What is systemic change?

 

Ethical solutions and social enterprise are a necessary but insufficient basis for systemic economic change

Joshua Malkin describes a Commons Equity Society – a new model of ownership, finance and distribution – that institutionalises ‘indirect reciprocity’ within the market through a systemic structure that reconnects wealth creation with the common good and bestows sovereignty upon communities. April 2016

Words like ‘systemic,’ are not easily comprehended from within our mechanistic culture.

The work of architect Christopher Alexander suggests that without the right language we cannot “see” the existing design of a system or envision a new design of how it might be. His thesis implies that if we cannot name it, we cannot know what we are looking for. In this sense, normal economic activity that automatically and naturally works for the common good is almost unimaginable today because we have no name for it. In part this is because we are so embedded within the current system it is difficult to imagine anything else and hence a different way of doing things remains invisible to us. Even when we think we are imagining something new, it often turns out to be a version of the same system in different guise.

For us at the Commons Equity Society the word “systemic” refers to a system wide design that connects the parts of a system together. It often does so by circulatory flows and feedback systems whose function is ‘invisibly’ operated through integral mechanisms embedded in the system to sustain it. These crucially influence the outcomes, equilibrium, resilience, longevity and nature of a whole system. In ecological and biological senses such mechanisms are often the key elements of comprehensive life support systems. In an ecological system, circulatory flows that go in the right directions to take nourishment to where it is needed are fundamental to supporting life. Equally living systems have natural mechanisms that self-limit, self-balance and decay. We cannot envisage an economic system that does the same without designing such equivalent mechanisms.

Our collective challenge is to create an economic system that supports life in a way similar to the self-replenishing systems of our planet. This can only be achieved at a meta-organisational level through a whole system change that can flourish and expand within the existing system.

Capitalism is a systemic design. There are at least three system wide mechanisms at the heart of capitalism – ownership, capital, and profit. Any intervention that genuinely can be classed as systemic must, in some way, address all of these integral instruments of wealth accumulation concurrently if we are to redirect the purpose of the “free” market system.

The essential problem with capitalism lies not in any of these mechanisms per se but how they combine together to extract value and consolidate wealth and power on behalf of fewer and fewer people  (with all the adverse social and environmental effects that accompany their systemic combination). A Commons Society structure in contrast uses each of these mechanisms in a different combination that reverses this direction, institutionalises virtuous cycles, sinks and flows in an overarching legal structure that creates value and common wealth for more and more people.

Systemic change requires some way whereby power is restrained and restructured automatically – independent of the imposition of regulation by government or of the individual intentions, ethical or otherwise, of entrepreneurs. This presents a conundrum or contradiction in terms within the terminology and cultural perspective of traditional free-market economics.

A new structural mechanism beyond regulation by government and beyond individual choice is required so the exercise of power through the mechanisms of ownership, capital accumulation and profit are contained within a countervailing balance (2) whilst at the same time allowing freedom of action for entrepreneurs to create wealth within the structure.

In a Commons Equity Society structure, ownership is redesigned and de-commodified, capital is accumulated mutually and profit is automatically re-directed by the redesigned system towards wellbeing creation and the expansion of the network.

The Commons Equity Society addresses the radical question – how can we turn the whole system, irrespective of voluntary commitment or certification into one that resources people, place and planet – whilst leaving entrepreneurs free to naturally pursue wealth creating opportunities?

This is not to say that attempts to create voluntaristic systems of social and environmental accounting or social enterprise based upon ethical trading are not hugely significant and sorely needed – we simply suggest they can be massively more effective in creating transformational change when they are combined with the systemic architecture of a Commons Equity Society.

A better way of doing business and a vision of a triple bottom line of people, place and planet are urgently needed. All over the world, innovative projects have created tremendous achievements through social enterprise and the new economy in its many forms. However in our view, many existing ethical and innovative initiatives go to great lengths to address values and purpose within organisations but in doing so leave the systemic structure of the existing political economic system intact. We think it helpful to ask what degree of change can be achieved by asking entrepreneurs and owners to be ethical without in some way addressing integral systemic mechanisms of the dysfunctional market. In short we suggest it is possible to only go so far.

So our question is whether the voluntary certification of good intentions is enough to do more than make a system that takes power and resources away from communities, as a matter of course, more acceptable? We hope those involved in similar initiatives will take our challenge in the spirit it is intended.

We also argue that cooperatives who do much of what a Commons Equity Society aspires to do have no integral mechanism for expansion within the market and unlike B-Corps define themselves as a marginal economic alternative that most individual entrepreneurs and consumers do not see as a route for them to engage.

The Commons Equity Society is a whole system of political economy – of investment, finance, production, distribution and governance – that can grow like a Trojan Horse within the existing system. At the same time it disadvantages no-one. In so doing it honours enterprise for its contribution to society and frees communities from servitude and dependence upon governments and corporations or philanthropy.

It is beyond the existing spectrum of politics, government, economy, shareholding and banking. It is an expanding self-replenishing systemic design that resources its own ‘ecologies’ by developing its own mutual banks and governance systems. Our vision is of a series of Commons Equity Societies across the UK and beyond within every bio-region gradually growing each year to a size that can match the financial scale of the London stock exchange.

It proposes a process of re-enclosing the Commons for the common good rather than their enclosure for self-interest by mutualizing the surplus revenues of (formerly) privately owned companies. It is a way of institutionalising indirect reciprocity within the market through a systemic structure that reconnects wealth creation with the common good and which bestows sovereignty once again upon communities.

Notes

(1), Christopher Alexander ” A Pattern Language”

(2), Countervailing Power, or countervailence, is the idea in political theory of institutionalized mechanisms that the wielding of power within a polity having two or more centres can, and often does, provide counter-forces that usefully oppose each other for higher outcomes considered in a wider system


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