Our world has changed dramatically.  The way we engage with each other must change too.

We are in the middle of one of the biggest social changes in all of human history; comparable to the dawn of agriculture.

For the first million years or so of human history, before the Neolithic revolution, we lived in small tribes of hunter-gatherers.  We had no large-scale social organization or institutions.    Everyone in the tribe knew everyone else – what their character was like, how much they contributed to the overall good of the community, who they were friends with, what they thought.

After the Neolithic revolution, everything changed.  Farming, probably the most important technological discovery ever, had a huge impact on the structure of human societies.  Agriculture led to a vastly higher population density, to fixed settlements, to division of labour, and to cities.

All of a sudden, we were living in groups bigger than we could keep track of.  No longer did we know personally all the people around us.  And so to manage this drastic psycho-social shift, we created new institutions and structures.

We created money to track the contributions of individuals to the shared economy.

We created laws to formalize what was acceptable behaviour in these new mega-communities.

We created courts, royal dynasties, and parliaments to organize these large groups of people.

And even our religious beliefs and systems changed.  Tribal shamans were replaced with formal priesthoods, with far-reaching social and political influence.

Eventually city-states grew into nation-states, and as they did so many people gave thought to what it meant to be a citizen.  Over time we developed the idea of a Social Contract, an agreement between the individual and the state.  The state provides stability, protection and  regulation, and the individual provides contributions of labour and  obedience to the laws and cultural norms of their country.

“civis romanus sum”

We may not talk about it much these days, but for centuries the exact relationship between the individual and the state has been a major topic of discussion.  The Latin word civis, or ‘citizen’ is the root of our words civil, civilized, civility, and so on.  A civil individual is one who understands his role and obligations towards a broader society.

Today, we live not just in connection with our local tribes, or our city, but with the whole world.  Each of us, daily, affects and is affected by people from around the planet.  This article can be read just as easily in Auckland as in Barrie.  The computer I’m writing it on was assembled in China.  In the news and in social media we can follow real-time updates from the sporting rivalry of the World Cup in Brazil or the horrific religious and ethnic violence in Iraq.

And so I believe we need a new, global, civics.  We need to be asking, and answering, these questions:

• What does it mean to be a global citizen?
• What are my responsibilities towards my co-inhabitants of this planet?
• How do my economic and political choices affect those on the other side of the globe?
• What positive, constructive steps can I take towards a healthier, more peaceful, more prosperous, more equitable global society?

Sometimes this world can be a depressing place.  When I read about the destruction of global ecosystems, the continued existence of concentration camps 60 years after the liberation of Bergen-Belsen, or our failure to bring war criminals to justice, I can get despondent.  But I’m not the first to feel this way.  The prophet Jeremiah experienced his country being invaded, his culture nearly destroyed, and  his fellow countrymen forcibly relocated.  He would have had every right to hate the system he found himself under.

But instead, he chose hope.  Seek the peace and prosperity of the city you’ve been exiled to,” he told the survivors.  And I hope today that we can learn how to seek the peace and prosperity of the entire planet. In our purchase decisions, in our politics, even in our Twitter conversations, perhaps we can pioneer a truly civil way of interacting with each other.

I started reading Muhammad Yunus’ book, Social Business. He suggests that in addition to government agencies, charities and for-profit corporations, the world needs another type of enterprise – the social business.  This is basically a company set up to address a particular social need, such as public health, poverty or education, and is structured similarly to a corporation but returns no dividends or capital gains to its investors.  Any profit is guaranteed to be re-invested into achieving the social goal.

This might sound like a pipe-dream coming from someone else.   Yunus, though, is the guy who founded the Grameen bank.  Through his work millions of people have had access to banking services and small business loans that would have otherwise been denied them.  He has demonstrated in very practical ways that helping the poor can be about more than handouts – that creativity and entrepreneurship are key aspects as well.

In his advice for those considering starting a personal business, he says Start with a personal passion.  Too often, as businesses or individuals, we do whatever we need to do to earn revenue, and consider our ‘mission statement’ as something to be tacked on afterwards, maybe to please investors.   But what would happen if we looked at it the other way round?  If we asked ‘what is my mission in life’ first, and only then asked ‘how am I going to achieve it on an economically sustainable basis?’

Dennis Bakke, in his book Joy at Work suggested a very similar concept.  He argued that the goal of a for-profit corporation and a non-profit charity should really be the same thing: providing a service for society on an economically sustainable basis.

But regardless of how we choose to structure our enterprises – non-profits, corporations, co-ops, we must start with defining our mission, and then decide how we will go about reaching it.

In 2006 Euromoney magazine published it’s annual list of best banks.

In the North American category, the awards for both Best Investment Bank and Best at Risk Management went to … Bear Stearns.

When the awards were issued, Bear Stearns was already dangerously exposed to toxic debt, and shortly afterwards collapsed, nearly bringing the global financial system down with it.

When it comes to finance and economics, it’s hard to trust that even the experts know what they are talking about.

givewell.org makes carefully research recommendations for your charity dollars.  If you’re wondering what the most effective use of your charity dollars are, I strongly recommend reading their recommendations.  On of the charities they recommend is the Schistosomiasis Control Initiative (SCI).

Interestingly, schistosmiasis is increasingly prevalent partly due to the decline of stocks of the fish that eat the snails that carry the disease-bearing parasite.

Overfishing is a classic example of a tragedy of the commons.  It is rational for each individual fisherman to do everything he can to maximise his haul, but eventually a tipping point can be reached.  In 1992 the stock of North Atlantic cod collapsed completely.  The Canadian government issued a moratorium on any further cod fishing.  A 500-year old industry destroyed itself,tens of thousands of people lost their jobs,  and twenty years later the fish stock has only recovered to ten percent of its original size.

It seems to be a tenet of all economic discussions that ‘growth’ is an unqualified good thing.  We need, however, to understand that growth in production is the same as growth in consumption.  As the chart above shows, the cod fishing industry experienced growth for nearly two hundred years.  But in this case, ‘growth’, meant ‘extracting more and more fish from a limited supply every year’.  Eventually the extraction rate surpassed the ability of the fish population to replenish itself, and the industry and ecosystem collapsed.

Unlimited, unbound growth is neither possible nor desirable.  Our global economy must, eventually, transition to a model of sustainability rather than growth.  I’ve discussed earlier the logical endpoints of a relentless focus on growth.

It’s time to figure out what a genuine ‘circular’ economy would look like.  I’m thrilled that people like Ellen MacArthur are taking on this challenge.

I just read the excellent ‘Economics in One Lesson’, by Henry Hazlitt.  Written more than fifty years ago, it is just as readable and relevant as if it had been published last week.

He starts out by arguing that the reason Economics is haunted by more fallacies than other areas of study is because the world is full of groups who have a direct interest in arguing plausibly and persistently for policies that will benefit them at the cost of others.  Unlike an objective field such as physics or mathematics, there are no end of individuals and groups who are intentionally trying to confuse the general public on the subject of economics.

Hazlitt’s primary lesson is this: “The art of economics consists in looking at merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.”

What amazed me reading the book is how up-to-date it sounded.  The policies and politics he discusses – strikes, tariffs, industry bailouts, interest rates, taxation, minimum wage laws and protectionism are precisely the same policies that are discussed today.  And the positions he argues against are just as prevalent today as they were in 1946.

The book is freely available at http://www.fee.org/library/detail/economics-in-one-lesson-pdf-doc-audio, and I heartily recommend it.

For a lighter presentation, though surprisingly comprehensive, I also recommend this Hayek vs Keynes Rap Anthem, and Keynes vs Hayek Round Two.

What do you do once you’ve sailed single-handedly around the world and been made a Dame Commander of the British Empire?  Why, you re-design the world economy, of course, and talk some of the biggest companies in the world into getting on board your vision.

“Bake them a cake, write them a poem, give them a kiss, tell them a joke, but for god’s sake stop trashing the planet to tell someone you care. All it shows is that you don’t.”

George Monbiot points out the absurdity and the cost of our obsession with consuming plastic junk to mark the season.

http://www.monbiot.com/2012/12/10/the-gift-of-death/

In better news, Princeton researchers design a significantly more efficient solar panel

http://www.princeton.edu/main/news/archive/S35/48/07I81/index.xml

And a gravity-powered lamp for developed nations that’s cheaper than burning kerosene.

http://www.indiegogo.com/projects/282006

The word economics has its root in the Greek word oikonomos – one who manages a household.  So economics is the study of how we manage our resources – individually, communally, locally and globally.

Our dominant paradigm is that of a market economy.  This is one of the staggering intellectual achievement of the last few thousand years.  I believe that a market acts as a distributed system for deciding how labour is allocated.  Unlike a centrally governed economy, in a market-driven economy the decisions about what to grow, what to mine, what to build and what to sell are decided by overall market sentiment – fundamentally, what people are willing to buy.

This has some major strengths.  No one individual or computer needs to calculate all the needs and requirements for the population of an entire country or an entire world.

It has its flaws too, which I intend to explore further in future articles.  Most critically, I feel that the market economy under prices the long term costs of resource extraction.  Consider an example.

I decide that I want to eat shrimp, so I go to a seafood restaurant and order some.  So do lots of other people.  As a result of the increased demand for shrimp, more restaurants are built.  The price of shrimp goes up.  Sensing an opportunity, a shipyard builds more trawlers, and more shrimp are caught, meeting the market demand.

So far so good.  But as a result of the extra trawling, the sea-beds are stripped bare, ecosystems are destroyed, other fish are caught up and killed by the nets.  The market system has worked perfectly, but we have failed to take into account the long term costs of our actions.  My grandchildren may never get to eat shrimp, if all of them are harvested now.

So what do we do?  What does a stable, sustainable, global economic system look like?  I have a feeling that it would have many of the characteristics of the existing market system, with a few key changes made.  Perhaps we come up with a way to accurately price in the costs of our actions.  Perhaps we change our concept of ‘value’ to take on a broader meaning.

Perhaps we start by asking – what are we trying to achieve in the first place?