The Learning from the Crisis of 2007-09
Presented at the Philosophy of Management 'Learning from the Crisis 2007-09' conference at the University of Oxford, July 2010. The paper can be downloaded here.
A philosophy for management must reflect transdisciplinary knowledge to stay relevant and capable of adapting to current conditions. The economics crisis of 2007-2009 needs to be understood as feedback from a system that has lost its capacity to understand and manage its own processes. Our failure to think in terms of whole systems and to recognize the ecological basis for prosperity is a consequence of a particular reductive worldview. Management practice must expand the scope of its inquiry to gain insight. This paper will suggest that the roots of the economic crisis are epistemological and that to correct this error ecological literacy will become increasing important in the practice of business management. Ecological stability is necessary for material well-being and economic stability but current management and business practices do not reflect what we know about complex systems or environmental science. Business models follow abstract economic theory based on mechanistic thought but ignore ecology, the basis on which wealth is created. The current trajectory of economic growth creates strains on the ecological system, which in turn weakens our capacity to create economic security. These stresses can only lead to deepening crises within economic and ecological systems, and while economic collapse is painful - ecological collapse is terminal. To avoid this dire scenario, we need to recognize that feedback from the economic system will be significantly faster than feedback from the ecological system, which has evolved over a period of millions of years and has significant inbuilt buffers.Epistemology defines how we know what we know. Alfred Korzybski said 'the map is not the territory’ which reminds us that our ideas about reality are not the same as reality itself. The notion that the dominant epistemological position is a poor reflection of reality has been described in detail by cultural commentators in multiple fields (Bertalanffry 1969, Bateson 1972, Orr 1992, Capra 1997, Sterling 2001, Meadows 2008). Our understanding of reality leads to a particular type of practice in business, finance, culture, education and politics. When our ideas conflict with the way that the world actually works, we make dysfunctional systems. We are now faced with an epistemological tradition that works for building clocks and cars, but not for understanding or managing complex systems. This reductive worldview conflicts with the highly complex ecological systems on which we depend. While this position has been rehashed over the past few decades in progressive circles, whole systems thinking is still marginal. Consequently, the economic system and business practices do not reflect philosophical or geophysical imperatives. The hegemonic reductive position prevents appropriate responses to maintain ecological homeostasis while also damaging economic stability in the shorter term. An ecologically literate epistemological position must start with the recognition of: 1-complexity, 2-limits (i.e. geophysical constraints, or carrying capacity) and crucially it must start putting these insights into 3-practice.