DAVID E.MARTIN Telling the Mongolia Story: An Economic Vision Beyond Resources

Jul 16, 2010 For a thousand years, the world has known Mongolia as a vibrant land filled with vast resources – home to a people of unquenchable spirit. To the rest of the world, the stories of the wealth of this land and its people have been told through the perspective of global trade since the 14th century when the Chinese launched their vast sea trade with the Americas, India, Arabia, Egypt and the Mediterranean.  By the 1430’s people from Mongolia – traders and slaves – were living in remote reaches of the world and were becoming a vital knowledge and industrial component to the world’s populated regions.  

From the outside world view, Mongolia has been a mystery.  It’s rugged, beautiful terrain seems desolate and remote to foreigners but within this land, great civilization has flourished for thousands of years.  The people of Mongolia are known throughout the world as peaceful, gracious members of the human family however, in the same people lies a fierce spirit that will defend and preserve land and life with legendary power.  Great civilizations – from China to the Americas to Europe – have sought to take the wealth from the land and its people.  However, history is filled with examples where the people of this country have chosen a different destiny – one that is uniquely Mongolia.

So it is on this beautiful day in June, 2010, yet another outsider is a guest in this land of the greats.  Like thousands before, I stand before you today and see in your eyes and hearts the wisdom and wealth that young cultures like the one I am from can only imagine.  You know that you have seen those “like me” countless times before.  However, on this day, I invite you on a journey – a journey into the Ancient Future  of this great land.  And by the end of my remarks, I hope that you have found a small glimpse of a future that, possibly for the first time, tells a story not defined by the outside but rather a story from the heart of Mongolia.

We live at an interesting time in the story of human history.  As you all know, the world defined at the end of the Second World War by the Bretton Woods powers – which form the center of the economic and political power of the last 60 years and have set the rules for the World Trade Organization, international banking, and militarization has come undone.  The economic models of the past centuries – whether we think of Karl Marx and Vladimir Lenin or Adam Smith and the capitalist industrialist John Maynard Keynes or monetary market theorist Milton Friedman – share common, incomplete assumptions.  They have a world view that doesn’t include a complete truth.

Let me explain.  In the economic theory of the last century, several fallacies exist.  First, all are based on an assumption that “natural resources” are the property of countries, companies, or those who “discover” them.  At no point in economic planning do we think about what happens after the forest becomes a collection of trees for lumber.  At no point do we think about what happens to the mountain when the minerals have all been mined.  At no point do we think about the water in the underground rivers and seas until they are dry.  A world view that sees land and life as “resources” ignores the need to make sure that those that exist are available for future generations.  Opportunity, in an exploitative economic view, is defined by maximizing the efficiency of production and profit, not understanding the generational stewardship of optimal,  replenishable  use.  It ignores the reality that whatever we take from the ground, the land, or the air, must be replenished or we are all poorer.  And, as we see with the giant debate about climate change, we realize too late that ignoring the real cost and value of resources has lead to bigger problems which threaten the environments where over 1/3 of the world’s population lives.  

Additionally, a “natural resource” view of the world sees people as units of production.  The more educated a population, the more the population can serve the production and consumption dependency upon which all modern capital systems is based.  People are not seen as holders of wisdom and sources of creativity.  Rather they are seen as producers and consumers.

Today, here in Mongolia, we need to stop and ask the question: is our land the sum of its minerals and are our people the sum of the labor?  If we haven’t considered this question before, it is appropriate see what a different world view could teach us.  And I hope that my effort to do that will inspire a few of you – maybe all of you – to build a different future – the Ancient Future of Mongolia.

Let me begin with a story.  Several years ago I was invited to Papua New Guinea.  Like Mongolia, the communities of Papua New Guinea are the descendents of a great civilization which spread across the globe.  Like Mongolia, the land of Papua New Guinea is filled with gold, copper, carbon fuels, forests, water, and other natural abundance.  And, like Mongolia, outside pressures of a global market have increased the desire of others to take the resources from the land.  Actions of foreign companies have displaced communities, polluted the land and sea, and left the country and its people in what most would consider poverty.  

I was asked to come to Papua New Guinea to help the local communities deal with the effects of the proposed undersea mining operation done by a company called Nautilus.  Choosing to operate in the Bismarck Sea as it is one of the few areas on Earth where local environmental law enforcement and protection of local interest in compliance with licenses and benefit-sharing go largely unenforced, the company plans to mine gold from a depth of up to 2 miles below the surface of the ocean.  Raising the ore from the seabed and silting the sea will kill much of the fish upon which many people’s livelihoods depend.  Processing the ore on the coast of East New Britain will lead to the destruction of the vital salt supply for the highland communities.  And worst of all, as has happened in the other operations in the region, the company will set up a number of corporations insuring that the local communities do not participate in any return of revenue in exchange.

The people who live in Papua New Guinea have an ancient history – estimated to be at least 30,000 years.  These people, like the people of Mongolia, have learned to steward their resources – to thrive and survive when confronted with good and bad times.  Over these thousands of years, they have come to learn how to live on a land that is filled with natural abundance.  So to understand how to engage in an alternative future which would benefit the people, not foreign investors alone, we began a process of sitting with the tribes and listening to what they could tell the rest of the world about living and building lasting enterprise.

The business models developed since the industrial revolution in Europe have been built on a few core assumptions.  First, they assume that value is created by managing scarcity.  By controlling “supply” and “demand”, the enterprise of a few can extract value from many.  Second, they assume that enclosure – the proprietary control of land, resources, ideas, and innovations through property rights – is the only way to protect the interest of investors.  And third, they assume that value – measured in monetary units only – must ultimately benefit shareholders; that the goal of the enterprise is to return maximum monetary returns to a few stakeholders.

None of these conditions are native to the communities of East New Britain and New Ireland, Papua New Guinea.  So we asked the question, is there any way to engage these communities in the global economy without relying on environmentally toxic mining operations, unmanaged timber extraction, or imposition of Western industrial, corporate models?  And we answered this question with a program called the Heritable Innovation Trust, the framework for which is published in the International Bar Association’s journal Convergence.

The Heritable Innovation Trust is an organizing principle for enterprise creation in which a fundamental assumption is that every human activity must explicitly acknowledge that the present generation does not own land, knowledge, or resources.  It has responsibility to engage land, knowledge and resources for benefit not only of the present but in a manner that honors customs and traditions of the past and includes the needs of future generations.  Rather than seeing the goal of enterprise to maximize profits to a few shareholders (in the case of Papua New Guinea and Mongolia, too often international corporations which take profits from the countries), it realizes that the goal of enterprise is to maximize the value of enterprise to all stakeholders.  This means building enterprises which replenish the resources – natural, human, and creative – for the benefit of the present and the future.

Understanding Heritable Innovation Trusts requires the understanding that human enterprises create value in many dimensions.  First, value is created through knowledge of how to interact with the environment – both physical and communal – in which an enterprise is formed.  By viewing knowledge as a vital community asset, we begin Trusts with knowledge investments and returns.  When community knowledge is shared, it is immediately linked to related knowledge from all over the world.  When a tribe in East New Britain shares its knowledge about their water containers made from bamboo, they are immediately linked to information about organic water bottle efforts around the world.  By sharing information, an immediate “return on investment” is made by supplying additional information from the rest of the world to add new value to the community information.

Second, since no individual is the “owner” of knowledge – in contrast to the failed ideas of intellectual property which has created vast inefficiencies in Western business – the Trust acknowledges that enterprises are the direct application of knowledge (acquired from others and experience) in a context in which value can be realized.  In short, we all benefit from those who taught us and our actions will ultimately teach others to adapt what we do.  Therefore, rather than creating property rights to exclude others, the Heritable Innovation Trust, creates contract rights in which everyone who participates, can identify the terms and conditions of the use knowledge and products.  Also, because knowledge enabling enterprises is a community resource, the community that contributes to the knowledge is explicitly included as the primary beneficiary of its use.  

A consequence of focusing on shareholder returns in equity corporations is the epidemic of speculation – a form of gambling – rather than linking value to the underlying enterprise.  The average investor in North America or Europe does not invest because they like the productivity of a company.  Rather, they invest based on an emotional decision about an anticipated, excessive return on the stock.  The underlying corporate performance is removed from the equity performance in many instances.  In the Heritable Trust, the returns are directly the result of active engagement.  Benefit flows as a consequence of fruitful productivity and engagement – not from the emotions of passive shareholders.

The Heritable Innovation Trust enables communities to immediately address a number of social and economic engagement challenges.  By immediately linking local information to global market information, the community becomes aware of the activities of others.  Local, regional and national governments have an increased visibility on areas where, with some additional industry, value-add can be linked to local enterprise to increase global market interest and engagement around a product or service.  Also, as much of the global market information comes in the form of business intelligence(оюун ухаан) and information – information disclosures like patents filed in one country but unprotected in another – businesses and governments in a region can use this information to become more informed customers on the global market.  Also, when communities find out that the products that they source are used for purposes that they don’t endorse (like excessive pollution, for example), they can choose NOT to export a resource without assurances on its ethical use.

Mongolia has lived in a complex global market role for thousands of years.  Surrounded by natural and political challenges, it has been forced into a position of relying on its neighbors for engagement.  Too often, this has meant that Mongolia’s interests are controlled by external factors.  Today, I would like to propose that we take this opportunity to change this dynamic.  Today I would propose several specific steps to let Mongolia emerge with its own, unique story().

Today, let’s begin to build our enterprises around benefit to Mongolia stakeholders – the land, the people, and the wisdom of heritage.  Rather seeing this as a land of extraction value, let’s commit to reclaiming this country as a land of stewardship.  Mongolia is a land rich in minerals and energy.  Let’s make it a land where our enterprises innovate the highest standards of the use of these resources.  Let’s teach our students and our communities how to become the best stewards of this great land rather than having outside shareholders take the majority of the value that is currently exported.  Let’s have our public leaders use Open Source, Public Domain environmental technologies to make Mongolia a country not contaminated by mineral and energy extraction but rather a model for deploying Open Source, Public Domain solutions to preserve the land, the air, and the water.

Let us commit to engaging our communities’ knowledge in Heritable Innovation Trusts.  In a world where water shortage and resource shortage is a fear of billions, let us learn from the camel and yak herders how they manage resources like food and water and share their knowledge with the world.  Let us create a service industry where the camel herders of the Gobi become Environmental Stewardship trainers to teach people around the world how they’ve built their lives and communities in a desert.  Let us use our knowledge of land management to teach others about how to live in harsh climates which are now appearing as a result of climate change.  Let us learn how to balance production and consumption from our remotest peoples who have created communities and value exchanges from which new economic theories can be clarified and adapted for broader use.  

Today, I am here not as an expert from the USA, not from North America, not from the West.  Today I’m here because, thanks to the rich history of the people of Mongolia, this great land played a vital role in building the civilizations from which my family in Europe greatly benefited over 600 years ago.  Anyone who seeks to learn from history knows that it was Mongolia and China that shared knowledge with Europe which fueled the philosophical, social, and industrial renaissance which built Europe and America.  So, today, I am returning to repay your ancestors’ investment.  In sharing knowledge, your ancestors helped bring Europe out of the Dark Ages.  It is only appropriate that now someone from the West comes here to thank you and pay honor to that knowledge.  You see, today, we’ve already taken the first step in the Heritable Innovation Trust.  By acknowledging this land’s role in the human story, we open up the possibility for cooperation that will build a new story – a story where your enterprises will now receive knowledge from those who your ancestors helped centuries ago.  Together, we can teach the world again.  Together I commit to opening the bank of innovation which will invest knowledge and technology to all enterprises of Mongolia to enable the telling of a new story – Mongolia’s future destiny.