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Date: 2019-11-21 Page is: DBtxt001.php L070-SEES-COMPLETE-SYSTEM

SOCIO-ENVIRO-ECONOMIC SYSTEM
COMPLETE SYSTEM
HUGE ... COMPLEX ... AND AMAZING
HUGE SYSTEM ... VERY COMPLEX
The system is very complex with many competing agendas!
Top down management of this system for best results is impossible
Conventional thinking about performance analysis simply does not work
Profits, financial wealth and quality of life is up ... for some
Improvement in quality of life for most is weak
Degradation of the environment is out of control
BETTER MANAGEMENT METRICS ARE ESSENTIAL

MANAGE FOR PROGRESS NOT FOR PERFORMANCE
PROGRESS is the increase in VALUE (of the STATE) from beginning to end of the period
PERFORMANCE is very complicated, and depends on the PERSPECTIVE of the analysis
PROGRESS is less complicated and very much easier to measure ... and manage!


By thinking in terms of three segments that embrace ALL of the system, the complexity of the system may be organized in a somewhat coherent manner thus:
PEOPLE
Social Capital
ENVIRONMENT
Natural Capital
ECONOMY
Economic Capital

Each of these have multiple sub-segments:
.
SOCIAL CAPITAL
  • Human Capital
  • Relationship Capital
  • Locational Capital
  • Spiritual Capital
NATURAL CAPITAL
  • Sun
  • Land
  • Water
  • Air
  • Resources
  • Biodiversity
  • Ecosystems
ECONOMIC CAPITAL
  • Financial Capital
    • Money
    • Securities
  • Physical Capital
    • Buildings
    • Infrastructure
    • Machinery, Equipment
    • Vehicles
    • Working Capital
  • Intangible Capital
    • Knowledge
    • Institutions
    • Enabling Environment
    • Culture

The dynamic change in all of these may be described using some core concepts of accountancy:
  • Beginning Balance Sheet (BOP STATE)
  • Value add | Contribution
  • Value destruction | Cost
  • Ending Balance Sheet (EOP STATE)
.
SOCIETY / SOCIAL CAPITAL
.
HUMAN CAPITAL
PEOPLE are the most important part of the socio-enviro-economic system.

The most important goal is simply that quality of life for everyone on planet earth should be getting better.

In order to live life there is a cost of living. Products ... a variety of goods and services ... are consumed to support quality of life.

People are also contributors in very many different ways. Some are 'unpaid' in a conventional sense, like parenting, which is very valuable for the child. Much is pay for work done within an organization that produces goods and services.

People are also decision makers ... and it is these decisions that are going to determine more than anything else the performance of the socio-enviro-economic system. Since around 1980 the dominant goal of decision making has been to improve the profit performance of companies primarily for the benefit of the owners. Decision making in the household has been constrained by available income. Household consumption growth was facilitated by financial innovation and easing credit, but hardly at all by increased income.

While scientists have understood for several decades that serious climate change will happen, most decision makers in the general socio-enviro-economic system have ignored the matter ... to everyones detriment.
RELATIONSHIP CAPITAL
People are social. They are better in a family setting and better with friends and a community.
LOCATIONAL CAPITAL
PLACE has a major impact on quality of life ... perhaps more than anything else. Places need to be liveable with decent housing and access to all the goods and services needed for a good quality of life.

Too much of the world's people are living in squalid conditions. This is not because the world does not have the capacity to do better, it is because the decision makers in the system do not have the objective to do better.

There are many attractive communities in the world ... but too many places that are dysfunctional in a variety of ways ... places where the economics do't work, where the environment is unhealthy and society broken. The places need programs to help that address ALL the systemic problems. Single issue initiatives are not enough. Programs have to addess all the issues in a comrpehensive way.
SPIRITUAL CAPITAL
Bhuddism Christianity Islam Religion ... spirituality ... has played an important part in human society for thousands of years. Arguably the level of spiritual awareness is a measure of something important in society.
There are many different manifestations of spirituality.
Over the centuries they have had a huge role in how society has developed.
In recent decades religion has played a low profile role in Western democracies but not so much in less developed countries. In far too many cases religion has been used as a basis for hate rather than for love and empathy.
Religion has an important role in quality of life, perhaps appreciated the most in times of stress and intense deprivation and crisis. This is important.
Religion also has a role in helping to define 'right' and 'wrong' in ways that are not simply materialistic.
.
ENVIRONMENT / NATURAL CAPITAL
.
SUN
UPON WHICH NATURE DEPENDS, AND PEOPLE, AND MANY ECONOMIC RESOURCES
LAND
UPON WHICH NATURE DEPENDS, AND PEOPLE, AND MANY ECONOMIC RESOURCES LAND ... critical for nature, people and the economy
WATER
WATER, WATER EVERYWHERE ... BUT VERY LITTLE GOOD ENOUGH TO DRINK
AIR
AIR CONTAINS OXYGEN, ESSENTIAL FOR LIVING
RESOURCES
MINERALS AND ENERGY ARE ESSENTIAL FOR THE MODERN ECONOMY AND SOCIETY
BIODIVERSITY
A LOT IS KNOWN ... BUT EVEN MORE REMAINS UNKNOWN
ECOSYSTEM SERVICES
VERY COMPLEX / VERY IMPORTANT ... AND VITAL THAT IT IS NOT IGNORED
.
ECONOMY / ECONOMIC CAPITAL
.
FINANCIAL CAPITAL
MONEY MAKES THE WORLD GO ROUND
FINANCIAL INFRASTRUCTURE
Financial engineering has become a big part of performance optimization. Without money the economy stops ... and life is miserable. However, finance is only a lubricant, not the engine!
MONEY / STORE OF VALUE
There was a time when money as a store of money because it had intrinsic value. Gold was a very suitable metal for making money.
MONEY / UNIT OF ACCOUNT
.
PHYSICAL CAPITAL
THE ENGINEERING THAT ENABLES THE MODERN MATERIAL WORLD
BUILDINGS
THEY HAVE LONG LIFE AND BIG IMPACTS
INFRASTRUCTURE
CRITICAL DRIVER / CONSTRAINT ON PROGRESS
PROCESSES

ECONOMICALLY EFFICIENT ... Impressive improvement in economic productivity, but less so for social and environmental impact
TRANSPORT
THE LINKS THAT ENABLE THE SUPPLY CHAIN
WORKING CAPITAL
ESSENTIAL FOR THE FUNCTIONING OF THE MODERN WORLD
.
INTANGIBLE CAPITALS
MANY OF THE THINGS THAT MAKE LIFE WORTH LIVING
KNOWLEDGE CAPITAL
THE UNDERLYING DRIVER OF PROGRESS
INSTITUTIONAL CAPITAL
ESSENTIAL FOR AN ENABLING ENVIRONMENT
CULTURAL CAPITAL
MUCH OF WHAT MAKES LIFE WORTH LIVING



The text being discussed is available at

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TrueValueMetrics (TVM) is an Open Source / Open Knowledge initiative. It has been funded by family and friends plus donations from well wishers who understand the importance of accountability and getting the management metrics right. TVM is a 'big idea' that has the potential to be a game changer leveling the playing field so the wealth and power is shared on a more reasonable basis between people who work for a living and those that own the economy and the levers of power. In order to be effective, it cannot be funded in the conventional way with a for profit business plan, but absolutely must remain an open access initiative.
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