Micah Saul: This project is built on a hypothesis. There are moments in history when the status quo fails. Political systems prove insufficient, religious ideas unsatisfactory, social structures intolerable. These are moments of crisis.
Aengus Anderson: During some of these moments, great minds have entered into conversation and torn apart inherited ideas, dethroning truths, combining old thoughts, and creating new ideas. They’ve shaped the norms of future generations.
Saul: Every era has its issues, but do ours warrant The Conversation? If they do, is it happening?
Anderson: We’ll be exploring these sorts of questions through conversations with a cross-section of American thinkers, people who are critiquing some aspect of normality and offering an alternative vision of the future. People who might be having The Conversation.
Saul: Like a real conversation, this project is going to be subjective. It will frequently change directions, connect unexpected ideas, and wander between the tangible and the abstract. It will leave us with far more questions than answers because after all, nobody has a monopoly on dreaming about the future.
Anderson: I’m Aengus Anderson.
Saul: And I’m Micah Saul. And you’re listening to The Conversation.
Aengus Anderson: Today’s episode is with John Fullerton. And I have a special place in my heart for people who change directions and rethink things they’ve been doing for a long time. And John Fullerton is one of these guys. He was the Managing Director of JP Morgan. He’s a guy who was very powerful in the financial world, knew it inside and out. He worked there for eighteen years.
Micah Saul: Yeah, founded a few other investment companies. And then, then he does the Capital Institute.
Anderson: And why don’t you tell people what the Capital Institute is, because it’s very much not like what JP Morgan does.
Saul: So, the Capital Institute is really focusing on how to make finance serve different goals. You know, the majority of the finance industry…well, it serves finance. It serves money. And the Capital Institute is interested in resilience, sustainability, justice; yet still operating in the financial world. It’s a major shift from attempting to grow money, to attempting to grow sustainability.
Anderson: And as we’re talking about attempting to do different things, the Capitalist Institute is really attempting to answer “what is capital for?”
John Fullerton: So, I was reading in the project, and what went through my mind was I’m often torn with this idea that we live at this special moment, and you know it’s kind of arrogant to think that—
Fullerton: —we live at a special moment, and yet I really think we do live at a special moment. So I’m intrigued that you’re doing this project which suggests that independent of the little bubble that I live in, there are people outside that actually agree with that. And it’s a pretty exciting idea to think that maybe this is a special moment. So anyway, I was just curious how you decided to do the project.
Anderson: Both my co-host and I have been talking about that for a long time, and debating whether or not it is. And so out of conversations with my co-host, who’s a friend of mine, we started thinking God, we should really pursue this with a big project. And I done two other projects about the present and the past, and I thought okay, this is the chance to do the project on the future, and to really have conversations with people both about different possible futures, but also about the very premise of is this unique moment and does conversation change things?
You know, coming from history, there are lots of schools of explaining social change. You have people who look at technological determinism, or environmental determine. And I’ve spoken to other people who are much more into intellectual history, who will say no, you can actually pinpoint people who unleashed powerful ideas, and that really does change things.
Anderson: Exactly. It’s hard to beat examples like that.
Fullerton: That’s the one that a lot of people in our space refer back to and say you know, imagine what it was like when Copernicus started throwing these ideas out.
Anderson: Yeah, I mean it would be insane.
Fullerton: Yeah, and it was eighty years before Galileo proved Copernicus was right. So there was this lifetime, literally people’s lifetimes, to process it, yeah.
Anderson: So I’m kind of looking for the Copernicus of today. Like, who’s throwing out those ideas now [crosstalk] that just seem nuts.
Fullerton: Well, you didn’t find them here. No, I think that’s what this kind of new economy conversation is about, is a— I’m not sure if there will be a Copernicus. The ideas that I have come across are remarkably not new. They’re just sort of new at this time, in many ways. But the whole rethinking economics is not something that someone just came up with, although I suppose Galileo could’ve said that people have been thinking about is the Earth at the center of the universe for a long time.
I guess my expectation is there won’t be a Copernicus, but there’s this kind of bubbling up from numerous different directions and different perspectives, an emergence of a new understanding of the human economy’s place on the planet, and—
Anderson: Yeah, and I think that sort of ties in with the very idea of conversation. There are these times where you can pin down actually a lot of people are talking about this. Maybe they’re not all specifically talking to each other. But there’s definitely like a buzz at certain historical moments. And I think they economy, you know— At this point I’m half a year into this project. So I’ve talked to a lot of people about the economy in different ways. And it does feel like at least in some areas, that is emerging as a conversation. So that’s some of the background.
Fullerton: Yeah, I man I think so. I’m torn between the crowd I traffic in on a daily basis is immersed in a conversation, and yet the mainstream—you turn on the TV at night and it’s still having the old conversation.
Fullerton: And they’re not connected. They’re just…different worlds. Imagine if I went on you know, the Kudlow Report, and started throwing my ideas around. The guy would think I’d lost my mind. And he’s got the TV channel and I don’t.
Anderson: Yeah, I want to bookmark that idea and get back to that later in our conversation.
Anderson: I’d like to start, though, with something that I was reading— You were talking about the choice, and sort of the choice between a future that is maybe economically prosperous, or one that is more environmentally sound, and how do we reconcile those two different paths. And different folks in this project have talked about one or the other, but no one has framed it as sort of a choice. And no one has talked about how do you do decelerate the current capitalist system in a way that makes you environmentally sustainable without having a real problem socially.
Fullerton: Yeah, you just put your finger on real nub. And I think it’s worse than most people realize, in terms of the chaos of this transition from one state which is perpetual growth, to what Herman Daly calls a steady state. One of the ideas that I’ve been working on and hope to contribute to this conversation is an idea of financial overshoot, which I think goes as a corollary to ecological overshoot. And I think, just to clarify, my view is that the choice is not ultimately a choice.
In other words we don’t really have a choice, we have a choice between adjusting our economic system and not destroying the planet, or we can choose to destroy the planet, which will destroy the economic system. But it’s ultimately not a real choice. But this idea of financial overshoot, at least for me as a finance person, puts it all into very stark relief, which is if you accept that there are finite boundaries to the planet— (And that’s not broadly accepted. I mean, it’s amazing how most mainstream economists will in a sense assume away that little problem and assume technology or some substitution of goods and imports will solve scarce resource problems.) But ultimately, certainly if you speak to anyone who comes from a physics or a ecological background, there’s a limit to how much substitutability can happen. And ultimately there’s this thing called the law of entropy that tends to interfere with endless ideas of exponential growth that demands material throughput. So, if you accept the premise (as the famous Club of Rome study, forty years old now suggested) that there are limits to physical material growth, if you then translate what that means to economics and finance, the financial system has financial assets that are valued based on some future projection of future cash flows. Probably the critical assumption into the future cash flow assumption is the future growth rate assumption of the economy.
So if you start to mess with, much less undermine, that growth expectation, you’re going to require a revaluation of the financial assets in the entire economic system. And that’s most pronounced in areas like fossil fuel companies. And there’s now research out that shows that if we are to stay within the two degree warming limit that the scientists suggest is kind of the tipping point, you can translate two degrees of warming into gigatons of carbon. And you can translate gigatons of carbon into [proven] fossil fuel reserves in the ground. And it turns out that we need to leave 80% of the [proven] fossil fuel reserves in the ground, let alone not go out and explore and find more fossil fuels.
And we did a quick, rough analysis and and came up with a number like $20 trillion dollars as the the value of that 80% of the fossil fuel reserves. So in other words, we just went through an economic crisis triggered by a $2.7 trillion dollar subprime housing crisis. And the stranded assets of fossil fuels, if we are to have the will to not produce them, is an order magnitude greater than that. And so this transition from an exponential growth economy to a stable, steady state, whatever you want to call it, economy will require us absorbing these massive financial shocks, which makes them, to your question, the challenge of how do you maintain prosperity through this transition. You know, a really really hard question and I don’t think anyone has a real good answer for that yet.
Anderson: That’s a really interesting way of putting it, too. I’ve talked to other people on this project about energy systems, but not in that language at all. But I’m interested in the idea that we would have to voluntarily choose to not exploit these resources and that that makes a huge dent in basically our expectations of growth.
Fullerton: That doesn’t drive the expectations of growth. In a sense it’s taking the candy away that the child really wants.
Fullerton: And then the child needs to adjust to a different form of sweet, or a different form of satisfaction that is not candy. But it doesn’t mean that satisfaction and prosperity is not possible. There’s no law that says we can only be prosperous if we burn oil.
Anderson: Right. So there’s an interesting calibration of expectations that has to go on.
Anderson: I was actually talking to Priscilla Grim, one of the Occupy Organizers—
Fullerton: Yeah. I’ve met her.
Anderson: —about this. And I was asking, do you think we can recalibrate our expectation maturely, in advance, through intellect, kind of looking at our problems, or do you think this is something that just sort of crashes onto us and we have a temper tantrum because we’ve had it too well for too long?
Fullerton: What’d she say?
Anderson: She said, “I haven’t no idea.”
Fullerton: Yeah. You know, I don’t have any good answers to that. I guess I believe that this is going to be a tumultuous path. But with that, I hope, comes sort of a renewed sense of common purpose that… You know, I remember my dad, who passed away a year ago, fought in World War II. And I went on a trip with him several years before he died, but late his life. We spent three days together driving around. And I asked him to talk about his life a bit. And it was it was amazing how throughout his entire life, and a happy marriage, two children, you know, all kinds of purposeful experience in his life, the one thing that he talked about was the war. And it was this immensely unifying, common, purposeful experience that horrible as it was—and he was on a sub chaser in Asia and he was on the invasion of D‑Day. I mean, he was in it. And yet that was what he remembered. So I guess my hope is that we, as we go into this increasingly turbulent period, it actually becomes the unifying force that seems so missing right now, particularly in this country. Maybe that’s just sort of naïve optimism, but…
Anderson: It seems like so much of that, and so much of this conversation is each individual’s read on human nature and what it’s going to do in a different point in time.
Fullerton: Yeah. I don’t think anyone knows. I think that’s what’s exciting about this time. You know, there’s this idea, that you’re I’m sure very familiar with, in nature called emergence. And it’s very chaotic, and unpredictable. And yet somehow order emerges out of that process. And so I kind of go about my life on a…you know, I’ve got this sort of big long-term vision thing, and then I’ve got the just going to get to work every day, and I use the image of sort of pulling my stool up to the big rock with my chisel and just start chiseling away because that’s all I know what to do. And it actually quite exhilarating. I don’t know if we ever get an answer to what’s going to happen. We more just know that it’s time to pull up our stool and start chiseling, and know that there’s no one part on the rock that is the answer. It’s this cumulative effect of a lot of smart people and different types of ideas, from different perspectives, working on what’s ultimately one big rock that we’re wrestling with.
Anderson: And when I’m thinking about the metaphor of the one big rock that we’re dealing with, there are a bunch of things that come to mind. And some of the most interesting conversations I’ve had in this series have been with people who are really big systems thinkers. But all of these thinkers talk about glimpsing these massive systems, some of which are natural, some of which a man made, all of which are essentially too complicated for us to just grab onto and fix. We have biologically evolved to deal with things that are tangible, that are in front of us, and here are these new problems that are systemic. Do you think that those problems in a way could go so deep that they’re almost impossible for us to really deal with? They have their own inertia, in a way.
Fullerton: You know, this is going to sound…presumptuous, but I actually think collectively we have a pretty clear understanding of the problem. And that problems like climate change are really symptoms of the problem. And the problem boils down to—and again this goes back to Copernicus—this idea today that economic growth is the purpose of our economy, and the source of our prosperity. It’s just a flawed idea.
And we actually know that it is. I mean, we can give very tangible examples like you know, if I happen to get sick in the middle of this interview and have to go the hospital, that’s good for economic growth. And yet obviously that’s not good for my wellbeing, and not good for your interview. So we know that economic growth, and we’ve known this for years, is not the real path to prosperity. I think what we don’t know yet is the very complex, interrelated, interconnected ramifications of shifting from an economic system that served its purpose very well in a period when we desperately needed economic growth and employment, and that we had sort of limitless or apparently limitless natural capital, Earth (whatever you want to call it) to operate in.
But I actually think you can trace many many of these big systemic crises to being symptoms of the flawed idea that economic growth can go on indefinitely, exponentially, on a finite planet. That’s sort of my North Star. And then as a finance person, why do we think we need economic growth? Well, because the way our capital system works is that capital demands that growth. In order to generate exponential financial returns on capital, the easiest path, let’s just say, is to generate economic growth. It happens to also provide wellbeing and jobs and employment and all that good stuff. But as we’ve learned in this recent election, no one who’s deploying capital in the conventional Western capitalist system is doing it with the idea that it’s creating jobs or creating prosperity. They’re doing it with the idea that it will generate a return on financial capital, and we’ve just assumed that if all the capitalist do that efficiently and effectively, the byproduct of that system will be full employment.
And you know, that broadly kinda worked for a long time. Problems and equality here, and some meetings and legislation there, but broadly speaking that was a brilliant system that happened to presume no finite boundaries on the planet. And that idea was perfectly sound when the economy was one fiftieth of the size it is today, and the population was you know, a billion people not seven billion people. So we need to rethink that, but that doesn’t mean that it’s not possible to have a capitalist economy that doesn’t happen to grow exponentially forever.
What it does mean is that financial capital can’t grow exponentially. That as radical too capitalists as “the Earth is not the same in the universe” to the church. Because if you’re in the capitalist system and you’re in the business of deploying capital, no one questions what the goal is, which is generate compound returns, risk-adjusted, blah blah blah. But if my framework is right, and that the growth of financial capital is coming to some degree—not exclusively but to some degree—at the expense of the stock of natural capital (just to use simple terms), that can’t go on indefinitely.
That was true for the last five hundred years. It’s just that we’re now at the point where the reality of that truth is sort of biting—
Anderson: Right. And we’ve grown to fit the clothes.
Fullerton: Yeah. And all of a sudden, we’re feeling the tug. And then we sort of reached the threshold and then we fall back. And you you could even describe the recent financial crisis as a manifestation of having hit one of those boundaries and falling back. And it’s not that it was caused by too much carbon in the atmosphere. But all of the financial shenanigans happened in part because it got harder to deploy capital in a much simpler, more straightforward basis like going West and building condos. Well, that’s already been done. So now what’re we going to do with our capital?
And the capital base has only gotten bigger and bigger. So you’re having to do this on a larger pool of capital, which makes it that much harder to deploy productively.
Anderson: So you’re driving things into abstraction.
Fullerton: You drive it into abstraction, and your challenge only becomes harder every year you succeed. Because next year there’s more financial capital you need to deploy and earn a return. And the national capital, which is the foundation of your economic system is in a sense being depleted. It’s either being used up because we found all the cheap fossil fuels or found all the cheap minerals, or we’ve exploited all the cheap seafront for development. So it just gets harder every year. It’s just arithmetic.
Anderson: And that makes it sound like in its very DNA of what it is, it’s sort of a self-liquidating ideal.
Fullerton: Yeah. Which is different, by the way, than than what Marx predicted. So you know, this isn’t about well, we gotta go back to Marxism or socialism. I mean this isn’t at all about socialism or capitalism. In fact the communist system, the socialist systems, are equally destructive and unsustainable, because they too are predicated on growth. So this isn’t about an economic ideology, this is about physics and arithmetic and entropy.
Anderson: When I think about this idea of growth being naturalized, and you were saying that we kind of know that you just can’t grow forever— But I think of all the things that I see in the media, and some of the people I’ve talked on this project, for instance of the head of the Mars Society, a guy named Robert Zubrin, who said even if we stay on Earth, there will be no resource problems because creativity is infinite. Deep within there, and I think unquestioned, is an assumption of growth.
Fullerton: Well, I come back to— And again I suppose this is a faith that I have. You know, in my search for “sustainability” (whatever that means) I very much sign up in the camp that says well, let’s look to nature and natural systems for answers rather than relying on our human ingenuity to figure out how we’re going to outsmart nature. I can’t defend that. That’s just a position, a point of view that I have that seems remarkably commonsensical. But if I were a PhD in physics, maybe I would have a different view. But that’s where I come from. And so if I look to growth in nature, it actually has unique qualities. And you know, our bodies, the trees outside, grow physically and through adolescence aggressively for some period of time. But then ultimately that growth curve slows down and ultimately everything dies.
I forget who it was that said that exponential growth is the ideology of a cancer cell. That really resonates with me. And so there is there is a balance and harmony of how growth operates in the world, and so whether it’s financial capital or business enterprises, why do we think they will grow exponentially when nothing in nature does?
Some of the work we’re doing now in what’s the vision for this economic system that can work, the language I like to use is regenerative capitalism. Or a regenerative economy. and there is an idea we’re exploring, which is how business enterprises and economies as a whole mature from this exponential growth, material growth phase, into much more of a growth of their qualitative factors. It’s almost to the point where understanding where the answers are is the easy part, and articulating them and convincing people that this isn’t a fallacy and that it’s possible that the Earth is not the center the universe essentially is the challenge. It’s a communications challenge. It’s a worldview challenge that from my experience, the older people are the harder it is for them to even entertain this conversation.
And really interesting for me, personally, I’ve found that people that are working in finance have a particularly difficult time processing this. And my belief in the reason for that is that if you spend your career working in finance, you’re sort of accustomed to this abstraction disconnected from the real world, and you sort of live in the real world on the weekend maybe, and go camping or go hiking. But your business world is disconnected from that much more than say, an industrialist would be. I find that people that are under 30 get this, and look at you like, “What’s the big deal?” And people that have sort of worked in the system and lived in the system are the ones that have the hardest time.
Anderson: Something that I just realized we’ve used as an assumption this whole conversation, that we should probably talk about a little bit, is the notion that we don’t want the planet to heat up. Why not adaptation, you know? I mean why not just invest in Canadian land?
Fullerton: You know, this idea of the precautionary principle that I’m sure you’ve heard lots of people talk about—
Anderson: I talked to Carolyn Raffensperger, actually.
Fullerton: Oh, right?
Fullerton: Is she the one that coined that term?
Fullerton: Yeah. So that resonates with me, right. So, I spent years in finance in the world of risk and risk management. And it just appears to me to be complete stupidity to even suggest that when we’re dealing with the realm of complexity we don’t begin to understand, and yet one thing we know is that if we take all this carbon that’s been sequestered naturally over millions of years in the ground and burn it and stick it in the atmosphere and it’s not leaving the atmosphere, and that causes the atmosphere to warm, and that causes all these other things to happen and we’ve got models that can predict that, that we sort of go, “Eh, so what? Life’s going to change.” I just find that… It’s not an acceptable perspective, and I think it’s a rationalization for not interfering with the way I want to go about my selfish life tomorrow.
The analogy would be like a novice stock trader coming into the stock market and saying, “Oh, stocks are really volatile and people lose and make money all day long, so I think I’m just going to go and and short Apple Computer at two hundred dollars a share just for what the heck because maybe it’ll go down, and life’s volatile.” I mean, people don’t do that. They actually assess risk, and they make rational judgments, and they mitigate risk, and they manage portfolios, and they do things that are grounded in some idea of a rational approach to managing an uncertain environment. And we take on risk for expected gain, but this is suggesting we explode risk for an apparent loss. Like, that’s just not rational. That there’s nothing good that comes out of a six degree warmer planet that we know of. So why would we take risk to cause that to happen intentionally?
Anderson: What does a financial system or an economic system that is modeled on nature look like?
Fullerton: I start with this principle of holism. It’s essentially the idea how everything is interconnected, right. And we know that’s true in nature. And so the first thing I think to think about in terms of an economic system that operates the way nature does is to understand that the human economy now is so large that it’s part of nature. So there’s no longer economy and environment. There’s one thing, and we probably need a word for it. Because it’s the interaction of the human economy and natural systems as one thing. And so I think that’s sort of for me the place to start.
There’s an important paper that was written years ago now called “A Safe Operating Space for Humanity” I think is the title of it. And it essentially is a scientific assessment of the ten critical boundaries that we need to respect if we’re not to throw the planet into some different orbit. Not physical orbit, but you know, it’s the carbon cycle, the water cycle, the nitrogen cycle, biodiversity, things like that. And so for me, this idea of what does the economy look like, it’s an economy that respects those boundaries. And those boundaries should be determined by the best available science. Not by politicians, not by bankers. And so the effort on climate change, the IPCC, is sort of our first attempt at creating a global scientific consensus on one of these critical boundaries. And we probably need the equivalent effort on the other nine so that we have a set of facts that we can then all work off of in terms of how to govern this thing called the human economy.
And despite all of the talk about innovation and creativity which I’m a huge believer in and advocate for— In fact, without that we’re doomed for sure. So no one should accuse me of being a Luddite, but that doesn’t mean I need to sort of throw my entire faith in something that I don’t even see a possible solution for. So if you accept that as the constraints on the economic system, new constraints that didn’t used exist, you very quickly have to reassess and reimagine all the components of the economic system.
And so what does that look like? For example, if investors are willing to invest in a company that doesn’t grow exponentially forever but generates a stable distribution of dividends for…I don’t know ever, but some long period of time, then that company can concentrate on improving the qualitative values of its interaction with its consumers. And that’s very different than, “Well, if we move our plant to China we can lower our labor costs therefore we can grow our earnings therefore the stock price can go up.” It’s much more, “Well, if we stay here in Cleveland, we can build much stronger community that has all kinds of other values that benefit the community and still stay in business because, turns out we actually have a very viable competitive enterprise.” And so it’s hard to sort of generalize these things too broadly, but for me ultimately it comes down to letting go of this idea of exponential growth of financial capital, and then that that unlocks all kinds of possibilities.
Anderson: There are two thoughts that I sort of want to pull in from the fringes of the project.
Anderson: One of them I want to bring in right now is a neoprimitivist named John Zerzan. His general critique was that you just cannot have a level of technology without having a society that’s both hierarchical and is still destroying things that are innately valuable. There’s an actual bias to technological advancement itself. Can you rein this sort of growth engine in and still keep a lot of the technological things that we want? Or are they always going to be destroying [crosstalk] things that are valuable?
Fullerton: I don’t think the answer is to sort of assume “therefore all technology is a problem.” And I’ve heard people—I’ve not heard them describe themselves as neoprimitivists, but technology is a slippery slope. And my own experience with derivatives, which is a technology—you, know I can absolutely in a much longer conversation explain how derivatives when we first created them created real value, and served real purposes, and enhanced the efficiency and resiliency of the financial system. And then the technology kinda ran amok and it was abused and bad things happened. And certainly you could tell that same story for nuclear power.
But at the extreme, that means we all go back to living in caves. And seems to me there’s somewhere between where we are or where we’re going and the caves, that might be the right balance. And I think in natural systems, that comes from this balance of resiliency and efficiency. And I’m not smart enough to know how to find it, but I know where we are. I know which direction we need to head.
The whole question of the human place in life is pretty central to all this, I guess. And I certainly come down on the side of of thinking that we are one of many forms of life. We may be “superior” in many ways, but we certainly aren’t entitled in some way to destroy life for all the other forms of life. I know you’re interested in the idea of what good is and what what it’s not, and I’ve been very influenced by a colleague, Peter Brown. He wrote a book called Right Relationship which is really grounded in Quaker ideas; human economy, relationship with the biosphere. And he’s a philosopher by credential, and he was strongly influenced by Albert Schweitzer. A reverence of life is I think his definition of good. And he won the Nobel Peace Prize for that idea. I used to talk about the idea of the purpose of capital in a sustainable system, and I was asked in a conference after we did this whole panel discussion on the purpose of capital. And this woman stood up and said, “So John, what is the purpose of capital.” And I didn’t have an answer, but just what came out of my mouth very much spontaneously was, “To sustain life.”
I’m not sure what good is, but I know I feel very strongly that doing things that counter the sustainment of life on this planet must be a definition of evil. You know, I suppose that’s point of view not a fact, but it seems pretty self-evident to me.
Anderson: So, we started by talking about social change and does conversation matter. I spoke to an anthropologist and historian who wrote a giant book called The Collapse of Complex Civilizations. And over the course of his conversation, he laid out this airtight case for why in the next thirty to sixty years, X Y and Z factors are going to lead this system to—
Anderson: —its end. And I mean, he’s one of the darkest people I’ve met in terms of feeling like there’s nothing you can do to get out this. Obviously we’re here talking about this. We must have some faith that conversation matters.
Anderson: But, do you think it does, and if so, why?
Fullerton: I am open to his point of view being correct. I think we’d be naive to suggest that we know he’s wrong. Whether his point of view has a 10% probability of being reality or 50% or something higher, I don’t know. But I think we have to accept that it’s in the distribution of potential outcomes, and I’d actually like to read his book but I’m sure he could make a very compelling case, knowing the history that he does and knowing complex systems and knowing the facts that we’re facing. It’d be much easier to construct the case that this is all going to collapse rather than the case that shows how it’s not going to collapse.
Anderson: Right, which is based on something unknown.
Fullerton: Yeah. So, having said that, I go back to this idea of emergence. And when there was nothing but bacteria on planet Earth, if you and I were having this conversation and wondered how there could ever be human life, we’d never answer that question. Again, this maybe falls more into the faith category than the sort of scientific or logic category, but while I do believe we live at a time that is a unique moment, I also believe that I don’t happen to live in the time when this whole thing’s gonna come crumbling down—boom—forever. I just find that to be incredible, not credible.
The issue is more how will this evolve and how will this emergence to a new system occur? And to your question about conversation, intuitively I want to believe conversations matter. I like having conversations, and I’m drawn into these conversations. I spend a lot of time in these conversations. So somehow I’ve chosen, even subconsciously, to believe that conversations do matter. And I think again it gets to this idea of emergence. You know, I’ve learned from you today things that I didn’t know. You may have learned a thing or two from me. And you’re going to go speak to someone tomorrow. And that’s all part of this holistic, interconnected idea that none of us are smart enough to see how it plays out.
You know, in my work I get a little feedback from people out there orbiting around the Capital Institute that tells me that the work we’re doing is influencing and making some impact on some people that then do something differently than they would have otherwise done. And you know, you add up the all of those small connections, and that’s how networks work. And that’s how systems work. And we just don’t happen to have the master plan, the schematic, that shows us how it’s working. So I’m a believer in the value of conversation.
I’m also, by the way, a believer in the value of storytelling. We talk about these sort of abstract ideas on the future, and yet the future is evolving in front of our eyes in lots and lots of projects. And so one of the things we work on at Capital Institute is something we call our field guide to investing in a regenerative economy. And we’re trying to tell the stories of projects and companies that are demonstrating the principles of a regenerative economy, and particularly showing how investment can fuel and serve the emergence of those activities. And a central part of our culture is storytelling and connecting with artists, and creativity is the way to do this, not to academic papers and whatnot.
Anderson: Are you optimistic at all?
Fullerton: Yeah. I am. I ask myself that question all the time. I can easily become depressed about all this, but you know, I have three children, and I can accept that we live at a pivotal point in history and coincidentally happen be born at the time when all of these forces are kind of revealing themselves and this idea of exponential growth is going to be confronted. But I just can’t accept the idea that oh, and by the way you happen to live in a time when you and your children are going to get wiped off the face of the Earth for the first time in three billion years. Sure there’s been plagues and stuff, but what we’re talking about is orders of magnitude worse than anything that’s ever happened in terms of the potential impact. And I just, you know…it’s possible, but what’s the probability of that? It just seems too far-fetched, so I’m content to remain optimistic, realistic. But it’s an optimism that’s not grounded in sort of happy talk and it’ll all be fine and technology will solve the day. It’s grounded in my life work of working the rocks, so to speak. Which isn’t always fun.
Aengus Anderson: We’ve come in a great circle here. We began by talking about The Conversation, and we end by talking about The Conversation. And in the middle there we had kind of a detour through finance and economics and a couple other small questions.
Micah Saul: Yeah, just just a few like you know, minor points to be made.
Anderson: Speaking of minor points, good lord John brought up some really big new stuff for this project to explore.
Saul: Absolutely. We talk about these big recurring themes of sustainability and environmental collapse. But we talk about all of them from the perspective of an investor. It’s all about risk management. It’s all about… Really, much of it is about capital. And it’s about how everything can be viewed in terms of capital. Which is a really interesting way of looking at the world and one that I think makes maybe his arguments more effective in our society.
Anderson: Right. I think we’ve got a real reverence for people who work with money, and people who understand the markets and economics on that very high level. And so to hear someone who thinks about those things speak about risk, and then apply that to the environment and say, “What we’re doing is risky, and it would be a bad investment.” It feels like that that language really probably resonates with us in a very different way than sort of the biocentrism that David Keith left us with. His claim that you can’t really make the appeal to save nature or preserve anything environmental unless you have, ultimately, a deep value for it that’s kind of non-quantifiable.
Saul: In some ways is going in the face of a lot of people that have been involved in the conversation so far that really critique the idea of quantification.
Anderson: Which I think is interesting, right. Because Fullerton does seem like a biocentrist in a lot of ways. But it doesn’t feel like his argument is biocentrist in any way.
Saul: Because we’re talking about risk, and we’re talking about risk to ourselves, there’s a strong sense of anthropocentrism in his argument, though he’s arriving at biocentric goals.
Anderson: Part of that is it connects back to this broader conversation we’ve had about what can we know through science, and what can we manage. I mean, Fullerton is clearly in the camp with people like Wes Jackson and maybe Frances Whitehead, who think there’s a lot that you can’t know, and you do the best you can but don’t reinvent the wheel when it comes to the environment.
Saul: So, speaking of those big systems, [you] mentioned it briefly, but he does give us a different way of looking at how the systems are intertwined. Again, it comes down to the notion of capital, which I thought was really interesting. Did you see a connection with Tainter there, in some ways? By which I mean the economy and the environment, two massive systems, are connected together via capital.
Saul: And different types of capital. There’s actual financial capital. But then he’s also talking about that being built on the natural capital, the environmental capital. The natural resources as being another form of capital.
Anderson: Okay, I think I see where you’re going with this. So, you’re thinking Tainter was talking about the idea of solar energy, both pent up solar energy and renewable solar energy.
Anderson: And for him that’s kind of slang for basically everything that is running through the economic system. Your tree is a source of the renewable solar energy. Your coal is a source of the pent up. Is that what you’re thinking in terms of natural capital?
Saul: Yes, exactly.
Anderson: There is an interesting connection there. You know, we’ve talked to a lot of systems thinkers who say well, everything is connected to everything, and they’ve developed that argument well. Morton is sort of our poster boy for that. But Fullerton is talking about two systems specifically—
Anderson: —that kind of can’t be discussed separately. And he talks about holism, so you get the sense that he’s interested in all of these other systems. But really he’s thinking about the economy environment as one block, built upon, ultimately, natural capital.
Saul: In my mind, that’s one of the biggest things here. He’s able to say these other systems exist, but what is going to cause our problems in the immediate are these two. Or rather, what we think of as these two, but is actually just this one.
Anderson: Systems thinking is daunting, and I think it can also be very paralyzing because it’s too big. And it feels like yeah, Fullerton’s sort of collapsing that problem down and he’s letting us see here’s the real red flashing alarm, and you need to turn that one off.
Anderson: And he does that in some intriguing ways. We’ve talked a lot about growth in this project, right, and the fallacy of exponential growth. That’s been up a running theme. Fullerton points his finger right at it. But I think a lot of people when they point their finger at it, they conflate capitalism with an exponential growth, or at least an endless growth economy. Fullerton doesn’t do that. I think he’s the only person in this project who really doesn’t do that. And I think the other thing is that from my own bias, I conflate capitalism with growth.
Saul: Oh, sure.
Anderson: So I’m less likely as an interviewer—just highlighting my own bias here. I’m less likely to go after that. So I thought it was really good for me to have Fullerton go, “No. Those two things aren’t tied together. You can have a capitalist economy that functions in a way that is not predicated upon exponential growth.”
I mean, we’re not having a conversation about economic ideology, he says. It’s a conversation about…what is it, physics and arithmetic?
Saul: Yeah. Exactly. That was such a great line.
Anderson: So, I mean it is a great line. But do you believe him? Can you have capitalism without the growth expectations? Like, I’m not really convinced of this. I don’t know if you can do that.
Saul: I don’t know that that’s something I can answer. I guess I can imagine that it’s possible? Growth as a good is so deeply ingrained in our society. I have no idea even how to imagine an economy, especially a capitalist economy, that doesn’t have that as a central tenet.
Anderson: And you know what, I think it really highlights how embedded we are in the system is that we just had this entire conversation and never once did we suggest that growth could be non-material, right? We were just talking about growth as if it had to be material.
Anderson: Whereas of course I think what Fullerton is saying, or other folks like Korten have said, is that growth doesn’t have to be material.
Saul: You could grow in happiness. You could grow in stability. You can grow in equality. No, it’s fascinating that even while we’re talking about it and trying to dissect it, we’re still stuck in that world, you know, and we’re making those assumptions just without even thinking about them.
Anderson: Right. And then to wonder like could we deal with these other types of growth without metrics, right. And so maybe there’s a Douglas Rushkoff connection there. What happens when you have these other forms of growth, but you still have a capitalist economy? Do you have to quantify personal growth? Do you have to quantify health in all these? And what are the results of quantifying?
But we know there’s something else really big here that we have to talk about, so let’s just stop that last train of bloviation that I was on and let’s talk about the choice.
Saul: What is that choice? The choice is…it’s the choice between… I think the easiest way to say it is you can fix the environment and tank the economy, or you can let the environment die. And tank the economy.
Anderson: So, either way you end up with a tanked economy. And the question is, do you want an intact environment at the end of all of the social chaos?
Saul: Going back to that notion of risk management, his argument is this is a pretty obvious choice here.
Anderson: It is if we’re rational actors.
Saul: If, right. Aha.
Anderson: I think it’s also a question of what kind of animal are we? Are we a solely reactive animal? Are we the one that has to put our hand on the hot stove and go, “Oh! Don’t do that. That’s how we learn.” Or can we pick it up in advance? Especially with something that’s an abstraction, that’s not the hot stove. I mean, it’s a hyperobject. It’s global warming. It takes a lot of time into feed back and hurt you, and it doesn’t hurt you in a way that’s direct and it helps other people. So it’s super complicated. So, can you intellectually get to a point where you have to sacrifice a lot of things for this weird, intangible, hypothetical thing called global warming to be averted? Well, a lot of people in this project I think care about the environment. I wonder how many of them would make massive life changes to protect it.
Saul: What is the carbon footprint of this project?
Anderson: It’s enormous, right? Do you think this is something that we can really intellectually get to? Or is Tainter right? We just have to heat it up so much that the prices of everything rise, and then we feel it?
Saul: I don’t know if we can do that as a rational thing, or if it does require that price mechanism or some even nastier like…oh my god, my house just blew away in the storm.
Anderson: And if that’s the case, I think we have to do some interesting revisions on how we think about ourselves as agents, right? Because if that’s true, then we don’t have the ability to sort of anticipate and correct. We’re much more mechanical, in a way. And that’s not a conclusion I think anyone wants to draw. This project keeps running into the notion of agency and sort of free will, and disempowering ideas. And I think that’s a disempowering idea. And if we can foreshadow a little bit to the next conversation, I think we’re going to be presented with an idea and an argument for a certain type of moral behavior, in this case veganism, that is so strong, and most of us will never end up vegans, and I think the only response then is to sort of revise how you view yourself and maybe think of yourself as a little bit more…mmm, morally flexible? morally inconsistent? morally questionable? than you want.
That was John Fullerton, interviewed at the offices of the Capital Institute in Greenwich, Connecticut, November 6th, 2012.
Anderson: So thanks for listening. I’m Aengus Anderson.
Saul: And I’m Micah Saul.
This interview at the Conversation web site, with project notes, comments, and taxonomic organization specific to The Conversation.