GILLIAN HAMILTON: Koeksister economics — weaving a path to a better future
08 December 2022 - 15:27
byGillian Hamilton
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The social, political and economic systems that created today’s unequal, conflict-ridden and uncertain world will not be able to steer humanity to greater resilience and prosperity. For that we need “koeksister economics”.
You don’t have to delve deeply into today’s news headlines to know that humanity is not living up to its full potential. Between SA’s energy crisis, the Ukrainian-Russian crisis and the world’s climate crisis, governments are so busy putting out fires, literally and figuratively, that they barely have the resources or time to build schools, staff hospitals and fill potholes.
Fortunately, the business world is more capable: the best-paid executives have refined the art of setting their sights on doing something, assessing the risks involved, gathering the resources to do it (despite the global challenges we face), and executing their plans in ways that generate profit for shareholders. With all else in chaos, at least the business world is working for us. Right?
Well, yes and no. Yes because humanity would not have achieved half of what it has achieved without the driving force of business. Mobile phones, life-preserving medical technologies and innovations in “green” building technology are all available because of business. And no because these strides in human achievement have come at a cost we are only now beginning to understand.
The problem with business as conducted over the past 70-odd years is that our risk assessments have focused too narrowly on the risk to profit. Provided a company operates in such a way that it meets shareholder demand for quarter-on-quarter profit growth, a company is considered a success. What is missing from this assessment is the risk that business operations pose to the natural environment and the wellbeing of people.
When you include these externalised risks and their associated costs, it becomes evident that the business world is not the pinnacle of human evolution but rather a contributing factor to some of the most pressing challenges of our time, from food insecurity to plastic pollution to climate change.
This effect is multiplied when you consider the link between private sector investments and profit and GDP. An increase in GDP is generally regarded as a good thing. However, many policymakers forget that GDP is an imperfect measure of human wellbeing. Although an increase in GDP has been statistically linked to a decrease in unemployment, this does not consider the effects of increased economic activity on the natural environment and the people who rely on healthy ecosystems for their health and livelihoods. What use is a 1% decrease in unemployment if a far greater proportion of people experience negative health effects due to polluted air, or are unable to grow nutritious food due to degraded soil and water?
All told, we need to recognise that we live on a finite planet on which nothing grows without limits. Why, then, do we expect our economies to grow and grow and grow? We need to move away from defining prosperity in terms of endless GDP growth — and, by implication, of defining business success in terms of profit growth — and adopt a more systemic approach that considers both planetary health and people’s developmental needs.
The economist Kate Raworth speaks of “doughnut economics”, a catchy term that acknowledges the tension between two aspects of our reality: that many people on this planet lack access to the most basic of social rights such as education and food security; and that our planet has several built-in, immovable boundaries which, if overstepped, could result in cataclysmic change beyond which life as we know it would cease to exist.
Our aim as humanity, Raworth argues, should be to promote justice by bringing basic human rights to the greatest number of people while remaining on the safe side of these planetary boundaries.
How do we as a country try to find the balance of Raworth’s doughnut when our economy is locked into fossil fuel exploration, extraction and use, despite the environmental and financial damage these will cause? We believe an important first step is to build more resilient communities by following a localised version of doughnut economics: the koeksister economics model.
A koeksister recipe like no other
Koeksister economics weaves together Raworth’s doughnut with two concepts that are probably foreign to the modern business world. These principles are commoning and the transition towns movement.
Commoning is when people come together to collectively develop social standards and customs relating to the use of shared resources such as land, water and the oceans — and even information, such as in the case of Wikipedia. Commoning allows communities to build collaborative relationships, resolve conflicts, and care for communal resources. A community with strong relationships and a common understanding of what needs to be done will find it easier to face a crisis.
Meanwhile, transition towns seek to solve the problems of climate change by focusing on localisation (producing much of what the community needs locally, so reducing emissions caused by global transportation lines), implementing low-carbon projects, and living within the planet’s limits. Residents of transition towns understand that we don’t live in a world with infinite resources, and to be able to shape successful futures for themselves and their families they need to bring the assets they need — from buildings to energy generation to business — into the community rather than cultivating dependence on sources from afar.
Implications for business
Koeksister economics could help answer the question many companies are struggling with today: what does it mean to be truly sustainable? And, for the more idealistically minded, how can business contribute to a better society?
Companies that embrace koeksister economics can have a holistic picture of where they need to go to be more socially and environmentally sustainable; identify opportunities for new businesses that solve environmental problems and planetary boundaries; or create businesses that provide localisation solutions. The companies that spring up to meet this local demand or resolve environmental crises may not see the same profits as multinational companies that have optimised their economies of scale, but they will contribute to improving human wellbeing by creating jobs and — importantly — keeping financial flows within the local community.
Koeksister economics won’t solve SA’s problems overnight, or even in the next five years. However, it could set the foundation for a society that prioritises social development, climate action and living within the planet’s finite resources. In our view, this is as close to reaching humanity’s full potential as one can hope to get.
• Hamilton is with The Green Connection, which developed koeksister economics as a just transition model.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
GILLIAN HAMILTON: Koeksister economics — weaving a path to a better future
The social, political and economic systems that created today’s unequal, conflict-ridden and uncertain world will not be able to steer humanity to greater resilience and prosperity. For that we need “koeksister economics”.
You don’t have to delve deeply into today’s news headlines to know that humanity is not living up to its full potential. Between SA’s energy crisis, the Ukrainian-Russian crisis and the world’s climate crisis, governments are so busy putting out fires, literally and figuratively, that they barely have the resources or time to build schools, staff hospitals and fill potholes.
Fortunately, the business world is more capable: the best-paid executives have refined the art of setting their sights on doing something, assessing the risks involved, gathering the resources to do it (despite the global challenges we face), and executing their plans in ways that generate profit for shareholders. With all else in chaos, at least the business world is working for us. Right?
Well, yes and no. Yes because humanity would not have achieved half of what it has achieved without the driving force of business. Mobile phones, life-preserving medical technologies and innovations in “green” building technology are all available because of business. And no because these strides in human achievement have come at a cost we are only now beginning to understand.
The problem with business as conducted over the past 70-odd years is that our risk assessments have focused too narrowly on the risk to profit. Provided a company operates in such a way that it meets shareholder demand for quarter-on-quarter profit growth, a company is considered a success. What is missing from this assessment is the risk that business operations pose to the natural environment and the wellbeing of people.
When you include these externalised risks and their associated costs, it becomes evident that the business world is not the pinnacle of human evolution but rather a contributing factor to some of the most pressing challenges of our time, from food insecurity to plastic pollution to climate change.
This effect is multiplied when you consider the link between private sector investments and profit and GDP. An increase in GDP is generally regarded as a good thing. However, many policymakers forget that GDP is an imperfect measure of human wellbeing. Although an increase in GDP has been statistically linked to a decrease in unemployment, this does not consider the effects of increased economic activity on the natural environment and the people who rely on healthy ecosystems for their health and livelihoods. What use is a 1% decrease in unemployment if a far greater proportion of people experience negative health effects due to polluted air, or are unable to grow nutritious food due to degraded soil and water?
All told, we need to recognise that we live on a finite planet on which nothing grows without limits. Why, then, do we expect our economies to grow and grow and grow? We need to move away from defining prosperity in terms of endless GDP growth — and, by implication, of defining business success in terms of profit growth — and adopt a more systemic approach that considers both planetary health and people’s developmental needs.
The economist Kate Raworth speaks of “doughnut economics”, a catchy term that acknowledges the tension between two aspects of our reality: that many people on this planet lack access to the most basic of social rights such as education and food security; and that our planet has several built-in, immovable boundaries which, if overstepped, could result in cataclysmic change beyond which life as we know it would cease to exist.
Our aim as humanity, Raworth argues, should be to promote justice by bringing basic human rights to the greatest number of people while remaining on the safe side of these planetary boundaries.
How do we as a country try to find the balance of Raworth’s doughnut when our economy is locked into fossil fuel exploration, extraction and use, despite the environmental and financial damage these will cause? We believe an important first step is to build more resilient communities by following a localised version of doughnut economics: the koeksister economics model.
A koeksister recipe like no other
Koeksister economics weaves together Raworth’s doughnut with two concepts that are probably foreign to the modern business world. These principles are commoning and the transition towns movement.
Commoning is when people come together to collectively develop social standards and customs relating to the use of shared resources such as land, water and the oceans — and even information, such as in the case of Wikipedia. Commoning allows communities to build collaborative relationships, resolve conflicts, and care for communal resources. A community with strong relationships and a common understanding of what needs to be done will find it easier to face a crisis.
Meanwhile, transition towns seek to solve the problems of climate change by focusing on localisation (producing much of what the community needs locally, so reducing emissions caused by global transportation lines), implementing low-carbon projects, and living within the planet’s limits. Residents of transition towns understand that we don’t live in a world with infinite resources, and to be able to shape successful futures for themselves and their families they need to bring the assets they need — from buildings to energy generation to business — into the community rather than cultivating dependence on sources from afar.
Implications for business
Koeksister economics could help answer the question many companies are struggling with today: what does it mean to be truly sustainable? And, for the more idealistically minded, how can business contribute to a better society?
Companies that embrace koeksister economics can have a holistic picture of where they need to go to be more socially and environmentally sustainable; identify opportunities for new businesses that solve environmental problems and planetary boundaries; or create businesses that provide localisation solutions. The companies that spring up to meet this local demand or resolve environmental crises may not see the same profits as multinational companies that have optimised their economies of scale, but they will contribute to improving human wellbeing by creating jobs and — importantly — keeping financial flows within the local community.
Koeksister economics won’t solve SA’s problems overnight, or even in the next five years. However, it could set the foundation for a society that prioritises social development, climate action and living within the planet’s finite resources. In our view, this is as close to reaching humanity’s full potential as one can hope to get.
• Hamilton is with The Green Connection, which developed koeksister economics as a just transition model.
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