Economy

"Our human destiny is inextricably linked to the actions of all other living things. Respecting this principle is the fundamental challenge in changing the nature of business."
- Paul Hawken, The Ecology of Commerce

 

The Economists' Celebration 

Paris, December, 2012

The whole room was swinging with the sensual rhythms of the gypsy violin as Bo Larsson and his fellow economists enjoyed a well-deserved evening of dancing, singing and jazz at Le Hot Club Grappelli, on the Rue de Rivoli in the heart of Paris. They were exultant.

What a triumph! On Monday, Bo had been the proud recipient of the Nobel Prize for Economic Sciences for his work in cobudgeting, awarded by King Carl Gustav in the grandeur of Stockholm's beautiful Concert Hall, with all of Sweden watching. On Tuesday he had addressed the European Union's Council of Ministers in Brussels, and yesterday he had been treated to a private lunch at one of Paris's top restaurants with Marcel Duceppe, the French Minister of Finance. All week long the European financial media had been chasing him for interviews.

The economists' good humour gave Le Hot Club that extra charge, bringing out the best in the musicians. Bo's wife Dagmar was sitting across from him, playing footsie with him under the table while he told his fellow economists about his lunch with Duceppe, laughing at how little the minister knew about the principles of integrative and disintegrative budgeting. Speaking in Swedish, they felt free to be outrageously rude, knowing that hardly anyone in France understood Swedish.

Bo and Dagmar were in their early forties, and brought a much appreciated glamour to the economists' social circle. After years of being the butt of such jokes as "Why did so-and-so become an economist? Because he lacked the charisma to become an accountant," or "Why did God make economists? To make weather-forecasters look exciting," it felt good to have done something so radical that they had become the envy of the academic crowd. Watching Dagmar flick her blond hair back while flirting with the lead violinist made up for all the years of Swedish philosophers sneering at them, saying (for the hundredth time), "An economist is a man who knows a hundred ways to make love, but doesn't know any women." Well, guess who was laughing now - and to rub it in, cobudgeting was grounded in the most exciting breakthrough in philosophy since Descartes announced the birth of dualism with his Discourse on Method and unceremoniously dumped integrative thinking into the Seine almost 400 years ago.

To tell the truth, cobudgeting had not started with Bo Larssen's interest in integrative philosophy and syntropy theory. It had started with Bo's step-son Tord, Dagmar's son by her first marriage. As teenagers, Dagmar and her first husband had been heavy drinkers, with the tragic result that their son Tord was born with fetal alcohol syndrome (alcohol poisoning of the fetus), though it was not diagnosed until he was six years old. When Tord was four, Dagmar divorced her husband, joined Alcoholics Anonymous, and then fell in love with Bo. Bo took an immediate liking to Tord, but sensed there was something seriously wrong, for while Tord was very affectionate, he was slow to learn, impulsive, and easily influenced by his friends, who used to enjoy getting him into trouble.

As an economist, Bo specialized in full (or social) cost accounting, the difficult art of measuring the hidden costs of things such as air pollution or inadequate childhood diet, and bringing them into the open. It had always frustrated him that for the lack of a relatively small expenditure at the beginning of a problem, there were often such enormous costs at the end. If only he could find a way to link the two ends together, and allow the principles of investment and return to work in the social realm, the same way that they did in the business realm.

Tord's difficulties fuelled Bo' frustration. Digging into the research on fetal alcohol syndrome, he discovered that as many as twenty percent of the occupants of Europe's prisons were believed to be victims of the syndrome, costing the taxpayers enormous sums of money every year to pay for the crime, the legal costs, the time in prison and the subsequent rehabilitation. If as little as 1 percent of these costs could be spent on pre-natal education and alcohol counselling, much of those expenditures could be avoided, generating potentially massive returns. If only he could demonstrate the budgetary connections in such a way that it would entice investors to finance the front-end expenditures. The disintegrative nature of traditional budgeting lay at the root of the problem, breaking the deeper connections.

Bo was struggling with the problem in 2006 when he, Dagmar and Tord took a holiday in Tuscany. Bo took some reading to catch up on, including the bestseller Syntropy by Jean-Marc Kharoun and Elizabeth Mitchell, which was the talk of the world. Syntropy was the newly discovered tendency of all consciousness to seek organization and integration, the mirror-image of entropy, which was the well-known tendency of matter and energy to become disorganized. It was syntropy that provided evolution's fuel as it groped its way towards greater consciousness and wholeness. It was syntropy that inspired the eternal tango between hope and defeat, spiritual drive and material decay. By placing consciousness firmly at the heart of all that exists, Kharoun and Mitchell re-integrated consciousness into the heart of reality, not just in physics and the life sciences, but within the human spirit.

Bo was enthralled. This tension between syntropy and entropy was the very same tension he was struggling with in his budgetary problems. Surely, he thought, as he gazed on Tuscany's peaceful villas and distant hills, disintegrative budgeting was just another reflection of social entropy. What was needed, he realized with a flash, was syntropic budgeting, integrative budgeting - budgeting which would start from the premise that all things were connected and would go on to construct an entire assemblage of connections, linking the previously isolated departments. All over the world, governments put "law and order" in one department and "social welfare" in another; "environmental protection" in one department and "health" in another, when their natural state was connection, not separation. Looking up at the brilliant blue of the Italian summer sky, Bo knew that it could be done, and that he would be the one to do it.

Back amidst the falling leaves of Stockholm's autumn, he immersed himself in the world of chaos theory, meta-organizational principles, and integrational software programs. To anyone outside the enclosed world of the university economics department, it would have appeared incomprehensible, but as Bo worked, he kept a photo of Tord on his desk to remind him that he was working both for Tord and for the millions of Tords all over the world, wherever the inefficiencies of disintegrative budgeting undermined the principles of social and ecological wholeness.

In the spring of 2008 he presented his work to the Swedish Ministry of Finance, and that fall the government set up a pilot project linking the budget for crime and prisons to the budget for youth and community development. Swedish studies indicated that for every krone invested in community development and youth projects, seven krone could be saved in prison and legal costs. By linking the budgets through an integrative loop, an expenditure in one department could be turned into a saving in the other, and an investment could be made to generate a return. Once the process was in place, the government invited the public to invest $100 million in social bonds, with the promise of a good long-term return on their investment, potentially as high as 700 percent over twenty years, reflecting the sevenfold nature of the losses that occurred through disintegrative budgeting. Suddenly the sleepy world of budgetary finance was awake with incoming e-mails, and long before the investments had a chance to render their returns, people were paying attention.

Over the next three years the principles of cobudgeting were extended to other departments. In addition to social bonds, Swedish investors were able to purchase health bonds, family bonds and ecological bonds, the money from which was used to finance investments in a range of projects designed to heal a certain aspect of society. For a relatively small investment in making the homes of elderly people safe against falls, for instance, investors could enjoy a 300 percent return on the budget savings from avoided accidents and their associated medical costs.

Sitting that night with his wife and friends in Le Hot Club Grappelli, Bo knew that even while they celebrated, the social bonds he and Dagmar had purchased were paying for the additional help that Tord needed in school, to protect him from his fetal alcohol impulsiveness. Across the world, in the watersheds of Washington and British Columbia, ecological bonds were financing the restoration of salmon stocks, while in Alabama and Texas, family bonds were being used to finance pre-marital relationship courses for young couples, to increase their chance of enjoying stable, successful marriages. He felt proud that his work was being recognized around the world. The night was young, and the music was good. He had worked hard to earn this. "Hej - Dagmar, Jan, Kerstin. Hej - Eric ! Skol ! Here's to all those boring Swedish philosophers !" And they laughed together, raising their glasses of ice-cocktail guava juice.

*****

Notes

I have coined the word "cobudgeting," but I do not know of any country where the idea is being practiced yet. It is widely accepted that a dollar spent on programs for youth at risk saves $7 in prison and legal costs - and that's not counting the emotional and personal costs to the teenagers and their families, or the victims of their crimes. Similarly, a dollar spent on measures that prevent older people from falling saves $11 on medical bills. Once we start thinking in terms of wholeness, there are many synergies and positive mechanisms which can work to the benefit of humans, nature and the planet.

***

First published in Earthfuture: Stories from a Sustainable World, by Guy Dauncey (New Society Publishers, 1999). (www.earthfuture.com/earthfuture)

About the author

Guy Dauncey is an author, organizer and sustainable communities consultant who specializes in developing a positive vision of an environmentally sustainable future, and translating that vision into action. He is the author of Stormy Weather : 101 Solutions to Global Climate Change (New Society Publishers, July 2001), and ‘A Sustainable Energy Plan for the US’ (Earth Island Journal, August 2003). He is also the publisher of EcoNews (a monthly newsletter), co-founder of the Victoria Car-Share Cooperative, and a consultant in ecovillage and green building development. He lives in Victoria, on the west coast of Canada.

His website is www.earthfuture.com