Collectively forging a new economic model

A Collaborative Entrepreneur Strategy for Economic Transformation

By Steve Waddell

When people speak of options for organising the economy, they commonly reference three 19th century models: communism, capitalism and socialism. Happily, over the last decade, approaches beyond these models are springing up. They are being led by grassroots economic transformation entrepreneurs and thinkers organising around new labels. These include doughnut, buen vivir, circular, green, degrowth economics and more. A recent study found 37 such labels of significance.

Catalyst 2030 Working Group 11 on Financing Systemic Transformation co-led an examination of nearly 100 innovations that are associated with these new labels. The innovations share a set of values aligned with Catalyst 2030’s and grounded in equality, collaboration and a flourishing natural environment. Our analysis resulted in the insight that the innovation entrepreneurs are transforming “economic operating infrastructure” (EOI) to embed the values. Collectively, the entrepreneurs are developing a comprehensive new type of economy, although the innovations are still modest in size and fragmented. Connecting and growing them to their full potential is an exciting possibility. The concept of EOI provides a strategy for doing that.

Economic “infrastructure” is usually associated with physical things such as electricity, water, transportation and communications. “Operating” infrastructure like markets are social infrastructure and organising forms supporting economic production. Six types of EOI were identified. Collectively they provide a comprehensive description of an economy, with important interdependencies. The diagram below represents these infrastructures with illustrative innovations reflecting the new set of values.

1. Narratives EOI

All economies rest on specific values and stories about how the world “should” work. The current dominant ones emphasise individual profit maximisers in competitive relationships and assume endless natural resources. This view is being challenged with innovative activities like Catalyst 2030’s own narrative work and that of the campaign Reset.

2. Governance EOI

The narratives give rise to designs of economic governance structures and institutions that support the development of economic goals, such as central banks. The research revealed many examples of governance structures that are integrating the new set of values such multi-stakeholder organisations like the Forest Stewardship Council. An innovative approach in Costa Rica puts regional multi-stakeholder territorial councils in leadership roles.

3. Financing mechanisms

Wellbeing economies’ infrastructure approach to finance emphasises its role in the real economy of goods and services. It includes the need for justice, in contrast to the speculative financial activities for the wealthy. Initiatives such as the Principles for Responsible Investment are pursuing ways to integrate the new values into finance. Working Group 11 is exploring new “ecosystems for financing transformation” that are also integrating the new values.

4. Exchange Mechanisms

There are three components of EOI exchange mechanisms.

1. Markets: Markets today are characterised by complex supply chains with many players acting as intermediaries between producers and consumers. Power favours corporates in contrast to workers, consumers and community exchange. Examples of new values-based approaches include Catalyst 2030’s Catalyst Market and production chain agreements such as the wood products one associated with the Great Bear Rainforest on Canada’s west coast.
2. Currencies: Today’s markets depend on currencies issued by governments that benefit the wealthy and very large-scale activity. In reaction, local currencies have formed, like Toreke, Belgium; Totnes Pound, Devon, UK; Regiogeld, Germany; Berkshares, US. More recently, cryptocurrencies like SEEDS, designed explicitly to integrate values of community and regeneration are emerging.
3. Holistic Metrics: The new economy needs metrics that reflect its value goals. Many new systems are developing. In the foundation world, the principles-based Blue Marble Evaluation is becoming an important complement to traditional approaches. Other examples include the Happiness Index of Bhutan and the UNDP’s Human Development Index which are beginning to challenge the dominance GDP. The Value Reporting Foundation and The Investment Integration Project (TIIP) are advancing new business approaches that go beyond traditional short-term approaches with limited assessment of “impact”. Catalyst 2030 member TrueFootprint is a leader in this arena.

5. Business/Production Structures

The current structures favour holders of capital and large organisations within production chains. Traditional models, such as cooperatives, reflect values aligned with the new economic approaches. The Fourth Sector Group describes a growing sector of social value and income generating business as for benefits corporations. A new legal form with accountability to stakeholders rather than shareholders are called Benefits Corporations. New companies are adopting the form, while some traditional ones like Patagonia are converting to the form. Rather than production “chains” dominated by one or two corporations for profit making, emerging approaches emphasis value creation in “production ecosystems” where power is shared with all the participants.

6. Products and Services

To the user, wellbeing-oriented products and services are often indistinguishable from traditional products and services, although some toot their values. Co-production approaches are expanding, such as with eco-tourism where tourists support conservation and communities. Payment for ecosystem services to maintain a healthy environment is increasingly common for goods like water. And there are increasing examples of decreasing environmental footprint such as those of Goonj in India which integrates recycling of materials into rural development outcomes.

The EOI framework suggests that four actions are needed to realise a wellbeing economy:

1. Deepening understanding of EOI and promoting the value of its whole economic systems approach for economic transformation.
2. Evolving the power and impact of each form of EOI with on-going improvements and adoption of the innovations.
3. Speed up the emergence of connections. The power of new business structures will only be fully developed when they are also connected to new currencies, financial systems, governance frameworks, and the other EOI elements.
4. Ensure the previous steps move from isolated or ad hoc actions, to create new paradigm whole economies.

Catalyst 2030’s newly announced systems innovation economy approach is well-suited to support these steps. However, it requires working in deep collaboration with those who are developing other approaches to a shared end value. Together, we can see the transition to our high aspirations.