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John Fullerton’s ‘Regenerative Capitalism’: The Shift Our Planet Needs?

The noted economic (re)thinker urges we mimic nature’s systems. He speaks Feb. 19.

By David Beers 11 Feb 2019 | TheTyee.ca

David Beers is founding editor of The Tyee.

John Fullerton, J.P. Morgan’s head of global commodities, found his first-class seat aboard a jet to Singapore, opened his New York Times, scanned all the bad news, and was seized by a realization. The flight carried him on to high-powered business meetings in Asia. But suddenly his heart wanted him home with his wife and young children, and his mind was asking questions deep and difficult.

Why wasn’t capitalism, and its “success now, philanthropy in retirement” model, fixing the world’s big problems? What really mattered in life? What should be his work and passion, if not serving Wall Street’s interests?

That was in 1995. The questions kept nagging until Fullerton left his job in 2001 to embrace an economic philosophy foreign to his high-finance colleagues, a prescription for saving the planet he will share when he speaks in Vancouver the evening of Feb. 19.

Fullerton’s talk is part of the first Global Alliance for Banking on Values, a gathering of banking leaders from around the world committed to advancing social, environmental and economic sustainability. Fullerton’s keynote, open to the public, is presented by Vancity Credit Union.

“Regenerative economics” is a way of thinking about economic assets that borrows from the workings of ecosystems and the human body. Its bottom line is very different from global capitalism’s pursuit of short-term profit by acquiring, depleting and consuming assets. That way of thinking is “extractive,” says Fullerton. And it’s at the heart of global crises today including the vast wealth divide and climate change.

Regenerative economics instead, as its name implies, sees economies as living systems. If they are to be sustainable over long periods of time, they need to honour the patterns of all living systems. Regenerative economics views all assets as parts of a finely-tuned system. They are in healthy relationship to one another, not there to be endlessly exploited. Another word for this is a “living economy,” says Fullerton.

Fullerton, the founder and president of the Capital Institute in Greenwich, Connecticut, did not invent the idea of applying living systems principles to economics. He can trace aspects to such thinkers as Aristotle, Buckminster Fuller and Teilhard de Chardin. But he has become a leading spokesperson by authoring a book titled Regenerative Capitalism: How Universal Principles and Patterns Will Shape Our New Economy and a piece published by the Guardian and others.

By directing “impact investments” driving sustainable uses of land, food and water, he puts into practice on a regular basis the theories of regenerative economics.

It’s a philosophy, Fullerton says in a phone conversation, different from both modern capitalism and socialism, neither of which, he says, can address the big shift humanity faces.

“We’re not just in an era of change,” Fullerton says, “we are going through a change of era. And we don’t yet grasp the scale of it. The last time we went through a change this big it was from the medieval era to the modern. Now we need to make a profound shift in logic about our economy, from reductionist to integrated and holistic thinking.”

What does that mean in the particulars? For starters, “Money isn’t circulating the way we need it to.” In fact, the way banks move money is making societies sick. They siphon it away from local communities and invest it in ways that make them bigger profits in the short term but ultimately starve communities of capital.

“Remember the movie It’s a Wonderful Life?” he asks, citing the 1946 classic starring James Stewart who is portrayed as a hero for ethically running a small town savings and loan. In the film, and commonly in its time, Fullerton says, “The deposits that existed in communities were recycled. Someone puts money in their local bank, which loans it [to] the person down the road with a repair shop.”

Fullerton contrasts that scenario with how huge global banks pretend to be local, but instead act parasitically. Take J.P. Morgan Chase, his old employer, now the largest bank in the U.S. commanding over $2.5 trillion in assets.

“Chase may have a bank in your community, but it’s not committed to reinvesting in your community. Most customer deposits get sucked into the centre of its operation and deployed in a way that optimizes shareholder value. Those deposits are used, for example, to finance credit cards, which requires a sophisticated tech platform beyond the reach of small, community-based banks and savings and loans.

“I’d argue this is extractive and not regenerative. Because the community’s money is used to finance loans made by credit cards, or is invested in hedge funds, or used for a leverage buyout by someone who is going to fire a bunch of people.”

Pension plans are complicit, he says, because many “have got so big. They are supposed to work for long-term welfare of workers, but they end up investing in hedge funds that are in turn invested in ways that destroy jobs while delivering the highest rate of return.”

Fullerton’s critique is reflected in one of eight principles of regenerative economics laid out in his book, in this case the need for “Robust Circulatory Flow.”

“Just as human health depends on the robust circulation of oxygen, nutrients, etc.,” writes Fullerton, “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. The circulation of money and information and the efficient use and reuse of materials are particularly critical to individuals, businesses and economies reaching their regenerative potential.”

When he aims the lens of regenerative economics on the affordable housing crisis in the Vancouver region what does he conclude? “At the heart of the problem is we treat land as a commodity and it’s privatized. We need to acknowledge there is such thing as a commons.” That leads to policies such as land value taxes that discourage speculation, and land trust models in which the land portion of a property is owned in trust and protected from the market dynamics that destroys affordability for many.

Such policies face powerful adversaries among those profiting greatly from the way things are now. Implementing them, therefore, requires forms of governance responsive to democratic participation by citizens of all income levels, not just business leaders. Fullerton uses, again, a human body metaphor, to describe what he calls “empowered participation.”

“Think of your toes and feet. If your body is going to be a sustainable system, your toes have to be able to participate. They need to be exercised, and receive circulated blood and signals from your brain and nervous system. If not, they will die and fall off. Now you can’t walk, and so you get weak and sick. All people have to be able to participate in decision-making about the health of the community. If lower-income and working-class people are driven out by high prices, Fullerton says, “that harms the health of the entire community, including the wealthy.”

Fullerton says he intends his talk on Feb. 19 “to be inspirational and hopeful.” He will make principles of regenerative economics easy to understand, and offer practical applications.

The problems daily reported in the New York Times may not be any less daunting than they were in 1995 when Fullerton, flying high, began to realize he must transform his life by seeking to transform capitalism. But he remains positive, taking solace from diverse sources.

Instagram, for example. Too often we mistake technology for progress, he says. Yet he is encouraged by the success of the social media platform where people post mainly images and videos, noting that it proves humans yearn to connect by sharing positive emotions.

He is proud of his daughter, in her twenties, who works on an organic farm in Australia.

And he’s excited to be working with a highly regarded U.S. university that is overhauling its business school curriculum to incorporate the teaching of regenerative economics.

“It’s really hard to be young right now,” he acknowledges. At this moment of social, technological, environmental and economic upheaval, the key, he says, is striving to find “meaning with a balanced life, valuing things other than money.”

Every once in a while young people ask Fullerton whether they should go to work for Goldman Sachs. This is what he tells them: “If you are asking that, they probably won’t have you. But if they take you, it will be great training. For a while. The reason not to, is they may ruin your soul.’”

John Fullerton will be presenting 'Reimagining Economics' on Tuesday, Feb. 19 at the Vancouver Convention Centre.

This event will also feature a Vancity Community Marketplace, showcasing Vancity members who contribute to social justice and environmental sustainability through their impact business models.

Tickets are $15 and can be purchased here. Use the promo code VCTYEE and get $5 off.

Enter The Tyee's contest (click here) for a chance to win a pair of tickets and a bundle of local business goods. Contest closes midnight on Feb. 13.  [Tyee]

Read more: Local Economy, Politics

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