Chapter 3. Description of an Integrative Economy

Description of an Integrative Economy

“Economics: the study of mankind in the ordinary business of life”    Alfred Marshall (economist)

From the above definition then, we can say that an economy is mankind at the ordinary business of life. As we enter the 21st century, we can look back over 3000 years and see various economies that have evolved over the ages. Each reflects the needs of the humans of those times along with their accumulated knowledge and wisdom to apply in the “ordinary business of life”. Once we were hunter-gatherers that provided for a subsistence lifestyle and simple inventions. As we learned more, the agricultural economy emerged and while still subsistence on many levels, it did enable some levels of diversification for increasing knowledge and wisdom in new areas.

This was the primary economy for over 2000 years but the seeds of the Industrial/consumer economy were being planted within it. Global trade harkens back to these times but it would not be until the 1700’s that the Industrial economy would become more visible. It would still take another 100 years for it to become the primary economic system. By 1850, it was well on its way to taking over the Agricultural economy but not until 1960 would it reach its highest levels. Over all this time, we continued to expand our knowledge and wisdom accumulation and with each decade, more knowledge enabled new businesses and opportunities for “the ordinary business of our lives”.

The first computers emerged in the 1940’s but it would be another 40 years until this technology would significantly impact most people. Amazingly, within less than 20 years after this, the Service/Consumer economy would replace the Industrial/consumer economy—well, at least in the Western world. By 1975, the US and Europe were outsourcing manufacturing to China, India and Mexico who would handle the industrial aspect of the consumer economy while citizens in the West were participating in the Service/consumer economy as the major employers in their areas. This has now morphed to the Knowledge/Service economy for a small portion of the population.

Now, in 2011, we sit on the precipice of another economy, an Integrative Economy. We have labeled it an Integrative Economy because it will include aspects of all of the earlier economic systems as it transforms each of them to meet the needs of the 21st century and beyond. We’ve accumulated a lot of knowledge and wisdom over the last 5000 years and yet, we realize there is still much to be learned. At the same time however, this knowledge accumulation enables us to consciously choose to include the best of all the earlier economies yet transform them to meet the needs of who we are now in the “ordinary business of our lives” and in respect to the challenges that are before us.

Challenges R Us

Every phase of the human journey can be defined by the challenges faced by the humans who lived in that time. Those challenges have continually inspired humans to explore and design new ways of living and we can all be proud of our ancestors for had they not lived up to the challenges (many of them life-threatening), we would not be where we are today. Yet, as is also true, some of those new ways of living have had unintended consequences—such as environmental degradation, over-population, restrictions in freedom, and lifestyle implications such as the rise in obesity and Type II diabetes. But each of these challenges also offered inspiration for more exploration and redesign! And that is where we are today. We have many challenges ahead of us. Some of them we might not have predicted and some of them are the unintended consequences of earlier choices but all of them will require us to become inspired to design the next economy. That’s where an Integrative Economy comes in as the next solution for the on-going journey.

Quality of Life vs. Quantity of Stuff

The Industrial & Service/consumer economy was focused on the accumulation of things—money, possessions, property and power. An Integrative Economy will be focused on the quality of our daily lives. Yes, we will still accumulate some things, but now it will not be things for the sake of things, but things, services and knowledge that enhance our personal lives and that of the community of life around us.

There are several reasons. One of the most interesting is found in studies of happiness. Turns out, more and more stuff doesn’t make us happy! Sufficient levels of stuff mixed with the time to enjoy relationships with other humans and the earth (land, air, water, animal, plant) provides far higher levels of happiness than just stuff. So, quality of life emerges. Other reasons for the shift to an Integrative Economy include:

• Resource depletion. Even if we want to forever make more and more stuff there will be an end. We’re running out of the oil, minerals and other natural resources that would make this possible. Some resources are simply finite and we’re pushing their limits.

• Technology. A lot of the physical labor that we’ve done for millennia can now be done by machines.

• Knowledge accumulation. We’ve learned more in the last 150 years than we did in the previous 10,000 years. This is exciting news and clearly shows that human’s search for knowledge is now our primary interest. And that knowledge expands the entire universe. There is no limitation to our capacity to accumulate knowledge except our time to learn knowledge and use it in our lives. An Integrative Economy will enable more time for knowledge accumulation.

• Environmental stress. Whether it’s too much carbon, coral reefs dying, topsoil depletion, animal extinctions or global climate change, the earth we are dependent on is experiencing significant stress that we can no longer ignore. Much of this stress is the unintended consequence of the earlier economies and our lack of awareness of how our actions were impacting the earth. But now we have this knowledge and it cannot be ignored. An Integrative Economy allows us to reduce these stresses by putting our efforts into restoring, renewing and respecting the earth in coordination with creating a high quality of life.

• Human stress. What we’ve all come to realize is that the intense effort to accumulate massive quantities of stuff has a toll on humans and their health. Being part of the rat-race is no longer what seems like the only option. In fact, it clearly is not the best option. The ability to shift into a better work/life balance in an Integrative Economy makes sense.

Living in an Integrative Economy

An Integrative Economy requires us to integrate three major systems that currently are disconnected in the Industrial & Service consumer economy: Social (human), Natural (earth) and Economic (Business). Right now, business rules over the social and natural systems. In the simplest of terms, we’ve come to accept that anything that makes money is good even if it does so at the expense of social (human) or natural (earth) systems. This imbalance is no longer sustainable nor does it reflect the optimal outcomes for humans or the planet.

The rise of the Knowledge/Service economy over just the last decade makes factoring in the social and natural arenas a necessity. Many businesses in a Knowledge/Service economy do not fit into traditional consumer/”more is good” measurement parameters. Take for example ‘medical’. It’s projected that of the top 20 jobs in the next decade, 10 of them will fall in the medical field. As the medical industries ‘sell’ more and more services, it does so with an interesting twist. It requires many traditional, for-profit businesses to spend its profits on medical care. Spending on medical care means less available for purchasing products which may put many traditional businesses out of business. So, is growth in the medical sector good for the economy or not? Under traditional measurement system not necessarily if growth in medical results in decline in business. But when you factor in the social and natural areas into the economic measurement we can answer yes. Increased employment in medical fields results in highly knowledgeable humans who are aware of the value of healthy natural systems too.

You can see this as well in education. As the economy faltered, many unemployed decided to return to school for masters’ degrees while ‘waiting out’ the economic downturn. Colleges/Universities have seen a huge rise in enrollment, but is this good for the economy? For a Consumer economy the answer is no. It again takes funds out of buying products/services and puts them into knowledge accumulation. For an Integrative economy the answer is yes.

We can see a larger problem. We do not have the measurement systems available to show us the value in this transition. But we could. To maintain the limitations of the GDP requires us to stay attached to a consumer/”growth at all costs” economy because it is the only way to convince ourselves that the economy is good. This is no longer sustainable and disables our ability to create an economy based on high quality of life. We need to merge and integrate all three systems—social, natural and business.

The impetus to do this comes through the present bridge of the Knowledge/service economy and its exposure of the need to include social, natural and business systems together. When we do, an Integrative economy comes alive. We can then design employment that takes into consideration the needs of humans and the planet. The basic premise of an Integrative Economy is to include and transform the social, natural and business factions in ways that enhance the quality of life for all.

This will allow us to create new businesses, new ways of doing current businesses that are more beneficial to the integrated whole and it allows us to use the accumulated knowledge of the last 5000 years to create the most innovative economy ever. While we can now think global, we will live a high quality of life on the local level. Relationships to people and the environment we are situated in will be of utmost importance.

Features of an Integrative Economy

Agriculture: local/regional food systems. Accumulated knowledge now makes it clear that the quality of the foods we eat greatly impacts our lives and we can achieve higher quality food by growing it and consuming it at a local level. This does not exclude some global influences, but the majority of one’s food will be local because this also fosters relationship with one’s community of people and the earth around them.

Energy: renewable, sustainable and local. Oil dependency is not an option—but solar, wind, and other renewables will be. This needs to be locally assessed and incorporated. Ideally, we’ll create a closed loop energy system so that a local community would invest in wind/solar, etc., and sell itself back its own energy production. In time, an entire city could produce all it needs and pay off its investment this way.

Human capacity development: knowledge and wisdom accumulation is of such importance in an Integrative Economy that it will become a major employment sector in the future. We can no longer afford to have humans without the opportunity to grow and learn to the best of their ability. Life-long learning will be the norm and the variety of ways human capacity will be developed will allow education on many levels to thrive.

Financial/wealth accumulation: In the last gasp of the Service/consumer economy, we watched financial wealth accumulation over-ride everything. We were living insane lives and somehow came to believe that ‘making money on making money’ was somehow enhancing our lives. As the 2008 Great Depression has shown, this financial wealth accumulation had gotten seriously out of control.

In an Integrative Economy, wealth accumulation will be possible in many different ways not simply the traditional money/federal dollar option. In an Integrative Economy, we will be able to work/volunteer and register this work for future tradable exchange for someone else’s time. Local currencies and innovative exchanges will flourish. As well, the need for massive quantities of money will no longer be the primary driver of our lives since quality of life will override quantities of stuff for which we need/want money.

New indicators or measurements of the economy: Right now, the GDP is the only measurement stick—and it is set up only to measure the quantity of stuff. You can see why this is severely limiting in a quality of life economy such as an Integrative Economy! We’ll need to expand this to measure Social and Natural factors as well as Business. An Integrative economy might be a GDP (business) plus GHCP (social—gross human capacity production) and GEP (natural—gross environmental production)

Change what we measure/change what work we pay for: If we’re measuring GDP, GHCP and GEP, then the two new areas will allow new employment sectors that will help create this productivity! As a result, we’ll expand our employment options and in the process increase the quality of life for humans and the planet.

Government will be leaner and simpler because many of the social services will come out from underneath government and move into the new human capacity development and volunteer employment sectors. Schools will continue to thrive however maintenance of big buildings/ground will change as will teaching methods. More education will be locally sourced in the community in integrated networks of providers.

Health care: right now we have a disease care system..a fix it after its broke system. This will not maintain itself in an Integrative Economy for it is too expensive but more importantly it reduces quality of life. Prevention—connected to a knowledge based economy will enable each of us to take responsibility for our primary health at the point it happens—daily life.

Local production/small businesses will thrive: While today we have many large businesses obsessed with quantity of scale/profits, the future will enable far more local production with individual influence. An example of this is the microbrew industry which has enabled local production, creativity and otherwise challenged the big breweries as people wanted higher quality and individuality vs. mass production. While there are some businesses that will remain large-scale, many others will shift to local production/closed loop production whereby one local business will actually create many other income generators within the production cycle managed at the local level. For example, a local brewery might use its leftover grains as a medium for mushroom production and worm production. The mushrooms can be sold and the worms used as chicken feed for its egg production facility. Waste water can be used for spirulina production (a blue-green algae that is high in protein) which is used in its protein powder facility. Once the spirulina has turned the once acid water of the beer production process to a pH neutral water, it can be used in ponds where fish can thrive and local fishermen and tourists can pay fees to use the ponds for fishing. So, one closed-loop small brewery has now created several other businesses where once there was only one or, if done on the huge scale of traditional breweries, would’ve been too big to manage effectively.

Natural environment: we will develop experts in “true cost accounting’ whereby the production of the natural environment can be factored into the production of products and services that use them. We will develop experts who are masters in closed loop production because ‘waste is too costly to waste’ will make good sense for an Integrative economy (see brewery business above!).

It’s the best of the past with a nod to the future. As we redesign for an Integrative economy, it is with the recognition that all that has come before is a vital component of where we are now. Agriculture will take on a local/regional focus again. Consumer industries will use closed-loop production that will enable new businesses at the same time that it innovatively manages its waste. Service businesses will reach to higher levels of relationship connections that foster strong community.