy (broadly defined to include all surplus capital in my ideal state) must find a new name.   Philo – anthro - “love of man” is a very human-centric idea well suited to prior centuries and eras, but not well suited to the Anthropocene and the Integral Age when we can no longer separate “man” form “nature.”  Love of our fellow human beings means love of Earth. 

We should redefine [philanthropy] to include all surplus capital because if we awake to the reality that the enormous pile of surplus capital we have created from modern capitalism has come at the expense of a decline in natural capital (and the associated ecosystem function upon which all life depends), and at the expense of social capital (despite claims that more people have been lifted out of poverty (defined as $1 day).  We live at a time when the vast majority of humanity is struggling at best, and often miserable, living in fear for the next paycheck, the next illness, and now even having to contemplate the possibility of extinction due to climate change.  Certainly the prospect of human thriving is a far off dream, beyond the reach of most imaginations today, even in the “advanced” economies of the west.

So we need to understand that the purpose of this surplus capital, whether sitting in a foundation or not, must be to serve the transformation to a truly regenerative economy, and in the process, as necessary, transform itself into natural and social capital whose value is what is now scarce.  How much and who becomes the moral question of the moment.  But when roughly half of the estimated $360 Trillion of global wealth is concentrated in the top 1% of humanity, certainly there is ample surplus wealth – easily in excess of $100 Trillion - to tackle the defining challenge of our time:  Systemic transformation of our economy to one that is regenerative by design.  That is what “systemic philanthropy” is all about.  And it will take all shapes and forms, not just traditional project grants.

If you want to check out more of John’s ideas, you can watch this Big Think video below or for even more insight read his white paper on Regenerative Economics.

The Future of Work is a Future of Wonder

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We are living in the midst of what technology experts call the ‘4th industrial revolution.’ With the development of a new ‘cyber-spatial’ reality of algorithms, advanced robotics, and an explosion of data, rapidly evolving technological advances will further blur the lines between digital and physical reality, transforming the nature of how humans work.

As we face these new realities in the coming decades, how do we adapt and evolve our humanity in a way that leads to more human flourishing? This article explores a forgotten concept with ancient roots that could be the key to the future of work and more importantly to the future of human civilization.

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Earlier in 2019, scientists photographed for the first time a black hole 55 million light years away from Earth. Black holes, regions of space where the gravitational effect is strong enough that even light cannot escape, are some of the most mysterious of all phenomenon in our universe. The discovery not only took the work of advanced technologies like super-computing, machine learning, and multiple long-range telescopes positioned throughout the globe, but also the work of hundreds of researchers from countries from around the world.

Commentators have talked about the complexity of the discovery, the feat of scientific collaboration, and the power of these new technologies. However, what has been under reported is the incredible fact that this photo captured a physical demonstration of the theory of general relativity first imagined as possible in the mind of Albert Einstein over one hundred years ago. The human imagination perceived the existence of a phenomenon that took over one hundred years of analysis and observations to confirm.

Einstein’s theory of general relativity was of course informed by a brilliant analytical mind and years of learning complex mathematics and scientific theories articulated by other geniuses like James Clerk Maxwell and Max Planck. However, without a developed imagination and an approach to thinking that utilized this part of his consciousness, scientists might have never made this groundbreaking discovery.

What if the secrets of Einstein’s creativity and these monumental discoveries hold clues for the future of work? We live in an age of incredible innovation emerging at an exponential rate. Our human world is about to be changed in ways so fundamental one has to look back to the discovery of fire or the invention of art to the see parallels of scale in the change to our experience of reality. Our lives, our work, the way we raise our children will be completely transformed.

The fusion of various technological advances, described by Klaus Schwab as the ‘fourth industrial revolution’, is a melding of physical, biological, and digital objects to create a new ‘cyber-spatial reality’. This wave of technological advances is disrupting every industry and transforming, potentially for good and for bad, our systems of business, manufacturing, and government. In the past, our understanding of industrial robots was limited to large, clunky machines doing routine tasks at a contained car manufacturing facility. In the future, given that our lives and our objects are immersed in layers of data and geographical coding, these robots will be let out of the cage and into our human habitats as driver-less cars, delivery drones and even inside our bodies as surgical nanobots. Already, artificial intelligence, paired with human intelligence, is using the sea of data that we swim in to analyze, predict, and influence our behaviors.

In the context of the future of work, some researchers and economists have launched global warnings of the replacement of human workers by artificial intelligence and robotics, while others point to past industrial revolutions (steam, mass production and digital) that destroyed some jobs but then later created new, better paying jobs. Regardless of which experts one reads or listens to, the general consensus is that we will experience significant short-term shocks in our labor markets and that the spoils of the next economy will likely go to those that have financial capital, innovation skills, and high levels of brain power to adapt.

As we face this rapid change, how do we adapt and evolve our humanity in a way that leads to more flourishing? Many experts are talking about reskilling of workers, which is extremely important, but what if we are missing a bigger opportunity to build these new skills on something more foundational? One answer to this complex puzzle of the future of work could paradoxically be hidden in a word that has lost its meaning to modern ears: leisure.

For many, the word leisure conjures images of retirees in leisure suits, overweight deadbeats playing video games in their mom’s basement, or just the absence of work. For my generation, the idea of the absence of work sounds like the end we dread most: unemployment. We are the generation that has made work into a religion described eloquently by Derek Thompson as ‘workism.’ Unlike my grandparents’ generation, who survived the Great Depression and the Dust Bowl, work is no longer just about providing sustenance for survival. In contrast, our generation of highly independent and globally mobile workers look to work to provide what family, religion and locality provided to our grandparents: our identity, our sense of purpose, and our place to find community.

This elevation of work as the sole source of flourishing would sound bizarre to our civilisational ancestors. Aristotle, a polymath known for his incredible diligence and intellectual productivity, writing at least eleven books on diverse subjects as physics, politics and poetry, said ‘we are un-leisurely in order to have leisure.’ Basically, work is for leisure. But what did he mean by the word leisure?

For Aristotle and for great thinkers before our current modern age, leisure was not just the absence of work. It definitely did not mean idleness or acedia, an ancient concept that meant the worst of all outcomes for humans: a despairing refusal to act and be oneself. Rather Aristotle and later philosophers like Joseph Pieper defined leisure as ‘an attitude of mind, a condition of the spirit, an inner calm, a receptive attitude that allows us to experience the whole of nature in a spirit of wonder.’ While we may not experience this attitude now, we may remember what it felt like from our earliest memories of childhood or in our interactions with children. Wonder is something we deeply long for, something that has been lost in our age of ‘attention’ grabbing technology, sleepless nights and ‘total work.’ If we open ourselves to the creative power of this word, we can explore a new maxim: ‘the purpose of work is leisure and the purpose of leisure is wonder.’ Wonder sparked the creation of the great cathedrals and their flying buttresses that in turn spurred the development of modern engineering. Wonder inspired Leonardo da Vinci to paint masterpieces, develop new scientific disciplines, and imagine a future of human flight, solar powered technology, and computational machines. With these examples, we begin to see that wonder is the source of all great art and science, the regenerative font of human civilization.

Returning to Einstein, we can see with new eyes the power of leisure and wonder to transform his work. From a young age to his final years as a famous scientist, Einstein developed his imagination using leisurely breaks in his analytical work to explore new possibilities through creative thought experiments and visual contemplation of the mysteries of the universe. According to Einstein’s biographer Walter Isaacson, he learned this approach to thinking during his formative years at a Swiss village school based on the educational philosophy of Johann Heinrich Pestalozzi, who taught students to visualize concepts and connect an abstract idea to their own personal experiences of reality via their imaginations.

From his Autobiographical Notes, Einstein recounted how he built the foundation of the theory of special relativity when he was only 16 years old while visualizing himself pursuing a light beam traveling through space. From this imaginative exercise, he created novel ideas on the relationship between time, matter, and space that had no basis in experience or in contemporary mathematical knowledge, but it was “intuitively clear” to him. This clarity was enough to spark over 100 years of innovation in science and technology.

In reflection of his scientific achievements, Einstein stated, “When I examine myself and my methods of thought, I come to the conclusion that the gift of imagination has meant more to me than my talent for absorbing positive knowledge… knowledge is limited, whereas imagination embraces the entire world, stimulating progress, giving birth to evolution. It is, strictly speaking, a real factor in scientific research.”

If we want to thrive in the future of work, we need a suite of social innovations to fully develop our unique human capabilities of imagination to match the analytical powers of AI. We have to face reality: we cannot out-analyze AI and we cannot compete with the computational power of quantum computing. Our modern educational and training efforts to turn humans into memorizing and analyzing machines is outdated and not fit for purpose. Numerous ‘future of work studies’ have found that the in-demand skills of the future will be creativity, originality, and complex problem solving, all human capabilities originating in the human imagination. Given this change in the nature of work, we need a total paradigm shift that reimagines the ancient human practices of leisure, celebration, and philosophical contemplation that have been used for millennia to develop the receptive powers of our imagination. We need a return to wonder.

The Beating Heart Economy: Circulating Prosperity to All of Society

Published on Medium on Sept. 6, 2019

The Heart and the Brain by Tomas Fonseca

After winning World War II, when America realized that the threats of fascism and communism were an existential threat to our form of democratic capitalism, corporate leaders advocated for policies to create balance and stability in the economic system. Fast forward to today and the specters of the dark ideologies that drove our last global conflicts have not left our world. Unfortunately, they are growing stronger each day, in many cases fueled by inequalities created by corporate and financial power over playing its hand. This essay looks at practical ways business and policy leaders can create a new purposeful economy that regenerates our natural resources and shares the prosperity with all parts of society.

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The human circulatory system is intricately complex and powerful. In one day, the blood inside your body travels 12,000 miles. To travel a similar distance in the United States, one would have to drive from coast to coast four times. The relationship between the circulatory system and the human brain is one of the most important interconnections between two organic systems. The brain requires a steady stream of blood to ensure it gets the constant supply of oxygen it needs to function properly. Too much blood can cause the pressure in the human head to increase and so damage delicate brain tissue, while too little blood will cause it to starve. The heart needs the brain to regulate the proper flows of blood; the brain needs the heart for oxygen. Both systems need multiple other elements in the body to consume and process food, water, and oxygen. To thrive, the human body requires a network of organic systems to mutually flourish.

We see similar parallels in the modern economy. What corporation would exist without customers with adequate incomes? How could the modern business succeed without educated employees? How could a business operate without a legal and political license to operate in a society? What business could operate without the enforcement of government power in contracts and the limited liability that corporate designations give?

In 1970, Milton Friedman, the economist and creator of the shareholder maximization theory, reduced this complex network of mutuality into a single objective for a corporation: “to make as much money as possible while conforming to the basic rules of the society, both those embodied in law and those embodied in ethical custom.” 

This persuasive theory sounds rational but what happens when the corporations in question become so powerful that that they influence the basic rules of the society, the laws that govern it, and ethical customs that drive all of our human interactions?

Over the last few decades, multinational corporations have accumulated more power in the world than most countries. If you rank states and corporations together in the top 100 revenue-generating institutions, 71 are multinational corporations and 29 are nation states. As a result, international relations theorists had to change their discipline to account for this growing power of corporations in their study of global political dynamics.

On a more personal and relational level, the advent of smart phones, social media and behavioral influence through data analytics, companies are recognizing the ethical implications of their growing power to change society, our human relationships and even our perception of reality.

In recognition of their growing power and responsibility, The Business Roundtable, a coalition of 181 of the largest, most powerful businesses in the United States recently made a groundbreaking shift in their rejection of the maximizing shareholder value as the primary objective of a business.

In their public statement, these CEOs stated that “it has become clear that the [old language] on corporate purpose does not accurately describe the ways in which we and our fellow CEOs endeavor every day to create value for all our stakeholders, whose long-term interests are inseparable.”

Predictably, their financial backers did not back their play. Investors quickly pushed back and restated their dominance, stating that ‘accountability to everyone means accountability to no-one’ and that this effort would diminish shareholder rights. The Economist piled on their criticisms that this new statement of purpose would reduce efficiency, decrease competition, and further entrench CEOs who lack legitimacy with the broader public.

On the other side of the debate, the founders of the B Corporation movement, called on the corporate, financial, and policy leaders to go beyond talk and put the declaration into practice by changing corporate governance structures and implementing new public policy to reinforce corporate intentions. 

Each of these critiques is a reasonable response to this tectonic shift in corporate governance. How do we respond as business leaders and entrepreneurs? How do we put this more realistic purpose into practice while also addressing the challenges of accountability, efficiency, and competition?

Personal accountability: leaders go first

First, integrity and responsibility at a corporate level starts on a personal level. Each business leader and entrepreneur needs to ask fundamental questions about their own personal purpose and ethical performance as a leader. Although many executives are trying to escape death, it is likely still to be an inescapable reality for all of us. When we are lying in bed at the end of our life, will we be thankful of how we spent our limited days? What do we want our children, our spouses, and our colleagues to say about our leadership, our legacy at our funerals? These fundamental questions remind the leader that we will be ultimately judged on our virtues and how we contributed to the flourishing of others in our sphere of influence. Reflecting on our purpose allows us to see the value of the intangible realities like relationships and truth as more important than the tangible realities of wealth and money. I am not saying that wealth and money are not important, but rather their relative importance become clear as we reflect on our ultimate purpose as human beings.

Practically, leaders can use various techniques to discover their purpose. Virtuous leaders develop their vision of legacy and their internal conscience by taking time during their breaks from intense work to read sources of perennial wisdom: literature, philosophy, and the biographies of influential leaders. The writings of ancients like Aristotle or modern thinkers like Victor Frankl or Hannah Arendt, help leaders understand the importance of responsibility and meaning as cornerstones in a life of flourishing regardless of material circumstances. Leaders must go beyond reading to engage their full natures in the reality of existence through mediation, prayer, and time outdoors. The visionary leaders of history understood the power of strategic moments of contemplation to understand their purpose in times of great conflict and upheaval.

In addition, having a few close friends that know us well can help us sift through the wheat and chaff of our own self-perceptions. I know in my life, having a few deep, long-term relationships with friends whom I talk to on a regular basis and who know my strengths and weaknesses has positively impacted my growth as a leader and deepened my understanding of true success. Via reflection, contemplation and friendship, these encounters with “ultimate reality” help each of us to develop the inner resources needed to face the competing and sometimes conflicting needs of stakeholders. Without this inner sense of purpose, we can become unconscious pawns in someone else’s game. 

Professional accountability: steward the assets that drive long-term growth

Growth is a good thing. Without growth, any living thing cannot flourish. However, business and economic growth needs to be grounded in the reality of our human relationships and our renewable biosphere. We need to account for and steward all types of assets: human, social, and natural. 

With the advance of artificial intelligence, robotics and a host of other advanced technologies, we are witnessing a widening skills gap between the talent of today and the skills needed for tomorrow’s economy. Right now, technological changes are already transforming the types of workers in demand. Given the speed and complexity of these changes, business cannot fully depend on the education system alone to catch up and fully fill these gaps. Business leaders need to make significant investments in employees to develop these new skills.

In the wake of corporate scandals, from General Electric’s potential $38 billion accounting fraud, Google’s recent child privacy violations and Volkswagen’s tampering of emission monitoring technology, business people are waking up to the value of intangible assets like trust. The most advanced companies are learning new ways to model their social ecosystems and use a host of approaches to build better relationships with their various stakeholders. Each of these relationships is an opportunity for service and the creation of new value. These companies are measuring social capital on three fronts: trust, social cohesion, and the capacity for collective action. The most advanced technology firms are incorporating ethical considerations into their new product design.

In addition, our current way of managing the economy does not account for our dependencies on scarce resources of water, energy, soil and biodiversity. By measuring natural resource inputs (oxygen used in combustion, energy, etc.) vs. outputs like carbon, a company can align the corporate responsibility (stewarding the planet) with corporate interests (reducing costs). For example, Bill McDonough, one the leading thinkers in sustainability, has helped companies design products, office buildings and factories that are fully renewable and reusable. He recently worked with Ford to design a factory that uses renewable power, saving the automaker over $900 million. 

At the recent Responsible Business Forum at Oxford, leaders from across the financial value chain, from top accounting firms to private equity groups to commercial banks, discussed the idea of creating a new global standard for stewarding these non-financial assets for long term growth. This type of collective action among the private sector could create a common rule book for CFOs across the economy and fundamentally change the relationship between business, society, and the environment.

Public accountability: get the blood to the heart of the economy

While CFOs can help steward resources for efficiency and long-term value creation, the CEO’s direction of the VP of Government Relations may be the most important lever for improving the health of the capitalist system. With over $2.6 billion in corporate lobbying spent every year, US corporations have a massive impact on the “basic rules” of the game. Unfortunately, using this influence, tax laws have been changed to greatly favor investments in financial capital over human capital, anti-trust laws have been weakened to squash competition and privacy laws have largely been written in favor of the technology sector. That corporate lobbyists would hard wire these advantages into law is rational but at some point sending all of this blood to the head of the body will kill the heart that they rely on. Public leaders need to return to earlier legal foundations of the corporation to restore the social purpose and obligations of all corporations.

This was not always the case. After winning World War II, when America realized that the threats of fascism and communism were an existential threat to our form of democratic capitalism, corporate leaders advocated for policies to create balance and stability in the economic system. A new bipartisan consensus was built in the domain of domestic economic policy. Anti-trust law was further strengthened to encourage competition and entrepreneurship. The US Government made significant investments in American talent through the GI bill and expansions of public education. Tax policy was genuinely progressive and more fairly balanced between human and financial capital. Our social welfare system was strengthened to help the average American navigate economic change. The civil rights movement gave more people opportunities for economic opportunity and democratic participation. Labor policies were put in place to protect the interests of workers and to ensure the benefits of success were shared broadly across the company. Environmental laws were strengthened. As a result, those post war years were years of growth and strength for the American economy.

The specters of the dark ideologies that drove our last global conflicts of World War II and the Cold War have not left our world. Unfortunately, they are growing stronger each day, in many cases fueled by inequalities created by corporate and financial power over playing its hand. Fascism, thought long dead with the end of Hitler’s regime, is growing across the world. As I write this essay, the power of totalitarian socialism in China is encircling the free citizens of Hong Kong. To save the system that has created freedom and prosperity for millions from these existential threats, corporate and financial leaders need to support serious reform proposals from across the political spectrum to increase competition, steward our natural resources wisely, educate our citizens for the new economy, and share the benefits of capitalism across the entire system. If we fail to take care of the heart of the body, the whole body could die. It is time to be accountable and lead our society back into a season of sustainable prosperity.

Navigating the Future of Capitalism

Published on Data Driven Investor on Aug. 27, 2019

Survivors at a storm at sea. Painter unkown.

The future of capitalism is in question. What business leaders and entrepreneurs have long thought to be a stable social and economic system of capitalism, is now posing a risk for businesses. As business and policy leaders, we have to ask ourselves new questions. Why is this happening? What are the blind spots of our current system of business and finance? Are we missing important scarcities and sources of value creation right under our nose? In this essay, I take a look at the latest thinking on the future of capitalism and hopeful signs that we can navigate our way out of the current crisis.

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Capitalism is in crisis. A recent poll in the United States found that 40% of Americans would prefer to live in a socialist country instead of a capitalist one. Given America has been the standard bearer for free markets, and won the Cold War against a totalitarian form of socialism, this is incredible. What we have long thought to be a stable social and economic system of capitalism, is now posing a risk for businesses. As business leaders and entrepreneurs, we have to ask ourselves new questions. Why is this happening? What are the blind spots of our current system of business and finance? Are we missing important scarcities and sources of value creation right under our nose?

Before answering these questions, we first have to decide to take the time to reflect on the idea of capitalism; this is not an obvious reflex for most of us. Asking a business leader or entrepreneur to think about capitalism is like asking a fish to think about water. We live in it and breath it everyday. We are under intense pressure to keep swimming. It is the matrix that we cannot always see yet drives us. It is the system that guides our decisions, our investments, and our risks. On a smaller scale, we see this same dynamic of ‘the fish in water’ at play in our own businesses. Everyday, we operate ‘in’ our businesses serving customers, leading teams, managing our financial performance, etc. However, every entrepreneur knows that from time to time, you have to step outside the business and work 'on’ it. You need to rethink your strategy, imagine new products, and new ways of doing business to compete in the marketplace. The same phenomenon is occurring across the entire global economy. To regain public confidence in the capitalist enterprise, we need to work “on” capitalism, not just “in” it.

The distinguished Oxford professor, Dr. Colin Mayer, the former dean of the Saïd Business School and an expert on corporate finance, recently proposed a paradigm shift in how business leaders should think about capitalism.

He articulated the old paradigm as the following:   

“Capitalism is an economic system of private ownership of the means of production and the operation of these productive resources for profit. Ownership is a bundle of rights over assets conferring strong forms of authority on those that possess them. Firms in this context are nexuses of contracts and overseen by a board of directors for the benefit of their owners.” 

Basically, in this paradigm, governments uphold rights, private property ownership and contracts to encourage entrepreneurs and their employees to pursue their own self-interest in creating value for customers.

The brilliance of this system, first fully described by Adam Smith before even calling it capitalism, is its ability to align the interests of the investor and the business manager to effectively and efficiently employ resources for the most productive ends. In exchange for creating value for customers, business owners are able to receive money that becomes a source of their growing wealth. When capitalism works for employees, higher productivity raises incomes and living standards, improving access to important goods like healthcare, education, and housing. Over the past centuries, various incarnations of the capitalist economic paradigm have brought millions of people out of poverty into material prosperity.

A case for change: rising scarcities of human, social, and natural capital

If capitalism works so well at improving living standards, why does the old paradigm need to change? The nature of scarcity has changed. According to Bruno Roche and Jay Jaykub, authors of Completing Capitalism, “today’s dominant economic model still focuses on creating financial capital (making money with money) at a time when financial capital is abundant.” Using monetary policies that significantly decreased the cost of lending, central banks have pumped extremely high levels of money into the financial system over the last decade. Yet our political and economic system still makes management and measurement of financial capital our primary focus as if it were the only scarce resource.

Following the ‘maximizing shareholder value’ theory of University of Chicago professor Milton Friedman, we lost our understanding of the reality that business leaders are embedded in a society, in a network of mutual relationships. Friedman taught that a CEO’s sole social responsibility was to make profits for his investors within the bounds of the law and according to ethical customs. Lost was the post-WWII consensus that businesses needed to share the benefits of their success with their employees, local communities, and others that have a ‘stake’ in the business. Since the 1970’s, Friedman’s new ideology led to a glorification of short-term profits for investors over all obligations to other ‘stakeholders.’ Finance transformed from the enabler of business to become the absolute master, unleashing the new behemoth of ‘financial capitalism.’

As a result of this new ideology, we forgot what earlier business leaders like Henry Ford knew well: customers need livelihoods to buy our products and services. Ford made sure his employees could afford the Model T. While financial capital has been rewarded generously, wages for workers have flat-lined or decreased. The costs to maintain our ‘human capital,’ (health, education, etc.) have shot up significantly. To cover the gap between incomes and costs, personal debt has skyrocketed. In developed countries like the U.S., the benefits of higher productivity (higher incomes and living standards) are no longer being shared with the middle class. For the first time in America, our life expectancy is decreasing. We allowed inequality to explode to a point that now a growing part of our society is not participating in the work world. As a result, socialism and nationalistic populism are on the rise again in areas most affected by a dying middle class. We under invested in people, the heart of our economy, and now we are reaping the consequences.

Financial capitalism, as inspired by Friedman, has no regard for our human ecology, the reality that humans and our businesses exist inside a biological environment. In Completing Capitalism, Roche and Jakub reference that scarce natural resources are being used at an alarmingly unsustainable rate. We are overshooting our global capacity to renew what they term ‘natural capital’ (freshwater, energy, topsoil, biodiversity, etc.), the resources needed to support human life and economic activity over the long-term. We are taking more from Earth than the planet can now sustainably provide.

In the realm of technology, leading companies lived by a new motto: move fast and break things. Supersized tech behemoths (Facebook, Amazon, Netflix, Google, etc.) accessed abundant financial capital to launch new products and businesses so quickly society did not even have the time to understand what kind of impact it would have on our privacy, competitive markets, and our democratic institutions. In the age of Surveillance Capitalism and Cambridge Analytica, these companies broke the very things they were reliant on for their business models. Human connection has decreased. The legitimacy of democracy to govern has dramatically dropped. Sociologists and political scientists call this a dangerous crisis of declining ‘social capital.’

These long-term disinvestments in human, social, and natural capital will lead to the destruction of the very economic system that creates wealth for entrepreneurs and brought material prosperity to millions of people. Even Standard and Poor’s Rating Agency (S&P) stated that runaway economic inequality is harming American economic growth by excluding large parts of the population from its cumulative benefits. According to their research, higher levels of economic inequality in the developed world are increasing political pressures, discouraging trade, investment, and hiring. In fragile areas of the global south, the prevalence of famines, droughts, and environmental degradation will continue to intensify battles over scarce resources like water and topsoil and force millions of people to migrate to developed countries, risking political stability in all regions.  

As we likely head into a global recession, these issues will only be exacerbated. Ray Dalio, founder of Bridgewater Associates and manager of $150 billion in global investments, has predicted that high levels of inequality, unsustainable debt, and the upcoming recession will likely lead to war.

Redefining performance and success

The future of business hangs in the balance. To secure the future, entrepreneurs and business leaders need to quickly adapt to a new paradigm of success and performance. To reform our notion of capitalism, Mayer provides the following new paradigm:

“Capitalism is an economic and social system for producing profitable solutions to the problems of people and planet. Private and public owners provide these solutions and do not profit from producing problems for people and planet. Ownership is not just a bundle of [property] rights but also a set of obligations [to stakeholders] to put their purpose into practice. Firms in this context are not just nexuses of contracts but a nexus of relations of trust based on principles and values upheld by the boards, directors, and companies.”

As business leaders and entrepreneurs, we have a purpose to put into practice: solve problems for people and planet without creating more problems, build relationships of trust, and uphold our values as leaders in society.

This new vision ennobles our work as business leaders and provides a new way to think about performance, leadership, and management. Performance and success in this new paradigm is about managing scarce resources profitably for people and planet. It is inspiring because it is a realistic alternative to the failed ideologies of the past. It is built on the reality that our businesses are embedded in human societies and dependent on natural ecologies to thrive.

There have been hopeful signs. The Business Roundtable, a powerful collection of over 180 American CEOs, made a public statement this weekend ending their decades of support for Friedman’s idea that the purpose of business is to maximize shareholder value. They provided a new vision that looks at the full range of stakeholders that need to experience the benefits of growth and prosperity. This is a big shift in the right direction.

To practically implement this new paradigm as entrepreneurs, we need to be able to go beyond high profile statements to measure and manage all forms of capital (financial, human, social, natural, etc.) each according to their unique nature. Human capabilities, our social bonds and our ecologies cannot be managed like money but they can be effectively stewarded to support human flourishing. To rebuild trust in business, we need to ensure that all stakeholders of our companies get to experience the shared benefits of our success.

The Key to Rebuilding Trust in Institutions: Mutuality, Locality, and Stability

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Modern ideas about economics and society have pushed humans to become more individualistic, organizations to become more globalized, and relationships between everyone to become more disposable. The result is a crisis of trust. We have designed the world to be anti-relational which has worked for a time, but it is now proving to be an extremely fragile approach to organizing society. This design is ideological and totally unrealistic. It’s not how humans work. To restore trust, we need to design a human-centered economy built on the way humans actually thrive in localized communities. This essay looks at the latest research on how businesses and institutions can rebuild trust as well as improve their performance.

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In the age of new media, as leaders in various types of institutions, we are constantly being told to grow our social presence. We are coached by publishers and marketing experts, “Get more followers!” “Build your online clout!” “Build your platform!”

This advice is for good reason. The world is cluttered with information and ideas. As we consume this information we are constantly applying the filter of a person’s online clout as a measure of the credibility of the person and their information. We look at the number and quality of followers to assess if the person communicating is “trustworthy.”

There is no doubt that online networks give leaders new types of influence and global reach. According to Professor Adam Grant, one of the world's most recognized management thinkers, networks come with three major attributes: power, access to diverse skills, and private information. It is also obvious that platforms like social networks, wikis, crowd funding, and crowdsourcing are innovative tools for people of all walks of life to contribute their ideas and insights. However, when we need to solve complex social and economic problems or even everyday problems that require cooperation, are massive social networks and online platforms the full solution?

In the wake of the various social media scandals, for example, Facebook’s complicity in the Cambridge Analytica’s unethical disruption of democracy, YouTube’s child pornography scandals or the rising psychological toll social media has taken on mental health, we are all beginning to question the trustworthiness of large, global social networks. All of these violations of trust put the ‘social license’ of these businesses to operate at high risk. Businesses and organizations that are increasingly relying on social media as their primary way to relate to society may also become vulnerable to these risks. Could there be another way to relate in the 21st century that will help businesses and organizations be more sustainable and durable over the long term?

A mathematical case for community  

In 2017, a group of scientists, mathematicians and researchers from Harvard University and Emmanuel College, including Fields Medal winner Shing-Tung Yau, set out to understand which types of social structures lead to the best cooperation. According to the Harvard Gazette, key insights from the research include:

• “Large social networks foster connections by erasing national, geographic, and even linguistic barriers. But when it comes to fostering cooperation, global connectivity leaves something to be desired.”

• “More connectivity won’t necessarily promote people being good to each other. It’s not that global connections are bad, but they are no substitute for a small number of strong local connections.”

• “We can take any graph or social network, and if it has strong pairwise ties, that is what is most conducive for cooperation. This is a mathematical argument for stable families or for stable friendships.”

It sounds like common sense right? Aren’t we building trusted relationships in our businesses and organizations?

Unfortunately, we are struggling at building trust. A recent global survey showed that trust in institutions is at an all-time low in across Western society. This trend is not sustainable. Without trust, our societies and our civilization will slowly degrade into anarchy. The plethora of dystopian books and films clearly warns us of this ever present risk for humanity. If we know that trust is so valuable, how can we redesign how our organizations to rebuild trust? How can we perform and communicate in a way that builds strong, cooperative relationships?  

Part of the challenge is that modern ideas about economics and society have pushed humans to become more individualistic, organizations to become more globalized, and relationships between everyone to become more disposable. It is no wonder that trust has fallen. We have designed the world to be anti-relational which has worked for a time, but it is now proving to be an extremely fragile approach to organizing society. This design is ideological and totally unrealistic. It’s not how humans work. To restore trust, we need to design a human-centered economy. Revisiting the Harvard research, three key words stand out concerning the type of relationships that engender trust and lead to effective cooperation: pairwise, local, and stable.

Mutuality: We are wiser in pairs  

1. Pairwise in this context means: “occurring in pairs.” The basic building block of a community is a pair of two people connecting in a relationship: a friendship, a partnership, an employer-employee relationship, etc.

During the Industrial Revolution, company bosses diminished the importance of personal relationships to increase the productivity of the hierarchical, efficient factory floor. However, in today’s service economy we now intuitively know that relationships are central to our success. When you look deeper at the roots of professional life, the word 'company' comes from the Latin words 'com', meaning 'together', and 'panis' meaning 'bread.' Before the machine age, partners did business over a meal. Did we lose something human in our drive for performance and efficiency that we need to rediscover?

Returning to an earlier age, Aristotle described ideal relationships as “a mutual returning of love." He also said they were “a mutual choosing of what is good and pleasant.” To be successful, build your company or organization on a shared pursuit of the good, the true, and the beautiful, a shared purpose. Companies need to articulate a clear purpose and then build a community of stakeholders (customers, employees, investors, partners, etc.), break bread together and band together in collective action to deliver on this purpose. Profitability is one goal within a larger context of this purpose. Ethical action in service of this purpose builds credibility and demonstrates the responsibility of the corporation. Promises made and kept to these most important stakeholders prove your purpose and build the reservoir of trust needed for future collective action.

Locality: Everyone belongs in a community

2. Local means that your professional relationships exist in a physical reality, a place. Imagine the people that you interact with on a daily basis. Most of these people are online, but you deal with them face-to-face everyday. There is an opportunity for richness and presence in these interactions. As professionals, we need to understand our local community. We need to help cultivate a shared sense of history, landscape, culture, and memory. These elements give the locality its uniqueness and strength. For too long, corporations have been unconscious of this reality and have imported a standardized, homogenized global culture into local areas. Over time, it kills the soul of a place and destroys the sense of identity that makes that place worth caring about. This leads to a slow decomposition of what sociologists call “social capital”: the trust and cohesion necessary for cooperation.

What does this have to do with performance? The Harvard Business School conducted a study of 180 companies to explore the relationship between community engagement, sustainability, and performance. It found that the companies with strong community engagement practices significantly outperformed their competitors over the long-term in both the stock market and accounting performance. 

The study concluded that “a more engaged workforce, a more secure license to operate, a more loyal and satisfied customer base, better relationships with stakeholders, greater transparency, a more collaborative community, and a better ability to innovate may all be contributing factors to this potentially persistent superior performance in the long-term.”

Unfortunately, many corporations wait until a crisis hits to engage their local community. This is the worst time to build relationships and typically further the relational breakdown at a local level.

Stability: Build communities for the long haul  

3. Stable connotes a longer time scale and a sense of commitment long beyond a transaction or a tweet. Returning to Aristotle, “stable relationships demand time and trust. One cannot have a large number of relationships.” 

Dr. Robin Dunbar would agree. Dunbar, a professor at Oxford university, studied the relationship between our brains and social connections. According to his research, humans can only maintain about 150 stable relationships at a time.  

Bill Gore, the CEO of W.L. Gore & Associates, knew this truth about human nature in his gut. He was the innovative maker of Gore-Tex fabric used in many popular outdoor brands. Gore would not allow the staff at any of his factories to exceed 150 people. If it grew beyond this number he would create another, self-contained factory next to it. He knew that people needed to know each other on a first name basis. Gore & Associates used this philosophy to build innovative online customer communities and to grow the business into a successful 10,000 person, $3.2 billion company. Gore's success is a perfect case study of an organization that scaled trust through communities. 

If we want to build trust with customers, constituents, and other stakeholders we need to get back to the basics of building long-term relationships in our local communities. Don't wait. Start building now.

Inequality, Consumerism, and the Disintegrating American Community

This essay explores the centralization of wealth and power as one of the driving forces of political and social instability in America and asks the question, "Are we heading towards revolution?" Using French anthropologist, René Girard, as a guide to understand our instability, the essay explores the human tendencies of mimetic rivalry and scapegoating and their relevance in our current social disintegration. To counteract this growing fragmentation, the essay provides five opportunities for personal action to reintegrate our communities and ultimately our Nation.

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Liberté, Égalité, Fraternité. Walking around the neighborhoods of Paris, you see these words on every public building. The motto of the French Revolution is emblazoned not just in the architecture but also in the hearts and minds of the French people. However, living here in France, I have noticed that one of these values shouts louder than all others in the streets of Paris: égalité. French memoirist Marc Antoine Baudot surmised that the French temperament was more inclined to the equality than to liberty. To a point, I have observed this broad generalization to be true. The French seem to be obsessed with equality in a way that Americans are not. For better or worse, Americans have a tendency to focus on the starting line of opportunity vs. the finish line of wealth accumulation.

“The great enemy of freedom is the alignment of political power with wealth. This alignment destroys the commonwealth – that is the natural wealth of localities and the local economies of household, neighborhood, and community – and so destroys democracy, of which the commonwealth is the foundation and practical means.”

— Wendell Berry, The Art of the Commonplace

However, in the past decade, the rhetoric in the U.S. has stoked the fires of perceived and real economic and social injustice. Elite vs. middle class. Rural vs. urban. Black vs. white. Main Street vs. Wall Street. 1% vs. 99%. Men vs. Women. Looking at the economic data, there is much truth to the statements about growing economic inequality. Unstable wealth inequality, in particular, has risen significantly over the past 30 years. 16 thousand American families now have the same amount of wealth as 52 million American families.[1] Regardless of your politics, the data shows that the American middle class family has less wealth, lower relative incomes and faces higher costs than they did fifty years ago. Unfortunately, this downward trend of wealth creation is even worse for middle class families of color.[2]

There are many potential causes to these troubling inequalities: globalization, rapid technological changes in the workplace, legacy structural injustices and even misguided tax policy. Due to these forces, power and wealth have centralized significantly into the hands of a few elite players in a few American cities: financial markets and cultural power in New York, political and military power in Washington, D.C., cultural power in Los Angeles and technological power in Silicon Valley. This is not necessarily a nefarious conspiracy, but rather a historical tendency of human cultures to centralize around cities based on economic opportunity. However, an over-centralization of power and wealth could be a significant driver to the current instability in the United States. Will we have a revolution like the French that further pits our classes, religions, and races against each other in violence? What should we prepare for as it escalates? How do we prevent further violence and social disintegration? Regardless of one’s answers to these questions, there is a growing consensus that our country and our culture feels unstable and something must be done to prevent total disintegration of our Union.

Mimetic Rivalry and the Search for Scapegoats

“The world says: “You have needs — satisfy them. You have as much right as the rich and the mighty. Don’t hesitate to satisfy your needs; indeed, expand your needs and demand more.” This is the worldly doctrine of today. And they believe that this is freedom. The result for the rich is isolation and suicide, for the poor, envy and murder.”

— Fyodor Dostoyevsky, The Brothers Karamazov

French anthropologist René Girard, an ex-patriot to America, thoroughly explored this phenomenon of cultural instability and human violence in his writings and showed a link between these phenomenons to inequality. According to Girard, human cultures innovate creating new cultural goods and then others desire these new goods largely because other humans find the goods desirable. He called this phenomenon of comparison, mimetic desire. We want to have what others have because they have it. Think of the fast fashion, Instagram, and ‘foodie’ trends, all examples of the power of mimetic desire in modern consumerism. Girard saw this desire as the driver of much of human activity and culture creation. One man sees what another has. If he cannot recreate or accumulate this object of desire, he attacks him for it. On the other side, the possessor of the cultural good, builds defenses and systems of domination to protect and to accumulate his riches. On a wider scale, as this dynamic builds and grows at a social level, this inequity and envy if unaddressed can lead to large-scale instability and chaos. “The chaos that precedes collective violence is nothing other than this, the disintegration of human communities as the result of the mimetic rivalries that all human communities are liable to be caught up in.”[3]

In addition to this insight, Girard also discovered in his anthropological research another constant theme across all human cultures: the mechanism of human sacrifice as a tool for reunification of the society during periods of great instability. From Aztecs, to Vikings, to the Ancient Mesopotamians, all ancient cultures used this approach to appease the gods when in reality they were appeasing mimetic rivalries of the community. To solve the problem of social unrest and instability and to protect their power, religious and political leaders discovered that if they found a scapegoat, sacrificed that person to the god(s), they could miraculously return unity to the community. But this sacral violence does not solve the underlying cause of social fragmentation: mimetic rivalry. The cycle continues ad infinitum. In the case of the Aztecs, the complex human sacrifices to their gods reached over 4,000 people at a time. Girard sees this phenomenon ritualized and repeated in every ancient culture but also throughout history and into modernity. Girard saw in the Holocaust of Nazi Germany, the mass killings of Communist Russia and even the public lynchings of his adopted Capitalist America all as examples of scapegoating to secure the unity of the collective and the power of elites. One does not have to look hard to find remnants of this activity in our current popular culture, from the dystopian violence of the Hunger Games, the final ritual of the flaming effigy at the Burning Man festival or the music video from Radio Head, Burn the Witch. Maybe these cultural expressions reveal that we are not wholly different from our ancient ancestors.

From Radiohead's music video, Burn the Witch, a haunting commentary on the human tendency to scapegoat.

With the rise of political instability and the power of authoritarian leaders around the world, we see something ancient and dark in our human nature raising its ugly head again. What are the examples of this scapegoating in our current political culture? The right and the left do not have a corner on scapegoating. On the far right, the easy scapegoats for all of our economic and social woes are the liberal media, the immigrants, the refugees, minorities of color, and different ethnic backgrounds destroying the European roots of America culture. On the far left, the scapegoat is the white, under-educated working class man, the corrupt police officer, or the gun toting evangelical. On all sides, we hear the sabre rattling and the growing lust for violence and confrontation. Each side is building armaments and a compelling rhetoric that covers the dark mimetic desires and desire for scapegoats in a veneer of noble purpose. What if all of these targets of scapegoating are actually useful distractions from our “disintegrating human communities as the result of our mimetic desires?”

A Quiet Revolution of Reintegration

The more people I talk to, regardless of political persuasion, they have the same heightened foreboding sense of existential crisis about the future of American democracy. Most of my friends are young parents in the full throws of their careers. I can sense in their voices an alarm and concern. What kind of place will their children grow up in? What can they do? Is it too late to change the tide?

"Dinner Party" by Jennifer Pochinski

As I listen to these friends, I hear in each of them a wake up to a call to engage more deeply in our troubled society. This gives me great hope. Across America, my intuition tells me there are others who are seeing an opportunity to stand in the gap.

If so, how does our generation counteract the dangers of mimetic desire, rising inequality, and scapegoating? Returning to one of my favorite authors, G.K. Chesterton, I remember when he was asked by a prominent newspaper to explain the most challenging problem in the world of his day. He responded with the brilliant two-word answer. “Dear Sir, I am. Yours, G.K. Chesterton.” Any reflection on the destructive nature of mimetic rivalry has to start with me as a person. If I am going to be a part of the solution of “reintegrating” my own human community as a starting point, I have to start there. What do I desire of others that I do not have? Is my consumption sustainable? How do I create instability in my relationships by looking for a scapegoat? In what small ways do I encourage violence? This can happen in my family, my close friendships, in office politics, in my neighborhood and further out into my social networks. As a country, I believe we all need to start with contemplating our own role in the chaos of conflict and how our selfish desires destroy the fabric of our relationships.

As we work outwardly into our relationships, here are some practical ways that we can practice more integrity in our local communities and build more stability in our society:

• Be Generous - One powerful way to counteract mimetic desire is voluntary sharing. Generosity kills our unhealthy attachment to our own material goods. As we give, we experience true "liberté" in our interior lives and we begin to see the ultimate purpose of all of our private property is to encourage healthy relationships. What can you give away to others in your city or neighborhood to decrease the power of your own mimetic desire? What can you give to your local church, synagogue, mosque or local charity to increase your personal freedom?

• Give Hospitality to the Stranger and the Neighbor – One of the deepest desires of our heart is to belong to a family and to a group of friends. A simple thing we can all do is invite neighbors and even strangers over for a meal. If you feel inadequate to the task of cooking, there are excellent groups out there facilitating dinners for others willing to host. As David Brooks pointed out in his article “The Power of the Dinner Table,” this act of kindness has the power to break down walls, transform individuals, and build new relationships. Who are the people in your locality that need invitation into community? Who are the strangers that could experience belonging through a meal?

• Make Something Beautiful – Prince Myskin, from Dostoyevsky’s novel The Idiot, was right when he said “beauty will save the world.” Our culture will recover its integrity when artists, musicians, writers, call us all to be our better selves, to live lives of meaning and help us understand the importance of quality over quantity. Without art and public beauty, we lose this sense of purpose in our daily lives. We need you to speak prophetically to our society that we are more than just consumers of temporary, throw away goods. Artisans and designers, whether you create landscapes, make furniture, or design websites, we need you to be masters of your craft and to call us to integrity with your excellence.

• Invest in the Local Commonwealth – Regardless of our political philosophy, we can all agree that there are certain local treasures that are shared in common with our neighbors. In our cities and towns, each locality has local schools, parks, public art, and local landscapes that give a place a sense of identity and integration. Whether it is the local high school sports team or the fountain in the town square or the park in your city district, look for ways to invest in this commonwealth, especially in partnership with people that do not look or think like you. As we volunteer for the PTA, donate to the local museums, get involved in our local governments we discover that our neighbors are not that different than us. They care about their families; they have dreams just like us. By doing this, we build sociologists call ‘social capital,’ the trust and cohesion to have a healthy civic life. Social capital is also a key to unlocking economic opportunity for the disadvantaged; part of the solution for addressing inequality at a local level.

• Create More Opportunities for Human Flourishing – If you are an entrepreneur, we need you to start and grow your businesses to create more opportunities for meaningful work. Look for ways to solve social problems with your business, build diversity into your teams and play a leadership role in the communities where you operate. All of this is good business. Entrepreneurs have the critical skill of managing an idea into reality, serving unmet needs, and creating jobs for people. Ultimately, you show all of us the abundance of human creativity to solve our problems and when you do this with fairness, you create a culture of shared equity in our economy.

““We must all learn to live together as brothers or we will all perish together as fools. We are tied together in the single garment of destiny, caught in an inescapable network of mutuality.””

— Martin Luther King Jr., Remaining Awake Through a Great Revolution

Doing these small, daily acts of relational integrity does not mean we ignore the real inequalities in our society. Nor does this mean that there are not real inequalities in our society that need to be fixed. However, only addressing these issues at national level in hand-to-hand political conflict is not the best way to solve the problem of social disintegration. To explore inequality, we have to have a deeper understanding of what we really need to flourish as human beings in community before we try to fix these problems at a national level. We need a culture of encounter across our racial, religious, and political divides before we can understand how to fix the structural inequities. We need to be awake to our shared humanity. This can only happen in relationship.

From my conversations with our French friends, their society is still healing over two centuries later from the violence of the French Revolution. Endless revolutions are not a way to integrate the society. We have another choice: a form of peaceful, nonviolent revolution against the centralizing forces in our society. Powerful interests continue to create social instability by distracting us with advertisements that flame our mimetic desires and political scapegoats that stoke our fears. Are they trying to maintain control? Are they afraid that each of us would wake up and realize we each have power in our hands? If this is true, they will do everything they can to divert us from these simple opportunities with abstract political national dramas, reality TV, and mindless addictions to technology. Now, it seems they are combining all three in national politics. Using this strategy, our fears and desires are much easier to manipulate and keep us all asleep at the wheel.

Will we wake up to our own envious consumerism and tendency to search for scapegoats to blame? Or will we respond with generosity, hospitality, public beauty, local investment, and entrepreneurship? I hope that we choose the latter. Our communities are waiting for us to serve and lead the Great Reintegration.

From the Outside In: The Journey to Rediscover the American Idea from France

In America, the escalating violence of 2016 demonstrated fundamental dilemmas in our public and civil discourse. This essay proposes that the unrest and social fragmentation seen before and after the election provides both an opportunity and an urgent case for a deep reconsideration of our warring ideologies. From the vantage point of our sister country France, this article frames an effort to evaluate American philosophical frameworks using French culture as both a touchstone and a foil. Through this process of looking from the outside in, we can rediscover the American idea in all of its beauty, complexity, and paradoxes.

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“The whole object of travel is not to set foot on foreign land; it is at last to set foot on one’s own country as a foreign land.”

— G.K. Chesterton

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In February of 2015, my wife Kathryn and I made a leap of faith. We left the comfort and security of Washington, D.C. where we had lived for over 15 years to go on an adventure, an open-ended sojourn in France. To many of my friends and colleagues, this decision to uproot seemed to be the wrong time to move to a country they perceived as a political, economic, and social basket case. The economy was deep in the malaise of the administration of socialist President François Hollande. Two weeks before we landed in Paris, a string of terrorist attacks shocked the world. Over the next year, we would experience more terrorist attacks and violence; the questions and concerns from our closest relations persisted. 

As we left Washington, my wife, Kathryn, had a clear story. As an interior designer, everyone understood why she would move to the City of Lights. Paris is the international capital of design and fashion. She could explore the markets, experience the historic center of the art world firsthand, and deepen her expertise in her craft as a designer. In fact, she has already directly experienced the value of the “French Touch” in her work. 

What about my reasons for coming to France? To even some of my closest friends the narrative was unclear and complex. Why would a leader in a successful start-up, with a professional network based in Washington, D.C., and a maturing career move from the center of American political and military power to a country notorious for its anti-business attitude? The irony that I was paid to help my clients clarify complex problems and yet I could not explain my professional choices to my friends was not lost on me. But then again, it is also not uncommon for the 'shoemakers children to have no shoes.' 

Well, I did have a partial excuse. I had a client in London and my consulting firm was developing more opportunities in Europe. But the narrative begins to break down after I was asked the question, "Why not move to London?" The United Kingdom is perceived to be much friendlier to business and start-ups than France. Having a shared culture and shared language would have made our move to Europe much easier. Maybe, I could have justified that to be successful in international business I needed to be able to speak another language and understand life in another culture. This narrative would have been a more believable answer, but it is not the real one. It was not authentically why I moved to Paris.

Blaise Pascal captured my conundrum when he said "the heart has its reasons which reason knows nothing about." In some ways, it took me over a year to unpack what I intuitively felt when we chose to move. In the previous decade before the move, working in and around politics and government, I had the deep sense that something was fundamentally flawed in our social and political dialogue. Every year the ideological divides seemed to grow stronger and louder. In all of this chaos and confusion, I needed to make sense of what I really believed. The partisan ideology I was given had become a constricting straight jacket. I knew deep down that I had to leave Washington. I was drawn to Paris but I could not quite articulate why. 

Early on in our time in France, I had the chance to meet one of my intellectual heroes, the philosopher Jean Vanier, for a lunch. He was as generous and wise as he was in his writings. He was curious about my time in Washington and about my experience working in politics. He said, "Ron, your politicians are becoming more and more ideological, taking abstract ideas and forcing them onto reality. Do you know where this leads?" I sat in a moment of rapt silence. He responded gravely, "It leads to violence." Little did I know that his words in 2015 would prophetically predict the violence of 2016. I asked him for the antidote to this problem. Unlike Plato who contemplated abstract forms of reality to build his philosophy, Aristotle used observation and interaction with the common man to guide his reason. For example, to learn about the nature of fish for his works on biology, Aristotle would talk to to fisherman at the port to get their real life perspective. Jean Vanier believed a philosophy based on real human experience would lead to a right relationship to reality, encouraging peace not violence. His insight became the first puzzle piece to fall into place. 

The Thinker by Auguste Rodin at the Musée de Rodin

This conversation with Vanier sparked an idea. What if I could spend my time in France to learn the philosophical method as a way to explore the human experience and then use this insight in my work as an advisor and in my civic life as an American citizen. To study philosophy, I needed to be ready to go against the grain of my native culture. I come from practical Midwestern stock. Where I grew up, survival during the Great Depression and the dust bowls of John Steinbeck's Grapes of Wrath were not stories from a book but were part of the family narrative. Philosophy did not put food on the table; it was not necessary for survival and middle class prosperity. Beyond this, Americans, on the whole, do not study the great philosophical traditions. It is not in our cultural DNA. Alexis de Tocqueville aptly described the the intellectual method of my fellow Americans:

"To evade the bondage of system and habit, of family maxims, class opinions, and in some degree, of national prejudices; to accept tradition only as a means of information, and existing facts only as a lesson to be used in doing otherwise and doing better; to seek the reason of things for oneself, and in oneself alone; to tend to results without being bound to means, and to strike through the form to the substance - such are the principal characteristics of what I shall call the philosophical method of Americans...I discover that in most of the operations of the mind each American appeals only to individual effort of his own understanding...America is one of the countries where the precepts of Descartes are least studied and are best applied." 

De Tocqueville, in his journeys through America in the mid-nineteenth century, witnessed that the by this point the American mind was highly individualistic, skeptical of all systemic ways at looking at the world, and fundamentally pragmatic. If an idea could not be used immediately to solve a problem or make money, than it was not of interest to the general public. This rang true from my personal and professional experience. If American's are still fundamentally Cartesian, unconscious followers of the method of Descartes, I wondered about the implications for how this plays out in our social and political life. If we do not consider the philosophical tradition, which for past Western societies was essential, what are we missing? Surprisingly, our founders did not have this outlook. In America's political development, the Founders were deeply influenced by ancient Roman and Greek philosophy, the British philosophies of Locke, Hume, and Smith, as well as by the French Enlightenment thinkers of Voltaire and Rousseau. In moving to the very neighborhood where these thinkers met and changed the world, I was also able to walk the streets where the philosopher statesmen Franklin, Jefferson, and Adams walked as they negotiated both war and peace of our revolutionary birth. One block away from my apartment where I write, these leaders signed the Treaty of Paris that created our United States of America that still stands today as official recognition of our ‘free, sovereign and independent states.”

This statue of Thomas Jefferson, near Port de Solferino, stands close to the River Seine where he used to walk often when he was Ambassador to France.

After over two centuries of social life in America, what do we think and believe now? Are there dominant shared philosophies or just a incoherent swirl of "individual efforts"? Do our ideas about how we live socially and politically need to adapt as we enter the 21st century? Each major turning point in our history, largely driven by war or social unrest, has forced Americans to reconsider our guiding philosophies. As we entered 2016, I believed that our crisis of violence and social unrest provided a case for a deep, interegation of all our beliefs. I asked myself, “could I retrace the steps of our American intellectual journey and use the methods of Aristotle to understand what was most human, most reasonable about our current political ideas and frameworks?” If so, I could ensure that my social and political philosophy, was both coherent and built on the solid ground of reason and human experience.

“A walk about Paris will provide lessons in history, beauty and the point of life. ”

— Thomas Jefferson

As this idea crystalized, I faced two troubling realities: I had no formal training in philosophy and I did not know French. In the margins of my advisory work, I began the slog of French intensive courses and met regularly with a French dialogue expert. In a serendipitous encounter in my first year in France, I met two philosophical guides, Professors Antoine Guggenheim and Diane d'Audiffret, who were willing to take me under their wings.  In the midst of launching their movement Up for Humanness to facilitate a new dialogue on the future of the human person in the face of AI and globalization, they threw me into the deep end of salons and discussions with some of the leading lights of social and political thought in Paris. Dr. Guggenheim graciously agreed to meet with me on a weekly basis to explore the human person through the metaphysical frameworks of the ancients like Plato and Aristotle but also through the modern insights of phenomenologists like Husserl, Heidegger, and Levinas. I learned that phenomenology was a modern approach to philosophy that concentrates on the study of human consciousness and the objects of direct experience. I was most intrigued by Dr. Guggenheim's special expertise on the phenomonology of Karol Wojtyła, the future pope who later take on communism with his powerful philosophical defense of human freedom and dignity. Slowly, I learned two languages: the French language and the language of philosophy. The corners of the puzzle started to fall into place. I began to see the human experience with fresh eyes and began on this journey to understand a new perspective on human flourishing which would be become a foundation for future work.

During this season, a friend sent me a timely quote from an essay on the creativity that said "the best way to appreciate anything familiar in life is to discover it again; one can grow so inured to something that its essential worth is lost to view; and only by an immense jolt of the imagination can one see it as it really is." In my travels here to France, meeting these new friends, and exploring the new world of philosophy, I began to rediscover my own country, the way we think as Americans and how that influences the way we act in our public lives together. Being outside of my own culture has provided the unique opportunity to look more clearly and appreciate the ever evolving American idea "from the outside in."