Sociocracy and the New Economy

The non-profit Sociocracy for All has been calling sociocracy the “operating system of the New Economy”.

By: Ted J Rau


We say that sociocracy could be at the heart of the New Economy. Before we describe how sociocracy and collaborative paradigms go together, let’s look at the New Economy.

The New Economy

For us, the new economy are all the parts of our economy that are based on values around justice (social, generational, racial, environmental etc.) and cooperation. The underlying insight of the New Economy movement is that competition will always create winners but inherently also losers of a system. Supporters of the new economy are not willing to accept marginalized groups as an inherent part of a system. Instead, the basic assumption is that all humans are wired for collaboration, based on equality, and that collaboration serves us all. We are all connected, and if we harm the planet in one place, we are all affected.

Add sociocracy

The new economy is not run by isolated individuals. It is run by people collaborating. No one is an island. Once you’re a group, you have to make decisions together, in one way or another. Self-governance is everywhere, even in how we were raised and are raising our children. Methods of governance— how we make decisions — will impact not only what and how much we get done but also how we relate to each other in our group. Group decision-making can be cumbersome and painful. Or it can be productive, refreshing and connecting. It depends on what method you use to come to a decision, down to the very detail of who talks when (and how long). Sociocracy helps groups have those conversations, as equals, and to actually move forward. Beyond effectiveness, sociocratic tools make group discussions and decisions a uniting experience.

With sociocracy, we run organizations using the values of the new economy ourselves. Even more: since we are more productive, our positive contribution to our society and our planet will have more impact than with a traditional governance method.

Sociocracy supports the values of the new economy

To show how the values of sociocracy are aligned and supportive of the values of the new economy, I will focus on how decisions are made in sociocracy.

In sociocracy, we make decisions by consent. That means that a decision is made when there are no objections. An objection will be raised if a team member has a concern that the decision will harm the aim of the organization. For instance, introducing membership fees might harm the aim of providing inclusive access. But fees, therefore having a funds, might promote the aim of doing the work of the organization. Nothing is binary either-or. And objection is not a block, it is just a reques to look at one aspect of a decision and to improve that aspect. We need to look at objections and see how we can come to an overall solution that works for everyone. It might not be perfect for everyone all the time, but no one’s needs can be ignored.

Culture change

How is that different from consensus? Consensus asks “do you agree?” while consent asks “do you object?”. In consensus, we are tempted to demand our preferences, what we really want to happen. Consensus works well in a very homogenous group with very similar value sets and backgrounds. However, as we come together across boundaries, we have to embrace pluralism. Our experiences will not be the same. What is best for you might not be best for me. We have to find a way to work with that. Consent decision-making is exactly that. To me, switching to consent and leaving the ideal of assuming consensus behind is a matter of respect to the diversity of experiences we have in our society. Dropping the expectation that we can find a perfect solution, opens up more possibilities in the moment, between people and over time.

Sociocracy changes culture. Objections are not slowing down the process. People’s needs are not nuisances but needs that we want to consider. They are opportunities to take into consideration what we have missed before. Objections point to a concern, a way how a policy might harm our aim. While our experiences and feelings are all different, our basic human needs are all the same. Hearing differences but coming together in what we all share as humans, that’s the mindset of sociocracy and exactly what the New Economy is about.

Local decisions, and connected units

We can only tap into our sense of our one-ness if we have information about the impact our actions have. If I don’t know anything about your struggles, how would I be able to feel with you? (And then care about you!) We need to know about others and we need to be free to act. This has two implications:

  • On the one hand, decisions have to be local — where the experiences are made. Sociocracy puts decision-making into the teams where work is being done. Workers and only workers make the decisions about their department. They know what works well and what does not work well
  • On the other hand, there has to be flow of information between local units (we call them circles). What we are doing in one place might affect what is happening in a different place, sometimes in unexpected way. No one person or group can pay attention to the whole because the world is too complex. What we can do is link our circles for flow of information. This is exactly what sociocracy does. Linking provides transparency and unity. Through flow of information, everyone in the organization knows what the impact of their work is, and their work is being seen in the whole organization.

Circles are nested so that we can have state level circles that are made of leaders and representatives of the next-lower circles. That way, no information about what is happens on the small community level gets lost, it only gets filtered so broader (‘higher’) circles can pay attention to the whole.

The future

We want to practice sociocracy in every organization we’re a part of. Many communities and cooperatives are already using it. More and more non-profits are starting to be interested. And there are now more and more sociocratic schools — imagine a generation of kids trained in skills of cooperation and co-creation!

I am glad to contribute to the collaborative culture shift with a tool as powerful as sociocracy. Let the New Economy thrive!

(Watch 4 min introduction video “Sociocracy. The Operating System of the New Economy” that has been clicked more than 16,000 times!)