Capitalism’s Copernicus Moment

The end of capitalism is not near. It has only just begun.

Capitalism had its early definitions in Adam Smith’s writing and how the “invisible hand” emerged as people sought out the goods and services they needed, and provided the goods and services others wanted.

Value of Use and Value in Exchange

“Value of Use” and “Value in Exchange” summed up the economic system. Essentially, people consumed some stuff and then sold the remainder. A person can only consume so much, so there is a limit to that, but a person can sell a whole lot of stuff.

The 19th century barons took “Value in Exchange” to a whole new level as they “capitalized” on the New World and set the stage for today’s capitalism definition:

To use as much financial capital to leverage as much physical capital and human capital to convert as much natural capital into as much financial capital as physically possible

In this application, Capitalism is designed to create an economic system that is devoid of any understanding of the ecological domain that it resides in. “Value of Use” and “Value in Exchange” creates an insatiable creature hell-bent on consuming Earth’s resources.

Economic, Ecological, and Social Domains

A November 2022 paper by economists Dirk Schoemaker and Hans Stegeman sum up what many economists and ecologists have been discussing for decades, that the market economy is just one component of economic, ecological, and social domains in which the economy functions, yet the ecological and social domains are ill-defined or undefined. This limits the ability of the market economy to engage with the ecological domain in a manner that does not degrade or consume it at an unsustainable rate. Not only will the economy “spoil its nest”, it will dismantle and consume it.

The two economists conclude that an ecological domain needs to be added to the economic equation.

Economist’s Copernicus Moment

The economists do not propose the makeup of this domain, but they do state a solution is acknowledging that the economy is nested part of the social system and a subset of the ecological systems.

In other words, it is the ecology, not the economy that makes the world go around. The economy is just along for the ride. For old-time capitalists this is about as difficult to accept as the Church accepting Copernicus’ suggestion that is it the Sun, not the Earth, that is the center of the universe.

Value for Existence

If the ecology is the center of the economic system, then it must have inherent value for its existence. Ecology, via life, generates goods and services that humans and all other life find as a necessity for survivability and thrivability.

“Value for Existence” needs to be added to “Value of Use” and “Value in Exchange”. An ecological domain that represents “Value for Existence” must be created.

Ecological Domain

An ecological domain that could communicate with the economic and social domains would be based on natural capital. Natural capital lies at the nexus of the three domains. The ecological domain would consist of natural capital units (NCU) and would have the theoretical and technical capacity to account for the entirety of global natural capital and the provisional, regulating, supporting, and cultural ecosystem services the NCUs generate.

In this manner it can achieve the economists’ objective of “acknowledging that the economy is nested part of the social system and a subset of the ecological systems.”

Capitalism is not Dead or Dying

Of course, it was very disturbing to the Church and its parishioners when Copernicus stated that the Earth and hence themselves were not the center of the universe. And it was probably devastating when they learned it was actually true. The Church probably thought as an institution it was going to die or at least not be as profitable. But we are all, Churchgoers and not, better off for this knowledge.

Capitalism will not die either when we accept that an Ecological Domain is the center of our economic universe. Granted, those that degrade natural capital for profit, may not be as profitable if they continue to degrade natural capital, but that is the point of adding a domain of value. In the end, we will all, Economists and not, be better off for this knowledge.

Wandering Planets

Much like Copernicus solved the conundrum of why the planets would stop, go backwards for a while, then forward again, we can solve the conundrum of why we collectively think that valuing the ecology is somehow bad for our economy.

How anyone could believe planets would stop, go backwards, and then forward is as bazaar as believing our planetary resources are not vital to everything, economic or not. And both concepts seem ridiculous once you get your bearings.

V3 — Use, Exchange, and Existence

Adding “Value for Existence” to “Value of Use” and “Value of Exchange” is the expansion, growth, and maturation of capitalism. With this third dimension, it is estimated that the trillions of dollars of economic value generated by natural capital each year could be part of our healthier economy. We can no longer act like 19th century barons now that we know the economic system is not the center of our existence.

Next Steps to the Next Domain

If you have an interest in creating, investing in, and employing this NCU-based Ecological Domain, Tim Gieseke and Jerry Hatfield have been convening a small group of thoughtful and committed citizens to move this forward. Please connect if you want to be part of it.

Tim Gieseke manages natural capital and is the author of three books that outline the environmental, socio-economics, and governance of instituting a natural capital accounting system and employing EcoCommerce.

Collaborative Environmental Governance Frameworks: A Practical Guide (2019)

Shared Governance for Sustainable Working Landscapes (2016)

EcoCommerce 101: Adding an ecological dimension to the economy (2011)