5
The New Ecologies of Capital

The country needs and, unless I mistake its temper, the country demands bold, persistent experimentation. It is common sense to take a method and try it: If it fails, admit it frankly and try another. But above all, try something.

— Franklin D. Roosevelt

My experiences with the Food Lab and Bhavishya bracketed my work at Generon. One of the fallouts from Bhavishya was that Adam had started questioning the process. One of my mentors, Myrna Lewis, observed that this was undiscussable within Generon. The process, in other words, was sacrosanct in our culture and could not be doubted.

By late January 2007, it was clear that the two founding partners, Adam and Joseph, had irreconcilable differences on this issue. Joseph’s point, to some extent, was simple but unmoving. He believed that the “interior conditions” were the core of the work and that if a small group of people held an intention strongly enough, it would happen. This “strange attractor” of intention would then attract others until there was a critical mass of people.

If one member of this small group did not believe that, then, well, it was impossible. Joseph believed this, and it was a matter of integrity for him. Adam, on the other hand, seemed to be holding this idea as a hypothesis—maybe it was true and maybe it wasn’t.

The trouble in holding this position was its shadow side. Joseph was inadvertently making a judgment about Adam’s interior conditions. He found Adam’s lack of faith to be unacceptable because the work, to a large extent, required faith and, in particular, intentionality. Tom Rautenberg, half in jest and half seriously, referred to the situation as “Protestants versus Catholics.”¹ And it actually felt like a deeply painful religious dispute. I was torn. I shared Joseph’s beliefs, but I also instinctively felt that a diversity of beliefs was important.

During that time, I was supposed to produce a learning document on the Bhavishya experience. The experiences were so overwhelming that despite trying several times, I just couldn’t figure out how to do it. I was on the verge of giving up when I talked to Mia Eisenstadt, a friend with a background in athropology. Mia has spent a lot of time working and living with communities in Thailand and South Africa with tough social issues and so, to some extent, was undeterred by the mess. She suggested that one way to proceed was for her to interview me. Her interview opened the floodgates to the beginning of unpacking and figuring out the lessons from the Bhavishya project. Together we wrote a detailed learning document, called “The Birth of the Bhavishya Alliance” that helped me process many of the issues relating to the lab and helped us envision what could be more effective in new labs.

Finally, a number of people were encouraging me to think about setting up something new, a firm that would be a clean break from the experiences of Generon. I kept putting it off. Then one day I asked Mia, should we do it? She said yes, we should.

THE END OF THE BEGINNING

On February 27, 2007, I sent out an email to the entire Generon team and a small number of friends, inviting them to a conversation about setting up a new organization. Out of this initial group, eight people stepped forward: three partners from Generon, Adam, Joe McCarron, and LeAnne Grillo; three of the founders of Pioneers of Change, Mille, Marianne, and Colleen (whom I had worked with for years prior to Generon); and my friends Jeff Barnum and Mia.

The end of Generon represented the end of a critical phase of work, that of conceptualizing and launching the first generation of social labs. The second phase of the work for me would take place within the context of a new organization, Reos Partners.

Forming Reos prompted me into a renewed exploration on the potential of social labs. In thinking about what we had done, I asked myself the question, what results do social labs actually produce?

In our original description of the Bhavishya Lab, we described the lab as cocreating three sets of results:

Initiatives: Three to six systemic, scalable, sustainable initiatives that can, by the end of 2007, reduce by 80 percent the number of children suffering from moderate or severe malnutrition in the five hardest-hit districts of Maharashtra. Relationships: High-trust relationships among participating leaders and their organizations that will enable them to continue to develop and implement breakthrough solutions to this and other vital societal problems.

Capacities: Strengthened capacity of participating individuals and teams to undertake such deep innovation and change in large and complex organizational and societal systems.

The Bhavishya Alliance ran from 2006 till 2012. Including the three years of hard work to set up, it was a decade-long experiment. During this period, an extraordinary range of activities was undertaken. In April 2012, the Synergos Institute released a report on the legacy of the Alliance.²

The Taj Group of Hotels partnered with the Indian government to deliver a food diversification program. This involved ninety master trainers delivering training to 12,000 local women in one district alone. Anganwadi workers, self-help groups, and mothers’ committees received training and mentoring to prepare meals.³ The number of children benefiting from supplementary nutrition rose from 132,000 to over 149,000 in one month.

In another initiative, 7,800 girls completed a program designed to empower them by developing life skills. The program, called Girls Gaining Ground, increased their awareness of a broad range of issues, especially those relating to reproductive health and nutrition, and equipped them with vocational skills.

The lab had identified urban communities that suffered malnutrition as particularly vulnerable, especially when they lived in informal settlements, such as slums. The Day Care Centre’s Initiative extended child-care services to the children whose mothers were working. Over a thousand children benefited from this service, with acute cases of malnutrition dropping significantly.

Finally, I was pleased to see results from an initiative focusing on information. The Computer-Aided Adult Literacy, Health and Nutrition Awareness Project (CAALP) provided training to over 1,260 women who participated in the project over a one-year period at ten locations. This had been one of the original ideas coming from the lab team.

The overall nutrition situation in Maharashtra improved during the period that Bhavishya ran. UNICEF, one of the co-conveners on the lab recently reported: “The preliminary findings of the survey indicate that the prevalence of stunting in children under-two decreased from 39.0% in 2006 to 22.8% in 2012. Importantly, prevalence of severe stunting in children under-two decreased from 14.6% in 2006 to 7.8% in 2012. This positive trend is seen both in rural and urban areas.”⁴ These statistics include many districts where the lab was operating.

EMERGING FORMS OF CAPITAL AND PREVENTING COLLAPSE

Through examining these types of results we can see a particular class of outcomes emerging from each lab. They are best understood as different forms of capital. The first results we sought to cocreate with the labs were what we called prototypes or initiatives. When implemented, these provided a new set of services to stakeholders on the ground and are new forms of physical capital (infrastructure). The second set of results we sought to create, relationships, were a form of social capital. The third set of results, capacities, were a form of human capital. Finally, all the experience and formal lessons from both designing and implementing these labs were a form of intellectual capital.

The production of these different forms of capital contributes directly to preventing the collapse of social systems. John Michael Greer, in a paper entitled How Civilizations Fall: A Theory of Catabolic Collapse, outlines a theory that civilizations collapse because the productive capacities of a civilization fail “to meet maintenance requirements for existing capital.”⁵

An analogy helps illustrate what Greer means. Imagine a farmer growing enough food every season to feed his or her family. If crop yields decrease each season, the farmer is forced to draw on grain stores. Eventually the stored grain will run out. Unless crop yields go up, the farmer will end up with no stock until there is nothing to feed the family. This is when bodies will start to break down their fat stocks in order to produce energy. Eventually, there will not be enough energy left in the field or in the body to sustain life.

Greer defines capital as including “physical capital such as food, fields, tools, and buildings; human capital such as laborers and scientists; social capital such as social hierarchies and economic systems; and information capital such as technical knowledge.”⁶

Greer argues that civilizations collapse due to the depletion of natural resources, which causes a cycle of contraction where most capital stocks in a society are converted to waste. Human civilization is built on our ability to generate multiple forms of productive capital, which serves to meet societal needs for a period, before being converted to waste.

If, however, a civilization does not produce enough capital, then it starts consuming any capital stocks it possesses—just like a farmer with a failed crop and a family to feed. When the rate of waste being produced outstrips the rate of capital being produced—also known as the rate of consumption—then civilizations head toward ecological breakdown (what Greer calls catabolic collapse).

The divergent coupled trends described earlier in the example of Yemen—specifically, declining natural capital and increasing demand—paint a picture of catabolic collapse. This can be potentially averted if we produce enough capital, increase the efficiency of our capital consumption, or slow down the rate by which capital stocks are consumed.

An example of this is to ride a bicycle instead of drive. A bicycle is almost 800 times more efficient than the average car. It makes use of energy more effectively and produces less waste than a car. Driving uses more capital stocks and converts them to waste many times faster than cycling. Similarly, eating grain as opposed to meat is a more efficient use of capital stocks because it uses less water and less land in order to provide us with calories.

Why, however, is it that we drive cars or eat meat? The best way to understand these behaviors is to go back to the idea of habitus. The idea of habitus is deeper than the word habit. Bourdieu portrays a behavior that is deeply ingrained, mentally, physically, and systemically, one that is more of an addiction than a simple habit we can shrug off or just decide not to do. He writes that habitus exists “without being in any way the product of obedience to rules” and “can be collectively orchestrated without being the product of an organizing action of a conductor.”

Finally, we’re talking about “systems of durable, transposable dispositions.” In other words, it isn’t simply individual choice that we drive or eat meat; it’s also because there are systemic pressures on us to make these choices. You risk getting run over if you cycle, or there are no meatless options on the menu. These structural features condition us to a set of responses. Habitus thus represents a set of “permanent dispositions.” This permanence makes habitus “something like a property, a capital” (italics in original).

Breaking out of a cycle of collapse requires multiple stocks of capital. In addition to financial capital, we also need human capital, social capital, natural capital, and physical capital. We can create the option of strategically deploying these types of capital where we can actively produce them.

Bourdieu, in his explorations of habitus, makes the case for reclaiming the notion of capital from the economic and monetary spheres: “It is impossible to account for the structure and function of the social world unless one reintroduces capital in all its forms and not solely in one form recognized in economic theory.”

Greer’s description of catabolic collapse provides us with the backdrop against which we’re working and articulates the challenge we’re facing in broad civilizational terms. The paradox is that taking advantage of strategic opportunities requires us to deploy wisely what capital stocks we still possess in order to ensure that they generate new forms of capital.

Ultimately, we have to recognize that we are heading toward collapse because of habitus, which is nothing more than a decision about how we use energy, or our natural capital. Bourdieu explains, “Capital can be understood as the ‘energy’ that drives the development of a field through time.” While we tend to see energy locked in a barrel of crude as distinctly different from the symbolic capital of culture, they are forms of energy represented in different forms of capital. At the core of our challenge is energy in the most holistic sense, and reconciling the sacredness and profanity of energy is the circle we must learn to square.

If our strategies—whether they are social laboratories or other approaches—are to precipitate systemic change (as distinct from reinforcing BAU), this requires that we enhance “the art of estimating and seizing chances.” Producing these forms of capital improves our ability to actually take advantage of opportunities to change systems in the real world, a world in which plural forms of capital are shrinking.

Changing complex social systems requires that actors have competencies (human capital), the knowledge and understanding of what is to be changed (intellectual capital), the infrastructure and services required to deliver services (physical capital), the ability to pay for whatever is needed in order to do their work (financial capital), and the networks to organize themselves (social capital).⁷

In other words, we have to deploy capital to allow diverse stakeholders to find the opportunities latent in all crises.

THE DUMBEST IDEA IN THE WORLD

Success in a market-driven system has conventionally been measured in single forms of capital, or “mono” capital. How much money does a firm make? What financial returns does it provide to its shareholders? This notion of value, however, has taken a real beating in recent years. In a Forbes article, Jack Welch, the legendary CEO of General Motors, called the idea of maximizing shareholder returns as “the dumbest idea in the world.”⁸

During the dot-com boom, I saw firsthand the extremely messy process by which innovation is actually supported. Privatesector innovation is funded from a variety of sources. Investors make their decisions based on one key factor and one hunch. The one key factor is their faith in the entrepreneur or the team behind a start-up. The one hunch is their guess as to the probability that an idea might fly and become a market leader. Yes, investors want to invest in start-ups that will make billions of dollars, but they know that this cannot be predicted with any confidence. If an investor sees an experienced team and has confidence in the vision articulated by those behind the start-up, they will take a risk and fork out the cash.

The venture capital strategy for dealing with the real risk of failure is to spread bet, as discussed earlier. The strength and the weakness of the sector come from the fact that investment decisions are made on the basis of faith in people. Sometimes this faith is misplaced, and sometimes it is not. Either way, no one keeps start-ups artificially alive because they don’t want to tell their investors or look bad.

In the development sector, the notion of spread betting is unheard of. Instead, the rule of thumb is to avoid failure, which in practice means to avoid admitting failure, as failure in complex systems is unavoidable. Innovation is not an efficient process—it’s messy.

When contrasted with other sectors, such as the for-profit sector or research more broadly, donors attempt to hold NGOs to a series of impossible standards, ensuring limited impact.⁹ In his TED talk on all the things wrong with the “charity” sector (non-profit), Dan Pallotta makes the point, “Our generation does not want its epitaph to read, ‘We kept charity overhead low.’ We want it to read that we changed the world.”¹⁰

So how do we change the world? And what does that progress look like?

In an op-ed piece for the New York Times, Peter Buffett wrote:

Money should be spent trying out concepts that shatter current structures and systems that have turned much of the world into one vast market. Is progress really Wi-Fi on every street corner? No. It’s when no 13-year-old girl on the planet gets sold for sex. But as long as most folks are patting themselves on the back for charitable acts, we’ve got a perpetual poverty machine.¹¹

Donors also seem to believe that people working on social issues should be able to predict the future. Numbers that do so are fiction. Some are better fictions than others, in that they are believable, but they are still fiction. Donors should note that investor confidence comes from experienced teams, the quality of their vision in addressing a need, and their ability to ship a product or deliver a service.

While the idea of market-driven approaches to social challenges sounds simple, obvious even, it gives rise to a whole host of problems. The micro-loan is the poster child often cited as an example of how market-approaches can help alleviate poverty. However, recent studies show that micro-loans create a whole new class of debtors locked into “micro-enterprises,” unable to grow.¹²

Critics of central planning, such as Fredrick Hayek have argued that we need to let the market make decisions, but this replaces one set of problems with an entirely different and equally complex set of problems. It results in a shift from a horizontal, state-driven, planning approach to a vertical, market-driven, planning approach, as we see happening in the developmental and humanitarian spheres.

Organizations that focus all their efforts on the production of one form of capital, say financial, tend to be depleting other forms of capital at the same time. For example, strip mining depletes natural capital in order to generate financial capital, which is becoming less acceptable. It’s also increasingly unnecessary because we can design approaches that produce multiple forms of capital. Organizations designed to produce only one form of capital are a dying breed.

The opportunity for next-generation labs is to take a more conscious approach to the production of new forms of capital. The challenge becomes one of ensuring that we do not fall into the habitus of BAU, producing single types of capital (i.e., financial) that do little more than further entrench BAU.

By reclaiming the production of multiple forms of capital from the economic and monetary spheres, instead of locking capital in enclosures (benefitting a small class of people), we can inject it into the commons in a virtuous cycle of healthy growth. Increasing the availability of multiple forms of capital in the commons provides one vision for what the non-profit world (the development and humanitarian spheres) could be focusing on.¹³

Nicholas Negroponte, the founder of the Media Lab at MIT, explains, “Some things will not happen in an economy only driven by markets. And that is the reason you need a Media Lab.” He goes on further to say, “The lab was filled with solutions without knowing the problems. Seriously. We were not solving problems but inventing solutions and developing technology, in many cases for its own sake. Like a gold mine, companies just had to find it.”

MORE RAINFORESTS, FEWER PLANTATIONS

How do we build environments that support innovation? One of the most successful ecologies for innovation is Silicon Valley. Venture capitalists and entrepreneurs Victor W. Hwang and Greg Horowitt set out to answer these questions: What makes a place like Silicon Valley tick? and Can we replicate that magic in other places?

In doing so, they created a model for innovation ecosystems called the Rainforest, which “nurtures budding ideas so they can grow into flourishing and sustainable enterprises.” They explain, “The Rainforest model is more than a metaphor. Innovation ecosystems are not merely like biological systems; they are biological systems.… Human systems become more productive the faster that the key ingredients of innovation—talent, ideas, and capital—are allowed to flow throughout the system.”¹⁴

Just as healthy rainforests are rich environments, teeming with life, so too are healthy social labs, cultivating diverse forms of capital. The rules for fostering healthy biological environments such as rainforests are very different from those for a planned plantation.¹⁵

By examining the first-generation social labs, we see that some produced new capital, not due to clear and conscious design but as by-products of our processes and intuition. So in some cases, we genuinely created new forms of capital, and in others, we fell into habitus and consumed capital. By reflecting carefully on these results, we can learn how to be more conscious of what we’re trying to produce and then cultivate the conditions for that production. More rainforests, fewer plantations. If we can achieve this, then social labs have the potential to become engines that generate enormous amounts of capital in a world running dangerously low.