6.1.2. Economics 101

There are a few ways that permaculturists may look at economics differently than most, and a few things we try to incorporate into our designs from an economics viewpoint.

Economics should serve our needs and not the other way around (us serving the economic machine). It is easier to accomplish that with people-scaled economics - i.e. strong locally-based economies with some regional and international trade.

Local economies build community. Doing business with your neighbor humanizes the system by encouraging the creation of relationships with each other that go beyond using credit cards to make an online purchase. In a society that can be lonely and unsupportive, this can make a big difference to people’s resilience, happiness and quality of life. It also keeps that energy circulating in your local community.

Most of society is only using a small part of its resources and opportunities. Almost everyone has underutilized knowledge, skills and time, and many people would find it fulfilling to be better utilized. A permaculture designer would include ways that these resources could be more deeply accessed.

When money is used for ethical purposes, projects and products, it creates more future survival potential for individuals, the community, humanity, and all living things. This may seem obvious but the correlation is not always easily recognized. 

Economic activity that is ethical toward the planet, people and the future is part of the permaculture design process. Being regenerative is ethical.

A new wave of ethics has arrived in investing, entrepreneurship, and trade. It goes by various names such as Impact Investing, Slow Money, Social Entrepreneurship and Fair Trade. All of these areas have demonstrated that they can be profitable and make money while remaining ethical.

Permaculturists think of money as an energy in the system, just like any other energy in the system. It may be useful to think of it like water since it flows from one area to another. Note the pattern of its flows and consider how to design the system to ensure the pattern is more regenerative. Money can either be directed toward regenerative activities or against them.

A truly regenerative economic system would be designed so that money flowed toward regenerative systems, and people who built and managed these would be rewarded, while people who harmed the earth or other people would be economically penalized. Surplus funds would be used to ensure the system stayed healthy and regenerative, including both ecosystems and people. One way of doing that is through the use of True Cost Accounting. True cost accounting means adding up ALL the costs, which includes damage/harm made during the activity. True cost accounting charges companies for harmful externalities such as pollution. There are many other tools we can use to create regenerative economics. The key is that we need to think like designers on the subject of economics itself. It helps to have an overview of the basic aspects of the subject. 

There are many ways of exchanging energies other than using money that have been used throughout history. We can increase yields substantially by recognizing and fully incorporating these ways. Here are some major forms of value not always recognized by society:

Let's share an example of how each one of these can be enriching.

Intellectual capital

What do you know that is valuable and can be exchanged? I do permaculture design and education for a living, but I have other knowledge as well (as do we all). In a community exchange program, I gave some music lessons to someone who helped me move some heavy boxes. This was fun for both of us. I used to give music lessons for a living but it’s been many years. I still have the skill, just didn’t have a chance to use it. 

Spiritual capital 

An obvious form of this is a spiritual leader or counselor who has wisdom that is helpful to people. On a more subtle level, some people just tend to calm an area down and help everybody be more positive. That’s valuable! When we’re in that space ourselves, it’s valuable too. Taking the time to renew one’s own “spiritual capital”, whatever that means to you, can help us do everything better. 

Social capital

Many of us have developed friendships over the years that are valuable to us simply because we like the person. Using permaculture tools, how might we deepen the ways that we can help one another? Some ways we’ve done that is by investing in each other’s projects, promoting each other’s businesses, tools sharing, seed and plant sharing, information sharing and many other aspects. This can greatly increase yield. 

Material capital

What kind of tools do you have? Tools that help you increase your yield? If you have quality tools that last a lifetime, this is a better form of capital than cheap tools that will fail early and need to be replaced. Quality material goods, well maintained, tend to retain their economic value but more importantly, their usefulness, and can be used in many ways to increase yield. Are you investing in material things that can help you increase abundance? Or things that degrade and use up abundance? 

Financial capital

This is the form that most people focus on exclusively. The rest of this section may give you some different viewpoints about how you can approach this aspect. 

Living capital

Have you ever sat around looking at seed packets and thinking about how much value is in each packet once it’s grown? It’s kind of mind boggling, especially when you consider that most things go to seed and you can continue to plant more and more. This is real wealth! 

Cultural capital 

This is the combined capital of a community of people. Does your community function in a resilient, life-affirming way? Investing in helping it to do so can have a lot of returns that are beneficial to each member of the community. Sometimes, this can seem very daunting. If so, start with people of like mind, on the same page. Some communities have a lot more cultural capital than others. They haven’t squandered it. Forms of cultural capital can be various forms of art, celebrations, life-affirming agreements, and understanding of local ecosystems passed from generation to generation.

Experiential capital 

In some ways, it’s obvious how life experience creates value. A person fresh out of college is often not considered as valuable as a person who has used their skills in real life situations and dealt with the unexpected things that sometimes come up in those situations. There are less recognized forms of experiential capital that can have deep value too. People often appreciate being around someone who has developed emotional maturity, for instance. Less drama, more support.

There are many more ways in which these types of capital can enrich your life. Keep these in mind as we introduce more tools in the next sections.