ReFi to Usher in a Post-Capitalist Inclusive, Sustainable Economy
Introduction
In 2001, my PhD Advisor at the University of Colorado recommended I read the book Natural Capitalism. He knew I was passionate about entrepreneurship as a discipline and that personally I was an outdoor, mountain sports enthusiast. He had already embraced the idea that those two worlds could be combined but I hadn’t realized it until I read Natural Capitalism. I then dedicated my career to the pursuit of sustainable entrepreneurship.
Aside from being an early researcher and professor of sustainable entrepreneurship, in 2011, I also had the immense pleasure to coauthor the sequel to Natural Capitalism, called Climate Capitalism, with Hunter Lovins, one of the co-authors of the book that inspired my career.
Clearly at that time, ten years after obtaining my Ph.D. in Entrepreneurship, I remained a believer that capitalism could be re-oriented to solve the social, ecological and economic inequalities, and externalities the industrial revolution had wrought on the world.
As time went on I gradually became disillusioned with the direction our economy was headed and the pace of action, or often inaction on climate change. This led me to publish my third book entitled Post-Capitalist Enterepreneurship: Startups for the 99%. In this book, I focused on new forms of organizing economic actors who are built by default with the collective good in mind. It covered chapters on topics such as:
- entrepreneurship for the commons
- local and digital currencies
- platform cooperatives
- DAOs (decentralized autonomous organizations)
- blockchain-empowered smart cities
In recent interactions with John Ellison of ReFi DAO, he asked if I could provide him some places to start exploring my thinking and writings on topics related to my journey to ReFi. I ended up sending him a few links, and all three of my previous books with explanations of what each one had to do with my current intellectual, spiritual and entrepreneurial journey to ReFi.
Capitalism is not equipped to enable the economy we want
I am more convinced now than I was when I was writing Post-Capitalist Entrepreneurship more than 5 years ago that capitalism is not equipped to solve the problems we face and that an economy on crypto rails can be a powerful force to change the direction of humanity towards one that is more in harmony with community and the planet.
Let’s take a look at some of the evidence supporting my claim that capitalism is not solving our biggest challenges and is often exacerbating them instead.
Income inequality
The home of modern capitalism is the US, followed by Europe. Income inequality has grown much more acute in the US, than Europe and other parts of the world in the past 40+ years. The trendline is going in the wrong direction. The rich are getting richer and this trend was actually accelerated during and post Covid as well.
Climate Change and Natural Capital
As the evidence is mounting that capitalism is not lifting all boats but rather lifting yachts and leaving many behind, to my dismay, we have yet to properly re-orient capitalism to internalize the negative environmental externalities caused by our growing population’s growing consumer trends and the insatiable appetite industry has for energy, resources and transport, creating growing amounts of waste, increasing carbon emissions and negatively impacting ecological systems.
At the current pace of population growth, the rate of biodiversity loss and carbon emissions is beyond alarming.
ReFi and post-capitalist entrepreneurship and a new world order?
There is little debate that the industrial revolution and capitalism itself have contributed to unprecedented innovation and transformation of every aspect of our lives, from how we move to what we eat, to how we work, even how we meet people and build relationships locally and globally.
Yet, it is hard to dispute the evidence that capitalism tends to favor the rich and fails to incorporate the negative externalities into the prices of goods and services. Meanwhile governments, including multilateral negotiations have demonstrated that coordination problems are pervasive beyond private enterprise.
Blockchain technologies have emerged in the past decade with a set of primitives that could serve to reshape our global economic model. Embracing blockchain business models does not mean abandoning private enterprise, nor hyper competitive markets.
What blockchain and associated technologies does do however, is create the enabling conditions for rebuilding our economy currently dominated by platform deathstars where legacy and Web 2 companies accumulate more and more power and wealth by building unstoppable network effects (think Facebook/Meta, Apple, Amazon, Netflix, Google/Alphabet).
As decentralized ledger technologies (DLTs) enable democratized ownership of both the platforms that users and creators participate with as well as ownership of digital assets, we are already witnessing a new economic model emerge on crypto rails. Blockchain protocols are increasingly owned more by the community than by a centralized company that contributed to launching the protocol. While still early, and flawed, governance tokens themselves can contribute to not just shared ownership and value capture, but also democratized governance of these protocols.
ReFi Accelerating a More Inclusive Economy
If the primitives are there for blockchain technology to rewire our economy into one that more fairly rewards users and contributors to protocols, ReFi takes inclusive economy to another level altogether. For example, several ReFi projects such as Impact Market have sought to bring Universal Basic Income (UBI) on chain.
Meanwhile many other projects such as Kolektivo seek to leverage blockchain to empower local communities to ideate, fund and support public goods infrastructure and micro-enterprise. Similarly, EthicHub supports on-chain loans and investments into unbanked small-hold farmers who collectively generate a substantial amount of more sustainable good the world consumes.
From the EthicHub whitepaper:
Furthermore: some of the greenest areas of the world is where the Unbanked live: 80% of the global production of coffee comes from poor farmers with 2 or less hectares of land. Agriculture is key for Climate Change with more than ⅓ of the food being produced by smallholders. Their inclusion into global financial, certification and carbon markets is a blue ocean oportunity enabled by new technologies as blockchain because DeFi can act as a catalys to fuel resources to the consecusion of the Sustainable Development Goals, allowing people around the world to take part in solving these problems.
ReFi accelerating climate action and transparency in carbon markets
Our current economic model has failed us in the race against the devastating impacts of climate change and the loss of biodiversity. In my opinion, the biggest flaw of our current economic model with respect to ecological impacts is that neither consumer demand, nor corporate responsibility, nor government intervention has found a path to putting a proper price on the value of healthy ecological systems, clean air and a healthy climate. In fact, the most widely cited academic paper on this topic, suggested that the economic value of the world’s natural ecosystems to our economy was $33 trillion, and this was published in 1997!
Enter ReFi to the rescue? Perhaps I am putting too much hope into the role of ReFi to help solve this wicked problem that has not been solved in previous decades. But crypto rails and community-owned protocols are an ideal solution to create a market for protecting our planetary ecosystems. In the past few years we have seen markets emerge for renewable energy trading (e.g. PowerLedger), renewable energy credits on chain (e.g. FlexiDAO), protocols for establishing transparent, credible on-chain land-based carbon offsets (e.g. Regen Network) and a whole lot more.
In fact in a recent post, I highlighted ReFi projects across the crypto stack who are already demonstrating the potential for ReFi to become a major part of the solution to the market failures with respect to reflecting the negative externalities of our current production systems.
Conclusion
In this post I sought to highlight my own personal journey towards becoming an active member (and hopefully contributor) to the ReFi revolution. I have explored how capitalism as an economic model has unfortunately led to prosperity for few and at the cost of ecological and climate peril.
However I am an optimist and choose to believe that ReFi will become a major contributor to rewiring our economic model to one that brings more inclusive prosperity and leads the way in creating transparent, and transformative ways to price externalities into our market economies. Thus ReFi allows us to leverage crypto rails to help shape market forces towards the world, and economy, we all want.
About the Author
Boyd Cohen is CEO and co-founder of Iomob, which is building the Internet of Mobility network and WheelCoin Move2Earn to gamify green mobility and is a contributor on ReFi to CoinDesk. Since obtaining his Ph.D. in strategy and entrepreneurship at the University of Colorado in 2001, he has spent the past two decades focused on accelerating the path to a low-carbon sustainable economy. He has published three books, multiple peer-reviewed articles and started a handful of ventures in the smart cities and sustainability arena.
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