The Path to Accountable Capitalism

Overview of NewRock’s Hybrid Approach to Address the Climate Crisis

To address the climate crisis at the pace and scale required, NewRock offers a locale-adaptable, hybrid business model to accelerate the buildout of sustainable energy. A stakeholder-inclusive, relational design smartens-up today’s disconnected, dumbed-down ‘consensus’ model that has proven itself incapable of signaling us as systemic threats emerge—social, fiscal, ecological, moral, political.

Nor can today’s solely transactional model align interests, evoke a common sense of purpose, operate across ideologies or monetize the key forms of physical capital required to create healthy, stable and resilient communities. The NewRock model bypasses ideology (as in China), nationalism (as in Russia) and blind faith reliance on financial signals—as in the West.

Our hybrid approach shifts economies toward bottom-up inclusion and incentivized accountability. With the help of open-source AI, the model can reflect feedback from those most affected. Big data is engaged to reduce healthcare costs and personalize therapies. Whole system resilience emerges by design—using metrics that reward stakeholders as behavior reflects a measurable decline in civic, financial and environmental costs and inefficiencies.

In collaboration with open source-committed AI firms, NewRock will demonstrate how the economies of tomorrow can support inclusive and ecologically robust communities and nations. Key features include:

• Self-financed
  • EBITDA-plus projected/measurable savings & efficiencies, including reduced fiscal costs.
  • Debt secured with power purchase agreements—see below.
  • Loan guarantees from agencies/ministries that benefit from the model’s hybrid structure.
  • Remittances ($702 billion worldwide in 2020) as ratepayers become stakeholders.
  • Vendor payments—as the model generates purchasing power in lesser developed countries.
  • Sustainable Development Banks(s)—see below.

• Hybrid structure—a portion of future value committed to support education and healthcare.
  • Education becomes a real partner and knowledge a widely shared asset.
  • Support for pay-it-forward education and vocational training.

• Information-rich—AI-facilitated feedback to incentivize and reward optimal stakeholder behavior.
  • Enabling a more relationalmodel to respond to a broader bandwidth of values.
  • Quantifying and addressing costs imposed on future generations by the current consensus.

• Monetization—of those productive assets required to create and sustain healthy communities.
  • Access to clean water, nutritious food, affordable energy, education and healthcare.
  • AI-enabled cryptocurrencies to complement central bank-created monies.

• Sources of finance—in lieu of private equity, Sustainable Development Banks will be capitalized with:
  • A portion of proven reserves of major hydrocarbon producers and other in-kind capital.
  • Capital committed by the wealthy and/or those managing great wealth—see below.

The funding gap typically provided by private equity can be addressed by the first in a proposed network of Sustainable Development Banks capitalized, in part, by those who share these concerns (e.g., signatories to the Giving Pledge). The $117 trillion-plus in assets under management worldwide (projected to top $145 trillion by 2025) can acquire and hold self-liquidating Sustainable Development Bank-issued hybrid bonds designed to help accelerate the transition to sustainable energy at the pace now required.

Norges is a natural partner in the buildout with $1.34 trillion in assets under management (2021). The original hybrid structure of Statoil, the Norges-funding source, traces to a 1960s dinner discussion between New York Governor Nelson Rockefeller and Norway’s King Gustav IV. Two-thirds state-owned and one-third publicly traded, Statoil was an early hybrid that included Rockefeller’s proposal that Norway’s corporate tax become a tax credit for R&D, enabling Statoil (now Equinor) to emerge as a major in-house innovator and job-creator in the energy sector with Equinor an promising leader in sustainable energy.

As ministries grasp how a hybrid model can expand their available resources, sovereign wealth funds will gravitate in the direction of our hybrid approach ($9.2 trillion in assets are held in the 100 largest funds–2021). Given a choice, why would any nation want to transition to sustainable energy without a hybrid business model designed to address priority social needs such as education and healthcare?

For optimal leverage, the model targets banking. A global network of Sustainable Development Banks can be capitalized, in part, with proven hydrocarbon reserves, enabling producers (e.g., in the MENA region) to access their natural resource wealth without extracting, depleting or burning it. And without exposing that wealth to the vagaries of energy markets and financial markets. Algiers saw the promise in this approach a decade ago using a combination of power purchase agreements, loans and government loan guarantees to bootstrap their emergence as a global leader in sustainable energy.

The energy technologies required to protect our habitat—partnering directly with community and bypassing private equity with NewRock’s hybrid model—can provide liquidity for trillions in hydrocarbon wealth. That natural resource wealth is presently captive to a consensus model that requires the extraction, sale and use of those hydrocarbons to access that wealth. Instead, the NewRock model leverages that value to localize sustainable energy and wealth creation while leaving the bulk of hydrocarbons in the ground.

We estimate that a sustainable energy future can become irreversible with an initial commitment of $13-$15 trillion, an amount well within current financial capacity with global wealth at end-2020 of $418 trillion. A global sustainable energy future can be kickstarted by setting aside a portion of the wealth held by the ultra-rich to help capitalize the first Sustainable Development Bank. New Rock envisions that wealth being matched by institutional investors such as Norges and/or governments. This approach would create a hedge for financial wealth while also seeding a solution that could transform global financial markets.

Beijing’s regulatory moves bled $3.1 trillion off the market value of large firms. Xi Jinping is dealing with instability and volatility while promising a common prosperity built on “foundational technologies” such as renewable energy. Yet China lacks a model for growing middle class purchasing power alongside the productive power of key industries. If China sets an example, others will follow—regardless of ideology.

MacKenzie Scott (Bezos) is widely dispersing her Amazon-derived fortune to needy causes while leaving intact the structural dysfunctions in today’s globally dominant economic model. In effect, this approach ensures that (a) the consensus model will remain intact, and (2) the impact of her Giving Pledge will not outlive her. Bill Gates promotes this idea. His immense personal wealth was amassed by, in effect, imposing a hidden tax on productivity worldwide with Microsoft’s suboptimal products.

Step-by-Step Progress Toward Structural Change

Absent structural change, the current consensus will continue to (a) fracture and polarize the U.S. and other nations, (b) ensure the emergence of autocracies,[1] (c) discredit democracy in the eyes both of our citizens and our adversaries, and (d) increase fiscal strains that crowd out budgetary resources for education, healthcare and retirement security while jeopardizing support for national security.

A thought experiment re the transformative possibilities. Consider the impact on climate change if:

(a) Ten billionaires pledged 25% of their wealth to capitalize a Sustainable Development Bank (SDB),

(b) Half the Giving Pledge signatories committed 25% of their wealth (they could recover their capital in a decade and give it away),

(c) Half the largest hydrocarbon-producing nations committed 10% of their proven reserves, and

(d) Half the top-ten fund managers worldwide committed to buy SDB-issued hybrid bonds.

The point of this thought experiment: the climate crisis can be addressed. The missing pieces: private sector leadership and sensible financial design. Each Sustainable Development Bank would be dedicated to accelerating the buildout of next-generation sustainable energy and storage with a portion of that newly created energy sector wealth pre-committed to fund education and healthcare and support local entrepreneurs. In overly simplistic, bullet-point format, NewRock’s hybrid model offers:

• A for-profit means to anticipate and address the two largest fiscal outlays—education and healthcare.
• A free-market approach appealing to business, government and NGOs.
• A self-financing strategy funded, in part, by measurable savings and fiscal efficiencies.
• A means to accelerate investment in next-generation energy technologies and infrastructure.
• A digital approach to preventive healthcare using big data to incentivize systemic cost savings.
• A demonstration project to show how AI can benefit (vs. endanger) community.
• A means to ensure cryptocurrencies are secured with real assets that benefit community.
• A means to invest in credit instruments that positively impact long-term outcomes.
• A means to align incentives and rewards throughout the value chain.
• A path to bypass the current consensus with its proven inability to create sensible outcomes.

Our hybrid microgrid buildout offers a means to reduce costs imposed on the commons such as:

• Healthcare costs—bad air/water quality, poor primary care, inferior nutrition, failure to treat.
• Environmental costs—impact on air/water quality, fisheries, forests, wildlife, quality of life, etc.
• Insecurity costs—indignity of poverty, illiteracy, displacement and trans-generational exclusion.
• Social costs—widening social divide, lack of trust, cynicism, loss of confidence in government.
• Subsidy costs—for food, fuel, education, transportation, pensions, public sector jobs.
• Fiscal costs—debt imposed on the future, deferred maintenance, foregone infrastructure.
• Education costs—restraints traceable to illiteracy, poor education, ill-trained workforce.
• Security costs—law enforcement, growth of the military, militarization of law enforcement.

As living systems, both markets and democracies operate in a constant state of emergence. NewRock’s relational model suggests that nonfinancial values have a critical yet untapped role to play in evoking a resilient future that must become organic to communities to make sustainability real. Piecemeal strategies are insufficient. A whole-system approach is required. NewRock prefers to ally with those prepared to embrace a bold yet practical strategy designed to achieve genuinely systemic health.

In the future, knowledge will be the principal currency and a primary store of value. NewRock’s hybrid model is designed to:

• Bypass government – subsidies and incentives are neither needed nor sought.
• Support critical public services without expanding government.
• Bypass today’s dysfunctional ‘consensus’ model.
• Have a positive fiscal impact–vs. more fiscal costs.
• Be self-financed and stakeholder inclusive.
• Bypass/displace the middleman.
• Deploy AI to benefit community.

[1]The financial dynamics of today’s “consensus model” operate through a “closed system” that, absent change, will continue to concentrate wealth and income in ever fewer hands. That mathematically foreseeable outcome ensures the emergence of autocracies and the simultaneous erosion of robust consumer markets while placing more fiscal strain on governments. For an explanation of that “closed system of finance” see “Money, Democracy and the Great Divide” Chapter 6 of Guilt by Association. Combine globalization with deregulation and worldwide financialization and this model of economics ensures suboptimal outcomes, periodic crises  and ensuing failure. As the source of this systemic failure traces to a shared mindset, its creators evade accountability while a duped public suffers the effects. See Donella Meadows, “Leverage Points: Places to Intervene in a System.” Academy for Systems Change.