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May 15, 2015
At Yale, John Fullerton Presents on Regenerative Capitalism
    by Robert Kropp

Speaking to the generation that will have to reverse the course of multiple crises, the founder of the Capital Institute envisions a holistic organization of social systems to replace the current reductionist and competitive approach. Third of a three-part series.

“Our current economy is destroying the planet, the very basis of civilization,” John Fullerton recently told a group of Yale students, “because there is profit in it.”

“Welcome to the Anthropocene, he said.” (In her 2014 book The Sixth Extinction: an Unnatural History, Elizabeth Kolbert described the Anthropocene as “an era in which almost nothing about the planet escapes the effects of human activity.”)

Fullerton, the founder of the Connecticut-based think tank Capital Institute, was at Yale to present on his recently published white paper, entitled
Regenerative Capitalism: How Universal Principles and Patterns Will Shape Our New Economy. At one time, Fullerton was a managing director at JPMorgan; but sensing a culture change with its acquisition by Chase Manhattan Bank, he left, without a clear idea of the direction in which his career would go. Shortly after came 9/11, and the convergence of the two life-altering events appears to have set Fullerton upon a spiritual quest; one whose culmination can be said to be the 120 pages of Regenerative Capitalism.

“We live in a time of interconnected crises: economic, social, and ecological,” Fullerton said. “I came to the understanding that the economic system was the root cause of the ecological crisis, and that finance is what drives the economic system.”

“I kind of stumbled into this question of how to fix capitalism so that it works for people and the planet,” he continued, “and a related question, what is the purpose of capital?”

I noted in my previous article in this series that the intent of Regenerative Capitalism is not to provide a slate of solutions, but to encourage further discussion on a complex and even revolutionary view of finance. Considering the magnitude of the crises we currently face as a civilization—increasing resource scarcity; the growth of Gross Domestic Product (GDP) at the expense of the Genuine Progress Indicator (GPI), which accounts for environmental and social well-being as well as economic; and global social upheavals—a solutions based approach would likely be as outmoded as our current financial system is.

The time in which we live, Fullerton said, “May be as big as the Copernican shift. The paper is a synthesis of all that we know, but is in conflict with the way we run the world.”

“Theory matters when we are in times of great change,” he added.

“The most important point I will make today is this,” Fullerton said. “For 500 years we have perfected the skill of analytical problem solving. We break down what's complicated into component parts. We optimize. But in doing so we lose sight of the whole. That's when we get in trouble; and we're in trouble.”

“If we are to avoid a major systemic collapse, the leaders of tomorrow will need to think in systems,” he said.

“So what is a regenerative economy?” he asked. “There are universal principles and patterns that govern healthy complex systems throughout the real world. They apply to living systems such as our bodies and entire ecosystems. But also to nonliving systems such as the Internet. Our challenge is to bring economics and finance into alignment with these universal principles and patterns.”

Referring to the
Field Guide to Investing in a Regenerative Economy, published in 2014 by the Capital Institute, as an important source of the concepts in his new white paper, Fullerton described eight principles that would govern a regenerative economy:
1. In right relationship. “The current system is exactly inverted from the way it has to be,” Fullerton pointed out. “There is no such thing as environmental issues. We are part of the environment.”
2. Holistic wealth. “Money is not wealth,” Fullerton observed.
3. Adaptive management.
4. Empowered participation.
5. Honors community and place. (As the poet Wendell Berry wrote, “There are no unsacred places; only sacred places and desecrated places.”)
6. Edge effect abundance.
7. Robust circulatory flow.
8. System balance.

“My suggestion is simple,” Fullerton said. “Align our economy with these eight principles instead of the relentless pursuit at all costs of GDP growth and shareholder value.”

“Regenerative capitalism is radical in the literal sense of the word, as in getting to the root of the issue,” he continued. “It represents a huge challenge to business as usual. But anything less is simply not a credible response to the immense challenges we face.”

“I believe this integral or holistic approach is not only realistic. It is already emergent in the world,” Fullerton observed. “We are already moving in the right direction, albeit too timidly.” Sustainable investment is one such strategy, as are social entrepreneurship, micro-finance, and community development institutions, as well.

Inevitably, even such well-meaning initiatives fall short of the radical overhaul espoused in Regenerative Capitalism, as they do not change a failed system but attempt to effect meaningful environmental and social justice from within. What remains, Fullerton believes, is the development of systems that adhere to established scientific discoveries in quantum physics and other fields of science.

“The core insights of our wisdom traditions are remarkably aligned with this new science as well, yet in conflict with our economics and finance,” he said. “We now understand the principles and patterns that describe all the systems in the cosmos.”

“My hope is that the framework that I call regenerative capitalism will provide the vital roadmap we need to help us find that better way.”


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