#28: System Collapse – Risks and Opportunities
Many environmental and human systems are declining rapidly. Collapse of these systems poses major risks and opportunities. The risks of system collapse are obvious – major disruption of business and society. One opportunity of system collapse is the beneficial systemic change likely resulting from it. Another is using the threat of collapse to avoid it in the first place.
Flawed systems are the root causes of climate change and other major challenges. System change is essential for resolving these challenges and ensuring the long-term well-being of business and society. People often resist change. The pain of collapse might be necessary to compel humanity to make essential systemic changes.
Alternatively, we can use the threat of collapse to motivate us to voluntarily change systems before they involuntarily change (collapse). Investing can play a central role in voluntary system change. It is a huge opportunity for investors, business and society. This post discusses system collapse, why it occurs, and the opportunity it provides.
Unprecedented Times
Humanity is living in unprecedented times. Rapidly growing climate change impacts are only one environmental problem. Every major environmental life support system is in rapid decline, with some regional exceptions. Human systems also are declining, as evidenced by high inequality, poverty, migration, political turmoil, public division, and military conflicts or risks in many countries. In the US, we’ve rolled back or eliminated many environmental, human rights, labor and other societal protections built up over the past 50 years.
Stock markets largely continue to rise, in part because some of the brightest people in the world are tasked with making this happen. However, stock price is a collective market opinion. It is not directly tied to any hard number. It largely is an expectation of future performance. But there is no stock market, economy or business without the environment and society. As environmental and social problems continue to rise and investors better understand that the economy is built on an increasingly unstable and declining foundation, expectations of future performance will change and stock market growth will slow or reverse.
Throughout human history, many economic and political systems collapsed, usually quickly (e.g. American and French revolutions, end of US slavery and USSR communism). But system collapse has never occurred in a world that is this crowded, interconnected, and close to many environmental and social tipping points. Modern system collapse could destabilize humanity as never before. This situation poses unprecedented risks and opportunities.
Why Systems Collapse
Current environmental and social problems did not result from coincidence or bad luck. We (humanity) unintentionally created them. Human society is a reflection of human thinking. Essentially every major challenge facing humanity is foundationally caused by our reductionistic, illusory thinking. This myopia produced economic, political, financial and other systems that ignore relevant factors, and thereby produce unintended consequences, such as widespread environmental and social degradation. These systems (and the flawed thinking that created them) are the root causes of essentially all major challenges.
Modern human systems often put humanity in conflict with nature and each other, as well as put business in conflict with society. Reductionistic systems do not hold companies fully responsible for harming the environment and society. This makes it impossible for them to voluntarily stop harm in competitive markets. If they try, they ultimately go out of business.
Modern systems unintentionally demand that companies create climate change and other environmental and social problems. These systems inevitably will change. If we do not voluntarily change them, they will involuntarily change through collapse and unprecedented business and societal disruption.
System collapse usually happens quickly, largely because vested interests oppose system change. This causes negative impacts to accumulate, become overwhelming, and drive rapid collapse. Quickly growing, unprecedented problems show that humanity almost certainly has entered a phase of rapid system collapse.
During collapse, fear and uncertainty often cause reversion to old ideas and actions. This accelerates collapse as actions that failed in the past fail again. Removing environmental and social protections and irrationally blaming problems on the other political party (instead of root causes) are symptomatic of system collapse.
Human Potential
It’s clear that environmental, social, and other system collapse is a major risk. But why is it an opportunity? Comparing human society to nature shows that we can be vastly more sustainable and prosperous (individually and collectively) than we are now. Nature displays nearly infinitely greater coordination, sophistication, resilience and widespread prosperity than humanity. But we are nature. We have the innate ability to do the same thing.
Widespread inequality, poverty and environmental destruction certainly are not inevitable for humanity. Judging by the trajectory of life on Earth over the past 3.8 billion years, the opposite is far more likely. This might seem impossible to many people because we usually see the world through our biases and current belief systems.
Why is system collapse a large opportunity for humanity? Because pain is the great teacher. People often resist change, especially if they are prospering in the short-term under destructive systems. Collapse, when it becomes severe enough, shows that running society the same way is no longer an option. It forces change. We have the option to ensure the change is hugely beneficial. Capitalism and other human systems can be made sustainable. Under these systems, businesses will benefit and no longer harm the environment and society.
Whole System Framework and Investing
As discussed in Global System Change (GSC) articles, books and previous posts, many actions are needed to evolve human systems into sustainable forms. But a whole system framework is required to coordinate them. Focusing on parts without reference to the whole system that contains them (i.e. reductionism) is the root cause of essentially all major challenges. Individual sustainability and system change efforts are most effective when done with reference to the whole system.
This reference must be based on the actual whole system (Earth/nature and its sub-element human society). Basing society on a philosophy or opinion does not work. Observing living systems shows what nature demands of all life. These laws of nature will completely determine human survival and prosperity.
The GSC framework provides a whole system, nature-based frame of reference for guiding and coordinating sustainability and system change. It clarifies sustainable society using the laws of nature, systemic changes needed to achieve it, and the actions required to bring about these changes. GSC also guides the development of advanced corporate and financial sector system change strategies. It is the basis for advanced System Change Investing (SCI) models.
The largest opportunity of system collapse is using the threat of it to voluntarily change our systems before they involuntarily change. SCI can play a main role in this. It strongly incentivizes the powerful corporate and financial sectors to drive collaborative system change. Companies that understand the need for system change and effectively drive it will be seen as the new sustainability leaders. These visionary, more sophisticated companies often will outperform financially and prove the concept.
SCI rates companies on system change performance with whole system, return-enhancing models. Using this research to guide investments is truly doing well by doing good. Investors prosper by compelling companies to engage in the most important action needed to ensure the long-term well-being of business and society.
For more information, visit our website SystemChangeInvesting.com or contact us directly.
