Regenerative Enterprise Part 2: The Eight Forms of Capital

Regenerative Enterprise Part 2: The Eight Forms of Capital

In 2009, the authors developed a new economic map to fully conceptualize and account for the world’s multiplicity of resource flows: The Eight Forms of Capital.13 Even as the soils erode away, biodiversity plummets, and ecosystems reel from the shocks of species loss, fragmentation, and climate change, economists and governments insist that economies must ‘keep growing’. How is this possible? Can our global society truly continue to grow forever?

The infinite growth required by our current global system is primarily an infinite growth of one form of capital: financial. The Eight Forms of Capital economic model recognizes that there are other forms: social, material, living, intellectual, experiential, cultural and spiritual capital. We propose that the ongoing growth of financial capital is only possible through the loss of other forms of capital.

The current global society is organized and controlled primarily through the flow of financial capital, but the survival of any human or society depends primarily on living capital and the material capital that arises from it: food, water, energy, and shelter. It is the cooperation and collaboration of people in the forms of villages, tribes, regions and nations that support each other to successfully gather these provisions of ecosystem services and transform them into the goods and services that underly the global economic system.

The Eight Forms of Capital provides a clear framework to understand this global web of interactions and transactions. The Eight Forms of Capital can be summarized as follows:14

 

Re_Blog2_VueMap_1

 

        • Social Capital – Connections, relationships, and influence. Can be complexed to webs of social indebtedness.
        • Material Capital – Non-living physical objects: Timber, minerals, metals, fossil fuels. Can be complexed to plastic & electronic products, and further into structures, infrastructure, and technologies.
        • Financial Capital – Money, currency, securities, and other instruments. Currently, facilitates the exchange of goods and services.
        • Living Capital – Soil, water, animals, plants, human health and the health of other organisms, complexed to the ubiquitous ecosystems of which humans are a part.
        • Intellectual Capital – Ideas, concepts, knowledge, “truth”. Held primarily in the human neocortex, intellectual capital is highly valued in the current society.
        • Experiential Capital – Actual embodied ‘know-how’, built from personal experience.
        • Spiritual Capital – Sometimes expressed as karma, faith or presence, spiritual capital is defined by an entity’s internal connection and awareness of a greater whole. Spiritual capital is often complexly intertwined with cultural context and Cultural Capital.
        • Cultural Capital – Shared internal and external experiences of a group of people: Cultural capital is an emergent property of the complex inter-capital exchanges in a community, village, city, bioregion, or nation. Story, myth, song, and art are tangible manifestations of cultural capital – they are also sometimes liquidated and exchanged for other forms of capital, usual financial.

 

Pools of capital can be held and developed by multiple entities, and various flows can occur within and between each form of capital:

Figure 3.2 – Multi-capital pools and flows.

RE_Blog2_CapitalPoolsFlows

The sum total of global inter- and intra-capital exchanges is the current economic system. The international trend is to deplete the pools of most forms of capital while exponentially increasing the amount of financial capital. This mono-capital trajectory has significant impacts on the sustainability of current and future generations.

 

Excerpt from:

Regenerative Enterprise: Optimizing for Multi-Capital Abundance by Ethan C. Roland & Gregory Landua

 

13 Roland, Ethan, and Gregory Landua. “8 Forms of Capital” Financial

Permaculture, 2009.

14 ibid

©2013 Ethan C. Roland & Gregory Landua. All Rights Reserved.