Food. Finance. Fuel. Fukushima.

Sunday, April 3rd, 2011 | Uncategorized

Finance, food, fuel, Fukushima. Each time another crisis occurs it feels like déjà vu—as if we are not encountering the problem for the first time. But what exactly is it that gives these crises such a familiar ring? Here are a few observations on eight characteristics they seem to have in common:

(1) Efficiency: The pursuit of efficiency is one of the main causes of this 4F system breakdown. Our systems are over-focused on efficiency. These efficiencies tend to maximize a single variable (return on investment; yield per hectare; energy return on investment) instead of optimizing a broader set of variables that would improve the viability and health of the larger ecosystem. This over-focus results in a lack of resilience and a blindness to externalities.

(2) Externalities: Over-focusing on efficiency leads to not seeing the negative externalities in the larger system. A financial sector on steroids inflicts huge negative externalities on nature, on people, and on the real economy. A food sector on steroids inflicts huge costs on nature (soil erosion, groundwater pollution), on people (working conditions for workers, health issues for junk food consumers), and on society and culture (agricultural mono-cultures). A fuel and energy sector on steroids leads to technologies like nuclear energy production that are cheap only when and if all the risks and negative externalities are socialized (while privatizing the profits). In other words, it becomes a business model that the Wall Street oligarchy perfected and deployed leading up to the financial crisis of 2008. Which leads me directly to observation no. 3:

(3) Powerful special interest groups hijack regulation, public investment, and government. We have a revolving-door issue: The offices in Washington, D.C., that are supposed to oversee and regulate Wall Street are often occupied by people who come and go from the Wall Street oligarchy (Bank of America, Citigroup, Goldman Sachs, and JPMorgan Chase). They are full of people whose thinking has been framed by these institutions (assuming that what’s good for Wall Street must also be good for America). The same revolving-door issue exists in the FDA (Food and Drug Administration) and the EPA (Environmental Protection Agency) with Monsanto, the agri-business multinational, which is at least as problematic as Wall Street. I don’t know all the facts about the energy sector. But I do know that the nuclear power industry was (along with Wall Street) a major contributor to the Obama campaign. And every dollar really paid off for them when you consider the banks got a bailout package with no conditions attached, and when you consider how quickly Obama returned to business-as-usual, saving the nuclear power industry from what its colleagues experienced in Germany: that the nuclear option for future plants is effectively dead, and that all the old power plants are being taken off the grid right now.

(4) Marginalized people pay the most. In all these crisis situations the greatest pain is suffered and the highest price is paid by those who have the least: the poor. While Wall Street bankers are back to enjoying their bonus payments—for activities that not only don’t help the real economy, but also often harm the people working in it, —most people on Main Street are still suffering the ripple effects of the financial meltdown of 2008. They are paying for it by losing their jobs, losing their schoolteachers, losing nutritional support for their children, losing services that have kept afloat those who are struggling the most. In the food system it’s the same situation. What happens when food prices go up? It hurts those who can’t pay the higher prices: the poor.

(5) Delayed feedback prevents learning. All of these systems operated with delayed feedback loops that prevent decision-makers (in government and at the top of global companies like Monsanto and the Wall Street Big Four) from experiencing the negative externalities that their decisions inflict on the larger system and hence prevent real learning and change from happening. As Vandana Shiva, a global civil society thought leader from India, once put it so eloquently: the raw material streams move from the Global South to the Global North, while the streams of waste (and other negative externalities) move from the Global North to the Global South. That description, with some modifications (mainly through the rise of the emerging economies) still describes today’s situation.

(6) Money flowing the wrong way. Another flow that’s moving in the wrong direction concerns money. Money flows readily to those who already have (lots of) it, while those who don’t have it have to struggle even harder to fund ventures that may be high in positive externalities and low or even negative in financial return. The global agriculture business, the non-renewable energy industry, and traditional Wall Street–type banking all have privileged access to capital and money in all forms. It dwarfs the capital that other sectors (renewable energy, social value-based banking, and organic sustainable agriculture, for example) can attract.

(7) Consumer awareness. Consumer awareness, of course, is the key to turning all of this around, which is precisely why the traditional vested interests do everything possible to keep consumer awareness at the lowest possible level. Yet the more consumer advocates succeed in creating transparency about the ecological and social footprint of products in the marketplace, the more numerous and influential will conscious consumers become – gradually shifting and rebalancing the distribution of power between producers and consumers.

(8) Arenas of Awakening. What is it that we have not seen in any of these crisis situations? Arenas of Awakening. Places that facilitate the process of the system becoming aware of itself. The Tahrir space of the food system, of the banking system. Etc. Which is why we haven’t yet seen the toppling of the old tyrants in these systems (as of yet).

What does all of this have to do with Fukushima? Everything. (1) The nuclear power industry is an example of extreme efficiency that makes total sense as long as you disregard all of the (2) negative externalities. (3) It is facilitated by a regulatory framework that privatizes the benefits and socializes the risks. (4) In the case of disasters like Fukushima, the industry put the biggest burdens on the poor, who pay with their health and their lives. (5) The overall structure of the system prevents learning because the negative externalities do not affect the decision-makers themselves (the people who die from radiation overdoses are the workers, not management). (6) Money keeps flowing in the wrong direction, e.g., federal funds continue to be poured into old industries instead of into new, renewable energy technologies. (7) The current structure prevents consumer awareness by not allowing people to choose between nuclear and renewable energy. (8) We also do not see any attempts to create Arenas of Awakening. By contrast, the press conferences of government and Tepco officials are a painful example of communicating the truth too little and too late. Even today the Japanese and the world community have not heard the true and complete story from the leaders of the system.

How can we turn things around? Just reverse all the above principles: (1) multi-variable health (instead of mono-variable efficiency), (2) internalize externalities, (3) use transparent and inclusive multi-stakeholder processes to develop regulatory frameworks, (4) give special attention to and co-create with those who live on the margins of the system, (5) close the feedback loop between decision makers and those impacted by these decisions, (6) reverse the flow of money, (7) empower consumers and citizens, (8) create Arenas of Awakening where the whole system can see itself – and leverage the collective awareness that flows from that.

What do you see going on? What are some other examples you see that are related to these eight observations? Are there additional observations that you consider relevant? What can we do to turn things around?

Thanks for your input. All the best — otto

15 Comments to Food. Finance. Fuel. Fukushima.

Cindy Wold
April 3, 2011

Excellent post. Concise and spot on.

We learn when we are children dealing with our siblings that the cake is very unlikely to be split fairly unless the one doing the cutting is the last to choose.

We need systems that mediate our natural tendency toward self-serving. Let’s admit that to some degree we’re all greedy, self-serving and likely to take advantage of others if we can get away with it. Consciously or unconsciously – so we agree to set up systems that foil that tendency – or we have in the past.

It’s time to quit pretending that if only we have “good” people in positions of power we can be more efficient by not questioning or monitoring that power. We’re all vulnerable to corruption if no one is effectively looking.

I’m curious about what you call “Arenas of Awakening” and what that would look like.

Ebbe Høyrup
April 4, 2011

Just a very short one to begin with:
The general focus is on material growth as the solutuion to all problems instead of balance with Nature on all levels. I see that as an underlying cause for most of the crisis today. To solve this we don’t necessarily need more knowledge (?) but definetely more wisdom.

Ralf Lippold
April 4, 2011

Good morning Otto – In a way it is strange that your activities here on the blog reach my awareness in very short time. It is like hungering for excellent mind food – as soon as it out I “smell” it.

A 9th characteristic, which I constantly hear in various contexts and conversation is

(9) Bounded rationality – people are sure that the micro-cosmos they are acting within is controllable and perfectly overseen. Visiting the last opera freshly performed at Semperoper, “L’incoronazione di Poppea” (on my blog), all your findings of above and (9) could be beautifully seen in action in this 3.5 hours play.

When human systems once run smoothly people become resistance on change due to externalities. Instead of questioning their own role accuse the “system” or other reasons. It reminds me of Edgar Schein’s work on DEC Digital Equipment Corporation, whose leaders got the “bounded rationality view” after time when everything worked “fine”.

Best regards from Dresden – Ralf

Matthew Taylor, PT, PhD
April 4, 2011

I see an endless parade of clients in the clinic that suggest an appropriate springtime in the US analogy: A fifth F, or an F5 to use the tornado intensity scaling system….the highest, most intense of the inland weather systems.

That fifth F would be Fatigue.

Information fatigue: Japan, Haiti, Libya, Wall Street, 24/7 media technology (to include early a.m. blog commenting!); Social fatigue: soccer, school board, work affairs, church, family, volunteering, isolation, etc.; Health fatigue: weak diet, stress, meds, mindless exercise, financial burden for coverage, pathology based health system, etc.

Children to retirees arrive exhausted, their central nervous systems fried in a state of hypervigilance and fatigue, literally gasping for the next breath. Asking them to find 15 minutes to lie down and sense (an embodied Theory U) is often met with a bewildered, “But when?”

This appears to be the microcosmic expression of the macro 8 characteristics above. Which takes us back to the emphasis in Presence on personal practice as key to shifting larger systems. Lay down, shut up and feel to put it in the vernacular for my clients…then fall into the Silence and wait to unfold back up the right-hand side of the U. Everyday. No exceptions.

Without Rest, the Fatigue mounts and I suspect both individually and collectively, that will lead us to being other f-words. Thanks for so clearly laying out patterns in this post Otto.
~ exhaling, matt

Willi Schroll
April 4, 2011

Wonderful analysis+synthesis, insight! Full-heartedly agree especially to the consequences. We need a new mindset for giving space to de-focussing, transparency, re-design, and to rapidly change the vicious loops into learning loops …

What we see today in the news with Fukushima as a “not ending catastrophe” might be seen as the metaphor of the global state of a somehow ill-founded, uber-technicistic civilization’s agony. Before it breaks down as a whole, as a system, we find it cracking and creaking. “Food. Finance. Fuel. Fukushima.” these are the cracks and breaks. Only the terrifying pre-signals. One should not be in short distance when not merely the parts, but the “system” finally shatters. Where to go then on this tiny planet? Of course refuge is nearly impossible even for a minority. There is no place to hide. There are only grades of impact then.

Is this an exaggerated, pessimistic view? No, it is meant to get prepared for “the day after” and to create “islands of resilience” today. Call to action. To enable Phoenix’ rise from the ashes. Or wouldn’t it be the next tragedy of mankind, if the wrong people/structures/values keep somehow on top and they start all this mess again?

Kamyar
April 4, 2011

Thanks for the perspective Otto. Illuminating as always.
I just wanted to add a question here: who can we be for things to start to turn around?
Life know how to heal itself, and us included. How can we tap into that auto~healing process that’s deeply embeded in life & earth and allow it to “do” it’s work through us?
With love from a student of yours, K

Mattias Ohlson
April 5, 2011

Thanks for a great analysis. I’m glad you bring up the down-sides of efficiency. Most people seem to believe that efficiency is always better, without asking what is being made more efficient. In fact, efficiency helps disguise the detrimental effects of poorly designed systems, allowing them to exert their negative effects over a longer time and making it more difficult and costly to change system. A positive development to address point #1 is the (slow but steady) rise of regenerative design strategies such as Cradle to Cradle design.

Another very positive development addressing #2 and externalities is the great work done by the team issuing the TEEB-report, where serious effort is made at putting a price on eco system services and biodiversity. I believe ESR (Eco system services review) will give government and companies in the future a tool to incorporate the ecological baseline and effects of their activities in their accounting, which will help internalize the cost of negative externalities.

One point I might want to add to your analysis is “linear material flows”. Almost all materials that we move around through our activities are in a linear flow rather than a cyclic (metals, minerals, fossil fuels etc taken from the ground and then disbursed). We need to move from linear, unhealthy to cyclic, healthy material flows, and these flows obviously have to be powered by the sun. Their is no reason why metals, plastic, phosphorous etc. through intelligent design can be brought into cyclic flows rather than linear. We simply put materials in the wrong place, where they end up as “waste”. Think phosphorous being mined and ending up in lakes and seas doing a lot of damage (too much nutrition) rather than being recycled back to the soil, or gigatons of carbon having been moved from the ground to the sky and the seas by burning fossil fuels. Recycling today usually means “one loop”, or possibly a few. We need to think 100 or 1000, without degrading the qualities of materials. It will take some redesign of products and systems, and we need a service-based economy, but it is possible.

Finally, you might also want to add “short-term thinking” as another point (although long-term thinking is implicit in your analysis!). I think the world would look very different if investments and policy truly had a 10 year perspective and the world would look totally different if that horizon was 50-100 years.

alain
April 5, 2011

Efficiency: Nothing wrong with focusing on efficiency, nothing wrong if you do not either, but, as you rightly said, these efficiency tends to maximize one single variable: ‘profit’ and this is in my mind is where we over-focalize the most; Ego and profit, both share something in common both have become a thing in itself, whose sole purpose is itself, and as such both are illusory. Both have gain a momentum of their own and are entirely disconnected from such an obvious blind spot, that we have forgotten all about it; we over-emphasize on what we look at (ego/profit) and turned our back (ignore) that by which we look from. No doubt we should put the emphasis on a much broader set of variable, but as long as we will forget, turn our back to that by which we look from, what we value the most will always reside outside of the most important; that by which we look from. We look at a specific ‘I’, we look for to look at specific financial result, but look from ‘me’, from an undifferentiated, non-specific, whole, Me.
Externalities: Focusing on efficiency, may very well be inclusive to what you call externality, they are not necessarily exclusive, profit, greed, ignorance, habits for the most parts are the most important factor. It is truly sad to see what we have done and still continue to do, how can anyone not see what we have done, not only them, but we. There is a Zen story about a disciple asking his teacher ‘why do these chickens fight each other’ and the teacher answered ‘it is because of you’. There is something very profound in this, it is because of you, ‘I’. Over-focusing on profits, leads to not seeing the negative externalities in the larger system, in fact, how could most of those ‘leader’ do otherwise, they look at the world according to a twisted fragmentary misrepresentation of what the world is and more importantly, dismissing for most of them ‘That they are’, that they are that by which they look from. How can you do otherwise when the only landscape that you look at of yourself is a phantom in a machine?
What can we do to turn things around? Turn around!
Emphasis is on what we look at, turning around or shifting around puts the emphasis on That we look from. It is a big surprise for many to see/sense for the first time in their life That they are.

Ralf Lippold
April 9, 2011

Otto – You are asking, “What can we do to turn things round?”

A truly relevant question. Coming from an extensive economics education and real action research the moment on the GDR collapsed (back in March 1990 we hosted students from Dresden at our faculty at University of Mainz), I would say two things:

1. Transparency in political and the business related connections & processes
2. Restructure economic incentive systems

Of course now everybody would say, “We can’t do that! The system is as it is. It works!”

Does it really work?

How come that in Germany unemployment figures go down (roughly 3 mio people unemployed) and at the same moment the figures of people receiving minimal social support is rising to over 6 mio (this number seldom finds its way into the papers).

For each unemployed person who gets a job through the employment agency, the agency gets 6.000 €. If the new job is arranged by a private employment connecting company, this one gets 2.000 € (out of the 6.000 €) – no success controlling over longer time period established.

Just two examples which I have experienced myself as -in an very unusual way I am action researching as unemployed myself (my startup did not generate revenue, even though the business model was thought to be beneficial for all involved participants. I learned that from a visit to Team Academy and adapted the following http://bit.ly/a2DK21 (http://flavors.me/LockSchuppen).

Entering the established business world with innovative business models in lack of supporting structures, is pretty much in danger to be extinguished soon. Only to rise in another area of action again.

In this sense what are others’ experiences on how to change the course of business?

Cheers, Ralf

Tim Reynolds
April 15, 2011

Greetings, Otto,
I have been following you for some months since my Servant Leadership class started using “Presencing” – what an enlightening book! I purchased “Theory U” and found at a local store “The V Discipline” by Senge – all excellent books.
I am a professional leader in a small, rural town in NW Ohio. I have lived here for a little more than 3 years. Formerly, I lived in France and W. Africa. During my time here, I have noticed a decrease in population in this small town of less than 20,000. The youth are leaving to find work. Two large corporations as well as a two local hospitals, three local school districts and a local small college cannot support the interests and job opportunities of the youth here.It’s almost as if the community has not awakened to new ways of employing and keeping the youth here. Once they finish high school, the children move on to outside colleges and universities – rarely, if ever returning to live. The community cannot see new ways of reaching out and growing; it is as if the community wants to hold on to the old ways that are literally allowing the community to die.
There is an increasing population of poor and working poor; as the middle class diminishes the disparities between rich and poor become more apparent.

I am a pastor and our local congregation has developed a community meal one night a week. At that meal, I have seen networking, friendships develop, honest conversation about life and the community, and some steps toward re-creation of this community. Such small steps may be important to the life of this rural small town. They may also be important in helping to answer your questions. Community plays such an important role in all that I do. Every day I see connections to community that 10 years ago I would have thought little connection existed. Perhaps, if there is any good thing about globalisation, globalisation has offered an opportunity to anyone who is willing to see the connection of all humanity with one another and with all of nature/the created world.

Thank you for all you do to make the world a better place!
Peace,
Tim Reynolds

Ralf Lippold
April 24, 2011

Observe, Observe, Observe – what has happened over the last weeks?
What are the changes in the social fabric?

Otto has mentioned the “big issues” in the world that are coming up disrupting the world’s thinking about how life is going on, what will be feasible in the future, and in which way humans will fulfill their lifes.

Sometimes it takes longer than a life time to move from one stage in the U Process to the next, with all the protagonist of the former to have vanished.

Today seems different. The opportunities of bringing thoughts and actions together across boundaries has never been so flawless than today.

Being drawn into the world of opera last summer I follow regularly ballet and opera performances here at http://semperoper.de in Dresden. Often I visit performances more than once, just to experience the shift in the social field (on stage amongst the dancers, singers). It depends vastly on the audience and subtle signs (such as when fans of certain dancers/ singers are in the crowd, whistling specifically when their idol comes up). What Otto describes happens all around us, we only have to shift our awareness of focusing on “big issues” to see the “daily life” ones as well.

Not only myself see this performing arts as a mirror of our own behavior (individually and collectively). All the great operas for example have been written by their composers because something had driven them to it. The performance is adapting the “real world” in form of a “cultural island” (as Edgar Schein calls it) where people get the chance to watch from an outside perspective (as audience). They then have the choice to connect to what their personal experiences are – connect with the play on stage, rather than just watching and listening to the music.

Mrs. Dr. Ulrike Hessler, newly appointed director of Semperoper last summer, beautifully puts this into play. She has the vision (as stated for example in the foresight of the new 2011/2012 program, pages 6-9 from http://www.semperoper.de/fileadmin/semperoper/bilder/publikationen/SO_JV_web.pdf [http://translate.google.com to translate in your language, you have to copy the text]) that opera once more becomes the underlying driver for innovation. Once people get the chance to get emotionally involved into the play, the mind opens up and loosens its grip on old thinking. Especially when there is a chance to interact with friends or your neighbor on what you have seen and heard.

Tomorrow there will be another “seed chance” with FIGARO Special Operncafé at 11 AM at Semperoper. There one gets the chance to not only meet some members of the ensemble but perhaps (it is the third event of this kind, I have been to both last ones).

Perhaps I am the only, perhaps not.

What is your advice from your experience to spur such a prototyping opportunity?

Peaceful Easter to all
Ralf

Yael Blum
May 16, 2011

Thanks for the post Otto. I live in Canada. We managed to sneak through the financial collapse. Or so we think. As property sky rockets to new heights on the west coast, some woman waited a week in the hospital hallway to have her broken arm repaired- a week- while obscene amounts of money go into putting a new roof on our sports arena. And we just re-elected a Prime Minister whose entire agenda is against the poor, in favour of big business, monsanto, corporate tax cuts and the elimination of any watch group or grass roots agency that is working for women’s rights, or health care, or education. Just today it was announced that since education in Ontario is suffering financially, it makes sense to put all the school libraries on the chopping block. Heck why should kids learn to read or be critical, independent thinkers? And then there are the car companies that continue to brain wash us all into thinking our worries will end if we just run our big, fat, gas-guzzling tires over the last corners of pristine wilderness this world has to offer….Which is all to say, i haven’t a clue and yet i hope- believing there are so many people who are getting it right and being called forth in community to do something better, with less for more…I personally feel our greatest road to salvation lies in supporting our children to fall deeply and forever in love with this world and its splendid natural wonder, generosity and beauty.

Takafumi Omori
May 22, 2011

I was so much impressed with your booth Theory U several months ago and it becomes more important for me after 3.11. Many people critisize TEPCO and/or the goverment for various reasons but I know I should be the part of the systrem generating such problems. In line with the context written in the book, how I can resolve it? I am keep asking the question to myself.

vanessa reid
June 5, 2011

i think part of the “How” is to consciously practice and BECOME the new cultures of being human together on and with this Earth.

what i’m learning in some of our work in the UK with the Finance Innovation Lab for example, is that it is one thing to gather together to “host in” these new cultures, but in order to truly do this we have to have a practice that is both personal and collective, and as such becomes systemic. in essence, the how is in is developing a “practice leadership” to cultivate our maturity, and to be deep learners of life. this is incredibly brave – it requires that we have the courage to not-know, and to act from a fundamentally new place in ourselves and together.

one of the things that is beginning to show up in this systemic work is that there is real pain and damage that our current systems have created and are still perpetuating. so as we innovate towards the new, we must not ignore the shadow side, but seek to acknowledge and transform this pain. and this is a practice, for all of us individually and for humanity, and with the earth itself.

i believe this learning “with and from” the tangible (the facts, what is seen) and less tangible (energetic infrastructures, intuition, our vulnerabilities) is the edge we are on as a humanity. systemic learning IS the practice we need to seriously cultivate – and we ourselves, are the systems. this includes our inner and outer lives, placed within the many systems and relationships in which we live and breathe.

these are our Areas of Awakening.

Ralf Lippold
November 2, 2011

Thank you Otto and all the others who have commented!

We have to constantly challenge our own thinking and behaving (individually and collectively). What are the assumptions that we do what we do.

Lately I came across some incidents where institutions (that promote collective learning) have put down formerly set up on the Web information. Learning in a connected world therefore has diminished, people got disappointed.

What may have been the assumptions of the managers who decided to take the video, slides, photos, and other useful information off the public sphere?

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