Reshaping Our World By Remaking Our Accounts
“Accountability policies, like restoration, demand we see the reality of our actions…”
Skilled interviewer, delightful host, probing questioner and fearless follower of the twin defining questions of our times, Why is the world in crisis? And what are we going to do about it, Rachel Donald brings an obscure topic that is critically important in our times to top of mind for conversation at the vanguard of public discourse in her most recent comment on her most recent episode, Peter Pan Accounting.
What can be more boring than accounting?
Also, what can be more important to popular participation in prudent stewardship of social cohesion through shared hope for a dignified future quality of life on a planetary scale, in the 21st Century, and beyond?
Without accounting, there can be no accountability.
And without accountability there can be no integrity in our institutions of agency and authority for making social choices for society.
And institutional integrity is sorely lacking in our world today.
A lack of proper accounting for effective institutional accountability is why our world is in crisis. AND it is what we can do about it.
Famed management consultant Peter Drucker teaches it this way:
"What gets measured, gets managed."
Measurement is accounting. Accounting is measurement. These two are the same.
What we measure, what we account for, tells us what we really value. It determines how we hold ourselves accountable for the choices that we make, and the actions that we take.? Individually. Also, institutionally.
Philosopher of Accounting Paolo Quattrone tells us that accounting is a mirror that reflects back on us who we really are.
Unlike a physical mirror, that always reflects the true physicality of light and line, shape and color, transactional accounting can be designed to reflect back different visions of what it means to be human in the world.
For example, the transactional accounting for equity as ownership reflects back a vision of ourselves as value = price in the markets: what will others pay us for what we own (and therefor have the legal right to sell to them, for a price)? And how much can we borrow against that which others will pay?
This is how we account for ourselves and our institutions in the economy of the Capital Markets, an economy in which enterprise is financed through securitization for commodification. This is a process through which a large scale, long-dated agreement for the supply of money to enterprise, for a time, at a cost and on terms, is divided up into smaller, incrementally liquid commodity shares of ownership that can be bought and sold at market clearing prices in speculation on anticipated future movements in those prices, in markets for maintaining market clearing prices for such shares, through volatility and growth that ensures liquidity in those markets: buyers will always buy, so that sellers can always sell.
Price is the pivotally important thing in this economy, and all of our transactional accounting is designed to support the calculation of a price at which anything and everything can be sold.
And the higher the price, the better. Without doubt, and without question.
More is always better, without ever considering the consequences - More of what? Better for whom? At what cost? And who pays that cost? - because those consequences are not included in our accountings. They are externalized onto Nature and Society, on the theory that Nature is vast, and we are not, so we can just take and take and take from Nature, without ever reckoning with the consequences of our taking, because those consequences will just disappear into an ever expanding frontier, reabsorbed into Nature, without consequence, to us.
Further, if our extractions from Nature impose hardships on others, the story goes, that is not our fault, because as freely self-determining market participants we are each free to determine for ourselves our own fair share of what the markets can give, and if the share that we determine for ourselves is more than the shares that others have determined for themselves, that’s the consequence of their own choices. Not ours.
In the early decades of the 21st Century, this Myth of More through which we account for good and not-good in the economy that we inherited from the closing decades of 20th Century is crashing into the New Realities of climate change and other things, in the opening decades of the 21st Century.
Ian Edwards , Executive Director of The Cape Cod Center for Sustainability, Philosopher of the Environment, fearless follower of the question, What’s Next in Sustainability? and my collaborator in imagining Bank of Nature, tells us:
Nature is a bank. Climate change is an eviction notice.
Just as when we take money from a bank, there are terms, and consequences in the law if we choose not to honor those terms, when we take from Nature there are terms, and consequences under the Laws of Nature, if we choose not to honor those terms.
Climate science is teaching us that climate change is the consequence of our taking energy from hydrocarbons that Nature is already using to stabilize habitats on earth so that we humans can inhabit them.
If we continue to choose to ignore those consequences, the earth will continue to become uninhabitable by us.
As Rachel Donald tells us in her post,
We have a duty of care and a debt burden. To restore the world we must be accountable for its destruction. We must pay back in full what we have taken—and nature doesn’t take cash or card.
Nature doesn't take cash or card.
Nature doesn't deal in money.
People do.
Money is a legal instrument that facilitates exchanges in the economy between people who are separated by distances of time, space and social connection: you don't have to trust the person, if you can trust the money.
Money is also a social construct through which society directs the individual insights and initiative of each of us, as actors in society and the economy, towards some activities, and away from others.
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If we are going to direct individual insight and initiative towards stewardship of our relationship with Nature, we are going to have to use money to do it.
Nature doesn't deal in money, but people determine how we deal with Nature using money.
The world we are destroying is the artificial world that we make for ourselves in which to live, through our technologies, out of the world of Nature into which we all are born.
This is our uniquely human way of being together, and apart, in society through the economy as a mutual aid society for sharing an abundance of technology solutions to the everyday problems of everyday people living our best lives under the circumstances, every day, through networks of connections for enterprise and exchange that are energized by money as a legal instrument for effecting transactions between people separated by distances of time, place and social connection, and a social construct through which society directs our individual insights and initiatives towards some activities, and away from others, to adaptively evolve a safe and dignified house for humanity within built environments of Urban, Rural, Curated and Left-Alone landscapes along the creative edge of a constantly changing Human-Nature partnership, constantly choosing new beginnings from time to time and over time, to fit the changing times:
The world the we inherited from the 20th Century is built for Growth. The thing that we measure is Growth. The accounts that we keep account for Growth. The things that we manage are managed for Growth.
What is this Growth that has come to monopolize our thinking about ourselves?
It is a 19th Century narrative of Progress into an ever-receding geobiophysical Frontier, through technological innovation and economies of scale, that got stripped of its humanity during the 20th Century, and reduced to simple, numerical increases in qualitatively undifferentiated transaction volumes measured in prices paid in money, from one period of measurement to the next.
It is also a special pleading for the special interests (see D'Maris Coffman on Mercantilism - same dynamic here) of professionals who are expert in supplying money to enterprise through the Capital Markets in controlling the supply of money to enterprise so they can profit from their exercise of that control, professionally.
It is the voice of these special interests that we hear speaking when we are told that Growth in GDP that drives Growth in NPV that drives Growth in NAV that drives Growth in AUM that drives Growth in fees and profits for market professionals will always mean better for us.
This special pleading for the special interests of market professionals in controlling all the money, so they can make money moving moving into enterprise to shape the economy, is the source and origin of the Myth of More.
And it is not true. More for them is not always better for us.
Sometimes it is. But not always. And not in all ways.
It's complicated.
Because, experientially, it is not correct.
Nature is telling us so. Through climate change. And biodiversity loss. And health pandemics. In the erosion of social cohesion in far too many places, and across far too many vectors.
And in our fading hope for a dignified future quality of life. For the world. And for our own, individual place in that world.
THIS is why our world is in crisis.
So, what are we going to do about it?
One thing we can do is change our accounts.
In the 21st Century, we can evolve a new way of accounting for the quality of our stewardship of our world, so that we can hold our institutions of agency and authority through Civil Society, Finance, Enterprise and Government properly accountable for their institutional exercise of institutional powers true to their institutional purposes.
This new accounting can begin with the discovery of Fiduciary Money that is currently being hidden inside the Capital Markets.
It can proceed through innovations in fiduciary finance, mandating the move out of Ownership Equity and into Stewardship Equity through negotiated agreements on equity paybacks to a fiduciary cost of money, plus opportunistic upside, from enterprise cash flows prioritized by contract for:
To keep the choices made by fiduciaries correctly accountable to our shared common sense of care (prudence) and caring (loyalty), we can evolve a new accounting for suitability, longevity and fairness through which we can see how good we are being as stewards of our world.