How to build active value for everyone, everywhere.
In this unique historical moment, it seems worth asking: What does the conventional way of measuring the economic landscape of value exchange leave out, and can we remedy that marginalization without disrupting the institutions we depend on? Put another way: How many living future values are excluded from market prices, how does that erode value in our day-to-day experience, and what can we do to make this right?
The political, economic, and technological trends of the moment suggest answering this question will be the big challenge facing decision-makers at all levels, for many years to come. Many now vocally worry that prevailing market trends are redirecting investment away from the goal of sustaining a broad, inclusive middle class.
Since 1999, I have been working on a way of translating ecological economics broadly into the day-to-day activities that define our experience of work, life, income, and policy. To qualify for this role, the operative analysis must respond to the demand inherent in all ecological processes, and add value to the human space by doing so. This leads to the observation that there is, already inherent in our attempts at optimizing the flow of value, a Generative Organic Optimization Demand (GOOD).
A generative solution to global unsustainability
So, generative economics becomes the policy-design and day-to-day-living goal—if we want to meet the planetary design challenge of reorganizing ourselves to end the worsening global unsustainability crisis.
Another kind of GOOD, then, is the natural playing field for cultivating and expanding the reach of generative economics—Generative Organic Optimizing Dynamics. Instead of focusing on scarcity and deficit, the GOOD-based economics project will now focus on generativity—the affirmative capabilities by which we can expand the resource base through routine activity.
GOOD-driven economics must tie into how markets price goods and services, how we make choices about what has value to us in our personal experience of the world, and how the vast network of our ecological entanglements affect the future landscape of active value and condition improvement potential. Generative economics is a focus on not only what appears valuable in today’s marketplace, but on valuing what underpins sustainable future thriving.
It is critically important to recognize that generative value operates at the human scale. We cannot discount the power and meaning of personal choice, operating at the individual and community level, in determining what happens in every corner of the world. To achieve a meaningful way of valuing this behavior, however, we need to get beyond the notion that value is a zero-sum game.
Ethical-operational entanglements do mean we have a responsibility to find value sustainably and to share it, but that does not mean austerity and consumption avoidance are the optimal (or only) solutions. Optimizing the whole landscape of economic activity is more important, so the areas of value generation the market values structurally (through policy and enterprise) should reinforce both the empowerment and liberation of individuals and communities.
Since the demand for organic generativity is inherent in how we attempt to relate to value at the human scale, looking for and mobilizing generative organic optimizing dynamics (GOOD) can give us new information about what is missing in the way we relate to value at the market level. If we can identify those areas where optimization and generativity are most essential, we can correct hidden market failures and expand routine access to increased value for everyone.
Macro-critical drivers affect the value of everything
Macro-critical drivers of value are those non-price active ingredients in our economy which, despite not being valued as products or commodities, nonetheless determine how much thriving there can be in a given marketplace, over time. We know, for instance, that a nation that persecutes and under-educates girls is more likely to experience violent sectarian conflict than one that does not; education of girls is a macro-critical driver that enhances or degrades the nation’s economic prospects.
On Christmas Eve 2013, the small island nation of St. Vincent and the Grenadines experienced such extreme rainfall in 3 hours that damages amounted to a loss of 15% of GDP. To paraphrase one IMF Executive Director, when you lose 15% of your entire annual economic output in just 3 hours, you realize there is no reliable way to value a unit of currency. Investments that are already priced into the marketplace may end up costing not 15% more, but 30%, 50% or 100% more, depending on their exposure to such risk.
The unprecedented extreme weather caused by climate change is a macro-critical impact that cannot be ignored when one is doing fiscal math.
Beyond education and climate, the subtle but salient difference between spending that is generative (ever more efficient solar technology) and spending that is degenerative (subsidies that deepen dependency on fossil fuels) determines much of our day-to-day experience. Getting the math wrong limits human freedom and access to thriving; getting it right expands both. We can achieve real leverage over the generative tendencies of organic market behavior, by focusing on macro-critical drivers of value.
The Sustainable Development Goals are a map of connections between the macro-dynamic and the micro-experiential. To fully comprehend how climate action, fully equal education access, sustainable cities, and the SDGs generally, can achieve an unprecedented enhancement of the basic human experience of value, capability, and improvement potential, we need to apply a generative economic lens to both the personal and the structural experience of local market dynamics.
We can add GOOD reinforcements (below) to the 17 Sustainable Development Goals and their 169 Targets, to ensure a logic of generative empowerment is operating in the lives of people everywhere. This will not cost more than other investment strategies; in fact, it will optimize investment at all levels.
GOOD reinforcements localize & sustain generative value
Economic cycles as they relate to resources are most often self-reinforcing: a fabric of economic activity reliant on resource-corrosive practices and depletion of generally available stores (or potential output) of goods and services will reinforce the cycle of depletion as it expands; a fabric of economic activity which generates added basic resources for generalized consumption will reinforce the cycle of constructive collaborative improvement as it expands.
So, a GOOD-based economic improvement strategy needs to cultivate and propagate reinforcements of the following kinds:
Biological: First of all are the life-sustaining compounds without which human life is not possible: clean air, clean water and food-borne solid nutrients.
Structural: Next are those structural comforts of the built environment, without which human beings are less able to achieve long life expectancy and educational and professional excellence: shelter, plumbing and heat and electricity.
Intellectual: Then come the intellectual commodities: information, education, technology sufficient for erasing the digital divide.
Political: The hope, then, would be that with these come political liberties: freedom of thought, freedom of assembly, freedom of worship, freedom of the press, freedom from all forms of discrimination, and an enforceable guarantee of voting rights and the right to petition the government for redress of grievances.
Community: Individuals and families tend to be, as economic actors, expressions of Generative Organic Optimization Demand, specifically over and above the four preceding categories of primordial GOOD economic requirements: biological, structural, intellectual, political. Individuals and families are best able to participate in the economic, social and political constellation of influences, when there is community infrastructure allowing for substantive, character-driven interaction at the human scale.
This means opportunities for children to gather, play and compete, safely and without undue ideological pressures or quality-of-life dictation from budget processes, violent crime, resource scarcity or contamination of the environment. Some of these community assets would be: art and music in school, school sports, community-level recreational activities, extracurricular educational opportunities, and clinics, hospitals and other services that guarantee quality affordable on-time medical attention.
Measuring the quality, affordability (as against individual, household and community income) and accessibility of biological, structural, intellectual, political and community infrastructure reinforcements is then necessary to understanding what is actually happening at the human scale, and what innovations, incentives and/or collaborative initiatives would build resiliency and mutual thriving into the human experience of a given community.
Valuing operative abundance
Once we moved beyond the early industrial phase of human economic development, into the knowledge economy, it became possible to tap into resources that constantly expand, as knowledge does. Openness, access, collaboration, and persistent rejuvenation and reinvention of standards, change the resource scarcity question and make it possible to more carefully and precisely value isolated inducements to abundance.
By planning for, tracking, investing in, and expanding the reach of GOOD reinforcements, we can measurably shift the way market structures measure value at the human scale. Getting that right does not undermine anyone’s chances of success; instead, it decentralizes economic influence and adds generative capacity everywhere across the economy. GOOD-based economics will make the difference between a deepening of the dominance of scarcity as a rule and reliable intelligent access to operative abundance.