By Graham Boyd
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This quotation from the preamble is why everyone using business as a tool to create a better future needs to read this book: “it occurred to us that we unknowingly had been trying to build something resembling a post-growth business but with classic capitalistic tools and mindsets.”
Building something intended to deliver a new class of outcomes, but using the mindsets, tools, and building blocks optimised to deliver the outcomes of today, is a recipe for failure.
A refined and optimised set of tools
So, what do Marcus Feldthus and Oscar Haumann have to say that makes their book worth reading by anyone determined to build an economy that works for all?
Firstly, because they focus on practice. This is a book for those who want to get stuck in and build immediately; either because they already know the background theory, or because they don’t need to know in order to choose to act.
Their framework is the 12 leverage points of Dana Meadows, and what they offer is a set of tools, refined and optimised through their own experience, and from the experience of others.
In the first few pages I was already nodding in agreement at their points. For example, their approach to ensuring their company stays alive through up and downswings in the economy is spot on: Make sure that one year’s fixed costs are in cash. Many companies have a strategy of keeping high levels of cash, including Warren Buffet. They typically came out of Covid in better health, and ready to get back to full operations again, because they retained people and equipment.
They are also clear on one of my bugbears: a digital business is a physical business and must generate financial revenue. Enough to cover both the physical and digital costs of operation; and to cover living costs. This is essential in today’s world for all of us building the bridges into a new economy—we must generate sufficient cash to cover all costs (unless we’re independently wealthy). This book follows a valuable principle—stay wedded to making a difference, not just to an ideology.
And they are clear on another of my personal bugbears: the purpose problem. Purpose has become co-opted and distorted, all too often becoming a stand-alone navel-gazing excercise because the relationship with the external context and need has been lost. They see this, and are guided by function as the basis, rather than a stand-alone purpose, thereby more easily avoiding the purpose problem. So long as they retain the relationship between the function and the context/need the function is a response to!
Companies must be free to respond
Freedom is an essential consequence of this. Every company able to make a positive contribution to our global challenges must be free to respond in the best way possible to the context and needs, independently of the narrow desires of a single stakeholder type.
As they write: “This speaks to a different vision of freedom as a business leader. We are not pursuing the freedom to do whatever we want. We seek freedom from being manipulated by the greed built into the capitalist system and, in that sense, the freedom to make better decisions fitting the ecological challenges we face in the 21st century.”
The chapters on accountability and rules are particularly relevant to me, and they cover a number of excellent and very practical points. One of the beliefs holding us back from creating a viable post-growth economy is that we need neither rules nor external accountability (and mechanisms to hold accountable). We do need some rules, along with ways to hold people and companies accountable for upholding or breaking rules. Their rules I find to be useful, and immediately implementable, and to protect and enable a company intending to be an antifragile element of the post-growth economy we need.
Rules vs. interpretations of rules
However, and this is my one nudge on where the book can be made more useful to readers: it’s vital to be clear on what a rule actually says, vs. what is merely today’s interpretation of the rule. There is actually far more freedom in law to build companies to do what we need, despite what is commonly believed.
Their example of a rule: “publicly traded companies are legally bound to maximise profits” is primarily an interpretation of what is in company law, not the rule itself. The rule is that a company exists to pursue its objects. The belief that this means profit has emerged because 1) many companies neglected to state the company objects, or left them way too open, 2) neo-classical economics has pushed the story that the primary object is to maximise profits, 3) and then in court cases the combination of 1 and 2 has left judges with no option.
Another myth is that investors own the company. The legal rule is that a company is a person in law, one of two persons that are parties to a contract. That contract is a bundle of rights, including the rights to vote, information, and to a share in dividends, capital growth, and residual value. Again, because of how we allocate voting rights we often end up with the same outcomes as ownership—but ownership isn’t the rule!
For post-growth, and all other flavours (regenerative, net positive, impact, etc.) this is a message of practical optimism: dive into what the rules actually are, not the conventional beliefs about them, especially not those stories imposed by a neo-classical economics missing key aspects of the real world. Look carefully for stories being treated as rules, because then you can do everything not explicitly forbidden by the rules, even if the stories are against you! This has been my personal source of optimism over the past 20 years.
And finally, their chapter 12 validly cautions against trapping oneself in a single paradigm! It’s all too easy to do so, and all too challening to remain fully aware that the opposite of a deep truth is quite likely to be another deep truth. The real challenge we all face is to simultaneously remain open to other valid truths, paradigms, and approaches, but without succumbing to the bypass of “everyone has an equal right to their opinion”, or “we’ll just have to agree to disagree”. As Douglas Adams said, “All opinions are not equal. Some are a very great deal more robust, sophisticated, and well supported in logic and argument than others.”
The opinions of Marcus Feldthus and Oscar Haumann are certainly informed opinions, and almost all are robust, sophisticated and well supported in logic and argument.
Graham Boyd is the author of two books on building and investing in businesses fit for purpose to create an economy that works for all life on earth: Rebuild: the Economy, Leadership, and You; as well as The Ergodic Investor and Entrepreneur. In these he lays out the explicitly not property FairShares Commons way of making existing co-operative and limited company law do the tricks we need (co-developed with Prof Rory Ridley-Duff and the FairShares Association, supported by an EU Framework programme) and how to solve the ergodicity error that is driving so many negative externalities, and preventing us moving to a post-growth economy.
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