By Lois Guthrie, introduced by Bill Baue and Ralph Thurm, r3.0
In late December 2020, r3.0 released its first White Paper, From Monocapitalism to Multicapitalism: 21st Century System Value Creation, written by Senior Director Bill Baue. To support the proliferation of the ideas in this White Paper, we will post a series of extracts here on Medium that help encapsulate the most important concepts.
To kick off this series, we start with a letter written by our longtime friend Lois Guthrie, who has participated in the r3.0 Transformation Journey Program, which she sent to us as a kind of “holiday gift.” She has granted us permission to post her writing, as a way of stimulating broader thinking on the implications of our Multicapitalism Paper. What we particularly appreciate about Lois’ offering is that she asks how the ideas in the Paper might best be acted upon. In posting this — and all subsequent articles in this Medium series — we hope to spur consideration and discussion amongst all of you, our readers, of how to act most effectively to bring about the shift from monocapitalism to multicapitalism.
“We are drowning in information, while starving for wisdom. The world henceforth will be run by synthesizers, people able to put together the right information at the right time, think critically about it and make important choices wisely.”
On my holiday “work-related reading” list was Bill Baue’s From Monocapitalism to Multicapitalism: 21st Century System Value Creation. Because it is written by Bill, I know without even opening it that it will be well-researched, deeply thoughtful, draw on a variety of disciplines and offer insights into addressing environmental and social challenges. I’ve read it now and my expectations are rewarded. His references to Bob Dylan endear me even more to his writing. I agree with all Bill says in his paper, but questions about where his call to action will go, who will hear it and more importantly act on it, lead me on a wriggly reading journey and cause an avalanche of questions.
In the introduction Bill asks whether capitalism as currently practiced, that is, with a focus on financial growth (monocapitalism) at the expense of other capitals, is the root cause of humanity’s predicament. As an alternative, Bill’s paper explores multicapitalism that “maintains the carrying capacities of all vital capitals respecting normative thresholds…that distinguish healthy capital resource stocks, which can continue to generate healthy flows, from unhealthy stocks, too compromised to produce healthy flows.” The paper therefore calls for a paradigm shift from Monocapitalism to Multicapitalism.
This is a shift that many — (Bill cites Boulding, Daly, Ekins, Elkington, Meadows, Porritt and others) — have been demanding for decades . The first question is — why then, with all this wisdom dating back years and modern repackaging of it in different forms, do we not already have multicapitalism? Bill offers a few suggestions, including the limitations of estimating optimal economic growth that simultaneously preserves natural systems. The linear assumptions of economics and study of dead matter (per Joe Brewer) fail to recognise the effect of non-linear possibilities and living matter in natural and living systems.
On this theme, the authors of ‘The Problem of Fit between Ecosystems and Institutions: Ten Years Later’ identify the need for institutions to receive knowledge from natural systems in order to act upon it. However, they also identify a lack of ‘fit’ — or a transmission failure — between human institutions and natural systems, which limits the ability of institutions to receive, process or act upon knowledge about natural systems. The authors attribute this failure to various forces including:
- The tendency of human institutions to ignore accumulating evidence. This tendency is not confined to environmental risk, it has also featured in the list of factors blamed for the financial crisis where risks lurked unobserved in the dark pools of banking. Bill speaks of it in the part of his report that deals with irrational exuberance (section 2.1.3).
- The lack of proximity and connection between human institutions and the natural resource base on which they depend. The Fit Authors contend that the ‘separation of humans and nature has alienated society from its dependence on functional ecosystems and the support that they provide for social and economic development’.
- Discontinuity in timescales, space and processes between human and natural systems that make simple correlations fall apart. In particular, the multi-nested, non-linear and unpredictable properties that change ecosystems over time present the most trouble for human management, which tends to understand the world as a series of boxes in which there is a hierarchy and processes that can be understood in a snapshot of time.
The second question is therefore how can we achieve or catalyse the paradigm shift Bill’s paper calls for without the transmission and interpretation of signals that recognise non-linearity, uncertainty and the “voice” of natural systems? What signals are loud and clear enough to prompt the shift? Where will those signals come from? Richard Tarnas  tells us that even Thomas Kuhn was skeptical about science as a route to paradigm change. M. Mitchell Waldrop  warns us of lock-in that makes it hard for us to shift. Even when it leads to actual, tangible harm to financial capital, monocapitalism as currently practiced is hard to reform and the 2008 financial crisis did not trigger transformation .
One of the reasons the authors of “Capitalism and its legitimacy in times of crisis” offer for the lack of transformation to monocapitalism despite the 2008 crisis, is “the absence of an integrated set of alternative ideas shared by more than a handful of actors…[so] the stability of the regime is not necessarily a result of its economic performance but the consequence of the inability of anti-capitalist actors to develop a master frame that would resonate beyond the cultural sphere.” My third question is therefore, what master frame do we have to develop for the shift to multicapitalism such that it is widely adopted and resonates in the cultural sphere?
In his paper Bill suggests System Value as the master frame for which we should aim. “Creating system value requires that systems thrive in healthy cycles of resource regeneration. Well-functioning systems create value from sufficiently abundant capital stocks to generate ongoing resource flows. So, System Value creation requires cycling resources within their carrying capacities.”
The big question here is how we will know what stock of capital is needed to generate ongoing resource flows and how to measure system value. Bill refers to Peter Tunjic’s “capital dynamics” which supports the idea of System Value Creation in the sense of optimizing the overall capital stocks and flows instead of creating illusory value through overall capital stock and flow depletion for the sake of propping up growth of financial capital. Capital dynamics applies thermodynamic principles to determine whether non-financial capitals are used in business models to create more money but less capacity to bring about positive change. As Tunjic says “capitalism cannot defy the second law of thermodynamics.” This theme is also explored in the work of Terrafiniti including their book Sustainability context: Why the elephant is in the room where Joss and Dominic Tantram argue that truly sustainable economies and markets would be based (amongst other things) on thermodynamic optimisation — the use of energy and materials in alignment with the physical characteristics and limits of the planet with a focus upon entropic efficiency. With no background in science, I cannot imagine how this is achieved. However, if we are looking for measures and indicators to help us understand whether we are creating system value, deciphering whether energy return on energy invested is a useful measure might give some insight  and/or using thermodynamics to establish whether we are “exchanging the worth-more for the worth-less” (per Tunjic) seems worth pursuing, no matter how difficult . Will natural and physical measures of the state of natural capitals produce the signals that human institutions can act on? What interpretive lens should we apply to those measures? Are we simply seeking to limit the excess of our greed ?
The ideas advanced in Bill’s paper are complicated, and might appear unworkable, too difficult, too expensive, too much of an impediment to economic growth  and there will inevitably be resistance. Denying that this is complicated gets us nowhere. However, Bill and others have done much of the work for us by summarising the thinking to date and by proposing a way of weaving multi-capitals into our environmental, economic and social tapestry. Now, we just need to do the work and respond to his call to action.
The call to action asks readers to support mechanisms necessary to generate accurate carrying capacity data and to further experiment with approaches and methodologies for measuring the carrying capacities of the capitals, to ensure ongoing viability of all capital stocks and flows and hence the ongoing ability to create System Value. When I review papers, books, tweets, and articles I have bookmarked over the years, it looks like much of the information needed to respond to Bill’s call to action exists. The community Ralph Thurm and Bill have convened, including Nora Bateson, Michel Bauwens, Joe Brewer, Gil Friend, John Fullerton, Kees Klomp, Mark McElroy, and Daniel Christian Wahl pour wisdom and insight out into social media. My fourth question is where does this wisdom go to be consolidated and coordinated and turned to action and enshrined in practice and nurtured and developed and turned from information to knowledge? What makes for meaningful and actionable cooperation ? How can we “put our minds together and see what kind of life we can make for our children” ? In Chapter 3 of his White Paper, Bill outlines theories and practices that support the call to action, a list of organisations contributing to the multicapitalism agenda, examples of organizations that are already examining the impact of their activities on the environment and society and governments that are integrating multicapitalism into their policies and practices. Do they just need to be brought together and if so how?
Also, what sources/influences can we add to the list? For example, in addition to Bill’s super list of pathways to multicapitalism in Chapters 5.1 and 5.2, it might be worth considering a legal pathway as well as the corporate, investment, economic and policy pathways. The Safe Operating Space Treaty — a new approach to managing our use of the Earth System  offers ideas about introducing legal mechanisms to support multicapitalism and system value. As the authors say, the benefits provided by ecosystems in the maintenance of a favourable state enjoyed by all on a global scale are accepted, recognised and visible to science but invisible to the law. The Earth System is therefore a legal black hole. Does land or do ecosystems and rivers need to be given “legal person” status to save them as Turag has been awarded in Bangladesh and Whangaunui river in New Zealand? Should damage to the environment be prosecuted as ecocide ?
Much of the damage caused by capitalism as currently practiced results from legitimate behaviour. Provisions to limit tax revenues from being eroded by legitimate tax planning processes are in place . What will be the legal remedies to stop capitalism as currently practiced from eroding capitals? What can we learn from the BEPS scheme, including about transparency and coherence of action? What can we learn from the Social Value Act whereby public procurers are required to evaluate the environmental, social and economic consequences of their contractual and purchasing choices?
I’ve given up numbering my questions now, but more arise from my wriggly reading roaming such as does Peter Barnes’ Capitalism 3.0 — A guide to reclaiming the commons help us to articulate the master frame of System Value? Can the Galileo Commission Report  help unlock us from the current narrow materialist paradigm to a more interconnected world? I could go on forever with these questions and am now starting to annoy myself. Recognising that the questions could annoy others too, I nevertheless dare to commit them to writing here as I can’t quiet the (hopefully productive) turmoil they induce. How do we respond to Bill’s call to action through the turmoil of questions and achieve a peaceful mind which is our most precious capital?
“A peaceful mind is your most precious capital”
Swami Sivananda (TSW 703)
With peaceful wishes for answers and action in 2021 and beyond.
1 January 2021
 On 7 May 2020 Bill shared a video of Dana Meadows lecturing Dartmouth students in Spring 1977 on “Systems: Overshoot and Collapse” that addresses carrying capacity issues. As Bill says (page 43), even though Barbara Ward had neatly conceived a two perspective way of looking at sustainability in 1974 — meeting in the inner limits of human needs without violating the outer limits of the planet’s resources and environment –, “new paradigms can take a while until they reach tipping points..”
 The Passion of the Western Mind page 360–361
 Complexity — The emerging science at the edge of order and chaos
 Capitalism and its legitimacy in times of crisis (Transformations of the State) Edited by Steffen Schneider, Henning Schmidtke, Sebastian Haunss, Jennifer Gronau
 Capellán-Pérez, Iñigo & Miguel, Luis & de Castro, Carlos. (2019). Dynamic Energy Return on Energy Investment (EROI) and material requirements in scenarios of global transition to renewable energies. Energy Strategy Reviews. 26. 100399. 10.1016/j.esr.2019.100399. https://www.sciencedirect.com/science/article/pii/S2211467X19300926
 EntropoMetrics (Center of expertise (in formation) on nonlinear thermodynamic analysis of social/econ/fin domains from a macro-perspective) https://entropometrics.com/
 “No order can save us that simply limits the excesses of our greed” — Mary Grey in Sacred Longings quoting R Bahro “Avoiding social and Ecological Disaster, the Politics of World Transformation”
 As EF Schumacher said in Small is Beautiful “anything that is found to be an impediment to economic growth is a shameful thing and if people cling to it they are thought of a either saboteurs or fools.”
 What can we learn from: “Why Cooperate — The incentive to supply global public goods” by Scott Barrett
 Thathanjka Iyotake — Sitting Bull (1831–1890) quoted by Daniel Wahl in “Valuing Traditional Ecological Knowledge and Indigenous Wisdom.”
 The Safe Operating Space Treaty — a new approach to managing our use of the Earth System. (2016). Edited by Paulo Magalhães, Will Steffen, Klaus Bosselmann, Alexandra Aragão and Viriato Soromenho-Marques. Cambridge Scholars.
 Galielo Commission — Beyond a Materailist Worldview — Towards an Expanded Science. Harald Walach on behalf of the Scientific and Medical Network