Tuesday, September 29, 2009

The DNA of Social Finance






The DNA of Social Finance

The course of social finance is enlivened by transparency and trust. These essential elements of agreements between people are central to the value of financial transactions—and are in many ways inseparable from each other. What I mean by this is that transparency leads naturally to trust and vice-versa in a constant dance through time. I would add that the healthy circulatory system of money, even on a global scale, is built or carried by the dynamic present in transparency and trust. Consider the opposite where they are not present—circulation stops, economies falter, wealth is extracted, self-interest reigns, poverty results. This may seem a stark contrast, but a poignant one given the current state of the economy in which unemployment and foreclosures are rising increasing while investment houses continue to post impenetrable values.

Transparency and trust emanate from human experience, and are therefore quite individualized in their practice or find expression in the behavioral patterns of a particular culture. They are also deeply connected to the need for accountability and dependability. Most people want to know that whatever motivated a transaction in the first place will be recognized and respected by the other party to it. For example, if I agree to lend money to you, I need to know that the money will be used as expected and returned as per the understanding. I also need to know that if the scenario does not play out as planned and there is significant change, you would come back to renegotiate the agreement or return the funds. This epitomizes the tandem connection of trust and transparency, and is a measure of a healthy financial transaction—one that frees the lender to focus on other activities and the borrower to progress with the planned project while remaining connected through the lender-borrower partnership. If you cannot find out where the money you loaned went to, or the borrower feels no responsibility to the lender, something is broken in the flow of both money and human relationships. Accountability has both a human aspect in the context of relationship, and a financial one in the context of tracking and measuring the movement of the money itself.

The salient characteristic of social finance is that these two threads, the human and the financial, are recognized and worked with as inextricably linked. Every financial transaction has an effect on human beings, and every human being affects the quality of the world through how he or she works with money. This is a fully rounded concept of interdependence as it includes the perceptual and behavioral dynamic along with the more traditional economic one of interchange and efficiencies in the production and consumption of goods and services.

If trust and transparency are central to the vitality of financial circulation, serve a bridging function between the social and the financial, then what actually is the deeper motivating force that begins, sustains or augments that circulation? What if we could consider that social finance has the double helical structure of DNA, with the major strand being human actions and needs, and the secondary strand, the creation of money in its many forms. That they come into a dynamic relationship is inevitable in economic life and is epitomized by the tension between self-interest and community-interest. Add to this, movement through time and place. In this imagination, the pulsing dance between transparency and trust bridges the two strands and naturally gives rise to a vortex-like spiraling movement. But what of the motivating force? I would argue that the prime mover is human intention. It is the element that moves with the currency, the flow of money. It represents the energetic investment of people into the circulation, the rhythmic movement of value as it is generated, destroyed, and recreated anew within the whole economic process. Of course, one can make the case for the shadow side, the adverse effect of bad intentions or unethical practice. But, if we can understand social finance from the perspective of the elegant architecture of DNA with its life-building capacity, we might also see how social finance can serve as a restorative and healing force in economic life.

John Bloom © 2009

0 Comments:

Post a Comment

Links to this post:

Create a Link

<< Home