Donut Economics

 I came across an article about donut economics and I really really really like it as a concept and way to think about HOW we organize and to what end.

Here is the link: https://time.com/5930093/amsterdam-doughnut-economics/

Basically – there is level of ecological sustainability that we cannot surpass without killing ourselves.

There is also a bottom level of social sustainability (basically poverty) below which people can’t participate in society.

The goal is to have everyone living inside the donut hole space where we have both social sustainability and ecological sustainability.

Humanistic Management and Humanistic Capitalism

If you read my blog you know that I am an advocate for both humanistic management and humanistic capitalism. http://humanisthappiness.blogspot.com/search?q=capitalism

Demand drives the economy. Capitalism only works as a way to efficiently distribute resources if people CAN participate in the economy. If they can't, because they are too poor to or because they are excluded by discriminatory laws, then capitalism simply doesn't work. 

We need to be looking for ways to both eliminate poverty, but do so in a way that makes sure we don't overload our ecosystem. 

To me, it is pro-capitalist to have a social safety net. It is pro-capitalism to ensure ecological and environmental justice.  We must start rejecting the either/or false dichotomies and start looking for ways to help people and help the environment because doing both, will help the economy. 

Why am I talking about this so much?

Because as people concerned with humanistic management and humanistic leadership, we have an obligation to be leaders in this area. Our collective individual decisions is what leads to the big decisions. 

We absolutely must find the courage and the language to argue for sustainability and all that that means. We must start making the business case for this. Or nothing will change. 

Learn more: 

If you are in a leadership position and want to learn how to make better decisions consistent with the reality we all face - take my  Reality Based Decision Making Course: https://humanistlearning.com/realitybaseddecisionmaking/

If you want a more comprehensive leadership mindset shift - become a Certified Humanistic Leadership Professional. https://humanistlearning.com/certified-humanistic-leadership-professional/

Coffee and capitalism - the need for a humanistic model

File this under - why humanistic capitalism MUST become the norm.

Turns out - the story of how coffee became the drink of capitalist societies has everything to do with exploitation of workers.  And yes - every time I write that I think - wait - have I become a communist?  No. I have not. I am a humanist and I believe in the benefits of market economies.  The problem is and has been that our market economies are rarely capitalistic let alone humanistic.

The Atlantic magazine had a really interesting article by Michael Pollan reviewing a book by Augustine Sedgewick about Coffee and Capitalism. The book is called - Coffeeland. https://www.theatlantic.com/magazine/archive/2020/04/michael-pollan-coffee/606805/

What has coffee got to do with capitalism?  Well - workers would lag in the afternoon. Because - it's siesta time and our circadian rhythms naturally want to take a break and relax.

To fix that - workers decided they needed a coffee break and business owners agreed. Give people a break and allow them to take a drug - a stimulant and - magically - productivity in the afternoon increases. 

The problem is - growing enough coffee to keep workers working. Coffee is a stimulant. It allows owners to get more work out of their employees.

In order to grow coffee - they need workers and the places that grow coffee - turns out - the people who lived there - had no need to work for a coffee plantation. They were self sufficient in terms of food production.  In order to get locals to work on the coffee plantations - they had to impoverish the local population otherwise they had no reason to work on the coffee plantations. 

To do that - they privatized the land and instituted totalitarian monoculture - because as long as there was free food growing all around them - people had no incentive to work. Planned and intentional hunger was a pre-requisite for the coffee economy to function at all.  The result - brutal oligarchy in El Salvador (where a lot of coffee was grown), diminished eco-systems and exploited and starving people who were only starving because that is what the oligarchs needed to keep control of their workforce which had gone from sustainable ecosystems to exploited worker.

A Humanistic Perspective: 

A Humanistic vision for the economy is how do we help people flourish.  The answer - exploiting people not only isn't necessary - it's counter productive. Exploitation is only necessary if you want to control people and not share the wealth. It’s bad for people, it’s bad for the economy, it’s bad for the environment.

I have been a human rights advocate and worker - since I was in my teens and able to volunteer. What happened in El Salvador was brutal. And it was brutal because it wasn't a fair market economy. It was built by exploitation to sell a product to other business owners so they could exploit their workers.

We need to get the idea of exploitation as necessary out of our heads.  Capitalism is driven by demand. But it must be community demand. If an individual demands the right to exploit others to create personal wealth - understand - that person - is NOT a job creator. They are a psychopath posing as a business person. 

Imagine how different the world would be if humanistic economies were the norm. We would still have market economies. We would still have the innovations that market economies demand and therefore create. What we wouldn't have - is all this intentional and constructed suffering. 

Because honestly - if your business can only function if people starve - then something is wrong with your business. 

Our basic understanding about how the economy works - is wrong.

It’s not supply and demand – it’s demand and supply.

One of the blogs I really like to read is Evonomics. They have a really great essay on an arabic economist from the 14th century and highlight the similarities and difference between him and Adam Smith - who is usually the person western textbooks cite as the - father of modern economics. Here is the article - https://evonomics.com/amazing-north-african-scholar-beat-adam-smith-half-millennium/ 

To quote the article: "The invention of supply and demand analysis wasn’t invented in the 19th century: the Islamic scholar also described the relationship of demand and supply, and also took the role of inventories and merchandise trade into account."

There are some important things to learn from his work.

1) Demand matters. Creating demand is what creates the market. When supply side people say - we need to create a supply - they are missing something important - that is the customer. Without the customer - there is no demand for the supplies.

2) The government matters. Particularly - taxation matters. Taxation helps create civilization. Government helps people see themselves as a united group - which allows commerce to happen since we tend to want to trade with people - we view as friendly. This is expensive and requires money.  Money to build the infrastructure that allows all that trade to occur. 

The government is also one of the biggest creators of demand!  And this is true in most countries. The government hires more people than - pretty much anything else and spends more money than anything else. We don't need government to get out of the way - as much as we need government to use it's purchasing power for good - and not evil.

3) Greed/Hoarding wealth is bad. Basically - greed is what brings the downfall of the civilization.   Khaldun’s words are telling: “dynasty and government serve as the world’s greatest marketplace, providing the substance of civilization. Now, if the ruler holds on to property and revenue, or they are lost or not properly used by him, then the property in the possession of the ruler’s entourage will be small. Thus (when they stop spending), business slumps and commercial profits decline because of the shortage of capital”. “ […] Furthermore, money circulates between subjects and ruler, moving back and forth. Now, if the ruler keeps it to himself, it is lost to the subjects” (Khaldun p. 365).

Lowering taxes on rich people, allows the money to be hoarded and when this happens it is lost to the people. And when it is lost to the people, consumption slows and stops - and the economy crashes.

When we consider our current situation we should realist that companies are fine - when consumers are fine.  We don't need to bail out companies. We need to bail out consumers. The whole point of a free market is to allow consumers to decide which companies succeed and fail. Consumers should be deciding that - NOT the government. When governments bail out companies – they are picking winners and losers and interfering in the economy – not supporting it.

When I read the proposals governments put out to fix their faltering economies it really feels like NONE of the people currently running countries have even read The Road to Serfdom by Hayek.  Here’s what they need to know.

Capitalists capitalize on demand. If there is no demand - there is no business. Build up demand by building up consumers - who by the way - are workers - and the economy will work fine on its own. That is the proper role of government.

The other proper role of government is setting standards of behavior so that people aren’t defrauded or the commons ruined. Which brings me to the ecological impact our business activities have.  One of the things the Covid19 shutdown showed people all over the world – is just how much pollution we were creating. Governments can and should be setting pollution standards and NOT allowing businesses to destroy our commons. Commerce and business must start occurring in an ecologically sustainable way! Governments must regulate businesses. Business must become responsible for the pollution they create. Only then, will the pollution problem we all suffer from – be solved.