Just Economics

Regenerative Economics

Solving the Root Causes of Social and Environmental Challenges

By Tom Andersen

The ability to adapt to climate change and minimize its effects rests on humankind’s ability to follow several pathways – the Pathways to Planetary Change that were the subject of the Garrison Institute’s symposium on April 17-19, 2018. They are Half-Earth, Ecological Civilization, Pervasive Altruism, and the topic of the second of our follow-up conversations, Regenerative Economics.

We spoke about regenerative economics with two of the symposium’s participants, John Fullerton and Vincent Stanley (our first follow-up conversation, with Carl Safina and Andrew Revkin, is here). They bring years of theoretical and practical experience to the topic – and they argue that both theory and practice are essential for regenerative economics to take hold on the scale needed to be effective.

John Fullerton spent 18 years at JP Morgan, where he was a managing director. He is the founder and president of Capital Institute, a non-partisan think tank in Greenwich, Connecticut, that is working on ways in which the economic and finance system can promote a more just, regenerative and sustainable way of living.

Vincent Stanley started with Patagonia at its founding in 1973, worked in numerous capacities there, and is now its director of philosophy. He helped develop the Footprint Chronicles, the company’s interactive website that outlines the social and environmental impact of its products. Vincent is also a poet and a visiting fellow at the Yale School of Management.

Tom Andersen: I’d like to start with the basics to make sure what we’re talking about is clear. John, can you explain regenerative economics in simple terms?

John Fullerton: Sure. I guess the context is that one needs to come to the conclusion that the conventional approach to environmental and social challenges is not working, and we need a more systemic understanding of the root cause of the problems. And I believe the root cause is the economic system that’s fueled by our finance ideology and our financial system. And so we set out on a search for some alternative way to think about designing an economy, and landed on an idea that’s not new – in fact, it goes back to indigenous wisdom.

But in more contemporary times, lots of people like Bucky Fuller and Jane Jacobs have been wrestling with this idea that there are universal patterns and principles that describe how systems in the real world sustain themselves, from non-living systems to living systems to, I would argue, even human complex living systems. And that if we want our economy to deliver well-being without all of the unintended consequences that range from, you know, poverty to climate change, then we need to align our economic system with these same patterns and principles.

It’s easiest to see in the world of agriculture, and it’s where I first stumbled upon it. So for example, there’s a grazing methodology that has been developed called holistic planned grazing, which essentially looks to understand how the grasslands work as a system. And it turns out they work symbiotically with large herbivores. So if you’re going to have a sustainable grazing system, if you’re going to have a sustainable meat industry, then the grazing of the cattle needs to align with these same patterns and principles.

And it turns out that you can regenerate grasslands, and if you do that you grow more grass, which means you can run more cattle per acre, which means your ranch is more profitable. And at the same time, growing more grass means more photosynthesis, which means more carbon sequestration. So by thinking about grazing as a system, and understanding how nature used to bunch cattle together, and thinking about it in a more holistic way, the Savory Institute and their disciples have been able to restore and regenerate large swatches of grassland.

Tom Andersen: At National Wildlife Refuges in Nebraska they’re reintroducing cattle in hopes that they can reproduce what the bison added to that system.

John Fullerton: Exactly. Exactly. But the application of regenerative thinking to agriculture is the easiest step, because it’s land and living systems. It’s a harder leap to make that extension to, for example, a manufacturing economy or a diversified economy. And that’s really the work of regenerative economics: to get clear on what the principles are and then apply them in a much more significantly different context. And we’re still trying to figure out how to do this.

Vincent Stanley: One of the things actually I learned from you, John, was that if you talk about regenerative economics, you really have to talk about it in the context of place. One of the things that makes regenerative agriculture or grazing easier to understand is that you can look at everything as a whole system. You cannot look at everything as a whole system when you look at either finance or manufacturing. But you can start to get a feeling for systems when you look at them in the context of place.

One of the ways regeneration makes sense is when you ask, “How do human beings live in this place? How do they make a good living? How do they make a living that’s also satisfying and that honors and helps revive the local ecology?” So you also think about the forestry nearby, the agriculture practice.

Patagonia now is working on something called a regenerative organic standard for grow crops and tree crops. (The personal stories of Vincent Stanley and John Fullerton help explain their commitment to regenerative economics. Vincent was heavily influenced by the turmoil of the late 1960s; John by 9/11. We invite you to read more about them here.) We’re working with Dr. Bronner’s and Rodale, and we’ve found two critical pieces that haven’t become part of the USDA standard – fair treatment for the workers and animal welfare. We’re not talking about only regenerating the soil, which is critical, but we’re also talking in a holistic way about how everything that is affected by agriculture, including the workers and the animals, all fits together to create a system that’s viable.

John Fullerton: Rather than thinking about the economy as industries and corporations and nation states, if you think about a series of nested bioregional-scale diversified economies, you look at them in an entirely different way and then you start to think about how to manage them in an entirely different way.

Vincent Stanley: You also think about work in a different way, because you’re no longer thinking about the labor market – you’re thinking about what is the work that needs to be done in a particular region, and who can do it and how do you support their lives.

Tom Andersen: What is the most effective catalyst for that? Is a company like Patagonia the place where this can start, or does it have to start smaller, or even bigger?

Vincent Stanley: I think it can start anywhere, and Patagonia is actually not an example of what we’re talking about. Patagonia is an apparel company and now a food company that operates in a lot of different places. We try to focus on what our effects are on that community, on people, animals or the ecology. It can start with a company like Patagonia, and it can start with others – Dr. Bronner’s is a great example of companies that are becoming B-corps, because there is a lot of human energy capital work reputation tied up in businesses, and when businesses do the right thing they tend to be influential in ways beyond punching our weight in that way. But I think a lot of other work needs to be done on a lot of other fronts outside individual businesses to help bring about what John is talking about.

Tom Andersen: Can you give a couple of examples of other kinds of work on other kinds of fronts?

John Fullteron: I certainly agree with Vincent that corporations, governments, hospitals, schools, universities, all of these can rewire themselves using a regenerative approach.

But the natural, logical unit of analysis for an economy is really a place, rather than a corporation or a government. Corporations and governments are kind of human abstractions that are useful for a bunch of purposes, but they weren’t designed to be aligned with how living systems work.

So our approach at Capital Institute is to begin in the context of an actual place and work with the complex economy that exists in places. And there’s no right answer to what’s the right scale. But if I were to try to suggest the optimal scale it would be a bioregional scale because it’s big enough to be meaningful and yet small enough to have a shared ecological – and often cultural – context.

Often culture maps very closely to bioregions because the physical reality of a place tends to influence how the culture evolves over time. So another way to think about stimulating regenerative activity is through joint initiatives that occur in the context of specific places that bring together multiple businesses, government sector, hospitals, universities. One of the other principles of regenerative systems is something called the edge effect. The idea is that there is potential for working across conventional edges, the edge between a university and a business, or between a nonprofit and a government.

Right now, we’re working in a network of place-based hubs where we’re trying to help catalyze the place to see itself as a system and then to identify these opportunities that typically exist across sectors of an economy. These disruptions of the status quo could be as simple as a community getting together to restore dilapidated housing that then benefits the nearby businesses. It might have a community garden and it might have solar panels on the roof. All this means is that regeneration doesn’t need to to come from some advanced, new whiz-bang invention.

But it’s something where the benefits are shared across multiple sectors, and therefore multiple sectors have an interest to contribute to the creation of something. Whereas a business on its own or a hospital that’s on its own is not likely to tackle something like this that exists at the intersection of the different sectors.

Tom Andersen: Is there’s a difference between what you’re describing and what some people have been trying in the Hudson Valley during the last 20 or so years? That is, a place where there is a regional identity, where there’s local agriculture and markets for local agriculture; where there is an effort by local governments to replan and rezone to make their communities more sustainable.

John Fullerton: It’s not going to surprise you that the Hudson Valley is one of our hubs. And there’s tremendous regenerative activity happening in the Hudson Valley already.

I think what’s new is that the people doing that work, some of them would not have seen it as part of a regenerative process that is following these time-tested principles.

Our hope would be that this work accelerates and encourages more of that regenerative activity, so that it’s not seen as a few nice projects that are fighting the beast of degenerative economic systems, but actually part of a global process to rethink economic development.

Vincent Stanley: There is a lot of activity going on that doesn’t have this theory at its basis, but it has a decent understanding of regeneration as part of its work. I spend a lot of time in New Haven, and what I see is activity trying to revive or create a viable economy in New Haven, which is very hollowed out, except for Yale.

There is a lot of effort around forestry and organic agriculture in New Haven, a lot of questions about how you treat the boundaries between these places that lie between the urban and the rural definitions of space. I think one of the reasons that John’s idea is so timely right now is that people are approaching regeneration and community building in a self-organized and organic fashion, but without any kind of theory at the basis of it.

Tom Andersen: They’re not calling it regenerative economics. They’re just looking for something that works a little bit better for their community systems on a scale they can deal with.

Vincent Stanley: Right. But it’s different from the type of conversation that happened around 15 years ago, where there was a feeling things are not good and we can improve them. The difference then was that the minute those conversations disrupts a particular operation, whether you’re a company or a city, they’re going to back out.

What you have now, I think, in a much stronger sense, is that that center does not hold. And if you’re going to deal with big problems like climate change and massive inequality, you’re going to have to bring about some big changes. And those big changes are fairly specific. You’re looking at getting away from fossil fuels. You are addressing inequality and inequity directly. We’ve identified one goal very specifically: getting out from fossil fuels, for instance, we ask, “How do we get there? How do we transition to that?”

John Fullerton: And without collapsing the economy. Many people have a strong desire for practical solutions, and I certainly share that and understand that. But a lot of these initiatives are people just figuring stuff out without any kind of organizing framework or theory. And I always like to quote Einstein, who said, “Theory determines what we’re able to see.”

And so one thing this regenerative framework does is provide some structure for a principle-based approach, to help us know whether we’re heading in the right direction, or whether we’re basically hoping for utopia. What I hope happens is that people can reaffirm their conviction that something that they intuit makes sense is actually aligned with the direction the economy is heading, and so it accelerates the process.

Tom Andersen: What about the skeptics or the people who are agnostic about all this? One of the things Vincent said at the symposium that got a laugh is that many of Patagonia’s customers like the company for its values, but you suspect that there are maybe a greater number that like Patagonia in spite of its values. Are the people who couldn’t care less about this new framework an obstacle?

Vincent Stanley: I don’t think enough of this work has been done or looked at to create an opposition. The obstacles we’re seeing are the existence and the malfunction of the current economic system and our current ecological practices, and the way we work and the way we treat our neighbors. I don’t know that individual skeptics are an obstacle to the development of another framework.

I think there are forces at work that tend to drive us toward doing the right thing because everything else has failed. At the same time, there is a lot of good will and a lot of intelligence and a lot of people at work trying to figure out a way to live better and to treat the environment better. That combination of the failure of the old system and the goodwill of people yearning to create a new one is what I would hope would be the force that drives us forward.

John Fullterton: And our job is to have something reasonably coherent and organized, and in progress and in reality, by the time the conventional wisdom shifts.

Vincent Stanley: In 2015, you had three very interesting events. You had Laudato Si’, the Papal encyclical, which is the first time a major world figure really argued for the radical environmental position that human beings don’t have the right to ruin the planet. The second thing that happened was COP 21 [the Paris Climate agreement], which was signed by all 183 countries, and we were the only ones who backed out.

And then the third was the adoption of the UN Sustainable Development Goals, which was also signed by 182 countries. And whatever you think about the goals themselves, whether they’re too cumbersome or they’re too idealistic, the interesting thing is everybody signed on. They weren’t goals for first-world countries as different from third-world countries. They represented a broad agreement on what it would be like to live in good conditions on this planet. So that’s hard to achieve. Those are breakthroughs that I think, in spite of the reversals of 2016 with Brexit and Trump, provide a good field for those of us who are making an argument for regenerative economics or regenerative practices.

Tom Andersen: When I left the symposium in April, I thought: they ought to do this over again, but invite nobody over age 40. Because it was kind of an old crowd. And young people are going to be inheriting the situation. Do either of you see signs or indications that young people are doing interesting things in this field?

John Fullerton: For sure. And I tell you, if I get depressed, I think about all of the activity that the millennials and the nearby generations are doing. It’s just innate in them. It’s like none of this is complicated or controversial or even particularly insightful. It’s like – duh. And they’re getting on with it. They’re doing it without any permission or government advice or businesses. They’re just doing it. And so I think if you want to get optimistic about the shift that’s happening, you hang around with people who are in their 30s and even 20s. And you just realize that the horse has left the barn, and we just don’t see it yet.

Vincent Stanley: I would second that. I worked a lot with joint students at Yale in the Forestry and Environmental Studies School and the School of Management, and all of the stuff is very easy for them to grasp. Their sense of purpose and inhereitance, I think, is really well-defined at a very early age.

John Fullerton: I guarantee if you analyzed it, you would see the regenerative economics processes and principles cropping up everywhere. I guarantee it.

Vincent Stanley: Everything that came out of Lewis Mumford or Jane Jacobs now you’re starting to see on the streets in a number of cities. When you mentioned cities, it’s a key element of the conference. It’s important to pull together this concept of a region, and as part of the region you have an urban hub, you have regenerative agriculture, and you have wild space. And it’s a very simple, three-part idea that I think paints a vision for the future.

John Fullerton: Well said. That’s the reason for the bioregion focus as opposed to local or urban or rural. Bioregion is really the natural organizing whole, if you will, to move toward. It’s also supremely interesting. In Brooklyn and in the Lower East Side, one of the things that’s got all the young people excited and galvanized is connection to food systems and clean water. Whether that manifests in rooftop gardens or farmers’ markets connecting them to the Hudson Valley, those linkages are some of the first things that occur in the regeneration of those places.

Tom Andersen, author of This Fine Piece of Water: An Environmental History of Long Island Sound, conducted the interview.

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