I wonder, what are the structural issues that lead us to re-enact unhelpful patterns of the past? What is the underlying blind spot that, if illuminated, could help us to see the hidden structures below the waterline?
Dr Otto Scharmer, senior lecturer at Massachusetts Institute of Technology’s Sloan School of Management, argues in his book Leading From the Emerging Future that when we look at the entire set of disconnects as a whole system, we see ourselves. The problem is us. It is we who burn resources beyond the capacity of our planet to regenerate them. It is we who participate in economic arrangements that replicate the income divide and the consumerism and burnout bubble that come with it. And it is we who use mostly traditional banks for our financial transactions in spite of our knowledge that these banks are a big part of the problem.
Dr Scharmer goes on to explain that the word ‘ecology’ was coined in 1866 by the German biologist Ernst Haeckel to mean the study of a living organism and its surroundings. Its Greek root is ‘oikos’, which means ‘the whole house’. The word system denotes a set of interdependent components forming an integrated whole. Thus an eco-system is a system whose elements interact with their surroundings, the ecological, social, intellectual, and spiritual context as a unit – the whole house.
Today’s real economy is a set of highly interdependent eco-systems, but the consciousness of the players within them is fragmented into a set of ego-systems. Instead of encompassing the whole, the awareness of the players in the larger system is bounded by its smaller subparts. The gap between eco-system reality and ego-system consciousness may well be the most important leadership challenge today – in business, in government, and in civil society.
Wherever you go, leaders and change-makers are working to bridge that gap. When the leader of a company works with departments that need to improve their collaboration around a common core process, that person is trying to move the departments from ego-system awareness (of their own departmental needs) to an extended stakeholder awareness (of their shared process needs across the firm). When a group of leaders convenes the key players in the value chain in order to facilitate cross-institutional collaboration and innovation, they are doing the same thing: extending the ego-system awareness in their institutions to an eco-system awareness of the entire extended enterprise.
For Aristotle, economy was an integral part of his practical philosophy, along with ethics and politics. In its original meaning, the managing of ‘the house’ related to the whole house and was not yet separated from the polis – that is, the association and community of free citizens. And until the seventeenth or eighteenth century, the term economy related to the management of the whole house, and not to activities that serve the purpose of making money, which was described as commerce.
Modern-day economics has developed in ways that separate the economy from the polis. Economics has become a narrow set of propositions that deal only with the so-called economic subsystem of society. Economics no longer deals with the whole house—with the economic subsystem’s impact on society as a whole and its social, ecological, cultural context. Instead economics refers to those as externalities.
In the twenty-first century, we are seeing a return to the original meaning of oikos. The social and ecological challenges for today’s institutional leaders are starting to redirect the course of economic inquiry toward its oikos-related origins by forcing us, once again, to broaden our perspective. A twenty-first-century finance system needs to be designed according to principles of fairness, inclusiveness, transparency, and effectiveness for the real economy – none of which are part of the design of our financial systems today.