Book Reviews: 'The Locust And The Bee' And 'The Collaboration Economy'

by: Hazel Henderson

Author Geoff Mulgan, former top aide to Britain's Prime Minister Tony Blair and founder of the celebrated think tank Demos, earns his spurs as a top-rank, global public intellectual with his latest book, The Locust and The Bee (Princeton University Press, 2013). Mulgan has been watching the evolution of markets, finance and the many emerging models of capitalism with the insights of a policy practitioner and a deeply thoughtful scholar. Author Eric Lowitt's The Collaboration Economy (Jossey Bass, 2013) compliments Mulgan's historical view of how capitalism has evolved into many new forms over the centuries.

For full disclosure, I admit that I have read Mulgan's previous books, including Connexity (1998), and recall a pleasant invitation to tea at 10 Downing Street while Mulgan served there during Tony Blair's prime minister run.

Mulgan breezes through the early centuries of capitalist development with many fascinating anecdotes, reviewing Pareto's "power laws," Hayek's "cattalaxy," Adam Smith's Theory of Moral Sentiments (1759), and Schumpeter's celebration of entrepreneurs and their creative destruction. He points out that in the Oxford English Dictionary of 1897, an entrepreneur -- adopted from the French -- was then defined as the director of a public musical institution and that U.S. President George W. Bush had commented that the problem with the French was that they didn't have a word for entrepreneur!

Mulgan's main thesis is that capitalism with its twin tendencies toward both useful production with innovative value creation -- and its tendencies to predation and overreach -- have on the whole served human evolution. He then turns his attention to how capitalism is morphing into many new forms, whether in China, Japan, or Brazil, from its earlier forms in Britain and the U.S. He identifies seeds in these present markets for signs of these next stages of capitalism. Mulgan focuses on the role of science and the institutionalizing of R&D in the U.S. by Vannevar Bush, who helped create the infrastructure of technological innovation, such as in the National Science Foundation, National Institutes of Health, and the tax-supported backbone of its knowledge-based economy -- with most R&D still funded by governments, rather than by venture capitalists or private sources. Having served as a science policy wonk in Washington, D.C., I can attest to Mulgan's assessments of the role of taxpayer-supported innovation, including the Internet, often byproducts of military and space budgets.

Mulgan sees the future of capitalism in mature economies as continuing shifting from goods manufacturing toward services and intangible value-creation based on relationships, trust, reputational assets, brands, and social networks. This view is similar to my own work and that of computer scientist Jaron Lanier in Who Owns the Future? (2013), Erik Brynjolfsson and Andrew McAfee in Race Against the Machine (2011), and Nicolai Peitersen and Adam Arvidsson in The Ethical Economy (2013) and other books I have reviewed here on Seeking Alpha. Mulgan also sees the same kind of crises of unemployment experienced today in Europe and the U.S. as technologically driven. The radical efficiencies of computerization and automation disrupt every industrial sector from publishing and media to manufacturing, retailing, healthcare, insurance, smart driverless cars, distributed energy, and local currencies. Our TV program, "The Transformation of Work" discusses all of these issues.

Mulgan sees a similar future to the one that I document and Ethical Markets covers daily: the shift now accelerating toward greener, cleaner products and services, innovation of production methods based on biomimicry principles, open-source software allowing collaborative consumption, sharing as well as re-localizing many activities from farmers markets and local credit unions to 3-D printing and custom fabrication, recycling, re-manufacturing and re-purposing old buildings for energy efficiency. Our Green Transition Scoreboard reports on this shift and total private investments since 2007 currently at $4.1 trillion. We see this same global trend as a huge opportunity, endorsed in 2012 at the RIO+20 UN summit by 191 nations' pledge to accelerate this shift to the inclusive, green, more sustainable global economy.

Mulgan sees the same revolution in metrics as Ethical Markets (SRI News) is tracking of these shifts: at the company level in triple-bottom line ESG accounting for six forms of capital now identified as financial, intellectual, social, human, national, and ecological by the new ratings and accounting protocols. At the level of national accounts and macroeconomic indicators, Mulgan shares our interest in all of the new indicators beyond GDP, which include OECD's Better Life Index, the Canadian Index of Wellbeing, the UN's Human Development Index, the Ecological Footprint, Living Planet Index and our Ethical Markets Quality of Life Indicators, developed jointly with the Calvert Group in 2000. And there was the "Qualitative Growth" model I authored with physicist Fritjof Capra in 2009, published by ICAEW and Tomorrow's Company along with my forthcoming "Mapping the Global Transition to the Solar Age: From "Economism" to Earth Systems Science."

Few new breakthroughs are needed for this next stage of human technology. As Mulgan points out, the first electric car was produced in France in 1899. Electric delivery vans were common in New York in the 1950s and solar rooftop water heaters were common in Miami and Los Angles in the 1900s. Cheap oil an gas drove these renewable technologies from those earlier markets. Today's shale production of fossil fuels are water and energy-intensive and may be another bubble -- while fossil-fuel reserves in major portfolios may soon become sub-prime assets as solar, wind, and renewable technologies scale competitively with coal, nuclear, and other fossil sources.

Eric Lowitt picks up the story in The Collaboration Economy with many contemporary examples of how global companies -- including General Electric (NYSE:GE), Coca-Cola (NYSE:KO), and Unilever (NYSE:UL) -- are morphing their business models in directions that follow Mulgan's global research. These companies realize that in today's world, new stakeholders are forcing them to change and internalize all those external costs that 19th century economic theories permitted: polluting air and water, disrupting communities, and exploiting public assets and taxpayers. Such business models are now proving perilous due to social media and NGO opposition, taxpayer revolts, and new take-back laws, making producers responsible for all their products over their lifetime -- reclaiming, re-manufacturing, recycling, and redesigning them.

Author Lowitt describes how Unilever has changed its business model and sees society's new demands as huge lucrative business opportunities. CEO Paul Polman has become a leader in engaging critics, NGOs and government agencies in coalitions to smooth these transformations. Similarly, Coca-Cola -- stung by its battles with indigenous peoples in India, Latin America, and worldwide over water rights -- is now collaborating with NGOs and governments to create more rational policies for a water-hungry, climate-stressed planet. Lowitt and his colleagues, who co-authored various chapters, point out that water is vital for food production as well as direct human needs, but vastly overused by our fossil-fueled and nuclear-powered energy sector. Less discussed is the fact that Coca-Cola's business model is still based on extracting water from public watersheds, bottling it, often loading it with sugar and coloring, and selling it with multibillion-dollar advertising.

The chapter on GE and its Ecomagination campaign focuses on our unsustainable energy systems and how to shift to cleaner, less water-hungry, renewable energy from solar, wind, geothermal, tides and energy efficiency, the lowest hanging fruit. Lowitt's volume gives widespread evidence of the quiet changes taking place in global corporations and their trade associations, including the World Economic Forum, the World Business Council for Sustainable Development and others. I would add Business for Social Responsibility; the Future 500; and the American Sustainable Business Council as well as C-40, the global association of big-city mayors led by New York's Michael Bloomberg.

I welcome this useful, well-documented book and look forward to Lowitt's further explorations. Missing from its pages: the crucial role of marketing in these companies and how their PR and advertising is still driving obsolete promotion of materialism, consumerism and green-washing instead of illuminating important changes. Commercial advertising still drives mass media business models and influences the content of programming in subtle forms of commercial censorship. Millions are still spent on ad campaigns assuring us that shale fracking for oil and gas is safe; that nuclear power is clean, safe an "carbon-free"; that we can have "clean coal," etc. One hopes that Lowitt can make the $500 billion annual advertising industry the focus of his future work since advertising, for good or ill, is our main de facto global education system.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.