Chapter 2. Transitioning to an Integrative Economy

Transitioning to an Integrative Economy

Just as no one saw the start of the Industrial/Consumer economy with the invention of the Watt Steam Engine of 1869 (and this was actually an adaptation of a much earlier steam engine), few if any saw the start of the Service/Consumer economy attached to the 1975 Oil embargo. That’s because after each of these events, it appeared that everything pretty much remained the same. The Agricultural economy was still in full view in 1869 and the Industrial consumer economy was clearly dominant in 1975. But each of these events set in motion a fundamental shift from one economic system to another.

The 1975 Oil embargo made once ‘cheap oil’ a much more expensive part of the production cycle. Looking for ways to maintain high profits, businesses discovered a new cheap resource: people overseas. So we outsourced our production to cheap labor and things continued on. This was the beginning of the shift from the Industrial/Consumer economy to the Service/Consumer economy.

Today, we have fully transitioned into the Service/Consumer economy. Throughout the 80’s and 90’s, we were shifting out of manufacturing/production as the primary driver of the economy. As these jobs disappeared, we began a transition into more service based businesses; financial, medical, education, insurance, entertainment, technology and real estate. But we were doing this while still attached to the language of the old economy; Unlimited growth and production = profits. We were trying to maintain the standards of the traditional market systems by selling more and more services.

At first look, the Service/Consumer economy seemed like a smooth transition. But since the start of the new millennium, a split was beginning to emerge. Those with high levels of knowledge did well, but the grand majority of people ended up in low-paying service jobs. In fact, a Knowledge/Service economy has taken over and where we find ourselves today. But as we’ve seen since the 2008 recession, this split of Knowledge/haves and Service/have nots is becoming ever more difficult to reconcile. We are being forced to confront that the transition that started in 1975 from the Industrial/Consumer economy to the Service/consumer economy has led to the beginning of what will now be an entirely new economy—an Integrative Economy.

A Foot in Two Different Economies

In 2013, it seems everyone is confused! Are we a consumer economy or a knowledge economy? You can see this in action as we try to jump-start the economy with green jobs. But this is still about selling products and services on the unlimited growth and production = profits pathway. It runs up against the very same problems that all of the Industrial & Service/consumer industries face—production cannot continue to grow and grow and grow. We’re running out of cheap resources, as oil which is in every product (even green ones!) becomes ever more expensive and limited. We attempted to switch to biofuels but this option will offer a limited capacity to fuel (pun intended) our attachment to a consumer economy. Because it isn’t only oil—we’re running out of minerals, water and other production necessities too.

Now, add to this a global financial crisis resulting in lost jobs and lost wages in many of the remaining Service/consumer businesses (finance, real estate, consulting etc.) and consumption is plummeting even in these non-production consumer industries. While everyone keeps thinking ‘ah, if we could just get everyone consuming again, we’ll be okay’, it’s become quite apparent we will not return to previous consumption levels of the 20th century. The Industrial & Service/consumer era is just about over. Yes, we will still consume at some level, that’s for necessities but as consumer debt has awakened the consumer to the rat-race treadmill it requires them to run on, the days of consume at all costs are finished.

Alas, in the last 35 years we saw the transition into the Service/Consumer economy and while it looked like all was going well, we can see now that in reality, more and more were being left behind. In the last 10 years, we saw Service/Consumer morph into a Knowledge/Service economy. But only a minority portion of the population easily moved into it. Those with education, technology backgrounds, and creative capacities found good jobs in the first wave of the Knowledge/Service economy. But a larger portion of the population saw their jobs disappear and/or be replaced with low-wage service jobs. Prepared as they were for the previous manufacturing economy, it meant many were lacking the education that would enable them to move effectively into the Service/Consumer economy and even fewer would make it in the Knowledge/Service economy. Couple this now with the 2008 Great Recession and we end up with a jobless recovery being predicted and 15 million people could be permanently left on the sidelines. And while unemployment seems to have improved by 2013, in reality, many people have given up and left the employment roles or are under-employed in jobs that do not use their full skills or pay well.

Time for an Integrative Economy

Maintaining the Service/consumer economy as the primary driver of our economy will not be sufficient to meet the employment needs of the population or the world around us. It is like is jamming a square peg in a round hole—eventually we just have to acknowledge it’s not fitting. Trying to go back to an Industrial or Service/consumer economy, instead of embracing the Knowledge/Service stalls the inevitable—moving to an Integrative economy. It is time for a change.

An Integrative Economy offers us the ability to engage far more of the population with employment options and wealth accumulation methods not possible within the Service/Consumer economy. These new employment and wealth accumulation options of an Integrative Economy got their foundation from the short-lived Knowledge/Service economy. These new options will be a necessity because it is untenable to have any portion of the population sitting on the sidelines or relegated to jobs that won’t provide a living wage. Especially, when there is plenty of work to be done in an Integrative economy!

The tricky part is recognizing that we are not yet at all comfortable or effective at valuing the Knowledge/Service economy because it does not fit into traditional measurement parameters of ever-constant growth. By giving ourselves permission to change the measurement systems, it solves this dilemma and in a very short span of time, this new measurement system will feel as normal as the current GDP system does. Remember—we lived without the GDP until 1946 and even its founder, Simon Kuznets warned in The New Republic in 1962, “distinctions must be kept in mind between quantity and quality of growth, between costs and returns.” We are not destined to maintain this measurement system—in fact, we are encouraged to change it.

An Integrative Economy includes much of the work found in previous economies (Agricultural, Industrial & Service/consumer, Knowledge /Service) along with new employment options not previously seen. Each of the previous economies had a major driver for employment:

Economy Drivers

Agricultural                         Home and survival

Industrial/Consumer          Machines and production;  quantity of stuff

Service/Consumer            Finance, real estate, education, entertainment, medical, etc

Knowledge/Service          Technology, sciences, medical, education; quality of life;

human capacity and sustainability

An Integrative economy will recognize the value of all of these drivers and tap them all under the umbrella of a high quality of life for humans and the planet. An Integrative Economy will transform each of these drivers to meet the needs of people and the planet for the 21st century. It is a very exciting time to be alive and an Integrative Economy offers us the opportunity for the most incredible economy ever created by humans. Home will become more central again as will regional food systems. Manufacturing will be closed-loop, waste neutral, Services will be relationship and community based and knowledge will focus on wholeness for humans and planetary systems.

An Integrative Economy will require new measurement systems (beyond the GDP), new employment sectors and significant infrastructure development to launch these new employment sectors. Just as we did after the 1929 Depression in order to get the Industrial economy booming, we need to invest in the infrastructure for an Integrative Economy. In the Industrial economy, that meant roads, factories, electrical grids, cars and trucks and standardized education systems.

For an Integrative Economy, infrastructure includes paying for human capacity development at the professional level, transforming the 20th century education system for the 21st, and a huge focus on high level thinking and social relationship skill building along with new energy systems, technology innovations, regional food systems, and environmental restoration.

An Integrative Economy is driven not by machines but by creative, innovative, relationship-driven humans who will be able to include the best of the past while transforming for the needs of the future. There’s tremendous value in us going to an Integrative Economy. It will set the foundation for the most vibrant economy ever designed. It won’t be easy, but it will be worth it.