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?
