Imagining a Regenerative Economy with John Fullerton

By Kevin Boon


John Fullerton is an unconventional economist, impact investor, writer and, according to some, philosopher. After a successful 20-year career on Wall Street where he was a Managing Director of what he calls “the old JP Morgan,” John listened to a persistent inner voice and walked away in 2001 with no plan but many questions. Building on and integrating the work of others, he is the architect of Regenerative Economics, first conceived in his 2015 booklet, “Regenerative Capitalism: How Universal Patterns and Principles Will Shape the New Economy.” John founded The Capital Institute as an organisation to build the foundation for a regenerative economy. 

John argues that, despite its remarkable achievements during the 20th century, the economic system of the past can’t continue into the future without a fundamental transformation. The science is irrefutable, beginning with the second law of thermodynamics. The ethics are equally clear; justice demands systemic change. The expectation of the financial system for exponential growth of capital and, by extension, the exponential and extractive growth of GDP has positioned our global economy on a collision course with the finite resources of our planet, from the soil to our atmosphere. This relentless and narrow pursuit of infinite growth of returns on invested capital, without any grounding in moral and ethical values, or an understanding that we are a part of nature, not apart from nature, is contributing to the collapse of ecological function upon which we depend, a growing and destabilizing wealth gap, as well as security crises around the globe.

On 24 August 2020, John joined members of nRhthym for a “Design Sprint” webinar to discuss the regenerative economy. 

A lot of interconnected problems – the climate crisis, inequality – are rooted in economic system design. If we look at how living systems work and how indigenous communities interact with nature, we may find solutions to how a human economy could work in a sustainable way. 

The principal way in which a regenerative economy differs from a conventional economy is that the outcomes would be defined by terms such as flourishing, abundance, beauty, permanence rather than wealth creation, extraction, pollution, destruction, chaos, uncertainty, abuse and violence.  The premise of our current economic ideology is that well-being comes from economic growth. We don’t tend to see the fundamental flaw that exponential economic growth is in conflict with a finite planet. This has nothing to do with ideology – it is science. 

Humans and human communities are living systems. We therefore need an economy that behaves like a living system. John has come up with eight core principles of what constitutes a regenerative economy.

Imagining a Regenerative Economy with John Fullerton

He talks about the principle of being in right relationship (or symbiosis). Consider modern capital markets which have severed the relationship between real investors and real enterprises. As such they cannot be mutually beneficial regardless of so-called sustainable finance initiatives such as ESG. 

The stock market is not the entire economy although it is the main focus of mainstream media. However, major players in regenerative business come from the non-public sector from companies such as Patagonia. Then there are corporations, particularly in Scandinavia, that are owned by Foundations. These operate to a very different mandate and time horizon and are re-evaluating their mission primacy. To bring about change, John argues for tax and incentive systems that penalise what’s detrimental and encourage what’s beneficial. Currently we do the opposite, taxing labour and providing incentives to financial speculators. John advocates making trading less profitable through a financial transaction tax which would shrink Wall Street by an order of magnitude. The income from this should be invested in subsidies for positive activities such as renewable energy and regenerative agriculture. 

John referenced some of the pioneering work which has influenced his thinking. The foundation piece for him was Dana Meadows’ The Limits to Growth which he described as a “holy shit moment”. He also mentioned Herman Daly and Robert Costanza and their work on ecological economics, Fritjof Capra in terms of systems science, Lynn Margullis and James Lovelock in relation to Gaia theory. But this is nothing new – regenerative economics is putting into practice what humanity has known about for a very long time. To understand this, we just need to look at the sustainability of indigenous societies. 

John is clear that the network provided by the internet is fundamental to a regenerative economy. It creates the potential to share robust circulation not just of energy and materials, which is what the circular economy is focused on, but of information, empathy and knowledge. He talks about the Regenerative Communities Network in which he is involved. Its vision is to connect a multitude of bio-regionally-based regenerative economies to a single regenerative economy through a network. 

John’s advice to people that want to have an impact in this area is to start by creating space to self-reflect. Consider who you really are – your unique essence – and not what culture dictates that you’re supposed to be. In his words “It’s the empowered participation of each of our unique essence that will make change happen”. This will be different if you’re an artist to a lawyer or someone in finance. Local food systems are a good place to start taking action as food is so fundamental to well-being and the current system is highly extractive and destructive. 

You can watch the full webinar below.