The Center is Uncertain: Further Notions of a New Economic Story
December 16, 2010
By John Bloom
Farmers have much to teach us about money and the economic climate. Good farmers now know that they can no longer count on historical weather patterns; instead, they speak of climate chaos and are challenged to farm with a new consciousness. Their planning has had to let go of past expectations, and instead they attend to deeply observing, anticipating, directly participating in, and reacting to the climate as an immediate phenomenon—changeable, unpredictable, filled with events of an unprecedented scale. For farmers, global warming is only one facet of the new chaord, a delicate and shifting condition that holds both chaos and order as co-present and a term coined by Dee Hock.
In a New York Times op-ed piece from November 28, 2010, titled “An Almanac of Extreme Weather,” Jack Hedlin, a Minnesota farmer, explained the plight of farming in the era of climate change: “Climate change, I believe, may eventually pose an existential threat to my way of life. A family farm like ours may simply not be able to adjust quickly enough to such unendingly volatile weather. We cannot charge enough for crops in our good years to cover the losses in the ever-more-frequent bad ones.” The production or market farmers I know, even the biodynamic ones, have been worried about this issue for more than a few years now. What Hedlin has touched on is not only symptomatic of agriculture but also has broad-reaching implications for all of how economic life sustains us, or not. So, uncertainty, whether you think of it as a concept or feel it as a condition of psyche, is central to and, to a degree, defines our lives and our times. It plays at the boundary between our desire to know and control, and the capability of functioning effectively in the ambiguity that characterizes the chaord.
There are many uncertainty parallels between agriculture and our financial system. The extreme financial “market” events of the last few years have devastated the economy, just as the volatile weather events have wiped out whole farm crops at short notice. The restoration process, whether rebuilding a retirement fund or the fertility of the topsoil, is long. What distinguishes the financial markets from agriculture is that while farmers are privileged to steward natural systems, financiers operate in a world that is entirely human-made. It is our own invention and thus has within it both the genius and flaws of human character.
That human nature could be considered disconnected from the rest of the natural world, or that humans are the master of nature are both fictive concepts. From an economic standpoint, from the perspective of how we work in the world to meet each other’s material needs, such fiction is used to justify how one person can benefit from another’s sacrifice and how we can continue to consume and waste nature for the sake of undue profit. To accept the fictive concepts, and narrative that follows from them, means that the moral foundation, one might even say purpose, of our economic interdependence is debased. This is one way to make sense of, but not explain away, the abysmal Wall Street actions in which bets were made against the best interests of people, whether in securities (an ironic name), derivatives or hedges, in the name of profitability. A culture without a moral compass is also a chaord because it is so vulnerable to the whims or intentions, good and bad, of individual action with no force of accountability or law. This is not to condemn all financial markets, just as I would not condemn all agricultural practices. It is a question of whether those practices contribute to healing or further destroying nature and the integrity of human nature.
Farmers and investors who have chosen or are choosing a healing path are developing new approaches and new capacities to operate with integrity in functional uncertainty. Some investors now know that modern portfolio theory no longer works; its assumptions, based on certainty of patterns, are in serious question. This theory, it turns out, assumed that the world operates with machine-like predictability, and that the theory itself would suffice as a predictor of market behavior and return. Does the risk-reward paradigm still make sense in light of how closely it has come to resemble gambling? Risk, it seems, is an index of possible failure. Actuarial methodology is devoted to understanding, measuring, and managing risk. It is all based on a gesture of protection and distrust, and consciously excludes uncertainty from its formulas. But it is uncertainty that most directly affects us.
What does investing look like if uncertainty is recognized as a central tenet? How does one develop trust that an entrepreneur or enterprise will be successful and over what time frame? One might say that a new approach to investing is like a farmer planting a crop. You prepare and plow the field as best as you can, pay full attention to all the natural forces at work, pay loving attention to the plants as they grow while in deep observation of the environment, weather, climate, prepared to make adjustments—sometimes it means frost protection at 4:00 in the morning. These are all part of an active engagement that places a premium on minute-by-minute human attention and a capacity for anticipation, always with a view of long-term outcomes. This kind of engagement leaves no room for a mechanistic view, no room for passive assumptions, and treats uncertainty as real and present, and as a prime motivator for bringing a healing impulse into the world.
Uncertainty has a role to play in our transforming consciousness. Uncertainty pushes the boundaries of knowing in a new way that may not fit within conventional science, since it assumes we are part of rather than master of world. This view means that we (human nature) suffer as the environment suffers, that everyone’s future is equally uncertain despite the inequity of resources. We are fully interdependent; and our inner climate inseparable from the outer. So, the balancing force to uncertainty resides in how we work with others in and through our social structures: of relationship, community, and work; how we develop trust, create our agreements, and engage out of natural interest in each other. This is also an imagination of risk sharing as a new strategy for risk mitigation and management.
For anyone seeking a spiritual path, uncertainty is a call to practice. With this call in mind, due diligence takes on a new level of discipline, one which adds imagination and intuition to the analysis. The marketplace as it currently exists places great emphasis on results and commodities, with little interest in the consequences for human sustainability and soil fertility. The investor and the farmer will find this set of priorities transformed when they recognize that they do not really decide or operate solely for themselves out of self-interest, but rather are long-term contributors to the broader value-creating community, whether local, regional, or global.
When uncertain events occur, community is the first responder because the value of the activity, farm or enterprise, is held as essential to the sustainability of the community itself. Thus, understanding community, imagining it, testing it, setting prices with it are part of a new discipline that will inevitably change the financial system. Uncertainty can be a powerful teacher as we invite it in from the shadowy margins of our financial systems. As we learn to live with and celebrate its ambiguity, we will likely be more awake to discerning those opportunities that recognize economic interdependence, and those investments that bear the seeds of a more social and livable economy. Such a change will also require a reframing of outcomes and purposes. The outcome of farming: soil fertility with commodity production a by-product. The outcome of investment: economic renewal and equilibrium with return as a by-product. Living into uncertainty can certainly bring about the needed shift in our priorities for a new economy.
John Bloom is the Director of Organizational Culture at RSF Social Finance. If you enjoyed this post, look for John’s book, The Genius of Money, on steinerbooks.org.