The Next (two) Economic Ecosystems
The economy seems about as amorphous as a social intuition can get.
Where does it start, when did it start, can it be controlled, how does it evolve — it certainly seems like a mysterious creature in its own right.
Invisible Hands
Adam Smith is credited with being the first person to somewhat get a handle on the economic system. He simply observed how people were interacting to garner resources to support themselves and their families and concluded that there was a deeper force — the invisible hand — that made an economic system tick.
This “invisible hand” is wrongly interpreted by many as some magical capitalism force that has gone awry. But more correctly, the “invisible hand” was his way of describing the emergence behaviors of a complex system (e.g., economic system). Emergent behaviors are now a known concept in all complex, self-organizing systems. So, technically speaking, invisible hands can be found pretty much everywhere there is sentient beings engaged in a complex system.
The Economy’s Invisible Hands
Long before Smith’s 1776 “Wealth of Nation’s”, invisible hands were guiding humans on how to survive and support themselves.
Ecological Ecosystems
Nature, or Ecological Ecosystems, was the first economic ecosystem humans enjoyed. From this “Garden of Eden” perspective, one could pick fruit, kill animals, and construct a shelter. These items became the economic “value of use” as Smith described them.
Agricultural Ecosystems
This was the prominent economic ecosystem for tens of thousands of years until humans developed new economic protocol; domestication of plants and animals and ushered in the Agricultural Ecosystem.
Domestication of plants and animals, led to the domestication of humans in the establishment of communities. This reduced mobility required transportation routes to garner supplies and to communicate leading to trade and “value in exchange” as described by Smith. As these new protocol were developed and adopted, Business Ecosystems emerged.
What is important to note is that as new economic ecosystems emerged, the previous economic ecosystems remained albeit as a lesser percentage relative to the expanding Value Possibility Frontier.
Business Ecosystems
The Business Ecosystem emerged following these new communication and transportation protocols. Niches developed to support production and trade. Business Ecosystems evolved for centuries and were hardly noticed until Moore (1993) described them in the 1990s.
E-Commerce Ecosystems
The E-Commerce Ecosystem emerged following the digitization of communications and supply chains of business ecosystems. The internet and Web 1.0 protocols enabled entities to create and join E-Commerce Ecosystems. Entities such as Uber, Airbnb, Amazon, Craigslists, and other multi-sided platform models ushered in the E-Commerce Ecosystem era.
The E-Commerce Ecosystem brings us to the point on the graph where these four socio-economic ecosystems reside simultaneously. It also brings us to the threshold of the Eco-Commerce Ecosystem.
Eco-Commerce Ecosystem
The emergence of this fifth socio-economic ecosystem brings the economy somewhat full circle back to the Ecological Ecosystem, but with the previous three economic ecosystems integrated into the economy.
The Eco-Commerce Ecosystem is now possible due to the adoption of GIS, GeoNFTs, blockchain and Web 2.0/3.0 protocols. These new protocols integrate and internalize new values into the overall economic system.
These new protocols expand the economic Value Production Frontier to include “value for existence” along with Smith’s “value of use” and “value in exchange”.
“Value for existence” accounts for the socio-economic values associated with the bio-physical processes of specific species, ecosystems, or more generally, of life on Earth. Life is the only known force to counteract entropy and create new socio-economic values. By incorporating the means to account for, and hence, value existence, EcoCommerce expands the economic Value Possibility Frontier beyond just value of use and value in exchange.
According to government, NGO, and corporate assessments, this new value exceeds the entire value of today’s economy with BlackRock estimating biodiversity, as value for existence, exceeding $100T/year.
This is economic value that remains an externality to the economy due to the lack of the protocol needed to internalize these values. Just like the previous economic ecosystems, the “invisible hand” needs to guide participants to adopt new protocol. That is already occurring, but a critical mass along with market organization need to occur.
EcoCommerce Catalyst
Despite thousands of eco-market efforts, millions of professional hours applied, billions of dollars of investment, and an estimated trillions of dollars of potential value in the EcoCommerce Ecosystem, it has failed to materialize into a self-organizing ecosystem.
The emergence of the EcoCommerce ecosystem is unique from the previous because it entails capturing public and common goods within the economic where as the others focused on private and club goods. As Smith noted, these more tangible values are self-evident and markets can spontaneously emerge to meet individuals’ self-interests.
The EcoCommerce ecosystem will require a NCU (natural capital unit) as the accounting system and the Eco-Unit as the transaction unit. The NCU has the capacity to account for the entirety of global natural capital and the full suite of provisional, regulating, supporting, and cultural ecosystem services it generates.
Eusocial Ecosystem
The sixth economic ecosystem to emerge is the Eusocial Ecosystem, or true social era. This ecosystem will incorporate social values into the economy. The protocol to enable this ecosystem to emerge is based on the spatial web, AI, IofT and other technologies that are becoming common place. Many entities are already establishing niches in this new economic ecosystem. It too will capitalize on “value for existence” but will do so with the value that individuals bring to the socio-economic system. For example, significant economic value is created by families, caretakers, volunteers, and a whole host of values that remain externalities despite supporting untold trillions of dollars of economic value.
Adam Smith of EcoCommerce
Timothy Gieseke has been called the “Adam Smith of EcoCommerce”. His vision of the economic ecosystem provides a more manageable perspective of how new economic value emerges. Using Smiths’ keen observation on the invisible hand, absolute demand vs. effectual demand, value of use and value in exchange, and Smith’s perspective of the complexity of the self-organizing economic system, Gieseke has laid the foundation for the next era in the economy to capture “value for existence”.
This vision and application is possible due to his experence in government, non-profit, and the private sector with each encompassing the space between economic and ecological aspects of land management. He is also a farmer and the first-noted ecocommercist. He authored a trilogy of books; EcoCommerce 101 (2011), Shared Governance for Sustainable Working Landscapes (2016), and Collaborative Environmental Governance Frameworks (2019) that describe the environmental, social, and governance aspects of initiating an EcoCommerce Ecosystem.
In the coming months, Timothy Gieseke and others are developing the technological architectural plan and the minimum viable platform to enable the billions of dollars of current efforts to coalesce into a coherent economic ecosystem.
