Our economic system is no longer working and what is required is a radical rethink of private, public and philanthropic investment
In 1901 Andrew Carnegie published an essay titled Gospel of Wealth which would become the touchstone of the great American philanthropic tradition. He concludes his essay believing he had found a cure for poverty requiring no major change in the economic system:
Thus is the problem of Rich and Poor to be solved. The laws of accumulation will be left free; the laws of distribution free. Individualism will continue, but the millionaire will be but a trustee for the poor; entrusted for a season with a great part of the increased wealth of the community, but administering it for the community far better than it could or would have done for itself. The best minds will thus have reached a stage in the development of the race… thoughtful and earnest men into whose hands it (the wealth) flows… by using it year by year for the general good.
This model remains largely unchanged a century later: unbridled global competition in our growth-obsessed capitalist world, when paired with compassionate philanthropy administered wisely, will solve the inequities and other undesirable consequences of our economic system.
Private impact investors and leading-edge philanthropists are defining this critical shift through innovative and holistic approaches
It could be argued, though, that the model is flawed. What is needed is a holistic rethinking of the problem. Conventional philanthropy is often relegated to sweeping up the mess left in the wake of the expansionist, global economy. This often excludes a majority of the world’s population from sharing in its wealth-creating benefits and systematically, although usually unintentionally, causing environmental destruction. Human health too has been impacted from the dumping of chemicals into the environment and our food system. Regulation is an important but inadequate tool for the scale of the challenge. It is a system-design problem that demands new thinking.
Fortunately, we have a model that has been tested and refined over 3.8 billion years that provides the design principles we need. This model is called nature and is one which inspired Leonardo DaVinci’s flying machine drawing. For over a decade Janine Benyus and her colleagues at The Biomimicry Institute have been teaching some of the world’s leading corporations to integrate nature’s principles into their designs, products and processes.
Much has changed since Carnegie built his steel empire to feed the expansionist industrial era a century ago. Today we have a new scientific understanding of how the world’s biochemical systems operate, and how they connect. The much larger human economy, which scientists estimate has an ‘ecological footprint’ which consumes half of what the earth can naturally replenish, is embedded in, not separate from, these natural systems as we thought in Carnegie’s day.
This demands fresh thinking about the purpose of financial capital – both investment capital and philanthropic capital. Investment of all kinds – private, public, philanthropic – is the bridge to the economic system of the future. It is urgent that all investment supports the shift to a regenerative and resilient economic system that mimics nature in order to ease the burden we place on the tool of regulation. The Capital Institute’s Field Guide to Investing in a Resilient Economy tells the story of such regenerative investment. Private impact investors and leading philanthropists who deploy the tool of grant making while also using the full power of their endowment to invest in ‘mission-related investments’ are defining this critical shift through innovative and holistic approaches. To be most effective, they often involve cooperation across the private, public and philanthropic sectors of the economy, mimicking nature’s ‘edge effect’ where the creative and regenerative force of life resides. An example is where rivers flow into wetlands at the edge of the sea.
Nature is sustainable because it is regenerative. The challenge of today’s capitalists and philanthropists is to lead the transition from the current degenerative financialisation of capitalism to regenerative capitalism. Such a system demands a humble retreat of capital from master to servant, in support of an economy that operates within the finite boundaries of the planet while generating a broadly shared human prosperity.