Eight Forms of Capital

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Graphic via http://appleseedpermaculture.com/wp-content/uploads/2011/04/Fig_1_Eight_Forms_of_Captial.png

Capital flows graphic at http://appleseedpermaculture.com/wp-content/uploads/2011/04/Fig_2_Capital_Pools_Flows-1024x533.png, distinguishes horizontal intracapital flow between players, one type of capital flowing to another type of player, from vertical intercapital flow, i.e. converting one form into another.


Introduction

Ethan Roland & Gregory Landua:

"These eight forms of capital help us map our understanding of the world. The map clarifies that money is not the only form of capital flowing around and through us. This map expands the concepts of wealth (and poverty) to include the ‘valuable resources’ of personal connections, natural resources, land, knowledge, experience, and more. It provides a language for permaculture designers to communicate the value of healthy soil and healthy communities to people immersed in the current mindset of global capitalism, where financial capital is the only reality.


...


The eight forms of capital provide a clear path towards a small point of great leverage: Eco-social Investing. We can encourage individuals, businesses, organizations, and governments to mimic nature’s practices of investing:" (http://appleseedpermaculture.com/8-forms-of-capital/)


Discussion

The Ethics of Capital Flow

Ethan Roland & Gregory Landua:

"Although Bill Mollison originally stated the third ethic of permaculture as “Setting limits to population and consumption,”(6) many of us (especially in the more recent waves of permaculture) have been taught different forms of the third ethic. Some learn

  • “Fair Share,” a toned-down and friendlier version of “Limits”.
  • Others learn “Resource Share,” which directs attention away from scarcity and towards re-investment of abundance. And more recently I’ve seen Starhawk refer to the third ethic as
  • “Future Care,” which synthesizes the call for “Fair Share” and “Resource Share” into a focus on creating thriving inheritances for future generations. The eight forms of capital can and should be considered in terms of each version of the third ethic."


Fair Share

When people and the businesses, organizations, and governments understand the eight forms of capital, they may find that financial capital is not the whole system. This can lead to decreased consumption of non-essential goods and services that fuel our infinite-growth-based financial system.

A truly just society requires fair and equitable distribution of all forms of capital. While financial capital is important, non-financial capitals offer pathways to empowerment for the oppressed communities of our planet. In communities I’ve visited (Kazakhstan, Chile, and Latin America), the abundance of cultural capital often outweighs the financial capital, regenerating into a wealth of experiential and living capital that I’ve never seen in my northeastern-USA home. Any of us in the over-developed world can follow this modeling, working to end oppression caused by our current financial-capital-centric systems.


Resource Share

We can use the eight forms of capital to include resource sharing in our projects. AppleSeed Permaculture has set a new Carbon Policy, whereby 5% of our revenues will be dedicated to offsetting our carbon footprint through carbon-farming projects (living capital). The Permaculture Activist’s tree tax functions in much the same way, transforming financial capital into living capital for the good of the planet.

AppleSeed Permaculture is also inspired by our friends Shabazz and Josephine of Greenway Environmental Services, who explicitly donate 10% of every work week back to the community through education and consulting. They share their intellectual and experiential with urban youth groups and rural permaculturists alike, generating social capital for themselves at the same time. As an upper-middle class white male from the northeastern United States, I am seeking ways to transparently and joyfully use my multi-layered privilege to effectively share resources with those who have less power and freedom than I do. This article is one manifestation of my sharing of intellectual capital. I will also approach this goal through my work with eco-social investing. After seeking out leadership from people and communities who have been targeted by the oppressive effects of sexism, racism, and classism, their projects can be empowered through flows of multi-capital investment.


Future Care

To care for future generations, we need to move beyond finance into living and cultural capital. Of all eight forms, these two have the greatest potential for positive systemic change. Mollison writes, “We should develop or create wealth just as we develop landscapes, by conserving energy and natural resources [and] by developing procreative assets (proliferating forests, prairies, and life systems)”(7). Only through the songs, stories, and shared ethics of cultural capital can a focus on living capital can be sustained for the seventh generation to come."

Typology of Capital

Social Capital

Influence and connections are social capital. A person or entity who has ‘good social capital’ can ask favors, influence decisions, and communicate efficiently. Social capital is of primary importance in politics, business, and community organizing.

Jason Eaton of Social Thread LLC explained to me that Capital can be in the form of equity or debt. In social capital, a person can ‘owe’ favors or decision-making influence to another person or entity.


Material Capital

Non-living physical objects form material capital. Raw and processed resources like stone, metal, timber, and fossil fuels are ‘complexed’ with each other to create more sophisticated materials or structures. Modern buildings, bridges, and other pieces of infrastructure along with tools, computers, and other technologies are complexed forms of material capital.


Financial Capital

We are most familiar with financial capital: Money, currencies, securities and other instruments of the global financial system. The current global society focuses enormous amounts of attention on financial capital. It is our primary tool for exchanging goods and services with other humans. It can be a powerful tool for oppression, or, (potentially) liberation.


Living Capital

A precious metal dealer who attended both Financial Permaculture courses advises, “Rather than U.S. Dollars, measure your wealth in ounces [of gold and silver]!” Recognizing that “precious” metals are just another form of financial capital, Catherine Austin Fitts recommends that we diversify and, “Measure your wealth in ounces, acres, and hooves.” Living capital is made up of the animals, plants, water and soil of our land— the true basis for life on our planet.

Permaculture design teaches us the principles and practices for rapid creation of living capital. Permaculture encourages us to share the abundance of living capital rather than the intangible “wealth” of financial capital.

(Note: “Natural Capital” could be a synonym for Living Capital, but the 1999 book “Natural Capitalism” by Hawkens et al. focuses more on a slightly updated system of capitalism than on the true wealth of living systems. The current Slow Money movement is also making strides in a similar direction, seeking to transfer financial capital into the living forms of soil, animals, and agriculture.)


Intellectual Capital

Intellectual capital is best described as a ‘knowledge’ asset. The majority of the current global education system is focused on imparting intellectual capital — whether or not it is the most useful form of capital for creating resilient and thriving communities. Having intellectual capital is touted as the surest way to ‘be successful’.Science and research can focus on obtaining intellectual capital or ‘truth’, though it is often motivated by the desire for financial or social capital. For example, “going to university” is primarily an exchange of financial capital for intellectual capital. It is supposed to prepare people for the rest of their lives in the world.


Experiential (or Human) Capital

We accumulate experiential capital through actually organizing a project in our community, or building a strawbale house, or completing a permaculture design. The most effective way to learn anything comes through a blended gathering of intellectual and experiential capital. My personal experience getting a Master’s degree at Gaia University showed me that experiential learning is essential for my effective functioning in the world: I was able to do projects instead of take classes, and I’m now collaboratively organizing the local permaculture guild and co-running a successful permaculture design firm (2).

I can see that ‘Human Capital’ is a combination of social, intellectual and experiential capital,all facets of a person that can be gathered and carried in essentially limitless amounts. But there’s one more form of capital that a person can gather and carry inside themselves.


Spiritual Capital

As one practices their religion, spirituality, or other means of connection to self and universe, one may accumulate spiritual capital. It contains aspects of intellectual and experiential capital, but is deeper, more personal and less quantifiable. Manyost of the world’s religions include a concept of ‘the great chain of being’, a holarchic understanding of existence where spiritual attainment (in this context, the accumulation of spiritual capital) leads to different levels of being (3).

Buddhism even contains an explicit spiritual currency: Karma! This form of spiritual capital is tallied and accounted for not only in one’s current life, but (taking re-incarnation into consideration) also in all of the past and future lives of one’s soul. In spiritual capital again enters the concept that capital can be in the form of equity (gathering positive spiritual experience/understanding/attainment) OR in the form of debt. In some Mayan cultures (like the Tzutujil of Lago Atitlan), a basic understanding of existence is that humans owe a ‘spiritual debt’ to the magnificent beauty and complexity of existence. According to this worldview, the goal of one’s life in the world is to create works of unspeakable beauty and gratitude, thereby repaying the spiritual debt to existence (4). The Tzutujil also recognize that single human beings can never really be effective at gathering and flowing capital if they are separated from their community.


Cultural Capital

All the other forms of capital may be held and owed by individuals, but cultural capital can only be gathered by a community of people. Cultural capital describes the shared internal and external processes of a community – the works of art and theater, the songs that every child learns, the ability to come together in celebration of the harvest or for a religious holiday. Cultural capital cannot be gathered by individuals alone. It could be viewed as an emergent property of the complex system of inter-capital exchanges that takes place in a village, a city, a bioregion, or nation." (http://appleseedpermaculture.com/8-forms-of-capital/)


Typology of Currencies

Graphic at http://www.appleseedpermaculture.com/wp-content/uploads/2011/04/Fig_3_Eight_Forms_of_Currency.png

By Ethan Roland & Gregory Landua:


“There are two types of flow between pools capital:

  • Intra-capital flows, between the same type of capital. For example, using US dollars to purchase a stock or bond, or exchanging heirloom tomato seeds for a carton of eggs.
  • Inter-capital flows, between different types of capital. For example, paying for a 2-year apprenticeship with a master builder would be an exchange of financial capital for experiential, intellectual, and even social capital.


These properties of capital flow point to another interesting question and feature of this map: What are the mediums of exchange used for each form of capital?


EIGHT FORMS OF CURRENCY:

Although most definitions of currency focus on financial capital, the Oxford American Dictionary and the Princeton Wordnet both include the definition of “the fact or quality of being generally accepted or in use”. For this map, I define a currency as the generally accepted (or in use) medium of exchange between pools of capital. In many cases, the currency is the capital itself — for example, items of ‘Material Capital’ like copper or steel, can be the medium of exchange. Currencies can also be “complexed” into more interconnected and functional forms, and still used as a medium of exchange.” (http://www.appleseedpermaculture.com/8-forms-of-capital/)

More Information

  1. Financial Permaculture Course: www.financialpermaculture.com
  2. Financial Permaculture Blog: www.financialpermaculture.org