EIGHT
BRINGING FORTH A WORLD
From Individualism to Community

The ground crunches beneath my feet as pavement gives way to dirt, dirt gives way to beach, and the beach slopes to the water where the Gulf of Maine stretches to the horizon. A small white lobster boat pulls into the dock below. Nearby, a handcrafted sign nailed to a tree tells me this is the North End Lobster Co-op—one of the more than 20 lobster cooperatives found in Maine. All around stand towering piles of lobster traps, six high, each as large as an end table. Behind me, a clutch of lobster boats are stacked in shelves, out of the water for the season. Winter is coming on, and most co-op members have stopped lobstering, though a few hardy souls will remain at it all year. A yellow dog comes loping up offering greetings, its owner nowhere in sight.

After the high-end little utopia on Martha’s Vineyard, I’ve come to the coast of Maine for a reality check. Can generative economic models be set in motion in the state that is the poor cousin of New England? And if so, how? What’s the larger system design that makes it possible? It seems to me that this lobster co-op, where people make an estimated $30,000 to $50,000 a year from hard manual labor, might offer some useful lessons.

With me is Keith Bisson from Coastal Enterprises, Inc. (CEI), of Wiscasset, Maine—the community development corporation (CDC) that helped a group of five lobster fishermen obtain $380,000 in financing to buy this place in 2002. The co-op now has 24 lobstermen as members, and activity from this property supports more than 40 families.

“A lot of those guys used to fish on the town wharf,” Keith tells me. They had to haul their own bait and fuel every day. When they went to buy bait, he continues, “they’d be taken advantage of by wholesalers.” Owning land gives them guaranteed access to the water, as well as a secure place for winter storage of boats and traps. They’ve built a bait cooler on-site, allowing them to store a ready supply. Buying bait collectively, they get better prices. They’ve also arranged for a lobster buyer to come regularly to the co-op—in the busy season, every day—so that lobsters are moved efficiently.

“Access to water is important,” Keith says. “It’s hard for working folks whose livelihood is dependent on water to afford to buy waterfront property.” Of the 5,300 miles of shorefront in Maine, only 25 miles are still in use for fishing and marine industries. To preserve that land as working waterfront, CEI helped this lobster cooperative put a working waterfront easement on the property. Modeled after a conservation easement, this innovative ownership design was created by CEI and funded by a state bond program to the tune of $6.75 million. Some two dozen working waterfronts have been preserved, allowing hundreds of fishing families to support themselves. The easement is a covenant that attaches permanently to the property deed, guaranteeing that land will always be used for commercial fishing. Essentially, it involves selling development rights to the State of Maine. This lobster co-op received a check for $135,250—yet it maintains ownership and use of the land.¹

Still another powerful ownership design represented here is Coastal Enterprises, a private nonprofit corporation with a generative mission. As a CDC, it traces its roots to the 1960s civil rights movement. Its founder, Ron Phillips, is a former seminary student who veered away from the ministry to pursue social justice through economic development. CEI isn’t a traditional development agency, offering tax breaks to lure big corporations. Its mission is to create healthy communities in which everyone can reach his or her full potential. It focuses on creating local ownership and local wealth. A particular focus—as its name implies—is coastal activity. Fishing.

With a staff of 85, CEI operates also as a community development financial institution (CDFI), with more than $700 million under management. It’s one of the 1,000, found in all 50 states, and it’s particularly innovative in designing social and ecological covenants into transactions. Fishery borrowers are asked to sign agreements to take part in a Fishtag project, collecting scarce biological data.² A manufacturer borrower might be asked to commit to an Employment and Training Agreement (ETAG), to hire the unemployed, or to offer training to immigrants.³ In short, CEI practices Stakeholder Finance, where capital is a friend to the community.

BEYOND MARKETS AND STATE

Here, clinging to the rocky shores of Maine, is the generative economy groping its way into being. People are making a living in difficult circumstances and modeling an inclusive economy along the way. The ecological commons is benefiting dramatically. At a time when the vast majority of the world’s fish stocks are overexploited, the Maine lobster industry remains vibrant. Since the late 1980s, catches have been at record levels, despite intense commercial activity. While groundfish stocks—such as cod and halibut—support only 50 fishing boats in the Gulf of Maine, those same waters support 5,600 lobster boats.⁴ The Maine lobster industry is often cited as an example of successful collective action in “common pool resource management.”

“Collective action dilemmas have received an enormous amount of attention from social scientists, primarily because they describe so many of the most vexing problems plaguing humanity,” wrote James Acheson in Capturing the Commons: Devising Institutions to Manage the Maine Lobster Industry.⁵ The problem is “the tragedy of the commons,” as Garrett Hardin described it in his 1968 essay. Hardin said that if there were a common pasture on which everyone could graze cows, soon the land would be overgrazed and become worthless. The only solutions, he wrote, were state control or private ownership—“either socialism or the privatism of free enterprise.”⁶

But in 2009, Elinor Ostrom won the Nobel Prize in economics (the first woman to do so) for research showing that old dichotomy to be false. All over the world, she and her colleagues found communities that spontaneously devised ways to manage the commons successfully. These include irrigation systems in the Philippines, forests in Africa and Asia, grazing systems in Switzerland, and groundwater regimes in California. As Ostrom wrote, many of these involve “rich mixtures of ‘private-like’ and ‘public-like’ institutions defying classification in a sterile dichotomy.” She titled her Nobel lecture “Beyond Markets and States.”⁷

Something fascinating is at work in the Maine lobster industry. Going beyond old notions of traditional private property versus state intervention, a whole range of new economic architectures are in use. Alternative ownership designs play key roles. But they do so inside a larger frame of supportive infrastructure—a social ecosystem of generative design.⁸ The law operates in the background to help bring this economy into existence and hold it in place—yet its role is more innovative than top-down regulation. A panoply of supportive institutions and rules have evolved here mostly from the ground up—with “ground” meaning the bottom of the ocean, where lobster live and breed, and from which fishermen scratch out a living.

I’d come to Maine to experience two things on this, my final journey through the commons. First, I wanted to see a living example of the role of government in supporting a generative economy. Second, I wanted to see a whole family of generative ownership designs in situ. I wanted to categorize the various models and see it all operating as a whole system. I hoped to capture in this one place a sense of the social ecosystem of the generative economy.

THE FISHERMAN SCIENTIST

I make a date to talk with Ted Ames, the fisherman-scientist who won a 2005 MacArthur award (the so-called genius award), and I catch up with him in his office at Bowdoin College in Brunswick, where he’s serving as visiting scholar for a year. He is a small man with youthful energy and the weathered face of someone who’s spent years on the water. In the mid-1990s, he and his wife, Robin Alden—at the time, commissioner of the Maine Department of Marine Resources—helped put in place an innovative plan to protect the lobster industry, which Ted calls “a collaborative, ecosystem-based approach.”

There was a time, he tells me, when the lobster industry in Maine was in the same state of collapse as other fisheries are today. “In the 1930s, the bottom fell out of lobstering,” he says. Canneries were buying and processing all sizes of lobsters, and there were no regulations restricting what could be caught. Small lobsters and broodstock were being taken, which was decimating the next generation of lobsters. Big boats had also begun auto-trawling in the Gulf of Maine—a massively extractive approach that destroyed habitat and damaged traps. Lobstering had become “too efficient, too industrial,” Ted explains, if you wanted to preserve habitat to grow another crop. A new law was passed in 1947, which in Ted’s words said, “Thou shalt not catch lobster in Maine with anything but a lobster trap.”

It was part of a series of ecological ground rules that evolved over time in Maine. The use of traps protects habitat. Other rules prohibit the taking of egged females, protect juveniles until they are appropriately large, and protect older lobsters known to be good broodstock. Lobstermen were instrumental in lobbying for all these rules, some of which evolved out of best practices already in use.

Yet ecological rules alone weren’t enough. Attention was also needed to social architectures, for the issue was not only what could be taken but how and by whom. Tending to such matters was the aim of the 1995 regulations. As the lobster industry recovered and became steadily productive, it was under increasing pressure from big boats and new technologies. To rein that in, in 1995 the legislature passed the zone management law, which does three things: it establishes individual trap limits; it controls entry into the industry; and, most innovative, it delegates a good deal of authority to local lobstermen, through the zone management system.

The law divides the coast into seven zones, each run by a council elected by licensed lobster fishermen. The zones contain districts of lobster license holders who elect representatives to their zone council. These councils are technically advisory to state authorities, but their recommendations are generally adopted. They have certain areas of oversight. They can establish trap limits, differing from zone to zone, as long as they don’t exceed the state maximum. They help determine rules controlling entry into the industry, such as educational or apprenticeship requirements. And they have a voice in other matters dear to a lobsterman’s heart, such as how many traps can be hung from a single buoy.⁹

“It’s called democracy,” Ted says. “Isn’t that a novel concept?”

It is strikingly novel, in more ways than one. The law stipulates that lobster fishing in inshore waters can be done only by owner-operated boats. Large corporate-owned boats are still needed in offshore waters, Ted says, because only big boats can operate safely there. But corporate boats can no longer fish for lobster in sensitive coastal waters, where breeding occurs. It’s a powerful use of ownership design as a tool to protect both commons and fishing communities. According to James Acheson, the ownership rule is explicitly intended to prevent corporations like Shaftmaster Corporation—which operates out of New Hampshire, using big trawlers with hired captains and crews tending large numbers of traps—from coming to Maine and dominating and destroying lobster grounds.¹⁰

Big boats like those “could clean out one area and move to another,” Ted says. “The business plan for that kind of operation is completely different from the small-scale operator, where boats are invariably owned by individuals or families.” The ownership rule is supplemented by another provision requiring an apprenticeship period. No one can obtain a lobster license without working two years on another lobster boat, where stewardship traditions and lobstering etiquette are learned.

These rules set the stage for the zone councils. Voting for these councils is one-person, one vote—very different from the corporate world, where voting rights are proportional to wealth holdings. This empowers fishermen with small and medium-sized operations. As Acheson wrote, “These men had grown tired of watching ‘big fishermen’ or ‘hogs’ take a disproportionate amount of the lobsters and cause huge trap tangles in the process.” In passing trap limits for their zones, the little guys rein in that behavior.¹¹

FRAMING THE GENERATIVE ECONOMY

Both lobsters and fishing families thrive in Maine, because the system works at many levels to restrain extractive behavior and encourage generative behavior. There are many kinds of rules here, but operating in the background, as a kind of wire frame supporting the system, are different kinds of ownership architectures. As Acheson wrote:

According to the law of Maine, all of the oceans, lakes, and rivers are public property. Ocean waters are held in trust by the state for all citizens. All ocean beaches to the high tide mark are owned by the state, and all citizens have legal access to them.¹²

At this level, the overarching ownership concept is the ancient notion of trust: holding something in trust for the common good and for future generations. As trustee, the state of Maine calls on the property concept known as usufruct—the temporary right to use property belonging to someone else, as long as the property isn’t damaged—to create rules for right of access. In a sense, Maine holds the bundle of twigs of various property rights. And out of that bundle it separates usufruct rights, allocating certain of those rights to small owner-operators, leaving a different set of rights to corporate owners.

This law of the ocean is one supportive frame here. Another frame is provided by various enterprise ownership designs, such as cooperatives, CDCs, and CDFIs. Because of those sturdy background patterns, Coastal Enterprises can emerge as a CDC/CDFI, another part of the ecosystem of support for lobstermen.

CEI, in turn, devised a new contractual form of ownership design with the working waterfront covenant, which helps keep waterfront property in the hands of fishing families. Fishing families themselves join together to form groups like the North End Lobster Cooperative, which helps them to thrive in a competitive environment. At various points, these ownership designs emerge from the background like knots on a fishing net, shaping the energies of the system into stable patterns that tend to create generative outcomes.

What is explicitly restricted in this picture is extractive design. Large corporate boats can operate only in designated areas. Instead of permitting limitless liberty to absentee owners for the seeking of wealth—by hired hands indifferent to local custom—Maine set spinning a new governing pattern. It operates by generative principles, like the principle that the right of extraction has limits. That the right to make a living comes before the right to make a killing. That fairness for the many is more important than maximizing by the few. That sustaining the prosperity of larger living systems, both human and wild, is the root condition for the flourishing of all. And that these new economic principles are to be grounded in governance of, by, and for the community. Fairness, sustainability, community: the fundamental values of the generative economy are all at work. Through design.

As a fisherman and the son of a fisherman, Ted Ames doesn’t use such lofty terms. “It’s worked—that’s the neat part,” he says. “When basic rules are vetted by fishermen themselves, you get a different dynamic.” Although there’s a powerful state role in this social ecosystem, much of what arose in Maine came from fishermen, their practices, their lobbying efforts, their needs—and by extension, from the living needs of lobsters.

The notion of lobster zones has its genesis in a history of territoriality in the Maine lobster industry that goes back generations. A newcomer can’t just show up and start throwing traps in the water without incurring the wrath of locals. By time-honored tradition, lobstermen use small areas near their home harbor, working waters their families have worked for decades, which they defend vigorously.

As Acheson wrote, “At some point, usufructory rights strengthened into a sense of ownership, giving people justification for defending the areas against the incursions of others.” The lobstering territories were ownership in embryo. This territorial system, he continued, is “the root institution governing the lobster industry, making possible the generation of other kinds of rule systems.” The territorial system, Acheson said, “helped produce a sense of stewardship and one of the most effective conservation programs in any fishery in the industrialized world.”¹³

EMERGENCE AS A PATH TO LARGE-SCALE CHANGE

In the Maine lobster industry we see a process that systems thinking calls emergence. Instead of imposing abstract, large-scale concepts from the top down, the governing policies in this case emerged from the community. As Fritjof Capra emphasizes, effective change needs to be a living process. In natural systems, he observes, transformational change happens when traditional patterns reach “critical points of instability,” creating a crisis that is resolved by the spontaneous emergence of new ordered patterns. It’s known as self-organization, or, simply, emergence. “Creativity—the generation of new forms—is a key property of all living systems,” Capra says. “Life constantly reaches out into novelty.”¹⁴

Seeing the emergence of a new economy as a natural process is different from thinking of the competition of two ideologies vying for dominance, which is the paradigm of capitalism versus communism. Change as an emergent process doesn’t mean the absence of crisis or conflict. Both were present in Maine. And it doesn’t mean that some universally beloved outcome is reached. Solutions adopted in Maine generally favored one group at the expense of another. These things are natural in social systems. What emergence does mean, as an approach to policy, is starting small, proceeding organically, scaling up existing practice, and trusting that a creative solution is present in the very circumstances causing a crisis. Emergence also means that solutions may first appear not in politics but in business. One role of policy is to formalize and scale up what has emerged.

We can see this process at work in the development of other generative designs, such as microfinance. It began with the single example of Grameen Bank in Bangladesh making tiny loans to poor women and eventually mushroomed into a massive global industry. Microfinance today has its own rating agencies, consultants, conferences, institutes, and billions upon billions of dollars in lending. Central Asia alone is home to more than 1,000 microfinance institutions. In India, the number of microfinance clients grew tenfold over four years to surpass 10 million.¹⁵ The process of emergence mirrors that of evolution, where nature discovers designs through trial and error. A variety of new designs are tried out, and those that succeed are replicated and spread.

In social systems, as Meg Wheatley from the Berkana Institute suggested, the formation of networks is central to emergence—like the networks and institutes supporting microfinance. “We don’t need to convince large numbers of people to change,” Wheatley wrote; “instead we need to connect with kindred spirits” who share a common vision. In this way, separate, disconnected local actions begin to spring up simultaneously. When they “connect with each other as networks, then strengthen as communities of practice, suddenly and surprisingly a new system emerges at a greater level of scale.” Powerful emergent phenomena can appear without warning, such as the organic food movement. What can’t be accomplished by politics or strategy just happens.¹⁶

What can block emergence is the lack of clear mental models. Resource depletion often occurs, Elinor Ostrom and her co-authors wrote, when governments adopt schemes to privatize or centralize resource management in ways “that undermine or destroy communal rights.” Problems arise, she continued, “because the state does not recognize or support informal common-property regimes.” Lacking a simple mental model that allows them to see what’s going on, government leaders blunder.¹⁷

The lack of clear design parameters can allow emergent phenomena to go astray in other ways—as happened with microfinance. In recent years, a few lenders shifted out of nonprofit status and sold ownership into public stock markets. The Mexican microlender Compartamos did this in 2007, and SKS Microfinance in India followed in 2010. In the pursuit of higher profits for shareholders, these banks raised interest rates and began pursuing debt collection more aggressively. As Muhammad Yunus explained, empathy once shown toward borrowers disappeared, and “borrowers came to believe that lenders were taking advantage of them.” In India, some stopped repaying their loans, and a full-blown crisis in the field erupted. Microfinance took a wrong turn because it lacked design parameters. If the industry were to adopt ethical standards limiting extractive ownership—as the Maine lobster industry did—it might pave a resilient path to excellence again.¹⁸

NAMING AIDS SEEING

Much of the work of creating clear mental models is a process of naming. In the broad field of generative ownership design, this work isn’t yet far advanced. The sheer abundance of designs makes it hard to see that a unified phenomenon is at work. It can help to think in terms of a single family of generative design. Within it we can separate out different broad categories and subcategories. But since boundaries between these often aren’t clear, it can also be helpful to think in terms of patterns of design, as a way to reveal common shapes in the profusion (these patterns are discussed in greater detail in part 3).

In my work, I’ve seen four broad categories of generative ownership design—many of which I saw in Maine. Rather than a definitive categorization, consider this a loose grouping, possibly a starting point for further work by others.

1. Commons ownership and governance. Here, assets are held or governed in common. The ocean, a forest, land, a park, a municipal power plant (like Hull Wind) is held or governed indivisibly by a community.

2. Stakeholder ownership. This is ownership by people with a human stake in a private enterprise—as opposed to a purely speculative, financial stake. It includes cooperatives, partnerships, credit unions, mutual insurance companies, employee-owned firms, and family-owned companies. But for these models to be generative, their purpose must be life serving (not all mutual, employee, or family ownership can be considered generative).

3. Social enterprise. These organizations have a primary social or environmental mission and use business methods to pursue it. They can be nonprofits, subsidiaries of nonprofits, or private businesses. Social enterprises sometimes blur the line between for-profit and nonprofit.

4. Mission-controlled corporations. These are corporations with a strong social mission that are owned in conventional ways (often with publicly traded shares), yet they keep governing control in mission-oriented hands. They include the large foundation-controlled companies common across northern Europe. A family or a trust can also be in control.

The law governing ocean waters in Maine is an example of commons ownership. The lobster cooperatives are a form of stakeholder ownership. Coastal Enterprises, Inc., is an example of a social enterprise. These different enterprises use different ownership designs toward similar ends—to create the conditions for life.

Generative design, in essence, means kinds of ownership that have a Living Purpose, with at least one other design pattern that serves to hold that purpose in place (otherwise, what you have is not a design but only a good intention). With Hull Wind, the most important design pattern is Mission-Controlled Governance. The aim is not to maximize profits but to generate electricity for a community at an affordable price; the enterprise is governed with that end in mind. With lobster cooperatives, Rooted Membership is the defining element; the people who use the facility own it—they’re the members. They also govern it. As a community development financial institution, Coastal Enterprises practices Stakeholder Finance to carry out its mission; its aim isn’t extracting financial wealth from communities but helping them to thrive. Yet it makes loans, not grants. It blurs the line between for-profit and nonprofit, because it uses business methods to pursue a social purpose. As a CDFI, Coastal Enterprises is also part of an Ethical Network of other CDFIs, sharing similar goals (CDFIs are formally recognized in federal law).

If there are more kinds of generative design than many people realize, the scale of activity is also larger than might be supposed. In the United States, more than 130 million Americans are members of a co-op or credit union. More Americans hold memberships in co-ops than hold stock in the stock market.¹⁹ Worldwide, cooperatives employ more people than all multinationals combined.²⁰ In Colombia, SaludCoop provides health care services to a quarter of the population. The Japanese Consumers Cooperative Union serves 31 percent of the nation’s households. In Spain, the Mondragon Corporacion Cooperativa is the nation’s seventh largest industrial concern. Cooperatives account for 71 percent of fishery production in Korea, 40 percent of agriculture in Brazil, and 36 percent of the retail market in Denmark. Cooperatives represent 45 percent of the GDP of Kenya and 22 percent of GDP in New Zealand.²¹

Or take employee ownership. In the United States, the National Center for Employee Ownership reports that there are 11,300 employee-owned firms, with some 14 million participants. And in Europe, large companies have nearly 10 million employee-owners. Employee ownership has been increasing in such countries as Spain, Poland, France, Denmark, and Sweden.²²

Granted, not all of these companies are generative, if they don’t have a generative mission (and many may not). But their impact on employee well-being can still be significant. Workers in US firms with employee stock ownership plans have been shown to have 2.5 times the retirement assets of comparable employees at other firms.²³ And there may be a greater potential for generative activity when companies are majority employee owned; one estimate put the number of such companies in the United States at 2,000 to 3,000, with about 1 million employees.²⁴

BRINGING FORTH A WORLD

Generative design is such a large domain, how has it managed to remain so invisible? The answer has something to do with naming—in systems thinking, cognition.

According to the Santiago Theory of Cognition, developed by Humberto Maturana and Francisco Varela, humans do not perceive the external world in a direct way but instead filter it through our own internal maps. As we encounter new situations, we alter those internal maps. That’s how learning occurs. Through this process of building up our internal model, we construct the world in which we live. As Fritjof Capra wrote, cognition “is not a representation of an independently existing world, but rather a continual bringing forth of a world through the process of living.” The act of knowing brings forth a new world inside us. When I learn to identify a particular bird, I begin to see it more regularly. I perceive something I’d missed. Naming helps us to see.²⁵

The process is more than individual, because language represents shared reality—the world of culture. Human consciousness is a social phenomenon. When a culture lacks precise words for things, we have difficulty perceiving them. At one time, we lacked language for sexism and racial discrimination. The bringing forth of this new language helped a new world to emerge, where women and racial minorities gained power. Words have impact when they name something on the edge of emergence in the collective awareness, some collective impulse seeking recognition and release.

When Grameen Bank makes microloans to help the poor and a whole microfinance industry mushrooms into existence, some collective impuse is seeking release. When Elinor Ostrom tells us that communities all over the world are managing the commons successfully, it’s as if a spring of cold water has burst forth. Something we needed has been named, and now we can see it. Because we see it, we can bring forth more of it. This can happen with the models and processes of the generative economy. What begins as an experiment in one place can be replicated and spread, like shoots of a new forest rising up.

After I talked with Ted Ames, he returned to his work at Penobscot East Resource Center, the nonprofit that he and his wife founded. Its website told me he was rigging up his boat to go fishing for the summer and fall seasons.²⁶

I found a paper he’d talked about, where he suggested that lessons from the Maine lobster industry could be applied to fishing for cod, haddock, flounder, and other groundfish. The approach would involve coastal management units of reasonable size, with inshore areas collaboratively managed by local councils. Spawning grounds would be protected by prohibiting big corporate boats and requiring “habitat-friendly gear.” Translation: thou shalt not fish with anything but a hook and a line.²⁷

Depleted fisheries in the region have potential for renewal, he’d said to me, because several dams are coming down in rivers where groundfish used to swim, and hundreds of miles of old spawning habitat will be reopening. No one has so far taken his plan seriously, he said. But he remains hopeful. “I think you could re-create a lot of the original abundance that existed here,” he said. “We have an uncanny ability to screw things up, and also the ability to make things better.”