The Gift of Fire

Value manifests in diverse and various ways but is always more than economic value alone.

The purpose of capital is to be free to allow us to achieve our full potential as individuals and as a community of beings intertwined with the forces of life on this planet. If we are to realize this purpose, we must know that power of life of which we are a part and of which capital is a resource for us to use to rediscover our true nature of being in the world. 

Ancient Greeks believed in a time before time called the Golden Age, when humanity lived in harmony with the gods; a time when we were truly free, a time to which we must seek a return. Our purpose then, and that of the resources and tools we control, such as capital, is to help us find our way back to that period of ancient enlightenment, actualization, and freedom, as individuals and as a global community of humanity and Planet. Aristotle spoke of how all things in the world had a purpose, a teleos, and for centuries this idea was how we structured our understanding of purpose. Teleos is a relevant concept even regarding chaos, relativity and field theories given the nature of the entity is defined only in regard to its relation relative to other objects and, at a subatomic level, its being under observation. 

The value of capital is best appreciated when we understand it as simultaneously economic and social and environmental with each of these components, in turn, continuously interacting and intertwined. Value manifests in diverse and various ways but is always more than economic value alone. Capital is about more than money; it is about freedom. 

By extension, capital performs best when viewed relative to its context, its portfolio and market community; its nature is determined as a function of its relation to other entities. The value of capital is best appreciated when we understand it as simultaneously economic and social and environmental with each of these components, in turn, continuously interacting and intertwined. Value manifests in diverse and various ways but is always more than economic value alone. Capital is about more than money; it is about freedom. 

Jed Emerson on the Deficiencies of Traditional Finance Watch the Full Program
As taught in business schools, the idea of capital naturally seeking its highest use is still valid, save for the reality that our traditional understanding of “use” is only partially correct. It is not merely highest and best use of economic value creation potential but rather its total value creation potential. It must be put to use but applied in the fullness of its potential—not merely toward economic value creation. In the end, capital seeks to be deployed in pursuit of its highest potential optimization; and in that way to be free, to energize freedom. Capital tries to connect in as many forms and ways possible in pursuit of attaining its true, holistic and integrated natural state, which traditional, mainstream understandings of capital, markets, and organizations (as vehicles through which financial capital is deployed) do not adequately consider, allow for or advance. 

Value and Use are relative terms—defined in relation to other opportunities and the larger portfolio of which any specific investment is a part. The highest and best use of a portfolio is a function of our comprehending the aggregate impact that may be generated through the effective allocation of our capital into each investment we make. In this way, Total Portfolio Management is a first step toward attainment of capital’s best use toward the end of capturing opportunities, catalyzing change and generating positive impact—each of which is a degree of greater freedom to realize what one is or may become—as an individual, as an investment opportunity, as a community. 

Capital must be managed, deployed and assessed based upon its total and whole value creation potential—its ability and potential to generate returns on financial, environmental and social terms. We are called to manage capital as a resource to optimize the full potential of living beings and our planet, not to be gripped tight in one’s fist, with increasing amounts draining through dry, cracked fingers and pale skin but released to generate new levels of total performance and impact. Capital is to be invested to realize its full, value potential. It is to be managed to optimize freedom and creative experience of our living in the world as we are called to live. It is capital understood as liberator, not oppressor. 

Capital may also be a tool that can turn on itself and destroy our traditional understanding of what wealth is for and how it is to be deployed.

Jed Emerson on the Place and Purpose of Capital Watch the Full Program

The German historian and philosopher, Karl Jaspers, reflected upon the idea that history is a process of annihilation in that to advance each age had to be built upon the destruction of previous thinking and practice. 

The Gift of FireWe now live in a culture that claims to celebrate disruption of tradition and established economic order, whether in the form of transportation or technology or energy. One hears consistent if not constant references to Schumpeter’s vision of capitalism as a form of creative destruction and we claim that is what makes for innovation, progress and the future health of our society. If we truly believe this to be the case, then we have only yet to begin to fully appreciate the coming disruption of our economic systems. Management of capital via Impact Investing will serve as a sledgehammer to annihilate traditional, financial capitalism. 

Management of capital via Impact Investing will serve as a sledgehammer to annihilate traditional, financial capitalism.

Impact Investing is not some augmented approach to capital management and investing. It is a means by which we may first acknowledge, then begin to heal and then seek to create new, positive value out of the damage we have created in past centuries through our having taken a bifurcated approach to finance. Capital is an instrument by which we may deconstruct the gods of traditional economics and finance, returning their parts to the soil to nourish the new growth of whole system economics. Impact investing builds upon but deconstructs and then transcends traditional investment thinking and practice. 

As actors responsible for how capital moves in our world, we need to understand the importance of ourselves moving through the stages necessary to advance our vision of capital as a vehicle for human freedom and natural self-determination. We need to learn how best to engage in constructive social change.

This article is adapted from the author’s most recent book, The Purpose of Capital: Elements of Impact, Financial Flows and Natural Being, available in free digital format at the website.

Originator of the concepts of Blended Value and Total Portfolio Management, Jed Emerson has extensive experience leading, staffing and advising funds, firms, social ventures and foundations pursuing financial performance with social/environmental impact. He is an internationally recognized thought leader in impact investing, social entrepreneurship and strategic philanthropy. Emerson has played ... Read more

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