Blue Economy

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Book: The Blue Economy. Cultivating a New Business Model for a Time of Crisis. by Gunter Pauli



"Mere months after the 2008 financial meltdown, the International Labor Organization (ILO) reported the loss of 50 million jobs. Developing economies were deeply affected by massive layoffs in the formal sector and the loss of income in the informal sector. It was a social shock that unsettled the world. In essence, the world economy for the past few decades was capitalized on money that simply did not exist. Downsizing and outsourcing were some of the key driving forces of every major industrial group. "Wealth" was generated by making "assets" appear as though by magic through leveraging credit and creating financial instruments that contributed not even remotely to the value of the business. Money was multiplied over and over in special accounts without risk, initiative, or production of real assets. Innovation was limited to investments that could produce multiple short term returns. Entrepreneurs, on the other hand, verged on becoming a vanishing breed.

The form of capitalism that has dominated world societies is entirely disconnected from peoples' real needs. Some two billion people struggle to get by on less than two dollars a day, lacking access to food, water, health, and energy, the most basic requirements for survival. Over 25% of the world's youth are unemployed. Yet one billion of us are overnourished and swim in 400 million tons of electronic waste with higher metal concentrations than the ores extracted from the earth. Conservatively, the top 70% of the world's wealth is concentrated in the top 10% of the population.

The business model that requires companies to invest more in order to save the environment will be replaced with a framework that permits less investment and more revenues while building social capital.

Fortunately, times are changing. This book is about that change. As the second decade of the 21st century sets the stage for a new economy, the core question we answer is, "What is the business framework we really need?"

Up to now, the model driving our economies depended on perpetual growth, requiring ever more resources and investments. This model has inherent flaws. It leads to unjust societies, highly skewed and exploitative economies, and devastated ecosystems. The business model that defines corporate environmental responsibility in terms of size of investment, and defines corporate success as increased shareholder value and grandiose executive compensation, must be replaced. The new economy must be more effective and more collaborative. It must become truly sustainable, introducing innovations that permit less investment, generate more revenues, and build the strengths of a community and builds up social capital - not debt. This is the business framework that will drive the new Blue Economy. This is the framework that will seek out and define true sustainability for all living species on Earth.

The prevailing economic model predicates that scarcity is the major limitation. Industry searches for ever higher agricultural yields and manufactory outputs, demanding that the Earth and human labor produce more. We must re-evaluate this notion and begin to more fully utilize what the Earth and labor produce, rather than demanding more materials and more output. It is time to end the insatiable quest for ever lower costs that drives business towards economies of scale through egamergers and acquisitions financed by billion dollar loans. It is time to adopt broad-based innovative strategies that generate multiple revenues and greater cash flows while creating more jobs. It is time for a Blue Economy.

In shifting our focus to economies of scope, the framework of the Blue Economy opens possibilities for a new generation of entrepreneurs who use what is available to sustainably address the needs of the Earth and all its citizens.

The shift from the model of core businesses based on a single core competence and economies of scale to a framework of multiple businesses with aligned economies of scope may sound unrealistic to the executive trained by any leading business school. However, the current global crisis highlights the need for an framework of economic development that is based on fundamental innovation and that will generate desperately needed jobs while sustainably addressing the needs of the earth and all its citizens. This "blue" approach is not only viable, it has already begun to take root. Four years of research has identified a portfolio of 100 innovations including whole systems models that have the potential to generate as many as 100 million jobs worldwide over the next 10 years."


Roberto Verzola:

"I've gone throught the website you gave below and read the article carefully (as well as its continuation).

I like Pauli's positive approach of focusing on solutions rather than problems. I agree with many of his messages about possibilities of abundance and cascades (he uses this word too) of abundance.

I tend however to be more wary of technological solutions than he is. Every new technology must be thoroughly analyzed for hidden biases and built-in ideologies which might work against the values that we promote. I haven't done these with the technologies Pauli cites and therefore have little to say yet about each of the different new technologies he enthuses over.

I also tend to look for social solutions, more than technological solutions (often "fixes" that create their own problems).

I am not saying that Pauli's approach is wrong and mine is right, only that our approaches differ somewhat. Overall, it is important to explore different approaches, so it is still useful to explore the directions he is looking into. Perhaps many (or even most) of the technologies he cites will turn out to be actually useful. But we have also had many technologies that looked initially promising but whose unintended side-effects turned out later to cause serious problems. But we do need to look at every new technology and assess it, as Pauli is doing.

I would ask an additional question though: is there something we can simply do among ourselves -- as individuals, households, communities, societies -- to solve the same problem the new technology is trying to solve? Then I'd do a detailed comparison of the technological and social approaches. A few examples: - for couples who can't bear children, do we need new reproductive technologies (like test tube babies) or can't they simply adopt an orphan? - to solve electoral fraud, do we need to resort to automated voting and counting systems, or do we simply need to punish the cheats? - I heard this example from the late Teddy Goldsmith of The Ecologist: how did people deal with too much food when there were no refrigerators yet? (Ans.: they threw a party!)

Many times, of course, the answer is not either/or, so the choice between social and technological solution is not that simple.

My main issue with Pauli's approach, however, is what seems to be a glossing over of the power of corporations. I am not sure that this is a valid concern because I have not read his other publications. He might have covered this elsewhere. Given the extent of the political, economic and cultural power of today's corporations, any effort to reform them (like Pauli's, when he talks of "new business models" that corporations may adopt) must contend with corporate counter-efforts to stick to highly profitable but ecologically- and socially-damaging models. What if corporations adopt the technologies on Pauli's list because they are quite profitable, but subsequent unintended side-effects then require that the profitable technology be withdrawn from the market? Will the corporations withdraw them?

In fact, this is the greatest challenge of our era, from my perspective. It is not the search for new technologies for solving our current problems, but the search for ways to disable corporations who use their vast powers to continue their destructive ways because it is profitable for them to do so. It is a social problem, not a technological one.

That said, I would include Pauli and Zeri among my readings." (via email, December 2009)