Addressing Complexity: Regenerative Economics Excels at Understanding Intricate Issues

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Following the industrial revolution, Western cultures developed an affinity for reductionism, the notion that a system can be described as the sum of its constituent parts. Reductionism can be a helpful way of understanding a well-defined problem—like a broken watch, for example. Identifying and replacing a single dysfunctional part will likely get the watch ticking again. But when we’re dealing with complex systems like the environment or the economy, a simple fix-it rarely solves the problem.

Economics is one discipline that has been criticized for being overly reductionist. Something that seems true in theory may in fact make too many false assumptions to be useful outside of an economics classroom. This may be one of the reasons that monetary policy in the United States creates so many unintended consequences—reductionist models are often insufficient for describing complex systems.

In contrast, the growing field of regenerative economics (last covered in November 2022) attempts to understand complex systems through a more holistic approach. By determining what makes such systems unique, we can better manage our approaches to more complicated problems, such as pandemics, economic downturns, and the climate crisis, to name a few.

Understanding Complexity Through Relationships

So what are the characteristics of complex systems? In complex systems, the parts often relate non-linearly, in feedback loops. They are systems with so many interrelated variables that they can appear random. Ecosystems are great examples of complex systems, as they contain a variety of plants and animals all with dynamic and intricate relationships.

Additionally, you are also a complex system: your body is full of feedback loops, biological rhythms, and interconnected physiological relationships. As a reductionist, it would be difficult to paint a full picture of who you are based on your fundamental physical attributes alone. Instead, you could better understand your personality through observing your relationships and behaviors. This is exactly one of the ways we can better understand complex systems—by understanding how the system exists in relation to its environment.

The failings of our present economic system largely stem from the ways we have undermined key relationships: those between our economy and the natural environment, and those between human beings. Instead of addressing social and environmental issues holistically, we have continued to apply reductionist approaches that address symptoms of mismanaged relationships, but not the causes. For example, instead of challenging consumerist culture, the current system tries to accommodate it through the use of technological band-aids. This approach fails to address the root causes of our ecological crisis.

The Regenerative Economic Approach

Instead of isolating relationships, the regenerative economic approach recognizes the sensitive connections between the economy and the environment, and seeks to build reciprocal relationships between the two. By considering the economy as nested within the environment, regenerative economics recognizes that the well-being of the environment is essential for the well-being of society. In a truly regenerative economy, the environment is not just an “externality,” but the very basis from which an economic system operates.

Regenerative economics also emphasizes the importance of relationships between human beings. Instead of viewing people as isolated and purely self-serving, it recognizes that people are interdependent and exist in complex relationships with each other.

Ultimately, reductionism can be tremendously useful, but it has limitations when applied to complex systems such as the economy, the environment, and human beings. A more holistic and regenerative approach that recognizes the interdependence and relationships within these systems is necessary for addressing our complex social and environmental challenges. If we acknowledge and nurture the integral relationships that support our environment and society, we can work towards a more regenerative future.