Capital Ideas: Exploring Permaculture’s 8 Forms

hands cradeling an avocado symbolizes the wealth in the eight forms of capital
Permaculture offers a great framework around capital that let’s us see more than money. Sonora ©2018

I love the taglines from organizations whose values center on relationships.

These organizations know relationships in finance generate more wealth than simple financial capital and transactions create on their own.

Their taglines resonate with me:

  1. Reimagining money (RSF Social Finance),
  2. Inserting relationships into our financial system (Kiva U.S.)

In another example, the Fourth of the Slow Money Principles suggests we want to: “create vital, healthy relationships while catalyzing new forms of capital for small food enterprise.”

And finally, though not a tagline, the Kennedy speech on GDP embodies this idea.

Transactions to Relationships

Moving financial transactions beyond transactions to relationships is fundamental to both the work I do and to the ideas around ethical investing.

As ethical investors, you’ll find relationships help to mitigate the risk for any investment.

Early in my work, I needed to figure out ways to make relationship and trust, the essential aspects of all ethical investment,

more palatable to mainstream investors.

To do so, I turned to any available stories around money and finance that looked to meaning.

Mostly,

I was disappointed.

It seems, in our modern capitalist system, we’ve moved away from relationships in our business dealings to favor the use of computer blips, micro trades, and derivatives.

Permaculture’s Eight Forms of Capital

I finally discovered needed answers in the permaculture movement and the holistic paradigm described by the eight forms of capital:

  1. Intellectual
  2. Spiritual
  3. Social
  4. Material
  5. Financial
  6. Living
  7. Cultural
  8. Experiential

For those unfamiliar with the permaculture movement, it’s a grounded, holistic movement for design.

Many will be familiar with permaculture’s work in agriculture, but permaculture’s systems thinking reaches beyond farming methods to influence culture.

The eight forms, first imagined by Ethan Roland and Gregory Landua for Appleseed Permaculture in 2011,  are one such expression.

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The eight forms of capital were a significant breakthrough. They really helped me to explain the alternative economy to mainstream investors.

They are good to understand for ethical investors too.

The eight forms give us a way to build relationships into our financial transactions with broader ideas of capital.

Angel investors know this.

So do impact investors.

Many investors use their considerable experience and clout to support startup entrepreneurs across a wide spectrum of business types. They sit on their boards, they guide, introduce and help develop CEOs.

Ethical investors know this too.

Using the permaculture idea of capital is an interesting way to see additional ways we might support our business owners.

The Eight Forms Applied

In my work, I especially love the commonly used phrases to describe the intellectual and social capital forms. 

People get it when you start there!

In conversations with Slow Money minded entrepreneurs, I encouraged them to move beyond their need for financial capital. Part of being investor ready is having gratefulness for the other seven forms.

In traditional investment terms, adjusting to additional capital types helps with your burn rate.

In introductions for Slow Money Gatherings, I’d ask the room full of entrepreneurs to recognize the intellectual, cultural, and social capital in our Slow Money communities.

Sometimes it took a moment, but the room would relax.

People moved away from disappointment and toward recognition and finally, to gratitude.

And, we didn’t just leave the entrepreneurs with a greater sense of gratitude. We built on these ideas too.

Not unlike angel investors for larger companies, we found customers, mentors and suggested growth strategies.

We made introductions.

In the process, we tapped into the very intellectual, cultural and social capital we’d encouraged everyone in our meeting to consider.

Through the work and the relationships, we created more of what we used. We lived in a world of abundance and trust.

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Not to discount the need for money. We found financial capital too.

Sometimes we found financial capital from local investors attending our meetings, sometimes from a supportive group of crowdfunders.

Regardless, with the expanded thinking offered by the permaculture framework, the wealth was always so much more than money.

Can Capital be Dangerous?

That said, as I described the eight forms of capital to people over several years, something seemed mechanized about the way I used the term. It didn’t feel abundant.

My descriptions of the eight forms and the efforts they solidified, it all worked: I got desperate entrepreneurs to rest and consider what they already had as a foundation from which to build. They began to move beyond a single-minded need for money. We built community. We found abundance.

But it felt like a trick.

For me, it felt like a sleight of hand instead of an awakening.

Whatever the reason, my experience left me vaguely uncomfortable.

I started seeing articles mentioning the dangers of monetizing values.

I wondered if identifying these seven non-financial forms as capital was edging into a dangerous practice.

At the same time, I continued to recognize this broader understanding and enjoyed the freedom it gave me to look at business and resources.

I vowed to sit with the creative tension.

Answers in a Discussion on Labor

Occasionally, I’d meet with like-minded advocates and ask them to consider the eight forms.

Generally, these advocates found the words to be positive. They believed the description to be especially good for beginners learning abundance thinking.

And then I read John Hagel’s Labor Day post with an exploration of labor as human capital.

Hagel’s work finds human capital (note, human capital isn’t one of our original eight forms) on the income statement as an expense item, not on the balance sheet as an asset.

And, Hagel finds the idea of capital inherently dehumanizing.

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In Hagel’s framework, we own capital (we don’t own humans). To make it even more callous, Hagel notes:

most forms of capital depreciate over time.

This means, the worker, the human capital, is an owned and recognized as a depreciating asset for the employer.

Human capital becomes less ‘valuable’ as it ages. This seems to be a literally about brains vs. brawn.

Brawn ages.

Brains do not.

In order to find the appreciating asset, we need to move beyond brawn and to engage workers’ brains and see them as learners.

Looking at the entire discussion, I saw the ideas of expense and depreciation, tied back to financial capital – i.e., training programs are expensive.

Hagel’s work is masterful.

Language and Limits

In Hagel’s work, I find the long-awaited answers to resolve the tension I’ve held around permaculture’s non-financial forms.

Paradoxically, with Hagel’s insights on the limits of the word, I discover a new way forward.

I now name the discomfort while finding subtleties in the language.

With Hagel’s naming exercise, I find more comfort with the permaculture-based eight forms of capital and continue to use the framework to share and develop a deeper understanding.

Just as I was about to conclude this post, I mentioned this train of thought to a friend.

A former regional human resources manager for a major coffee chain, he took some issue with Hagel’s understanding. But, he did consider the words and considered exchanging the word, value for the word capital.

We tried it for a while, human value, social value, natural value.

Surprised, I found myself relaxing around the word.

We enjoyed our play with the language and found new nuance and understanding around the elements for any business.

How about you?

What are your thoughts about the eight forms of capital?

How does the word, value work for you?

Have you ever supported an entrepreneur with more than money?

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