Capitalism 4.0 and Neuroplasticity of the Collective Brain

Sunday, February 23rd, 2014 | Uncategorized

crossposted Huffpost

I have just returned from an interesting experience in Washington. D.C.:  a panel discussion with His Holiness the Dalai Lama. The event was sponsored by the American Enterprise Institute (AEI), a leading neo-conservative think tank responsible for much of the intellectual core and agenda of the Bush-Cheney administration. So why would I go to a place that co-engineered much of the thinking that led us into the disaster of the Iraq War and the financial crisis of 2008, costing us trillions of dollars, and causing massive waves of human suffering across cultures?

Three reasons. One, I was invited by my friends at the Mind and Life Institute, which hosted one of the panels at the event. Two, because I am annoyed by the collective paralysis that we are witnessing in Washington and that is creating such huge problems both domestically and globally. I am more than happy to contribute anything I can  to creating spaces for dialogue across intellectual and political divides. And three, because Arthur Brooks, who took the leadership at the AEI in 2009, is breaking away from many taboos of the old thinking and trying to do something new. It’s that kind of spirit that we need in many more places today.

That being said, I don’t agree with many of the official AEI talking points. But I did discover, particularly in informal conversations, a lot more common ground than I imagined I would—including a thought-provoking conversation with Paul Wolfowitz (former U.S. defense secretary and former president of the World Bank). Here are three observations from my trip to Washington last week: discovering common ground, capitalism 4.0, and searching for neuroplasticity of the collective brain.

Common ground: There is surprisingly fertile common ground between the value-based core of the conservative movement on the one hand and people (like me) who believe that we are living in a moment of profound disruption that requires us to evolve and profoundly transform all our institutions of business, government, and education. What is that common ground? Three points: entrepreneurship; individual creativity; and mindfulness. Together these forces represent the power of business and social entrepreneurship and the power of civil society.

But what’s missing? One thing is the environment. What could possibly be more conservative than environmental conservation? There is nothing inherently left or right in addressing environmental issues. As we see in the rise of the green parties in other parts of the world, they often are quite independent of the left-right axis of traditional political thought. But in the United States the far right has done everything to deny the environmental challenges that we’re dealing with today. You could sense the ripple effect of this denial in parts of the audience when the Dalai Lama and Diana Chapman Walsh, former president of Wellesley College, talked about environmental challenges like climate change. There was a bit of an awkward silence. It reminded me of the reaction I experienced in Davos at the World Economic Forum after suggesting that we break up all the banks that are too big to fail. An awkward moment like this happens when people hear truths that are obvious but unpleasant. Yes, they are uncomfortable, but those are exactly the moments when cracks to the future can open up.

So my first takeaway is this: Traditional right-left polarization keeps the political discourse locked into false dichotomies of the past. Finding common concerns with many people at the AEI event reconfirmed my intuition that we need a completely different force field in politics today—not necessarily a new political party, but something very different from what we have now.

Searching for Capitalism 4.0

During the first panel of the event, Jonathan Haidt of NYU suggested that today’s capitalism has three different story lines: (1) capitalism as heartless exploitation,  (2) capitalism as the greatest discovery of mankind, and (3) a “more ethical capitalism” that relinks morals and markets, including a constructive role for religion and ethics.

Haidt suggested that His Holiness believes in story 1 (“I am a Marxist,” the Dalai Lama occasionally likes to point out with a smile). Haidt said that his co-panelist Glenn Hubbard, Dean of the Columbia Business School, believes in story 2. Hubbard was previously the chief economic adviser to George W. Bush, oversaw the tax cuts, and became well known for his interview in Charles Ferguson’s Oscar-winning documentary film Inside Job (2010), in which the 2008 economic crisis is linked to the deregulation that Hubbard and many others (including Democrats) advocated for.

Jonathan Haidt then said that he sees the emergence of story 3. That story begins with capitalism as one of the “greatest human achievements” (see story 2), but unlike story 2 also focuses on the externalities that we are facing now.

Reflecting on Haidt’s point of view, which seemed to resonate with many in the room, I would like to point out two issues that time constraints prevented me from raising during the panel discussion on Thursday.

First, the framing of the three stories misses a story that matters even more: a story of profound institutional transformation—story number 4. And second: the framing of the three stories lacks a structural analysis that gets at the deeper core of our institutional transformation challenges today. Just bringing in religion, morality, and some other good wishes will not do the trick.

So here is another view that frames our current situation in the context of four logics and paradigms of economic thought. They all respond to the basic coordination problem of our modern economies, but in a different way.

1.0:                  Organizing around centralized power: state and central planning
à giving rise to socialist and mercantilist economies (single sector)

2.0:                  Organizing around decentralized power: markets and competition à giving rise to entrepreneurs and the private sector (two sectors: public, private)

3.0:                  Organizing around special interest groups: negotiation and dialogue à giving rise to the NGO sector (three sectors, conflicting: public, private, civic)

4.0:                  Organizing around shared awareness and cultivating our commons à giving rise to co-creative relationships among the three sectors (government, business, civil society) in order to innovate at the scale of the whole system.

These four logics mirror four different stages of economic development. Each earlier stage is included in the later ones. As economies move from 1.0 to 2.0, 3.0, and now possibly to 4.0, the consciousness of the human economic actors also evolves from traditional (1.0), to ego-system awareness (2.0), to stakeholder awareness (3.0), and to an eco-system awareness (4.0) that we see beginning today.

The problem of our current economic debate is that we are trying to solve 21st -century problems with 19th- and 20th- century economic thought. That is: our discourse is stuck between “more markets and free enterprise” (2.0) and “more regulation and government” (3.0). In reality, neither of these approaches will suffice. Trying to solve 21st-century problems with 19th- and 20th-century economic thought is like driving a car at high speed while only looking into the rear mirror. That is what the economic debate looked like while it drove us into the crisis of 2008. As Einstein famously reminded us, we cannot solve our problems with the same thinking that created them.

The present economic discourse does have three major views: 1.0—the authoritarian solution (à la Putin); 2.0—the free-market capitalism solution (the neo-liberal view); and 3.0, the stakeholder capitalism solution, which basically advocates “more of the same” in terms of the 20th century welfare state (the progressive view). But the problem with these three views—and the problem with Haidt’s three stories—is this: they all look backward, they all drive into the future while using frameworks of the past. What we need is a 4.0 framework and narrative that is based on transforming the patterns of economic action and thought from ego-system to eco-system awareness, in order to innovate at the scale of the whole (as I have laid out here).

Neuroplasticity of the Collective Brain

A panel moderated by Arthur Zajonc, president of the Mind and Life Institute, started off with remarks by Richard Davidson, one of the leading neuroscientists of our time.

Davidson talked about the neuroplasticity of the brain, a concept that has replaced the older static view of the brain. Neuroplasticity is based on the discovery that the structure (anatomy) and function (physiology) of the brain are much more malleable by our behavior and the environment than previously thought. For example, recent advances in epigenetics suggest that our behavior can alter the expression of the genes. According to a recent study, even a single day of mindfulness practices can change the epigenetics of your brain.  What follows from this is that well-being and its key drivers, such as generosity and conscientiousness, can be learned. Says Davidson, “There is absolutely no doubt that these factors can be learned.”

Listening to Richie Davidson’s intriguing presentation, I thought: Boy, the plasticity of the human brain is an unbelievable leverage point that points us to our ultimate leverage points as human beings: paying attention to our attention. It calls for a new type of leadership work that focuses on the cultivation of our inner instruments of knowing. But what would it mean to cultivate the neuroplasticity of the collective brain at the level of a whole system? That would seem to require a new type of leadership work that we all need to learn to engage in.

I followed that train of thought by structuring my own remarks around four major points.

One, that there are two sources of learning: learning from reflecting on the past, and learning from sensing, leaning into, and actualizing emerging future possibilities.

Two, that in order to activate the future-based learning cycle, leaders and change-makers have to go through a three-stage process:

  • Observe, observe, observe: Go the places of most places of most potential and listen with your mind and heart wide open.
  • Retreat and reflect: Allow the inner knowing to emerge. Share, reflect, and go to an inner place of stillness to connect with your deeper sources of knowing. Contemplate Who is my Self? What is my Work? 
  • Act in an instant: Explore the future by doing. Co-create rapid-cycle prototypes that generate feedback from stakeholders, which then helps to further evolve your idea.

Three, that in order to activate that deeper cycle of innovation and future-inspired learning, leaders have to engage in a new leadership work that focuses on cultivating three deeper capacities of knowing:

  • The open mind—the capacity to suspend old habits of judgment by paying attention to our attention (mindfulness);
  • The open heart—the capacity to empathize, to experience a problem from the viewpoint of another stakeholder, not your own view (compassion);
  • And open will—the capacity to awaken and activate the deeper creative, entrepreneurial core that is dormant in each and every human being.

There are many examples of exceptional business leaders who embody these deeper capacities in different ways. Steve Jobs is famous for his claim that the only way to do your best work is by following your heart. Do what you love, and love what you do.

Another one is Bill O’Brien, the late CEO of Hanover Insurance. Summarizing his experience as a successful leader of transformative change, he told me, “The success of an intervention depends on the interior condition of the intervenor.” What he meant is that what matters most is not just What leaders do or How they do it—the process they use—but the Inner Place from which a leader operates, the quality of awareness and attention that they bring to a situation.

An example of acting from this deeper place is Eileen Fisher, the founder and CEO of Eileen Fisher Inc., a highly successful women’s clothing company. She not only uses mindfulness practices for herself, as Steve Jobs did; she also introduced mindfulness moments in her company, just as Twitter co-founder Evan Williams has done in his company. For example, at Eileen Fisher, every meeting begins with a moment of stillness.

My fourth point related to the pressing societal challenges that we face across societies today. The number one leadership challenge in today’s major systems and sectors of society is the same. Leaders need to change how their key stakeholder systems interact. Instead of interacting based on a narrow ego-system awareness, they need to collaborate based on a shared eco-system awareness—that is, an awareness that focuses on the well-being of all.

What does it take to move stakeholder systems from ego-system to eco-system awareness? It takes a journey. A journey that we are seeing in many successful stakeholder projects in many cultures that moves them through the stages of “observe observe,” to listening with their minds and hearts wide open, to accessing their “deeper sources of knowing,” and finally to learning by rapid-cycle “prototyping,” by connecting head, heart, and hand.

I ended by asking His Holiness how we can apply the power of mindfulness and compassion not only to individuals but to evolving the system as whole. He gave two responses. The first one: “I think you know better [than I do] (laughter). You already have the experience…” He then continued: “My thinking is to emphasize the education. That’s the fundamental approach.” That approach is part of a major initiative to renew the foundation of education worldwide that the Mind and Life Institute is about to launch.

So here are my three reflection questions of this week: (1) Considering the collective paralysis in Washington DC, what would it take to shift the public discourse to a true dialogue? (2) Considering the evolution of capitalism: What would it take to take the eye off the rear mirror and onto the real challenges that we face in terms of Economy 4.0? (3) Considering the power of neuroplasticity, what would it take to unlock the neuroplasticity for our collective brain—that is, the sum total of our social, economic, and spiritual relationships?

Useful links:

Here is the link to recorded live-stream of the session.

The framework of Capitalism 4.0.

I will expand on these topics in my weekly blog posts here (bookmark).

1 Comment to Capitalism 4.0 and Neuroplasticity of the Collective Brain

Graham Oliver
February 25, 2014

Hi Otto I spotted a typo
‘Go the places of most places of most potential’…
Regards
Graham

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