The Great Unfolding
The Great Disruption by Paul Gilding tells of the impending and unavoidable crisis financially and environmentally and offers a grand plan to change course. The Big Shift proposed by Hagel and Seeley-Brown tracks shifts in financial viability, argues for talent engagement, and describes a new world of Pull methods. There are many namings for the future before us. No matter what we call it, there is a convergence of crisis at hand that involve a breakdown in the growth-focused form of capitalism. You don’t have to be a Marxist to perceive this, all you have to do is look out your windows and see the infectious #occupyeverywhere movement peopled across the political spectrum who say, “we have had enough.”
The Great Disruption might describe the short term picture. The Big Shift offers a longer view. Personally, I believe it could be useful to call what’s happening the Great Unfolding. It isn’t just the tremendous infrastructure that has aged and crumbled, it is the systemic infrastructures our society lives upon that are disintegrating from their own weight and internal contradictions. Financial. Political. Social. As they collapse, breakdown, or transform, they pull on the warp and weft of our flatland, opening new dimensions. It is as if we have been living in a two dimensional world, and another dimension must open to extract us from the dilemma of our dualisms and unfold a greater possibility.
While much of what is laid out here may apply broadly to many places in the world, I focus specifically here on the unfolding from a US-centric position (what I know and sense more tangibly). However, the world becomes so interconnected and intra-dependent that what impacts one ripples out to impact us all. A shift in capitalism itself transcends, in many ways, the boundaries of a nation-state. While the politics remains necessarily tied to the state itself, political memes spread beyond the borders of countries.
The polarizing marketplace tensions of the twentieth century — capitalism and communism; and the their drivers: the political left and the political right — fall away as useful but limited improvements on what came before: feudalism. Communism may have fallen first from its inconsistencies and poorly designed incentives, but Capitalism – as we have know it – teeters precariously too. We have learned much from both as we evolve through systems that better enable autonomy, mastery, and purpose – what Daniel Pink claims as the three keys to human motivation. Capitalism enabled a greater degree of these keys. It enabled much more autonomy than feudalism as well as deeper specialization (which brings with it a sense of mastery). However, it is time to improve on the human drive for purpose that goes beyond the self and harkens toward purpose for something greater than one. And we have before us the perfect storm for triggering a sense of purpose: convergent catastrophes across numerous domains: environmentally, economically, politically, and socially.
What has been touted about capitalism, markets, and endless growth — that consumptive abundance leads to human progress and betterment — turns out to be a myth. While many argue about what the limits to the environment for supporting economic systems based on infinite growth are, a more concise argument exists, one that proves the fallacy of the logic itself. The Death of Demand shows solid long-term data revealing that growth rates rise once and fall once in a very consistent pattern. All companies experience two growth trends during the life cycle – an uptrend and a downtrend.
“After experiencing a period of ever-increasing growth rates, a company hits a wall at which time growth rates turn south at ever-decreasing rates,” says economist Tom Osenton and author of The Death of Demand. “At this point, revenue as a profit driver loses steam and in its place cost-cutting grows in importance in order to deliver what Wall Street demands – ever-increasing earnings. However, just as revenue as an earnings driver has its limits, so too does cost-cutting. This illusory dance can continue for many years – but make no mistake about where it’s headed. And it’s very important to remember that cost-cutting and job-creation are enemies that cannot possibly co-exist – especially at a maturing organization.” So growth-decay companies are effectively starving themselves of resources to give the appearance of continually expanding margins. Who is in growth decay? The majority of companies listed on Wall Street.
Increasing rates of growth are something of the past for too large of a portion of Wall Street. Too many of the companies traded there have past their growth peak. Wall Street was meant for investment in businesses that were growing and now contains too many companies that no longer increase their rates of growth. The whole system becomes untenable. Unless a new sector kicks off, there isn’t enough mass in the early growth stages to counter the tremendous size and scale of those entering the late stages of growth decay. We have become so effective at growth that the time from “start” to “growth peak” is getting significantly shorter. Instead of long slopes of growth like we see with a company like Procter and Gamble over 100 years, we have Microsoft in 20 years, and Groupon in a couple years. The time to peak is so short in fact that even products or companies a decade old can be past their growth peak.
The illusion of infinite growth, like the Emperor’s New Clothes, is maintained by the Emperor. The citizenry see something naked and ridiculous which can’t be sustained. Much like the housing crisis and the dot-com boom/bust, the Wall Street Empire is revealed as naked, even to the emperor himself. #OWS has already succeeded by one measure, they broke the shared fiction about Wall Street for all of us.
As the incentive system of Wall Street – financial rewards for growth – demands what too many companies can’t provide. We should not be surprised that the ethics of companies decline to feed the “valuation” beast. It isn’t as simple as a few bad actors; rather, it’s a system that places such high demands on post-growth companies that bad acts become the only means to satisfy traders. As a result, bad becomes good in the lens of efficiency as marked by survival and marketplace robustness. The ultimate end result? A decay of trust in the systems themselves as people intuit how badly the system functions. This then undermines what the entire system requires – faith and trust – the root catalysts for financial and political action and transaction.
We begin to understand that what we consider to be the epicenter of capitalism turns out to be not just unsustainable but self-consuming even cannibalistic. Starving for the opportunity to meet stockholders/shareholders with growth by any means, corporations use ever more drastic, illusory measures to hide declining rates of growth. They truncate their lenses to short-term thinking and short-term gains/results. We can trust them to devour themselves as traders watch and gain, but we can’t trust them to serve the needs of citizens.
Is there hope? Where will we go? The center of the business universe implodes. And this is a very big problem. Are there options? Where is there stability in these changing time?
Outside Wall Street, small and medium size business don’t face these issues. Many businesses don’t focus on infinite growth. For these companies, what matters is staying trim enough to be agile and thick enough to stay alive in lean times. Non-publicly traded companies focus on providing goods and services in profitable ways. The local mom-and-pop restaurant isn’t trying to put more tables in the room, more seats at every table, or more meals in every day (or whatever scaling innovations corporations create to prop up their rates of growth). They understand that there are natural limits within their systems. They suffer no illusion about infinitely increasing their sales. Small business isn’t serving stockholders/shareholders of Wall Street. Small business is accountable to owners – to people who live in and engage with their communities. The feedback cycle between small business activity and their communities – is usually tight enough to ensure integrity in most small businesses who want to endure. An increasing demand for transparency, even in non-publicly traded companies can ensure the work of the invisible hand. True: the profit margins on these smaller businesses may not be significant enough to afford their executives or owners multi-million dollar bonuses. Oh, well, I guess that might have a secondary effect of reducing the extreme and increasing disparities between rich and poor. If you want a glimpse into what this might be starting to look like, explore the Slow Money movement, BALLE, and all the Go-Local endeavors. (If you don’t think income “diversity” is an issue for you, check the data from Richard Wilkinson: How Income Inequality Harms Society)
More than this, a new sector is coming to life. B corporations, L3Cs, and other ways of indicating For-Benefit Corporations, Social Enterprises, other blended models open the way for a hybrid of business and social benefit. While this movement has roots that are decades old, the scale and scope of the market is rapidly expanding and offers, perhaps, an opportunity to evolve our current form of capitalism to one that is more human-centric, impact-aware, and community-oriented. Marketplaces for social business expand daily with businesses that are still young enough to be in their upward growth cycle, prime for investment. And the returns are financial as well as social/environmental.
There is, of course, another disturbance beside the economic one. It is a related political one. Mostly because politics has morphed into corporations as a result of campaign finance reform – serving corporate needs. (State for Sale: A conservative multimillionaire has taken control in North Carolina, one of 2012’s top battlegrounds by Jane Mayer http://www.newyorker.com/reporting/2011/10/10/111010fa_fact_mayer?)
What was once a useful distinction between the left and the right has become artificially crafted polarity of two sides to the same position. As both the left and right have tried to sway the margins of the opposing group, they have moved closer and closer to the center. The political center becomes a gnarly knot. This is the entanglement of the current political scene that serves funders (read as corporations). The majority of the left and the right have come so close to the center to serve corporate interests and woo uncertain voters, that they collapsed into each other in a meaningless muddle.
The interesting question becomes: Is there something else emerging? Yes. And it isn’t just the Tea Party. (Because parties that fight AGAINST things rather than FOR things are not creative. They have no center of being once their demands are met or become irrelevant — they implode without something to resist – because they are not creating, they are opposing. This is yet another reason why the fear-mongering of the current republican and democratic parties is killing both sides.) Is there an emerging political energy that is elbows deep in making a community of voters and politicians that stands for something? Is there a force emerging that counters the tangled middle?
One way I imagine this could look: The Libertarians meet the Green Party or Pragmatic Progressives. On the left are pragmatic progressives focused on social justice, social change, and driven by a moral code bound to equality. The Pragmatic Progressives may value justice over business, but they know business can be more just and support causes making their efforts more resilient and financially self-stabilizing (rather than grant-dependent). On the right, we find Libertarians instead of Liberals. The Libertarians, valuing freedom, small government, and free markets want to show that we can bootstrap ourselves and make it on our own – the vision of the rugged individual – autonomous. They feel that business – not government or philanthropy – is the solution to social ills.
Both sides show up together in a place called social enterprise. Attend events for social entrepreneurs, and you will see these people who, under the old model of politics, are at opposite ends of the spectrum, rubbing shoulders, making deals, and agreeing vigorously on a path forward. They could rally under the flag of Agency. Agency for individuals – that we have each the right to act with agency in our lives.
Look around them to the larger group tied in there. Take a walk around Silicon Valley or much of San Francisco. Peruse the funding models of Skoll, Omidyar, and other dot.com mega-millionaires like Tim O’Reilly – a big advocate of Open Government. They are a strange blend of Steward Brand’s Whole Earth Catalogue and self-made millionaire geeks. This is not a small group and those in it wield significant financial and cultural influence.
Weave together the Pragmatic Progressives and the Libertarians, if we can even use these outdated terms. The old poles of politics disappear, and new poles of tension emerge. Oh, and the Slow Money, BALLE, and other emerging indicators of the new financial space? You will find a similar political “crossover” or alignment when you visit them too.
Even more than that, this group – the Social Entrepreneur party, you might say – often closely aligns to another group – the Pirate Party, aka the Open Government/ Transparency Party, emerging now in many parts of the world. Pirates are interested in shifting how we handle intellectual property, strengthening individual privacy, and also increasing government transparency.
In the old forms, identity was constructed by what we bought or what party we belonged to. In the unfolding, identity is made by what you make or create and whether others can share and build on that. In the Unfolding, politics will continue to drive toward greater transparency. As people move away from the collapsed political center, it may be that the unfolding brings with it a party focused on enabling agency at the individual and community level. We may even see Elinor Ostrom’s notion of polycentricity become more prominent in political discourse.
For now, the Great Unfolding is about the promise of the new systems we can step into as we move beyond the polarization of the old systems that have proven to be useful but limited. The future is already here, it simply hasn’t scaled nor been mapped yet. The edges move toward each other as the center collapses. It folds in upon itself. It unfolds a new era.
It is not a question of whether you are blue or red, or whether you prefer Pepsi to Coke. It is a question of moving toward new systems that have successful pilots or trying to salvage a broken, limited past. And we already know what the past gets for us. And they are protesting it around the world – from the Arab Spring to the #occupyeverywhere action.
For Liberty and Progress, we unite to step into the unfolding together.
What do you sense that might look like?
Great stuff Jean. The question now is where dos this go? Where is is it headed. It needs to credo and direction that is s legacy beyond money. The Great Americans 100 years from now will have little to do the solution and the irony is that money i only will only be a very small piece of it. Our legacy comes in the form of balls. Few have them.
Thank you Tom. And thank you for the wonderful influence you have had on my thinking. Also, thank you for the deep research you have done that shows the logical inconsistencies in the system.
A fine article, Jean. You expressed what I felt for a few weeks but had not words for. As for unfolding, for now I can see a mirage of things worth being against, melding into the vanishing point of the rearview mirror. Let’s see how it turns out when we look forward instead.
Let me honor one of the authors that hit me with enlightening as to what is really going on in the world of corporate and finance: feudalism and casino.
From The Divine Right of Capital (pdf) by Marjorie Kelly
Thank you Bernd. Wow, reading this quote reminded me of Elaine Scarry… In the Body in Pain, Scarry has a sublime metaphor for capitalism. I wish I had it in front of me now. Skype me later and I will read it to you.
Yes, I have a copy of Paul Gildings book The Great Disruption. But I feel that the key to the future is a revolution in understanding of finance. My project on Transfinancial_Economics maybe of interest. Click on my link above..
My evolving project maybe of interest here….
http://www.p2pfoundation.net/Transfinancial_Economics
Thank you Robert. Love the P2P Foundation. I have been digging into economics and alternative currencies etc for 7 or so years. Still, whether it was the day or something else, I had trouble grasping what you are proposing. I would read a few lines, process them, then be directed to learn more somewhere else (without a link to that place)…and my head was drawing a map of thoughts and it turned into a jumble in my brain. Can you give me the 2 line intro? I suspect that what you are offering is quite powerful – because it captures the awareness that money is about agreements and using our imagination to make things work for us. And, I suspect you have thought deeply through the interlocking dependencies of the system in operation.
Gosh – a lot to take in here . . .
I’ve been pondering some of these issues for a little while now. There does indeed seem to be something of a major change occurring, at least in the West, and an emergence of a new division, replacing the division between free-markets and command economies of the last 60 years or so.
I’m sure you’re right that things won’t simply go back to how they were, but I’m not so brave as to want to make any predictions (especially about the future).
It will be especially interesting to see how technology and globalised views (especially from China, India and Africa) will come to shape future politics.
Keep up the good work 🙂
Thanks! I encourage you to be fearless in making predictions. 🙂 Think of them less as verifiable science and more as an exploration of possibility. The wisdom of the whole will be better at settling on a real probability if each of us propose what we can imagine from where we are with what we each perceive. And thank you for the comment.
strong concepts.
Thanks Kevin.
We are about to have a significant change in the nature of political institutions in welfare democracies. It is and was entirely predictable. The development is not as grand as this article suggests, but it is profound. The most significant element is that the public en masse will accept responsibility for their politicians. If/when this occurs, it would be a move to Stage 5 in a 7 Stage evolution. You can read details about this process at: http://thee-online.com Go to: Frameworks > Politics > Spiral of Political Maturation For the present, see: Plutocratic Pluralism. Economic disaster is needed to precipitate a move to the Conventionalist Stage.
Thanks Warren. I couldn’t get to the page without signing up. 🙁 Is there any public place this spiral is displayed?
As a Millennial, I think my generation has a particular voice and role to play in allowing the Unfolding to continue, because we will be the leaders of this new world within twenty years. We are wired, connected, and socially fluid. We recognize that institutions are broken, and we are uniting around social entrepreneurship and Work on Purpose as effective levers for delivering the kind of change we want to see. We absolutely want to see massive change, and we are committed to seeing it through. As nascent movements gain in strength and numbers, we recognize a new ecosystem emerging in which to coexist and co-create. And while we inherit these unwieldly institutions, and struggle to reshape them – to give them a new rationale, as Hagel, Davison, and Seely Brown say – we also move beyond them in deciding to act with force and heart.
Thank you Auren. Gracefully put. #gratitude.
Poetic brilliance and clarity. Yes, indeed there is hope as long as we use our most valuable intangible asset. Imagination.
Dennis Mancini
Thank you Dennis! Yes. Imagination! The most important thing, I feel, is to focus on what we can imagine instead of drowning in fear and catastrophe thinking.
As usual you give a heady and insightful overview.
>> With what we know now <>we can solve lots of the problems<< we see, and actually make money or save money while doing it! (rather than mostly complain about ineffectually now). The new world, made, remade by whomever- capitalist, new info or by innovative thinkers like you, Jean, offers more than solutions. We have tools we can improve life for others, when we apply them.
Lots more opportunity than there was a few years back. And we can get appreciated in the process. The world that is such a mess offers opportunities to fix stuff. When you fix stuff not broken, few notice. We got lots of stuff that is really mucked up. ERGO (an assumption on my part) the fixer may get that much more appreciation for fixing something.
I like your overview as it kicks several elements into awareness that can be of use somewhere. On the high level, talking broadly:SOLUTIONS ARE OFTEN SPECIFIC in application. So speaking big picture, we got solutions. Applying specifically, we can use tools that are already 'out there' to change the games by increasing productivity dramatically, fast, cheap and realitively easily. Change happens fast. Little things make a, make that THE difference and the rule of the few: the few of us can put changes in place fast.
We create new models that fly away from the old ones. I hope some of the new models succeed for now, to be upgraded, repaired and someday abandoned – superseced – in turn. Taking a SPECIFIC example, gigantic sums are being spent on global interventions (e.g., vaccines) without the small, obvious upgrade of GIS mapping, social network mapping to map what is being done and fill the gaps. Sometimes incremental gains and additional tools can liberate – make much more effective whole systems. The mapping would SAVE MORE MONEY than it would cost, so the final point:
You can make good money at this. So don't through capitalism out with the water from the loo at the Occupy site. A bit of money can make LOTS happen, back to talking like a revolutionary, (while remaining a capitalist). Das Neue Kapital has many forms. Cheers – Drake
Thank you Drake. Not throwing out all of capitalism. This isn’t about rejecting as much as it is about upgrading. We learned a lot. Now to improve upon it.
Thanks for writing such a clear analysis and pointing out a way forward from the mess I think we all feel. I’m especially cheered by Auren’s idea that the Millennial generation is well prepared to take on the challenge. Just let us know what we can do to help.
Thank you Andy!
In your setup for your post-capitalism vision, you identified the problem facing large 3-letter-ticker-symbol companies (after a certain point there is nowhere left to grow), but I think you drew a rather cynical conclusion out of it. An alternative thesis is described in Clayton Christensen’s The Innovator’s Dilemma.
You can read the full summary on the Wikipedia page, but the gist is this: there are sustainable innovations, and there are disruptive innovations. Sustainable innovations improve a firm’s posotion in a market, but eventually as the market reaches saturation there is no where left to go (the textbook S-curve). Disruptive innovations change the nature of the market — more specifically, they create a new market for a new generation of the technology. These new markets are tiny in size compared to the sustaining market, yet he shows enough case studies to make a convincing case that over time these disruptive markets eclipse, encroach, and ultimately gobble up the firms which stayed in the sustaining market. The “Dilemma” is that it is not in the established firms’ best (short term) interest to invest in this tiny disruptive market (returns are too small to justify any real investment), yet if you don’t someone else eventually will.
I’m not defending capitalism here, I just don’t buy your argument that reaching the top of an S curve leads to the widespread rejection of capitalism as we know it. Groupon got to what it is in a few years because it invented a new disruptive market. Comparing it to Microsoft is disingenuous because there is no evidence to suggest the groupon market is as mature and therefore of the same scale as microsoft — you’re comparing apples to oranges. Rather, look at how they created a brand new market out from under the microsofts and googles, who are now focused on sustaining their established positions. You should be investigating how to use B-corps and L3Cs to take charge of the next disruptive markets before the established firms catch on.
Thank you John. First, I think a form of capitalism will remain, while we upgrade with the wisdom we have learned. I am pointing out the core aspect we need to upgrade. And yes, that upgrade involves lots of pilot projects of the new era including all the social (responsibility, entrepreneurship, triple bottom line etc).
I am reading Innovator’s Dilemma right now! And, I believe I accounted for that in saying we need a new sector, but even so it won’t be large enough (soon enough) to address the size and scale of declining growth. I encourage you to read Death of Demand or review Tom’s blog: http://peopleseconomist.blogspot.com/. The story you are describing is a hopeful one, and I love that. However, I also feel like the numbers there don’t pan out. It isn’t enough and won’t be enough to save the system as it is. Capitalism itself needs disruptive innovation.
Incredible piece. So glad Om Malik included it in his weekend reads as it deserves a large audience. Thanks for weaving so many strands together into an articulate whole.
Thank you Jodene. Glad it was useful for you.
Wonderful insights for those who are trying to understand the tectonic shifts in society, global and national politics, ideologies, business and economics. These shifts may seem unrelated to the untrained eye, but you have managed to go beyond the superficial, and somehow find the connecting undercurrent. “A prophet for our times…”. I’m now a regular follower.
Btw – this reminded me of something I read by George Friedman, a more conservative “geopolitical analyst” who still managed a thought provoking piece: “The Love of One’s Own and the Importance of Place” (http://www.stratfor.com/analysis/love_one_s_own_and_importance_place )
THANK YOU! Indeed as I’ve been watching the Tea Party and the #occupyeverywhere movement happen from here in Europe there is a strikingly similar lack of articulated vision. It makes me want to stand up and wave and say YooHooo! look over here at the social change space! We’ve got the vision and people all over the world who have already been working on new systems.
I’m going to tell some of my libertarian friends to have a look at this… love that part too.
Bravo, my sister. So honored to call you my colleague and friend. xoxo
Brilliant and inspirational post! My unfolding awaits, our unfolding emerges.
Interesting Insight. Look forward to hearing and reading more.
Great summary and thoughts. Thought provoking.
My guess is inertia is tough to overcome or unwind and thus I feel the convergence of crisis will do (force/facilitate) more of the heavy lifting. Ideally what results is more interest in participating in emerging alternatives in organizing, creating, buying, financing, and all things local. I think some of the well established companies and organizations will be smart and absorb or partner with the innovative ideas. Then I think those ideas that are ‘wildly’ successful and scalable or replicable that will move things over the hump to establish a new ways of doing things replacing the old or more likely co-existing.
As you’ve indicated a place to look is the locally grown, owned, made, and financed as there is arguably some excitement and possibilities evolving and gaining ground.
You gave me some new reading material – thanks.
Happy New Year,
Mitchell