Wealth (Video 5 minutes)
Peek into Snopes, the fact-checking service, and some entries imply that a fake claim is so incoherent that its own illogic clearly refutes it. But people believe it anyway.
Snopes is swamped by fake news from sites that spread outlandish tales, often unwittingly paid for by advertising. Perpetrators claim it’s only satire; no harm intended, but there’s money in it. Fake news is stoked by market exchanges of fake followers on social media. Influence – or blackmail – is traded digitally on an internet largely funded by advertising. Next up is fake porn, when any savvy kid can paste anyone’s face on an actor in a porn video that will pass for real, skewering “personal brands” in fakery.
So how much of what we think is wealth is fakery? Enron was notorious. Jeff Skilling and Andrew Fastow wove mark-to-market valuation and special purpose vehicles into a web of deceit that depicted money-losing, on-line energy trading as huge fountains of cash. The scam’s convoluted trail ended in Enron stock itself – at market value – as the only security for the whole thing. For the scam to keep going, Enron stock had to keep rising. Its fall snowballed into an avalanche burying the whole scheme.
From Enron to Bernie Madoff, almost all business scams sucker us into believing in high growth that doesn’t exist. Victims of their own illusions, scammers pitch their scam convincingly once they personally believe that it will work, afterward asserting that everyone would have been paid had only the law not interfered in a “free market.”
Scams work because people believe that wealth is made by acquiring more faster and faster. Investment bubbles have pockmarked capitalism ever since the South Seas Bubble. The Bitcoin bust and the Devumi scandal are the latest pops, and in China, scams have become a quasi-religious scourge. But the mother of all bubbles is the surge in human population and consumption. To escape our own illusions we need a saner concept of wealth. Let’s call it regenerative wealth.
Wealth to you is whatever you think it is. Today most people think it is money. Big banks report global wealth measured by money, the net value of all assets, or what we have, less what we owe. But by a labor theory, wealth is the total of all labor necessary to provide something, measured by labor hours. By the old land theory, more land equals more wealth. In feudal times, domination of land invested power over people because serfs or slaves working the land could rarely leave it.
A few thinkers, including the author, have proposed energy theories of wealth. It all comes from energy: human energy, animal energy; and fuel energy, all of it ultimately from solar energy. A few like Frederick Soddy explored linking currency to a unit of energy like a kilowatt-hour, reasoning that a standard of energy was more universal than the price of gold, which varies in all currencies. In practice, an energy dollar in common trading is indistinguishable from a fiat currency based on confidence in a government. However, energy coupons might ration energy – if black markets could be controlled, of course.
Hating uncertainty, mankind chases illusions seeking a “solid” standard of wealth like gold. Fiat currency depends on faith in the issuer, usually a government. However, both governments and banks come and go. Confidence in money depends on mystical faith in the dominant human power of that time and place. Mafia dollars, anyone?
For example, during the Roman Empire, the value of a denarius, stable during one imperial reign, wobbled over the centuries. Was some emperor wealthier than Bill Gates? If measured by power over people, most Roman emperors’ wealth would top Gates by “millions.” If using money to value assets, pick a number – any number. Try as we might, there is no such thing as a standard constant of wealth. In addition, human-centered measures of wealth are imputed to be human power ratings.
If all monetary comparisons of wealth are relative, initiatives to price nature or nature’s services seem destined to fail. Business people should conclude that nature’s wealth is non-tradable, but to do that they must sense that non-monetary wealth is based on different values. Your God is what you live by and measure by. Love money and it is your God. Love nature and it becomes your wealth – and a religion not centered on you.
What’s wealth? Some count their money; others count their friends. Some count power and influence – their Rolodex entries or social media followers – human-centered concepts all. But if all wealth utterly depends on nature, regenerative wealth presumes that we are ultimately subordinate to nature. That turns business thinking topsy-turvy, upside down, wrong side out. Nature has no central bank and no center of control.
Frederick Soddy observed that we never really own things; we merely own temporary claims to them, claims that we can trade among ourselves. Responsibility to care for them should be attached to our claims. In contracts sometimes they are. If so, they are usually intended to preserve future income from the claim. Nature – all minerals, all real estate, all natural processes – benefits all nature and all humans, not just “owners.” They were here before we came. In some form they will be here after we are gone. Whether our claims will remain in condition for future generations is up to us.
Since a finite earth can’t renew resources faster than solar energy and nature can replenish them, humans cannot expand forever. Or as Soddy put it, financial formulas can grow to infinity; the physical world can’t. Many people, including the author, note this fundamental disconnect. However, mired in our expansionary economic thinking, we psychologically resist helping customers use less. Instinct is to sell them more.
Imagine a business actually wanting to shrink. It’s upside down. It violates our basic concept of success. But upheaval and regeneration are necessary if we are to stop encroaching on nature. Our criteria of success have to shift toward quality of outcome for all stakeholders, including nature. We need different concepts of work, different concepts of social responsibility, different concepts of process learning, and different criteria for approval in human society. A whole different set of “social contracts” has to be worked out. We – all of us – have to do the working out.
A regenerative system has to dance with nature. To do that, it must relax the human status conflicts baked into most economic recipes in practice – in how our system actually works. Common regenerative purpose has to trump our conflicts with each other. Wealth then becomes our relationship with nature, the quality of our symbiotic dance with it. Our status or claims are secondary. If we learn to think regeneratively, without social power games, incentives for fakery fall away. To live well using much less, we need to learn facts, agree on them, and act – and of course, learn from our mistakes.
To do this, both our beliefs and our techniques have to support nature. One without the other doesn’t accomplish much.
Intellectually, many of us are well along rethinking our values – and to some extent, emotionally absorbing them. However, we must dive more than sweat lodge deep to resist the enticements of growth economics, displacing convenience to customers and efficiency of producers with much deeper systems-thinking foresight. How do we do that? It’s up to you – me – us.
For example, few people today feel more a part of nature than the Inupiat in the fishing village of Kivalina, Alaska. Yet, over time the village accumulated so much stuff that moving to escape erosion from the Bering Sea is “prohibitively expensive.” A hundred years ago they would have paddled away in a day or two. But like the rest of us, they slowly acquired conveniences – oil, gas, generators, Wi-Fi, a landing strip. Thus weighted down by “millstones of progress,” moving them is a huge logistic exercise. However, with confidence in themselves and their own ingenuity, they may yet escape the trap.
If Kivalina is an impending disaster, what about everywhere from Miami to drought-stricken Iran? We have very little time to end the fakery embalming our old worldviews and create new ones. How do we do it? Make different decisions, big and small.
Ask key questions about each decision:
Will it decrease total energy use – everywhere, not just in this locale?
Will it decrease water use?
Will it eliminate the use of chemicals that are harsh or toxic to nature, not just to us?
Is it fair to all affected stakeholders?
Will our life satisfaction increase as a result?
These are not questions normally fired at budding entrepreneurs in a shark tank. Business models are what we know how to build. Our skills and language support it. Equipping ourselves to build regenerative wealth is preparation for change from the ground up. Remodeling the old system is what we want to do, but it’s not enough. What are your ideas?