#30: How SCI Drives Democracy

System Change Investing (SCI) is a new form of responsible investing that is focused on driving systemic changes, such as implementing true democracy. Many people are concerned about the decline of democracy in the US and some other countries. However, they often feel powerless to do anything about it. SCI gives citizens a powerful lever for driving democracy – investing in SCI funds. This post discusses the essential need for democracy and how SCI drives it.

Rating System Change Performance

SCI rates companies on system change performance and shifts investments to system change leaders. It increases investment returns by assessing management quality as well as systemic risks and opportunities. The approach powerfully incentivizes companies to engage in the most important sustainability issue – system change.

Rating companies on system change performance requires a frame of reference (i.e. an optimal performance standard against which companies are rated). The most advanced form of SCI is based on the Global System Change (GSC) framework. It uses the laws of nature to provide an objective reality definition of sustainable society (i.e. not based on philosophy or opinion). GSC also defines the systemic changes and actions needed to achieve sustainability.

Laws of nature are consistent, observable qualities of living systems. They have controlled all life on Earth for 3.8 billion years and will continue to do so. When these qualities are absent, systems change or die.

Democracy

Democracy/self-government is an implied law of nature. In nature, creatures are free to do what they want (i.e. self-government). Democracy is the only sustainable form of government because it is based on the innate human rights to equality and self-government. The alternative (i.e. some people ruling others without their consent) violates natural laws, and therefore cannot survive over the long-term.

While democracy in principle is the only sustainable form of government, in practice, it is unworkable for more than small groups because all people cannot study and decide every complex issue. They usually are too busy supporting themselves and their families. As a result, democracy must be implemented through republican forms of government, where elected politicians rule based on the consent of the governed.

As stated by the US Founders, all the power of government comes from the people. They are the ultimate leaders of society. The main goal of democracy is to promote long-term individual and collective well-being. This is established in the US Constitution through its most important Preamble goal – Promote the General Welfare.

The degree of democracy can be determined by assessing a country’s collective well-being. Nordic countries, for example, have relatively low inequality and poverty, and therefore implicitly have high democracy. The US, on the other hand, has nearly the highest inequality in the world. About 43 percent of citizens cannot afford to meet basic needs (i.e. essentially are living in poverty). This strongly indicates that the US has low democracy.

Democracy can be suppressed in various ways. In Russia, China, North Korea and other totalitarian states, government controls the people. Their natural rights and freedoms are strongly suppressed. In the US, democracy is suppressed in large part through plutocracy.

Plutocracy

Beginning in the late 1970s, campaign finance laws were greatly weakened. Now wealthy individuals and companies are allowed to anonymously spend unlimited amounts on political campaigns. As the wealthy gained control of government (i.e. plutocracy), nearly all economic and stock market growth over the past 40 years was concentrated at the top of society. Inflation-adjusted wages have been nearly flat since then. Today’s young people are the first generation in US history to be worse off financially than their parents.

Unfair concentration of wealth (through inappropriate government influence, dishonest, society-dividing media, and other unjust means) violates natural laws. Throughout human history, all unjust human systems that violated these laws changed, usually by collapsing quickly. Given rapidly growing problems, humanity almost certainly has entered another phase of rapid system change.

The problem is not high profits or investment returns. These implicitly occur in abundance in nature. The problem mainly is profiting by harming the environment and society. This lack of accountability implicitly does not occur in nature. There are no externalities in natural systems. All actions and impacts implicitly are taken into account.

System Change and SCI

At the highest level, system change means aligning human systems with the laws of nature. SCI measures corporate efforts to collaboratively achieve this. Democracy is a major metric category in advanced SCI models. Companies are rated on their efforts to promote democracy, for example, through campaign finance, lobbying and media reform.

Unfairly concentrating wealth can increase investment returns temporarily. But unjust, natural law-violating systems that allow this will not last. Sustainable systems provide attractive profits and investment returns without harming the environment and society.

Visionary, sophisticated companies understand the need for system change. They do many things well and thereby earn superior returns. Vested interests that profit from current systems usually block system change. If this opposition remains in place, systems almost certainly will collapse further.

SCI shows financial institutions, companies and other vested interests how to profit from system change. It is one of the most powerful levers available to humanity for driving voluntary system change.

For more information, visit our website SystemChangeInvesting.com or contact us at info@SystemChangeInvesting.com