This paper was presented to the 12th International Forum on Ecological Civilization – Ecological Civilization and Symbiotic Development, April 27-28, 2018, Claremont, CA, USA

We have arrived at a defining moment in the human experience. Either we find our common path to an Ecological Civilization that meets the essential material needs of Earth‘s human population in a balanced relationship with Earth natural systems, or we risk being the first Earth species knowingly to choose self-extinction. This poses a distinctive challenge to China, which must now choose between leading the world on one of two paths. It can choose to be the final dominant super power in a dying Imperial Civilization. This choice will guarantee global system collapse and the possible extinction of the species. Or it can choose to lead the world through a profound cultural and institutional transition to an Ecological Civilization in which humanity relinquishes its role as parasitic Earth exploiter and embraces a new role as Earth healer and care taker on a quest to achieve material sufficiency and spiritual abundance for all. The two paths are mutually exclusive. China‘s choice will likely determine humanity‘s future.

Historical Anatomy of Our Current Global Crisis

Our now global society features an increasingly intense competition for the resources of a finite and overstressed Earth. The institutions by which we manage ourselves are the residue of a 5,000 year old imperial civilization devoted to securing the power and the affluence of the few at the expense of the many. That era is coming to an end. The only question is whether Earth and humans will survive.

For much of the imperial era, humanity‘s favored ruling institutions were governments, first of city states and then of nation states. Each state was defined by territorial boundaries and ruled by a king or emperor who had ultimate claim to the territory‘s lands and other resources. With some regularity, invader states breached the territorial boundaries of others in search of slaves and material resources to benefit their sovereign and his or her retainers.

The more recent introduction of representative democracy inserted layers of elected officials into the command and control structures of imperial governments through electoral processes in which the rules often give a significant power advantage to society‘s wealthy few.

As democracy began to infringe on the power of kings, limited liability corporations became a favored institution by which kings created income flows not subject to parliamentary oversight. With time, corporations became increasingly independent power holders. Yet until the late 20th century, their power remained largely subordinate to that of the nation states that created them.

As economies globalized, however, corporations used their considerable economic and political power to free themselves from the constraints of national borders and government oversight. As they gained increasing control of jobs and resources, governments found themselves competing for the favor of corporations that owed no allegiance to any state or any person other than persons who owned or controlled large blocks of their shares.

In the late 20th century, corporations began taking aggressive measures to rewrite the rules of global commerce in ways that served their bottom line and placed them beyond the reach of national law.

In 1994, the North American Free Trade Agreement (NAFTA) linked the Canadian, US, and Mexican economies. On January 1, 1995 the World Trade Organization (WTO) was launched to serve as a global body in which corporations could write and enforce the rules of global commerce with relative freedom from concern for the interests of nation states and the people whose interests these nation states presumably represented. This eventually triggered a growing global resistance from citizens concerned that corporations were using their power to bargain down wages and environmental regulation.

Growing corporate power and influence accelerated three troubling trends.

  • Growth of Life Destructive Technologies. Our nuclear, carbon energy, genetic modification, and artificial intelligence technologies give humans the capacity to destroy Earth‘s ability to support life. We continue to increase the numbers and power of those technologies, seemingly unmindful of the potential consequences.
  • Growth of Consumption Beyond Earth‘s Ability to Sustain. We consume at a rate 1.7 times Earth‘s regenerative limit. Yet we make accelerating consumption growth our defining economic priority.
  • Growth of Extreme Inequality. We tolerate a growing wealth gap that is reducing ever more people to lives of desperation and is ultimately detrimental to the wellbeing of both rich and poor. In our world of 7.5 billion people, the financial wealth of just eight individuals now totals more than that of the poorest half of humanity.

These are extensions of patterns of human suppression and exploitation of one another and Earth that have characterized the dominant human societies for the past 5,000 years. We now face the question, is this destructive behavior inherent in our nature and thereby beyond our ability to transcend? Or might it be the tragic consequence of bad choices that can be traced to the immaturity of our mastery of the distinctive cognitive abilities that distinguish our species?

What makes us human

We humans are distinguished from other Earth species by the development of our neocortical brain, the physical source of our capacity for cognitive reasoning, symbolic thought, awareness, and highly developed self-aware volition. This is in turn the source of our distinctive species capacity for choice.

These capacities do not make us better or more worthy than other species. It requires us, however, to accept responsibilities that other species do not bear.

In addition to our capacity for choice, our neocortical brain is the site of our extraordinary drive to understand ourselves and our place as conscious living beings in a complex and evolving universe. In search of such understanding, we create cultural narratives or theories that express our shared understanding. These narratives in turn guide us in making the individual and collective choices by which we organize as families, clans, identity groups, and societies—and now as a global species.

The history of our varied human narratives and their often dramatically varied impact on our choices at different times and places is brilliantly documented by cognitive historian Jeremy Lent in his recent book The Patterning Instinct: A Cultural History of Humanity‟s Search for Meaning.

Lent‘s contrast between European dualism, mechanism, and domination of nature and the traditional Chinese organic ―web of life‖ worldview is a particularly powerful contribution to this discussion. So too, are his observations regarding the emerging synthesis between traditional Chinese understanding and the organic living system frame at the leading edge of science.

This understanding provides a potentially powerful basis for Eastern and Western collaboration in framing a guiding narrative for the human‘s transition to a viable future grounded in a co-productive relationship with nature. The collective outcome of a synthesis of the most positive insights of our varied human traditions can be a beautiful, loving, caring, and fulfilling common future for both individuals and Earth‘s larger community of life. Lacking such synthesis, we will almost certainly continue our current self-destructive path.

The variety of our narratives and their outcomes in different times and places gives us a sense of the power of narrative and the diversity of our human possibilities.

A Flawed Narrative

The mechanistic dualism of our dominant Western narrative has led Western societies to view nature as an enemy to be dominated and life in general as a mechanism to be controlled and exploited. Stripping creation‘s unfolding of purpose or deeper meaning, we embrace making money as our primary measure of progress and make global corporations our defining institutions. In the latter stage of the second millennium AD, this unifying narrative drove extraordinary advances in technology and global domination by Europe and more recently the United States.

For a time, it made the United States the model of a middle-class democracy most of the world sought to emulate—until corporations became the defining US political force. We soon became the world‘s leading environmental predator, members of our former middle class were reduced to a desperate struggle to make ends meet, our democracy was reduced to kabuki theater, and our government lost its capacity to govern—and thereby the trust of the governed. The US is now less a beacon of hope and possibility and more an example of what most of the world—including most Americans—wants to avoid.

China is positioned to displace the US as the dominant player on this global pathway to ultimate global collapse. The choice turns on a narrative expressed in the Theory of the Firm. Obscure to most people, it is embraced as intellectual holy writ by most academic economists and teachers of management.

The Theory of the Firm frames much of the training that we as a now global society provide to those who assume the top-level positions in our business and government institutions. It indoctrinates the directors and CEOs who lead the world‘s corporations and the politicians and administrators who lead the world‘s governments in the fiction that society is most prosperous when we reduce human relationships to market exchanges and manage them to maximize personal financial return. It is one element of a larger ideological frame known as neoliberalism.

Reduced to its essential elements, the Theory of the Firm assumes that the sole purpose and responsibility of the firm is to maximize financial returns to individual shareholders. Neoliberal economic theory assumes in turn that this produces the best overall outcomes for society for so long as government interference is minimized. Government‘s role is reduced to aiding and abetting corporate profit making—leading to a world in which global corporations have become humanity‘s dominant institutions, resulting in global political, economic, social, and environmental crises.

Ostensibly, the purpose of the Theory of the Firm is to explain the behavior of firms. But it implicitly legitimates corporate behaviors that produce corporate profits for the benefit of a few in disregard of residual consequences for both people and nature. In the United States, 84 percent of corporate stocks are owned by the richest 10% of Americans. The richest 10% own 40 percent. Most Americans own no stocks at all, even thru pension funds.

Corporations guided by the Theory of the Firm seek to minimize labor costs (wages and employment) and value nature only as a cheap source of resources and a place to dump wastes. This undermines social and environmental health to the detriment of all people—including owners.

Specialist theoreticians may debate the details of the theory. Our concern here is for the bigger picture implications of treating the firm as society‘s focal institution and defining its purpose in terms of maximizing financial returns to its shareholders—who also happen to be the already wealthiest among us. The rich get richer, and the poor get poorer.

The theory is grounded in the self-limiting and destructive assumption that we humans care only about our individual self-gratification. It ignores our human needs for clean air, food, water, and other essentials, as well as emotional needs that can only be met by relationships based on mutual caring. Personal and collective care for one another and Earth are dismissed as irrelevant. Government is stripped of democratic accountability and its role is reduced to enforcing contracts.

In short, the theory denies all that makes us human, is blind to our dependence on nature, dismisses government‘s most essential functions, and places no limits on the financial or political power that an individual person or firm can accumulate.

The Theory of the Firm and the neoliberal values and assumptions on which it is based, legitimate exactly those collective choices that currently drive system collapse. Specifically, they legitimate:

  • Making money as the primary measure of value and arbiter of exchanges between people and between people and Earth
  • Celebrating as wealth creation the financial bubbles that enrich speculators who contribute nothing to the production of real value
  • Giving ever greater control of the creation and allocation of money to ever fewer private-purpose corporations that use that power to game the system to make money detached from any obligation to produce anything of real value
  • Allowing control of the corporations that hold this power to pass to an ever-shrinking minority of the human population
  • Detaching these corporations from connection to place
  • Giving these corporations dominance over the institutions by which the people in life-serving communities govern themselves.

In its disregard of nature and nature‘s vital organizing principles, the Theory of the Firm focuses on solitary human individuals and on relationships mediated by money, legal contracts, free market competition, and individualistic interests. It should come as no surprise that this theory is terminally deficient as a guide to organizing human relationships with one another and Earth. That it has taken our species so long to notice its deficiency, should be cause for serious humility and alarm.

As we learned from Thomas Kuhn, a solid critique is not sufficient to break the hold of a flawed theory. It must be replaced by a more compelling theory. The Theory of the Firm and the ideology on which it rests must be replaced by a new theory—a Theory of the Community—grounded in the rapidly advancing scientific understanding of life and suited to guiding the transformation of society‘s defining institutions and management practices. It also draws from the insights of ancient teachings of Chinese culture that recognize the inseparability of mind and matter and emphasize wholeness, balance, and harmony.

Critical Elements of a Theory of the Community

Looking to the life sciences, we see an emerging recognition that life as we know it exists only in community. Communities of organisms self-organize to create and maintain the conditions essential to their individual and collective existence.

Take as an example the human body. Each of us possess a body that functions as a community of tens of trillions of individual ever-adapting living cells engaged in the constant exchange of energy, nutrients, water, and information. With the support of complex communications systems that science is only beginning to understand, these cells self-organize to create and maintain the conditions vital to the existence of the body that is the instrument of our highly advanced capacity for self-aware intelligent agency. Yet our conscious mind not only does not control these processes, it is largely unaware of them.

When we turn to Earth, we see an even more vastly complex living organism. Like any multi-celled organism, the living Earth survives only so long as its countless individual organisms self-organize to create and maintain the overall conditions of climate, pure water and air, fertile soil, and all else on which complex life—including human life—depends. Back in the 1970s, we reached and exceeded the limits of living Earth‘s ability to sustain us as the parasitic species we have become.

The challenge of organizing a human society of 7.6 billion intelligent and self-aware people in cooperative partnership with the rest of living Earth‘s community of life seems almost simple by comparison to the challenge that Earth‘s other species have already mastered. In addressing that challenge, we have much to learn from healthy non-human living communities that meet their needs through continuous exchange between cells, organisms, and Earth with no evident equivalent of money, corporations, command and control authority structures, or legal contracts to guide them. Only rarely do exchanges involve an evident immediate quid pro quo as they do between bees and flowers. Yet, over periods that may span decades, there is usually some form of mutual benefit.

Life‘s capacity to achieve its miracle of self-organization and self-evolution is a product of extraordinary complexity, diversity, and distributed capacity for intelligent agency. And despite our failings, it appears we humans are creation‘s most advanced and daring experiment in the creative potential of intelligent, self-aware agency. We have yet, however, to demonstrate the wisdom and skills to use this capacity productively in service to the mutual health and well-being of ourselves and Earth‘s community of life.

It seems we need the guidance of a Theory of the Community based on the foundational premise emerging from the life sciences that:

Complex life exists only in multi-species communities that self-organize to create and maintain the conditions essential to their own existence. We humans are living beings. Therefore, we exist only as members of multi-species living communities.

This explains the deep desire of mentally healthy humans to be concerned for the welfare of others and Earth and to find joy in performing acts of kindness to neighbors, strangers, animals, and even plants, though there may be no immediate personal benefit other than the satisfaction of doing it. Exceptions to this pattern can generally be traced to cultural and institutional dysfunction.

Three foundational organizing principles follow from this premise. All have important implications for how we structure and manage the relationships by which we create and allocate our means of living.

Principle 1: The Defining Value and Unit of Organization: The defining value of both society and the economy must be the health and well-being of place-based living communities and their members. Communities of place, therefore, must be the fundamental units of societal organization. Corporations must be subordinate and accountable to the community.

If we embrace the health, resilience, beauty, and creativity of life as our defining human value and purpose, everything relating to how we organize follows. All living beings that contribute to life‘s health and beauty have intrinsic value. The distinctive value of the human species resides in our unique capacities and mostly unrealized potentials to serve life‘s continuing regeneration and creative unfolding.

Money, markets, corporations, and government are all human creations. Each has a powerful influence on our behavior, but none has a material existence outside the human mind. They are of value only to the extent that they serve us—and through us serve the whole of Earth‘s community of life. This is the larger frame within which we can address questions relating to the appropriate role and structure of the firm—and most specifically the role and structure of the for-profit corporation.

  • The only acceptable purpose of a corporation is to serve the place-based community defined by the territorial jurisdiction of the government that created it. Its legitimate legal standing is properly limited to that government‘s jurisdiction. It has no right to claim markets or resources in any other jurisdiction.
  • Each corporation must be created for a specific public purpose and be accountable to the community that created it for fulfilling that purpose. There is no legitimate justification for the existence of a purely private purpose corporation.
  • The corporation‘s ownership must be stable, local, and accountable to the community it serves. There is no place for speculation on the price and exchange of corporate shares.

Principle 2: Governance Structures and Processes: Top-down command and control systems, a relic of our imperial past, must give way to local self-governance within a global system of nested communities (holarchy) in which higher level governance structures support lower level resource control and self-organization (subsidiarity).

Living systems organize within structures that facilitate highly complex adaptive decision making by the community‘s member organisms. We humans must learn to do the same. Human communities must create institutions to facilitate their internal processes of self-governance. Ultimately, all institutions must be accountable to the people of the community in which they operate. Call it ―living‖ or ―deep‖ democracy.

The governance internal to individual governmental and business institutions is also at issue. The most effective human teams and organizations are largely self-organizing and self-governing, with people assuming tasks and roles as the situation requires and as consistent with responsibilities and agreements with neighboring communities. The greater the need for creative local adaptation, the more important and effective such self-organizing local processes become.

We can and must use our exceptional human capacity for self-aware agency to meet our own needs in ways that simultaneously serve others. Without a deep sense of responsibility for the whole of which we are a part, our capacity for agency makes us a potential threat to ourselves and others.

Our educational systems must advance our species‘ proficiency in distinguishing between the choices before us with wisdom, intelligence, and a deep sense of moral responsibility for the well-being of the community that in turn cares for us. Individual freedom comes with a responsibility for the well-being of the whole.

A Theory of the Community will favor creating incentives such that all relationships, both monetized and non-monetized, seek to optimize the health, creativity, and well-being of individuals and the communities they create. Specific implications include:

  • Defining and organizing communities within territorially defined bio-regions;
  • Striving for a level of citizen participation in self-organizing community decision making and self-organization far beyond current structures of representative democracy;
  • Structuring and managing higher level governance institutions to protect and support lower level communities in controlling and self-managing themselves and their ecosystems regeneratively to meet their material needs in ways that are spiritually fulfilling, resilient, and creative without shifting burdens to other communities;
  • Demonetizing human relationships to one another and nature to the extent feasible.

Principle 3: Resource Flows: Each community must strive for local material self-reliance in providing a full, healthy, happy life for all its members.

Living organisms meet their needs for water, nutrients, and information based on what is immediately locally available. They work with Earth‘s geological materials, structures, and processes to continuously regenerate soils, aquifers, streams, and rivers, sequester excess carbons, toxins, and other wastes, purify the air, and stabilize weather and temperatures.

Individual species may store for future needs and some may engage in regular migration over significant distances, usually in ways that make distinctive contributions to the communities through which they traverse. Others forage over modest distances, providing beneficial services along the way.

Overall, however, natural ecosystems meet their needs by adapting to local conditions. The community generally adjusts to keep local populations in balance with local conditions, including the regenerative capacity of local ecosystems. Other than the droppings of migratory birds or nutrients from the bodies of dying salmon, most everything needed is acquired and processed from local resources. So long as each local community is meeting its needs in balance with its local ecosystem resources, the global ecosystem will be in balance. Specific implications for the organization and self-governance of human communities include:

  • Meeting energy needs primarily with local capture of solar and wind energy
  • Minimizing the transfer of material resources both within and between communities
  • Maximizing the free exchange of knowledge, information, technology, and culture within and between communities
  • Organizing material processes around continuous circular flows
  • Maintaining energy, material and financial balance in exchanges with other communities.

Critical Challenge

The Theory of Community will challenge us to:

  • Break up concentrations of corporate power and restructure the individual pieces to assure each is accountable for fulfilling a public purpose beneficial to the communities in which they do business. This will require significant changes in corporate law and internal corporate organization and management.
  • Take democracy to the next level as a participatory process of community self-organization, not just a voting contest between two or more candidates.
  • Replace GDP as the primary measure of economic performance with measures of the health and well-being of people, communities, and nature—giving priority to equality, material sufficiency, and spiritual abundance for all.
  • Redraw the boundaries of political jurisdictions to align as far as possible with ecosystem boundaries and seek to optimize economic self-reliance within each jurisdiction.
  • Strengthen non-monetized relationships between people and between people and the lands and waters that sustain them.
  • Provide incentives to keep human populations in balance with the regenerative capacities of the bioregions in which they live.
  • Invest in life sciences research advancing understanding of the organizing principles, structures, and processes of healthy living systems.
  • Transform management education to prepare future leaders with the knowledge and skills needed to lead institutional transformation and the creation of resilient self-governing communities.

This brings us back to the epic choice that China must now make. Will it embrace the ways of a grossly deficient Western narrative to become the last global superpower in a now crumbling imperial world of corporate rule? Or will it lead the world to actualization of the vision born in China of an Ecological Civilization grounded in ancient Chinese philosophy?

If China chooses the former, the result may be an end to history—at least to the ability of humans to record it. If China chooses the latter, it may come to be revered for millennia as the nation that led humanity to recognize and actualize the highest potentials of our human possibility.

China may be the only major nation in a position to make this choice with the speed and intention required. It is a major economic power. Its government is dedicated to the well-being of its people and government‘s powers have not yet been subordinated to purely corporate interests.

The time has arrived when it is imperative for humans to come together as one people to navigate a dramatic civilizational transition as we find our way to a viable, prosperous, and fulfilling human future that works for all.


This is a revised and expanded version of a paper circulated to participants in the February 2, 2018 ―Necessary Conversation with David Korten‖ webinar sponsored by the International Humanistic Management Association. This version is for presentation to the 12th International Forum on Ecological Civilization hosted bythe Institute for Postmodern Development of China,EcoCiv, the Center for Process Studies, Pitzer College, Claremont Graduate University, the South China Institute of Environmental Science, the Ministry of Environmental Protection of China, and the Huanghe Science and Technology College, David thanks Michael Pirson for drawing his attention to the significance of the Theory of the Firm and the need for a Theory of the Community. To Fran Korten, Pirson and Erica Steckler for their critical intellectual and editorial guidance and to Pirson and Steckler for organizing and facilitating the webinar. Thanks also go to Zhihe Wang, CEO of the Institute for Postmodern Development of China for his invitation to revise the paper for presentation at the 12th International Forum on Ecological Civilization and for his guidance in its revision.