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by Bennet Zelner

The centralized, disconnected pattern of our current economic systems facilitates the extraction of resources from individuals and communities to support the interests of one group – financial investors – above all others.

Giant corporations beholden to Wall St. have displaced local businesses on Main Street. The bulk of the economic value produced in local communities has been extracted by a remote set of corporate shareholders. The extraction of this financial capital means that it is no longer able to recirculate in local communities to fuel local investment. 

Just as shareholders are disconnected from the communities from which they extract financial returns from, corporate decision-makers – managers – are disconnected from the local ecosystems whose resources they’re making decisions about. Because managers are not embedded directly in these ecosystems – and because their primary incentive is to maximize shareholder profit – they make decisions about how to use local resources that don’t account for the health of these resources and their ability to regenerate themselves in the future. This is true not just for natural resources such as plants, air, and water; it is also true for human resources.

If we look at evidence from across countries, there exists a distinct correlation between income inequality on the one hand, and measures of both mental illness and addiction on other. This pattern reflects the combined, interactive effects of the extraction of financial and human capital. 

The extraction of social capital – the depletion of social networks – impairs the foundation of local economic activity, because such activity depends on dense social networks.

So we’ve got these multiple extractive processes facilitated by different forms of disconnection. The core problem is the disconnected, centralized pattern of relations that characterizes the economic and social systems supporting our individual and collective well-being. The solution is a pattern shift – a shift to a distributed, connected pattern, in which dense relational networks facilitate the metabolic recirculation of resources in order to support individual and collective well-being, and the ability of our systems to regenerate themselves. 

Shifting the pattern is challenging because the systems we have established sustain themselves through institutional structures that support the extractive pattern and impede the emergence of a regenerative one. 

Financing mechanisms that prioritize investor interests over all others are fundamentally incompatible with the metabolic, recirculatory resource flows that define regenerative approaches. Hockey stick returns and quick exits are fundamentally incompatible with regenerative approaches. Businesses that are beholden to traditional investor pressures thus face a major challenge in trying to emerge regenerative approaches.

So if we’re really serious about promoting the emergence of regenerative approaches, we need to develop a new, alternative business ecosystem that provides a container in which this emergence can happen. 

 

Bennet A. Zelner (Ph.D., University of California, Berkeley, 2001) is a professor at the Robert H. Smith School of Business.  His primary interests include inclusive models of economic development, distributed governance, regenerative economics, and mental healthcare delivery.