Entries in economics (15)


Mutuality reading recommendations

Mutuality is a concept that many are exploring, from various angles and under diverse names. We are interested in exploring the work of those outside of Catalyst who are applying their knowledge and efforts to develop these ideas.  Two authors have recently been recommended to us:

  1. Peter J. Boettke  is the Deputy Director of the James M. Buchanan Center for Political Economy, a Senior Research Fellow at the Mercatus Center, and a professor in the economics department at George Mason University.  Boettke is particularly interested in interdisciplinary work integrating politics, philosophy and economics.  He is associated with the Global Prosperity Initiative (GPI), which was founded to explore through ethnography and economic theory why some nations prosper while others are poor.  In addition to his published books and articles, his commentary can also be found here.
  2. Harry Barkema is a professor of management at the London School of Economics. Professor Barkema is also the founding Director of the Innovation Co-Creation Lab (ICCL) where currently 20 people work on fundamental research and teaching (MSc, PhD, Executive education). This research includes; how to design innovative teams, innovation communities around websites, innovative science parks & corporate campuses, and successful business model innovation in close cooperation with companies. One set of new initiatives focuses on business model innovation at the base of the pyramid (BOP), in cooperation with multinational corporations, NGOs, and local businesses in South East Asia, Sub-Saharan Africa, and South America.

-- Bruno Roche


Holism, a new economic approach to address world issues

Image Source: Huffington PostA recent article in The Guardian explores a new report released by U.S. think tank Capital Institute, which we find to be very interesting. The report suggests that a holistic approach to the economy is vital in order to avoid social, environmental and economic collapse. The institute argues that the world needs to look beyond the standard views of capitalism or socialism, and explore the "hard science of holism" in order to debunk outdated views held by both the left and the right.

Holism, a term coined by author Jan Smuts in his 1926 book, Holism and Evolution, is defined as the tendency in nature to form wholes that are greater than the sum of parts. Under this theory, focusing too closely on the individual parts of an organism could get in the way of understanding the organism as a whole.

Capital Institute founder, former JP Morgan managing director John Fullerton, says:

Society's economic worldview has relied on breaking complex systems down into simpler parts in order to understand and manage them.

For example, a traditional economic view generally views automobile manufacturing separately from the mineral mining, petroleum production and workers on which it relies, relates The Guardian. This runs the risk of overlooking the impact that automobile manufacturing has on the environment, politics and economics in a region. Taking a holistic view, on the other hand, takes into account the entire chain of cause and effect leading both toward and away from automobile manufacturing.

The report warns that the consequences of the current economic worldview are boundless, creating a multitude of challenges ranging from climate change to political instability. The institute argues that what the world needs now is a new systems-based mindset built around the notion of a regenerative economy, focusing on the whole, not the parts.

According to The Guardian, this type of mindset could lead to close analysis of supply chains, investigations of the effects of water use, circular economy initiatives, community economic development work or a host of other sustainability efforts. It also turns long-held beliefs on their head. Rather than approaching global economics from a capitalism-or-socialism perspective, it would approach global economics from a capitalism-and-socialism perspective.

What are your thoughts on the current way of viewing economic systems, and this new notion of taking a holistic approach to the economy?

-- Bruno Roche


Innovation being driven by homegrown 'maker movement' in Africa

So-called makerspaces or hackerspaces are becoming the grassroots hubs for innovation in Africa, according to this recent article in Harvard Business Review by Ndubuisi Ekekwe, the Founder of African Institution of Technology. These open-minded individuals are combining knowledge of local issues with their own expertise and the ubiquity of computer-based tools to carve out their own markets.

Adweek explains that the Maker Movement consists of innovation ecosystems that take a bottom-up approach to the economy, enabling consumers to be engaged in designing and producing the products they'll ultimately buy.

Some examples of the Maker Movement in Africa include HacKIDemia, which empowers makers, typically youths, to solve local challenges and exchange best practices by awarding fellowships to mentors who engage with other makers in their communities. M-PESA, a Kenyan-based online payment system, and BitFinance, an ATM machine enabled for cash, digital money and Bitcoin, are two other examples of made-in-Africa solutions. Beyond the tech space, there is even a Nigerian group that is refining crude oil on a small scale.

Ndubuisi Ekekwe says:

These makers offer a platform for a new economic system that taps into the brainpower of Africans to seed shared prosperity.

With many issues facing the continent - clean water, energy, health care and food processing - these Makers are aiming to create solutions that address these challenges. There is also an opportunity to form partnerships with these makerspaces in an effort to garner insights into new products and offer methods to better reach new customers.


Analysis: where are the lifeboats if global growth starts to sink?

A recent article in the UK Telegraph focuses on the issue of the slowing global economy and asks, what options are left if the current shallow recovery fails?

The author points out that many international organizations have been reassessing and revising downward their estimates for near-term growth; the United Nations is the latest, cutting its 2015 forecast down to 2.8%. That is "only slightly above the 2.5% rate that used to be regarded as a recession for the international system as a whole." And several major economies, including China, are facing headwinds this summer.

I encourage you to look at the detailed data and analysis for yourself, but the message seems clear: the global economy has a thin margin protecting it against any economic shock. And with governments and central banks still addressing the aftermath of the 2008 recession, there are few easy options left.

Which should lead us to expand our efforts to look for new ways to build economic growth.

Image source: The Telegraph

-- Bruno Roche


Jubilee economics

The economy is a complex system, not a series of separate functions -- meaning that initiatives to grow and improve it require systemic approaches. One such approach was outlined in a recent Guardian op-ed.

In that piece, Alex Evans and Richard Gower promote the idea of a new civic campaign -- based on the Jubilee Debt Campaign that helped foster the UN Millennium Development Goals (MDG) in 2000 -- that promotes environmental sustainability and the reduction of economic inequality. The MDG debt campaign has been tremendously successful, as low-income countries’ debt has fallen from 69% of their national income in 2000 to 29% today.

Evans and Gower make the case that the inspiration for the 2000 campaign, the biblical tradition of the Jubilee, involved more than just debt relief.  The Jubilee required resting agricultural lands, granting freedom to all, and re-allocations of long-term assets every 49-50 years. Drawing parallels with the present, they note

"Living within environmental limits, ensuring everyone can meet their basic needs, and keeping inequality from getting out of hand – are at the heart of the sustainable development agenda."

What do you think of this concept? Our Economics of Mutuality initiative is also based on the principle that business can and should create mutual benefits across a full spectrum of measures: financial, social and environmental. We are interested in understanding the most effective way to engage and promote these ideas;  is a civic initiative based on Jubilee traditions the way to go?

-- Bruno Roche