#9: System Change - Part 3: Identifying Necessary Systemic Changes
Pathways to Sustainable Society
Post 3 of this series dives further into the details of the Global System Change Framework and explains how it helps to identify necessary systemic changes.
To recap:
The GSC framework is at the core of what makes System Change Investing unique.
The framework is intended to guide the evolution of human systems and society into sustainable forms.
It provides the whole system thinking needed to identify major systemic flaws and helps to guide addressing and resolving them.
As discussed last week, the first part of the GSC framework describes sustainable society at a high level by using the laws of nature. It shows what absolutely will occur on Earth, regardless of what humans think, say or do. This objective reality framework transcends human philosophies, biases and limited perceptions of reality, and thereby helps to overcome debate and facilitate system change progress.
Today we will focus on the second part of the framework:
Sustainable society defined by the laws of nature
Systemic changes needed to achieve it
Actions required to bring about these changes
Clarifying sustainable society at a high level makes it much easier to identify the systemic changes needed to get from here to there. There are many ways that humans could live within the laws of nature (and zero ways that we could live outside of them over the long-term).
In the same way, there are many ways that humanity could move from unsustainable systems and society to sustainable ones. But there also are absolutes on the transition path. Such absolutes also are defined by the laws of nature. These laws perfectly model how sustainable economic, political and other systems function. This helps to define the pathway of evolving current systems into sustainable forms.
As highlighted in these posts, using the laws of nature to guide the evolution of human society can be fairly easily described at a high level. But it can become overwhelming when one dives into the details.
The good news is that a lot of the work has already been done. It’s the strong foundation and unique value proposition on which SCI rests. Such whole system assessments of human society are laid out in the Global System Change books. In these books many necessary systemic changes are discussed and systemic solutions for all major areas of society provided.
Two of the most important overarching systemic changes are
implementing and/or restoring/strengthening democracy
abiding by the rule of law – aligning human law with natural law
Democracy, Media and Technology
As discussed last week, democracy/self-government is an implied operating principle of nature. From a natural rights perspective, democracy is the only sustainable form of government because it is based on the innate human rights to equality and self-government. The alternative, some people ruling others without their consent, implicitly violates natural law. As a result, totalitarian (Russia, China), plutocracy (US) or any other undemocratic form of government always ultimately will fail.
However, as the US Founders well knew, democracy is an unworkable form of government for more than small groups. Citizens usually do not have enough time to study and make well-informed decisions about every issue. As a result, democracy must be implemented through republican forms of government, where elected politicians, often assisted by experts, make decisions that maximize the long-term well-being of society. Obviously, this requires that politicians equally and fairly serve all citizens, a condition that does not exist in the US and many other countries.
Consequently, implementing/restoring/strengthening is of utmost importance if the goal is to create a sustainable society.
Wow, you may think, talk about stretch targets … here is one! You may also wonder how it all relates to business and System Change Investing.
And yes, obviously, many specific systemic changes are needed in this category. To illustrate, two subcategories related to democracy are
honest media and
beneficial use of technology
Citizens must have honest, accurate information to rule themselves effectively. But vested interest-controlled media routinely provides dishonest, inaccurate information that deceives, divides and disempowers citizens. This makes them unable to work together on their many common interests and effectively rule themselves.
On the tech side, concerns often are raised about the destructive potential of AI, genetic engineering and other technologies. Securing democracy is the most important aspect of technology. AI and many other technologies can be used in ways to greatly benefit or greatly harm society. The key issue is who controls them. True democratic government would ensure that all technologies are used in ways that only help and do not harm society. Unfortunately, democracy largely does not exist in the US and many other countries. When vested interests control government, technology potentially is used in ways that help them, but harm others.
As a result, SCI ratings favor companies that proactively, collaboratively and effectively promote the systemic changes needed to achieve sustainable society. In the democracy category, these include promoting honest media, beneficial use and control of technology, and ensuring that citizens have equal access to and influence over government.
The Rule of Law – Aligning Human Law with Natural Law – Do No Harm
Human laws allow extensive environmental, social and other types of harm. This does not occur in nature. There are consequences for harm. Abiding by the laws of nature means in part aligning human laws with natural laws. There are no free lunches. Individuals and companies are held fully responsible for harm, as occurs in nature.
From a corporate and financial sector perspective, the rule of law is the most effective way to frame up economic and political reform. This principle says that individuals and companies should be free to do what they want, provided that they do not harm others. As discussed throughout the SCI posts, the meta economic and political system flaw is the failure to hold companies fully responsible for negative environmental and social impacts. In competitive markets, allowing harm often compels companies to cause it. There are many specific system flaws that cause harm. They all have the common fundamental problem of not holding companies fully responsible.
The rule of law is an ideal system change framing device because it is objective. It transcends philosophies, biases and vested interest deceptions. Companies cannot logically argue that they should be allowed to profit by degrading the environment and society.
This principle boils system change down to one simple meta solution – hold companies fully responsible for negative impacts.
It can guide specific system changes, such as reforming externalities, time value of money and limited liability. We will know that these and other systems are reformed and sustainable when they hold companies fully responsible.
Consequently, SCI ratings favor companies collaboratively seeking systemic changes that hold businesses fully responsible for negative impacts. There are many specific system flaws that fail to hold companies fully responsible. Whole system SCI models assess corporate performance on addressing these flaws.
GSC illuminates system change greenwashing
Clarifying necessary systemic changes facilitates the development of effective responsible investing and corporate sustainability strategies by showing the optimal corporate role in system change. This enables accurate corporate system change analysis, in part by illuminating system change greenwashing.
As investors realize that system change is the most important (and therefore most financially relevant) sustainability issue, they will shift investments to system change leaders. As occurred with ESG, some companies will seek to falsely position themselves as system change leaders (i.e. greenwash). Understanding necessary systemic changes enables SCI analysts to assess whether companies are system change greenwashing or effectively promoting essential systemic changes.
Next week we will discuss part 3 of the GSC framework and focus on the actions needed in all major areas of society to bring about necessary systemic changes and achieve sustainable society.