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Impact Economy

Impact entrepreneurs seek transformational change.

There can be only one permanent revolution — a moral one; the regeneration of the inner man. How is this revolution to take place? Nobody knows how it will take place in humanity, but every man feels it clearly in himself. And yet in our world everybody thinks of changing humanity, and nobody thinks of changing himself.

Leo Tolstoy

In early March, 1776 a new virus emerged from a coastal town in Scotland, swept into Europe and from there across the rest of the world, becoming a global pandemic and upending economies. The virus, which initially infected the brain but ended up having profound systemic effects upon its victims, left a wake of unimaginable turmoil in its path. Millions died of a variety of symptoms — some from a blackening of the lung, others from cerebral hemorrhage, still others from a gradual paralysis. Other victims, who did not die, were driven mad and new institutions had to be created to house and treat them. Later, after they passed, autopsies were done on their brains, which found unusual calloused threads that wove like the Amazon throughout the tissues and that, the experts conjectured, interrupted the natural blood flow between the hemispheres. Many afflicted by the virus survived and recovered sufficiently to have outwardly normal lives. They worked, got married and had families. Disconcertingly, however, their offspring often demonstrated obsessive, occasionally violent and self-destructive behaviors. And, even more strangely, this same behavior, in over sixty percent of cases, was passed onto the next generation as well. Autopsies on the grandchildren of the original victims, in fact, revealed that they, too, had dark regions threaded through their brains. 

Another extraordinary element to this new virus was that once it had infected the human populations, it adapted well enough to jump to other species, with devastating impacts. In the latter stages of the pandemic, it is conservatively estimated by scientists that at least 477 entire species — 158 fish, 146 amphibians, 80 birds, 69 mammals and 24 reptiles — went extinct due to the virus, as contrasted with 9 species that would normally have been expected to go extinct under natural conditions. Scientists add that these numbers are an absolute floor and that the real numbers could well be exponentially higher.

Another extraordinary element to this new virus was that once it had infected the human populations, it adapted well enough to jump to other species, with devastating impacts.

Kirkaldy, Scotland is not the kind of place you might expect a global pandemic to have its origins. Located a dozen miles north of Edinburgh, Kirkaldy — which means “place of the hard fort” — was a manufacturing and ship-building town. There was, however, one place, one street, one house in fact, in the town of Kirkaldy that turned out to be ripe breeding ground for the new virus. The house was on High Street. It is no longer there as it was torn down in 1834 and replaced with a nondescript four-story structure that still stands today. But in the months leading up to March 1776, in that house, in a particular room in that house, the virus that killed millions, destroyed a significant amount of biodiversity, and profoundly impacted subsequent generations emerged from the brain cavity of a single human. A man. 

The man’s name was Adam Smith.

 

It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.

Adam Smith, The Wealth of Nations (1776)

Some viruses emerge from nature, cross over to humans, and wreak their havoc. Other viruses have less prosaic, even poetic, origins, and yet are also as deadly as a plague. The Wealth of Nations, widely considered the first book on modern economics, bequeathed to Adam Smith the title of the “Father of Capitalism” and, whether fully deserved or not (social philosophers will argue, as is their wont), one of the most enduring principles carried down to this day is that of so-called enlightened self-interest — “Self-love” as an economic motivator and bestower of societal good. Narcissism as an operating system for nations.

Statue of Adam Smith

Adam Smith

Of course, short term — meaning several hundred years — so the story goes, Smith-inspired economics lifted billions out of poverty and created the modern standard of living in developed nations. But even in the midst of humanity’s rampaging progress, observers were noticing some significant blind spots in the economics of narcissism. 

Charles Dickens noted the dehumanizing effects of modern economics when he declared, “Most men are individuals no longer so far as their business, its activities, or its moralities are concerned. They are not units but fractions.” And others, such as the nineteenth century artist and conservationist Thomas Cole, bemoaned the loss of connection to the natural world and its sacredness. “For those whose days are all consumed in the low pursuits of avarice, or the gaudy frivolities of fashion, “wrote Cole, “unobservant of nature’s loveliness, are unconscious of the harmony of creation.”

Gradually emerging from the enormous shadow cast by the Smithian economic narcissism of market capitalism, was a countervailing psychology. It can be seen quite vividly in the potent tradition of American nature writing:

A thing is right when it tends to preserve the integrity, stability and beauty of the biotic community. It is wrong when it tends otherwise.

Aldo Leopold, “The Land Ethic” in A Sand County Almanac

Why should we tolerate a diet of weak poisons, a home in insipid surroundings, a circle of acquaintances who are not quite our enemies, the noise of motors with just enough relief to prevent insanity? Who would want to live in a world which is just not quite fatal?

Rachel Carson, Silent Spring

The virus of modern economics has not only infected the brains of billions of individuals, but, like an addict surrounded and comforted by his enablers, a whole host of institutions exist to, far from offering a remedy, coddle and reinforce the pathology. Universities and business schools, political parties, think tanks, social media marketers, chambers of commerce… the list is endless. Self-love economics has built a nearly impenetrable System around itself, and like most closed systems, it has been blithely unaware of the damage it causes, or at least it has shunted the millions of people a year who die from fossil fuel toxicity and industrial particulate matter, the innumerable species driven to extinction, the loss of arable topsoil and potable water, the bleaching of coral and the infestation of plastic in the oceans and our bodies, into the neat category of “externalities” to the System.

As suggested above, the virus we are speaking of is first and foremost a disease of the brain. Those dark Amazonian webs that interrupt proper blood flow, that keep one’s social and environmental faculties separate from “the real business of life.” These faculties have evolved to work independently so that businesses can, for example, comfortably live within the absurd expectation of unlimited growth on a finite planet, or that one person can justifiably own as much wealth as entire nations. 

Thankfully, blessedly, there is now another path, a new way. Let’s call it Impact Economy. The impact economy is populated by impact entrepreneurs (a term I coined in 2011) and is fueled by impact investments. I define the word impact in two ways:

impact

  1. The rigorous application of blended value
  2. Transformation

The impact economy contrasts not only integrally but paradigmatically from the narcissistic, self-love economy of Adam Smith. 

Like alchemists of old, the brain on impact blends values to create a higher, golden gestalt. 

Blended value is a conceptual framework for advancing a vision of value creation which is not based upon a bifurcated understanding of the nature of value (either/or), but rather a unified, holistic understanding of value as “both/and,” integrated and non-divisible.

Jed Emerson and Antony Bugg-Levine, Impact Investing

Proper blood flow is restored and the social, environmental and financial blend in an ever-ongoing conversation. The brain on impact embraces the “triple bottom line”, it exhibits what I call a “triadic” brain chemistry. The literal mind has become the metaphorical mind: where relationship transcends the primal instinct to build walls. In the impact brain there are no walls, indeed building walls is impossible because there is no “other,” there is only an expanded awareness of “us,” or what Aldo Leopold calls the “land community”. 

The virus of modern economics has not only infected the brains of billions of individuals, but, like an addict surrounded and comforted by his enablers, a whole host of institutions exist to, far from offering a remedy, coddle and reinforce the pathology.

Systems change scholar Steve Waddell talks about three different kinds of change. The first of these is Incremental, which can be characterized as “efficiency or template-based change.” The second is Reform, which is “further along on the spectrum of reflective change, raising questions of how organizing can happen for increased effectiveness and how risks within a system can be better managed.” The third type of change is Transformational, which Waddell contrasts to the two earlier types and happens at the level of “deep reflection regarding the purpose of the system, and with the intent of renegotiating power dynamics as a means for re-envisioning the system itself.”

Moving beyond those useful parameters into more esoteric realms, world wisdom traditions have long emphasized transformation as a basis for enlightened thought and action in the world. Becoming conscious of the fact that the world is sacred, that the divine is immanent in every aspect of the world, permeates many of these traditions. Meditation, yoga, prayer and other practices are designed to free the mind (and body) and reorient it toward the things that matter most — the soul and its relationship to the divine. A closed consciousness, whether it be from simple immaturity or a “virus” of flawed thinking, entraps the mind within a prison of Self, and self-love or narcissism becomes the way a trapped consciousness seeks remedy. But such a philosophy is built on illusions — because death takes us all in the end, and since we will never be certain what comes after the end, understanding in the fullest what the Here and Now offers and teaches us, and embracing the one true operating principle, love, is the Path toward an enlightened state of Being. A transformed state of being.

Rachel Carson

Rachel Carson

In a similar fashion, impact economy is transformational. It is a transformed economy, revealing a brain chemistry that has been liberated from the Smithian self-love virus. Impact economy’s homeplace is not in Silicon Valley, not in government centers, but in community. It is inspired by the unique continuum of nature and culture that characterizes each place, and it is anchored by relationships built over time — to neighbors, to nature, and to an immanence that mysteriously roles like thunder through the landscapes of the heart. Impact economy embraces triadic thinking, a crucial evolution beyond bifurcated thinking. Us and Them becomes Me, You and the Totality of Life. The interminable wastelands of Here and There becomes a colorful tapestry of the Local, National and Global. One bottom line becomes three on the balance sheets of business and life.

Impact entrepreneurs seek transformational change in the businesses they create. They work within the presumption of systems change. They can see the System because they have liberated their minds, they have dissolved the dark Amazonian webs, and the blood now flows like free-running rivers whose dams have lately been blown to bits, allowing the anadromous fish of creativity back upstream to spawn and for the bodies of their innovations to become food for other fish and for the grizzlies of ethical commerce. 

Impact investors seek transformation, through rigorous and elegant application of the double and triple bottom lines. Concepts like integrated capital — which makes “coordinated use of different forms of financial capital and non-financial resources to support an enterprise that’s working to solve complex social and environmental problems” (RSF Social Finance) simply make sense to them because they have evolved from the narcissism of swift exits and high multiple returns to embracing complexity, patience and a modulated set of expectations.

Impact is transformation. Impact entrepreneurs innovate to transform. Impact investors invest to transform. And the Impact Economy, awash in its redolent fullness, resembles the exotic patterns and colors of the butterfly, emerging from its chrysalis and spreading its wings.

Call to Action

For each major step you take to change the world through an impactful business venture, take an equivalent, personal step toward transformation. As Tolstoy inferred, don’t limit oneself to changing humanity; try, too, to change oneself. This is how moral revolutions happen and transformations are made manifest. 

Laurie Lane-Zucker is Founder and CEO of Impact Entrepreneur, LLC, an impact economy business that hosts the Impact Entrepreneur Network — a large, global network of “systems-minded” entrepreneurs, investors and scholars of social and environmental innovation — and publishes Impact Entrepreneur Magazine. For over 30 years, Laurie has been a ... Read more

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