The world needs to move beyond the current economic structures of capitalism or socialism if we want to avert catastrophic environmental, economic and social collapse. A new form of capitalism, based on the principles of a “regenerative economy”, needs to take hold and thrive, according to a new report by the Capital Institute titled Regenerative Capitalism: How Universal Principles And Patterns Will Shape Our New Economy.
The Capital Institute was founded in 2010 by John Fullerton, a former JPMorgan managing director. The new report argues that “regenerative economics is not about the well-worn debate of capitalism versus socialism. Both systems, even if flawlessly executed, are unsustainable. Nor is it a proposal for incremental change to a system that is fundamentally sound but for a few glitches.”
Regenerative economics is based on the concept of “holism” and that everything is organised into systems in which interlinked parts function together to form a larger process or pattern. Thus, “universal principles and patterns of systemic health and development actually do exist, and are known to guide behavior in: living systems from bacteria to human beings; nonliving systems from hurricanes to transportation systems and the Internet; and societal systems including monetary systems and yes, economies.”
In the same vein that Conscious Capitalism seeks a higher purpose and meaning to the role of business in society, “Regenerative Capitalism is not about ending capitalism, but evolving it to produce the inclusive, broadly shared vitality and prosperity its founders envisioned.”
So how do you define Regenerative Economics? The report proposes that a regenerative economy operates from the fundamental assumption that “economic vigor is a product of human and societal vitality, rooted in ecological health and the inclusive development of human capabilities and potential.”
Thus, economic value under this new model is not defined by traditional means such as GDP or GNP. By definition, therefore, sound economic policy is not determined by objectives such as stable GDP growth, and that national prosperity is not narrowly identified as dependence on this growth.
In fact, the concept of regenerative system design is not new: for example, it exists in the realm of agriculture with integrated organic farms, biodynamic farming dating back to Rudolf Steiner, and holistic planned grazing developed by Allan Savor.
The report observes that “systems that last in the real world are systems that are healthy, regenerative energy flow networks. They follow a consistent pattern…Sustainability, in other words, is an outcome or a byproduct of regenerative system design that follows this universal pattern.”