From Voices of the ReGenerationVoices of the ReGeneration, a conversation between John Fullerton and Daniel Wahl about the qualities of a regenerative economy, February 2020.

On Capitalism

Daniel Christian Wahl | You have the founder of the World Economic Forum, as early as 2012/2013, saying capitalism is broken and needs redesigning. And you even get the IMF or the WTO saying it. And it’s not a taboo topic anymore to say something is fundamentally needing a shift, but then, of course, you get the camps: some people saying we can redesign capitalism, or rescue the world capital if we apply it in a more nuanced way. And others say, “No, no, no—capitalism is the problem.” Are we just getting stuck here with language?

John Fullerton | It’s funny—I think most people would guess that I’m deep in that conversation because I’m out of that world now. And the truth is, my phone doesn’t ring from the folks that are rethinking capitalism. I’m viewed as way too radical, and probably way too theoretical. And I’m frustrated by this. And I kind of roll my eyes when I see the great capitalists now talking about corporations needing a purpose. Well, what a brilliant idea… The business round table last summer came out with this new statement, “Hey, how about if corporations had a purpose?” And of course, that’s the same statement that the business round table had as its premise in 1982, when I started at JP Morgan. And it was only in the early nineties, I think, that the Milton Friedman school sort of took over and said the purpose is to maximize shareholder value!

So, we’re now right back to understanding what was the baseline in the early 1980s, which probably goes back 50 years before that. And there’s a lot of new energy around ESG (Environmental, Social, and Governance) and impact investing. With all due respect, these folks (most of them are guys) are very smart. They’re very competitive. They’re very successful. And because of that, in our culture, they have a very big megaphone. And so when they get up and say, “We need to reinvent capitalism,” everyone says, “Yeah, we need to reinvent capitalism!”

But they haven’t sat over there and read 100 books to think about this in a deeper way that you and I have. And so there’s a lot of well-meaning and good intention, but I think this gets back to this issue of not really getting your head around the fundamental profound disconnect. It just boils down to this: exponential growth on a finite planet—it won’t work.

How many people that work in business and finance actually understand what the Second Law of Thermodynamics says, and why it’s relevant to our economy? I would bet you, if you put a hundred CEOs in a room, and didn’t count people that worked in a business that requires a physics degree, half of them wouldn’t know what the Second Law of Thermodynamics is. And 95% of them wouldn’t be able to tell you why that’s relevant to economics and business.

Until people get their heads around that issue, we’re sort of moving deck chairs around. I do wish that my voice was in that conversation. I’d be lying if I said otherwise. But that conversation about the future of capitalism is pretty locked in. At best, it’s “We need to internalize externalities,” which is a reductionist way of putting the problem in the old paradigm. And that’s progress, so that’s good.

On Fullerton’s Eight Principles of Systemic Health

Daniel Christian Wahl | You honed in on eight principles. Could you sum them up briefly?

John Fullerton | I think the most important thing about my eight principles is really not my eight principles, but the idea of principles! The idea of principles is that there are patterns and principles of living systems, observed by the giants of living system science. It’s not like they’ve all agreed that there are these eight principles, but if you were to show them my eight principles or whatever eight principles you would come up with, there would be this broad consensus that, yes, these patterns and principles roughly describe our understanding of living systems.

So, the first thing that came to me was this need for principles. It’s a North Star, a roadmap. Maybe the word “qualities” is more accurate. Qualities doesn’t challenge people. It doesn’t have this meaning of, “I’m declaring what truth is.” It’s a less aggressive term.

But there certainly are qualities, like the fractal patterns of living systems and like the symbiotic relationships that are at work in living systems that will make anyone who’s studied them say, “Oh yeah, that’s right.” The real issue is to contextualize them for your purpose. And here’s where—as much as I’m a believer that there are universal principles—for some reason, those universal principles show up differently in different contexts.

As a friend of mine says—I think it comes from Buddhism—there are all sorts of fingers pointing at the moon. My eight principles are my fingers pointing at the moon, but we can’t confuse the fingers with the moon. And so what we’re really trying to do is reduce to as few as possible the patterns, principles, qualities—whatever word we want to choose—that allow us to see things through this regenerative lens.

I can spend an hour talking about each one of these eight principles because they all operate at many, many different levels. For example, one of them I use is called “in right relationship,” which is a Quaker term that I got from Peter Brown. He actually wrote a book called In Right Relationship. That relationship point operates at a planetary scale; the right relationship between planet Earth and the Sun is the reason why we have life on this earth. And so that’s a quality that is manifestly true. And yet it also operates certainly down to the micro-scale, the cellular level; the relationship between the cells in our body is essential to our health. And if that relationship is not symbiotic and healthy, we can’t be healthy. And if we’re living systems, and the planet is a living system, why wouldn’t the human economy also be a living system? And why wouldn’t that same quality of symbiotic relationships operate at the level of the human economy?

You can drill down on each of these principles individually, but the power of the principles is not each of them individually; the real power is in all the principles operating concurrently.

1. In Right Relationship — Humanity is an integral part of an interconnected web of life in which there is no real separation between “us” and “it.”

2. Views Wealth Holistically — True wealth is not merely money in the bank. It must be defined and managed in terms of the wellbeing of the whole, achieved through the harmonization of multiple kinds of wealth or capital, including social, cultural, living, and experiential.
3. Innovative, Adaptive, Responsive — In a world in which change is both ever-present and accelerating, the qualities of innovation and adaptability are critical to health.
4. Empowered Participation — In an interdependent system, fitness comes from contributing in some way to the health of the whole. The quality of empowered participation means that all parts must be “in relationship” with the larger whole in ways that not only empower them to negotiate for their own needs but also enable them to add their unique contribution towards the health and well-being of the larger wholes in which they are embedded.
5. Honors Community and Place — Each human community consists of a mosaic of peoples, traditions, beliefs, and institutions uniquely shaped by long-term pressures of geography, human history, culture, local environment, and changing human needs.
6. Edge Effect Abundance — Creativity and abundance flourish synergistically at the “edges” of systems, where the bonds holding the dominant pattern in place are weakest.
7. Robust Circulatory Flow — Just as human health depends on the robust circulation of oxygen, nutrients, etc., so too does economic health depend on robust circulatory flows of money, information, resources, and goods and services to support exchange, flush toxins, and nourish every cell at every level of our human networks.

8. Seeks Balance — Being in balance is more than just a nice way to be; it is actually essential to systemic health.

If we can align our economies and our businesses with all eight of these principles at all levels of their meaning, then we unlock immense potential that exists that we can’t see today. Exponential growth on a finite planet has ended; it no longer works with seven billion people, going on 10 or 12 billion. Given the footprint of the global economy and the current state of overconsumption, we need a new source of prosperity. And the reason that people won’t accept the idea of limits to growth is because they know subconsciously that it means depression.

So if we’re going to transition the global economy and survive as a species, we need to find ourselves a new source of prosperity—not just for humanity, but for all living beings. We need to figure out a way for humans to coexist on this planet and be prosperous however we define that. The traditional left-leaning etiology says, “We just need to redistribute wealth and everything will be good.” But it’s not that simple. We actually need an ongoing source of new prosperity, which is the way living systems work. And I believe with all my heart, and I’m dedicating my life to this idea, that if we can shift the human economy into alignment with these eight principles, or something that looks like these eight principles, we will unleash immense potential that we don’t know exists today.

On Regenerative Economy

Daniel Christian Wahl | I would love for you to reflect on why you think that bio-regional scale is important. How would you envision this new economic structure to be fractal—just like nature is in its dimension—in global trade and a global economy? How can we heal that global economy by re-regionalizing and re-localizing it?

John Fullerton | The idea of local is not a new one, but it does a disservice to the profound importance of this shift away from global and national to bio-regional. Bio-regional is a concept in which the geological facts that are not changing anytime soon—a river system, a mountain range, an ocean, a coastal plain—come into contact with human culture. So the context here is human economy and geological facts and the nature that they enable. And human culture comes into contact at a bio-regional scale. Wherever you live or wherever you call home, you can get a vision of what’s unique about that place that is different from other places. And if people have a choice, they tend to move to a place that is either what they know, because that’s where they grew up, or what they are attracted to for some almost spiritual reasons. Some people are attracted to mountains, some people are attracted to the ocean, etc.

To me, it is the sort of self-evident truth that it is where living human systems are grounded. And our global economy and our global capitalism and our pursuit of efficiency has run roughshod over that reality. And so even the idea of a nation state grew out of a different paradigm that has nothing to do with how do we operate in right relationship with this living planet.