Wait — isn’t economics over most people’s heads — and beyond our control anyways? Well, the 2016 Presidential campaign has made it quite clear that many many Americans are deeply affected and concerned by economics. No less so than in the campaign of 1992, when “It’s the economy, stupid,” was a hit slogan. No less than ecology, economy affects us all.
Previewing what I call the New Economy, it’s hard for me to resist telling a tale of the worst of times versus the best. Hard to resist, for a writer, because conflict always yields drama. Certainly, there’s enough gloom to becloud the sunniest of days. For instance, now that the world is moving from ZIRP (zero interest rates) to NIRP (negative interest rates), Bill Gross, who’d headed what was the world’s largest bond fund, called this “a supernova that will explode one day.” It’s a vivid image, for sure, even if implosion might be technically more correct. Maybe musical chairs might be an apt symbol. The fear is that if the global economy’s music grinds to a halt, there will be less chairs next time. (Oops!)
But I won’t go into the vagaries of derivatives or credit default swaps here, nor fractional reserve banking nor high frequency trading, or any of that. Just think: debt. I keep coming back to 2008 as a watershed. The Big Short, both the book and the movie did as good a job as any presenting the complex crisis of current economic assumptions. (Selena Gomez explaining Collateralized Debt Obligations [CDOs] alone was worth the price of the ticket.) Less known is how diverse glimpses of a viable, socially engaged new economy coalesced around that same time, now shaping up to be a trillion dollar market.
It’s little wonder, really. With the financial sector having taken up such an enormous part of America’s economic pie, (the “financialization” of our post-industrial economy), many realized by 2008 that innovative, solid, emerging alternatives are vital if a viable future is to be possible. Here we have such tangible, viable valuables as sustainable agriculture, clean energy, inclusivity, and local economics. Here the traditional capitalist Bottom Line is expanded into a triple metric: profits ... people ... and the planet.
This nascent next economy is making more and more appearances in mainstream media. Frankly, I initially explored the next economy only last year, while writing a column called Deeper Wealth, “on the intersection of the spiritual and the financial” for Dow Theory Letters, the longest-running financial newsletter in the USA, and to which I still subscribe. I also discovered that, since 2008, this new sector holds its premiere pow-wow, SOCAP, “at the intersection of money and meaning,” in San Francisco, my own home town.
This month, San Francisco’s reconverted military facility, Fort Mason, will host ±2500 people — activists and investors, faith leaders and entrepreneurs — coming together from around the world, for four days of panels and face-to-face information exchange. The name of this annual summit, SOCAP, is an acronym for “social capital.” It’s a simple concept: economics doesn’t occur in a vacuum; economics invisibly shapes the societies in which it operates, for well or ill. Business and finance can drive environmental and social missions. SOCAP invites us to consider what kind of society we’d like to live in — what kind of world we leave for our grandchildren, and their grandchildren — — and how to invest our time and resources in that vision, with others.
Starting September, September 12, (mark your calendars), I’ll be presenting The Huffington Post community with exclusive coverage of news from SOCAP16. Meanwhile, I’d like to round out this initial preview with a contextual historical frame, plus a striking image for your consideration.
To be sure, impact investing didn’t spring forth from 2008 like Venus from a half-shell. Historically, there had already been response amongst those concerned about the moral implications of their money. For example, besides venerable practices of America’s First Peoples, there’s also those of Quakers (who never participated in the slave trade, and stayed away from companies involved in guns, liquor, and tobacco), and Muslims (who don’t believe in debt), among others. More recently, this trend can be commonly found under a variety of acronyms: CSR (Corporate Social Responsibility); ESG (Environmental, Social, and Governance guidelines); and SRI (Socially Responsible Investing, now renaming itself Social Responsible Impact, to align with the impact investment movement.)
It appears to me that until 2008 the approach was screening: to screen out what not to invest in, while also focusing on what positive moral, spiritual, and socially engaged effects our investments could potentially have (in a word, their impact). This latter aspect of positive solutions seems to have noticeably come to the fore in 2008. Like the acronyms, it also operates under various names: values investing, green investing, sustainable investing, impact investing, social capital, ethonomics. A new economy.
This lack of any standard name reminds me of the sweet spot of 1990, when what we now know as the Internet went by a number of names: the Information Superhighway, cyberspace, etc. Moreover, this nameless protoplasmic vitality resonates with an even larger, contemporary, robust vector of change without any single name, which environmentalist, entrepreneur, and author Paul Hawken has called “the largest social movement in history ... restoring grace, justice, and beauty to the world.” It’s all been taking place under the radar of mainstream politics and media, but The Huffington Post is on the case. (Stay tuned.)
Meanwhile here’s an image to contemplate. And it’s not of exploding supernovas. At the tail end of last year’s Socap, the very last of the presenters stood up on stage and said he wanted to make it clear we were all here to prevent something from ever happening again. He opened up his wallet, and held up a dollar bill by two corners, for all to see. Then, Ppffffftttt!!!, he tore the bill in two, and shoved one half in one jeans pocket, and the other half in the other. “Once and for all,” he explained, “no longer will we need to ever do this again: separating our financial and our philanthropic investments.” The audience got it, and applauded.
I’m withholding the speaker’s name since it’s illegal to destroy currency. But his point is marvelous. Up until now, whether it’s government spending (mandate), nonprofit endowment (mission), or private investment (margin) — the assumption is that money that’s invested for profit is separate from how it’s applied for a better world. To me, that worldview is like a thief running a Ponzi scheme who also donates some of the rip-off to charitable causes. Absurd, but true.
As for any tale of two economies, we may indeed be living in precarious times. Only time will tell how seriously so. I prefer taking the middle path between extremes, and with a positive direction. I’ve found people committed to the New Economy don’t have time, really, to enumerate all the dreadful ways the current model is broken: they’re too busy happily establishing positive solutions. That’s yet another good reason I find it such a vibrant sector. I hope you join in as I report from the field.
To quote one of my favorite lines from Citizen Kane: “It’s no trick to make a lot of money ... if all you want is to make a lot of money.”