Meet Katrin Kaeufer
On ‘Just’ Money, Social Technologies, and Planting Trees for the Future
Katrin Kaeufer’s work on awareness-based systems change and alternatives to extractive finance will likely be familiar to those who have encountered Theory U or u.lab and her work on Eco-System Economies, or known Katrin as a teacher and researcher at MIT’s Community Innovators Lab or executive director at the Presencing Institute (PI). Building on years of research around socially responsible banking, Katrin leads the MOOC Just Money: Banking as if Society Mattered, which launches for the fifth time on March 15th 2021, and has recently published Just Money: Mission-Driven Banks and the Future of Finance (MIT Press, 2021). In talking with Katrin, we journey into the building blocks of her work and applied research — the what and the how of leading change from the emerging future by making visible that which already exists.
“Just Money” is an evolution of what Katrin saw even as she first entered the financial system. After high school, Katrin tells us, she worked in a bank. Her primary interests at the time were “people, and literature,” which far from being incoherent with her finance experience, helped her sense into the system as a young student and see harm. She wanted to understand more; she wanted to change the system.
A Theory and Practice of Change
Katrin brings us with her to a basement in a church in East Germany, back when she was a graduate student. Gathered with opposition leaders, her professor Johan Galtung placed a bet on the table in front of them: before the end of the year, the wall would come down. “Everybody in the room bet against that,” Katrin recalls. “They all said there is no way that this could happen.”
It was 1989, and in November of that year the wall came down. “That was a real wake-up call for me,” she remembers. “I thought: What is he seeing that I don’t see? I couldn’t think of a world without a wall in the middle of Germany, but he could see how it crumbled.”
Katrin has spent much of her life studying the financial system. She sees that now, especially, something is changing. She sees shifts on the inside of the system, such as ‘social impact’ portfolios now ubiquitous in the mainstream, and she notices the breadth and depth of movement on the margins, like the creations of digital and local currencies. “I don’t know where the wall comes down… But I see that we need to let go of our old notions of how things are running.”
Katrin is blunt about the state of the financial system. It is a “huge political power system,” she says. “In the US — but also in other countries — it completely drives our democratic system, and undermines it.” While Katrin doesn’t see herself in the position to create a political process for rethinking the financial system, she has learned over the years that ideas are powerful, and “questions become real.”
Implicit in Katrin’s theory of change is how to describe the alternatives, what is already going on all around us. And then to name, to find a language — such as ‘ecosystem economics’ and ‘just money’ — to make visible what already exists. Alongside Katrin’s research life, her role at the Presencing Institute (PI) has been crucial to her work. With this interplay, she continues to bridge her interest in the social with her connection to finance and the economy, linking theory with practice through the work of both MIT CoLab and the Presencing Institute.
Journey to PI and “the Social Field”
Katrin recognized that instead of overwhelm at the prospect of changing the big system, she was also being called to learn how to work in a smaller social system, one where there were dynamics at play which didn’t have a name yet.
She recalls this became apparent for her as a graduate student when she helped organize and lead a learning program for other students, traveling to 16 countries with the goal of researching peace. For Katrin, studying peace and conflict became an unexpected exercise in contending with not only the challenges belonging to the contexts the group studied, but also the outside world reflecting inwards. They were learning about Israel and Palestine, or East Germany, Katrin recalls, and students began arguing and dividing among themselves. Interpersonal conflicts and the interior condition of the group emerged to define the experience. Katrin found her abilities challenged as she reached for a framework and skills to hold the container for a complex, multicultural group of students. Holding the complexity of this highlighted for Katrin the ‘invisible’ elements that would become crucial to the work of the Presencing Institute, and to Katrin’s programs around finance: social technologies, and working with the “social field.”
In the U.S., she first found her place at the MIT Organizational Learning Center, which focused on questions of how to create dialogue and “containers where people can speak the truth.” In organizational learning, one contended with the current reality by looking back at what had occurred and then asking how one might improve. Soon, Katrin says, it became clear that something was missing. A question coalesced, for her and for Otto Scharmer, over the following years: what do you do in situations where you cannot rely on the only the past to respond to the future?”
Theory U sprouted along this line of thought. Developed together with Scharmer, Theory U asks how to lead from the emerging future, and what social technologies are needed to do so. This inquiry needed a place to live. Together with other people who had similar questions, Katrin co-founded the Presencing Institute (PI). That is now fifteen years ago.
“The experience there was to start with a small, tiny idea, and then you meet with a few people, and then the idea becomes more real, and then you continue to work, and then suddenly something emerges out of that. And that’s what the Presencing Institute is today.”
A Household of Engineers
“German engineers, to be more specific,” she adds, when describing the home in which she grew up. “Everything focused on fixing things, and on technology, but sometimes what was missing was the ability to communicate. I was often the person in the family system bridging communication gaps, and I think that sparked this awareness that there are physical technologies that we use, but there are also social technologies that are less tangible and less visible.”
According to Katrin, social technologies and understandings of the social field are crucial in improving our collective intelligence and creating foundations of trust. She references a meeting she had some days prior to our interview with a group of people who had “very high individual IQs.” However, “they were operating from silos, and not creating ways of thinking and working together,” she reflects. “They may have enormous skill sets and knowledge, but the collective IQ was really low.”
“Skill sets”, Katrin explains, “are not independent of their user and context. If you’re a carpenter, you have to work with the wood, so there is a dialogue between you and the piece of wood. Or as an artist, there’s a dialogue between you, the paint, the canvas. And the same is true for social technology. There is a connection between who you are, and what you bring into a social space, and the social space itself.” Katrin holds that creating a shared language and “making it visible allows us to learn this and to advance. That’s really the purpose of my research and the Presencing Institute.”
Social Technologies in Action
In Katrin’s life, the idea of changing the financial system “always creeped in.” She was holding on to the thought of, “how can I do this?” She wrote her PhD thesis on socially responsible banking, and in the years following began to realize the need to give smaller banks, the ones that are doing things differently, a platform and an ability to connect. “I felt I really needed to help them get more of a voice, as they are often isolated. You have a small credit union in Vermont or a small bank in Switzerland, or Nepal.”
Soon, several banks had self-organized into the Global Alliance for Banking on Values (GABV), and asked Katrin to join. Along with Sonia Reinhardt and Martin Kalungu-Banda, Katrin hosts a GABV program where participants go through the U Process. In these sessions, Katrin, Martin and Sonia introduce social technologies like deep listening solos and Social Presencing Theater, which are important in helping “to step into the unknown, daring to have a voice against the mainstream.” The learning environments reconnect participants with who they are as individuals, allowing them to connect with their purpose and more clearly see themselves and their places in the system.
Making Visible: Research and MIT CoLab
Upon arriving in the U.S., and before understanding the leverage points that would grow into her career, Katrin thought: “I need to rethink the whole financial system. We need a new monetary system. We need a new regulatory system.” She soon felt this was too big an entry point. So, she began to think: “Why not look at examples of banks that do things differently?” In taking examples that contradicted the current dominant paradigm, Katrin found her entry point and strategy in the academic discussion.
For Katrin, a core role of research is “to name existing situations that don’t have visibility because they don’t have a name yet.” She finds her roots in various influences, in particular her work with Johann Galtung, founder of peace research who developed the term structural violence. The violent impact of structures — systemic racism, for example, or the multiple violences experienced by refugees —was experienced, yet not named. Research is not a role Katrin takes lightly. Is research neutral? No, she responds. There is a responsibility there. “What’s really important as a researcher is to reflect on my role and my responsibility in describing something,” Katrin says. As a researcher, “On the one hand, you bring things, you have some knowledge. But on the other hand, it is about the reality [you] are engaging with, which you need to respect.” At MIT, Katrin builds on these principles and others in a course to students on participatory action research, run from MIT’s CoLab.
CoLab, or Community Innovator’s Lab, is a sibling of sorts of PI. Led by Dayna Cunningham, CoLab is focused on engaging marginalized communities to catalyze social justice and economic democracy. “CoLab is an application area which can use social technologies developed by PI, along with other applied research,” Katrin explains. Katrin’s research on values-based banking has its home in CoLab, where she is the director of the Just Money program. Just Money holds a MOOC (Massive Open Online Course) attended by thousands across the globe.
“It’s ‘Just’ Money — We Can’t Eat it”
Katrin carries the core idea of how changing the financial system facilitates other systems change. “How can we address the huge systems collapses and systems challenges we face as society, whether its climate change or the challenges with our democracies and inequality? The economic system is so important in all of that.” A first step, Katrin says, is awareness: to see the economic system as it is, and to question it.
Katrin’s 2013 book, Leading from the Emerging Future, co-authored with Otto Scharmer, expands on the concept of “Ego to Ecosystem” economics. It posits a mindset shift from ego-driven economic thought, to an ecosystem awareness. It isn’t only that egocentric behavior and profit maximization as core assumptions for how our economies function is wrong, Katrin explains. Rather, it is too short. There is certainly an ego, which can be important for driving creativity, entrepreneurial activity, and consumer behavior. However, “if we look a little bit closer at how humans behave, it is not just about the ego.” It isn’t the full picture. Ego-driven economic thought lacks a place to fully take into account what happens as humans wake up to negative externalities of globalization, when “the awareness impacts.” Or to the local systems which exist all around us. The move to ecosystem awareness in economic thought is perhaps more complex than Smith’s invisible hand, Katrin acknowledges. But it isn’t new. “If we want to change our economic system, we need to develop terminology that describes what happens that enables us to act in a different way.”
Katrin’s recently released book Just Money is meant to be accessible to all readers, to show not only that there could be different ways of banking and finance, but that in fact, many alternatives already exist.
In explaining the term ‘just money,’ Katrin first zooms out. “The purpose of society is really the well-being of humans,” she states. (A macro view that somehow rarely entered into my undergraduate Macroeconomic courses.) “The purpose of the economy is to provide goods and services that allow humans to be well. And the purpose of the financial sector is to facilitate this in the economy. But what happened is that the whole system is upside down.” Katrin explains: rather than an economic system acting in service of society, society is serving the economic system and the financial sector. In a system where everything seems to be about profit and money, enters the term: “Just Money.” The intentional dual emphasis on “Just” is to say both “only, that’s all it is,” and “Just,” based on what is fair. Katrin explains that they arrived at this wording after searching for a term “that puts the role of money and finance into place.”
She holds up a twenty dollar bill. “We can’t eat it. ‘Just money’ or ‘just banking’ really aims at rearranging this hierarchy and saying: You know, it’s just money. It’s not the purpose of what we’re doing.”
Katrin gives an example from the book: banks with one hundred percent transparency in their business loans. “It is an example of taking away the curtain that hangs between each one of us and our money,” she explains, “and it ties back into sensing the larger ecosystem, this time around our own money.”
“You take your phone, you open this map, and you see what they finance around you. If you go to Bank of America you have no clue what happens with your money, but if you go to one of these banks, you see on this map what your money finances. It’s a core idea of mission-driven banking that you use your money intentionally… you take responsibility for your money. You make sure your money doesn’t do harm, or even does good.”
What would re-understandings of finance look like in another setting? Katrin is deeply interested in regenerative agriculture. Organic farming is close to her heart, with family ties to an organic farm in Germany. Currently, Katrin is involved in a project with Soil & More, with an idea to create templates that municipalities can use to advance “true-cost accounting” with regards to agriculture. “One challenge in the economic system is that we don’t pay the right price for the food we eat,” Katrin explains. True-cost accounting takes into account the negative impacts of industrialized agriculture, like waste, environmental destruction, pollution. “When these are taken into account and presented to the municipality, then we can say ‘you either clean up later, or you work with farms in your area to help them create a business model that won’t have the negative impact.‘”
On Planting Trees, and Spaces to be ‘Good’
We have spent the interview discussing finance, but Katrin is a systems thinker and her hope for the future is not silo-ed. “Our education system is so mechanistic and so limited. So, if I had a wish for the future, I would start with changing the education system, allowing it to be artistic. And human.” Katrin’s cross-cutting work shows what can happen when limits and silos are removed and the artistic is not kept at the periphery. Many of PI’s social technologies are based in some sort of artistic practice or appreciation.
Acknowledging the cynicism that can compile in our current contexts, especially after advancements seem painfully incremental — or as of yet unrealized — Katrin sees her journey in two sentences. One, from a banker she works with in the Global Alliance for Banking on Values: “You cannot create the future that you want without describing the vision of what you want.” What she envisions: an equal and just society, one in which people are well. Katrin reflects that this gives her a place to build from and to feel responsible for her work reflecting that vision. And secondly, the older she gets, the more she feels the impact of another sentiment, which she phrases along the lines of: “Plant the tree today that you want to see growing. Even if you might not see it grow.”
Katrin is not afraid to state that she believes humans to be good. But this isn’t the end of the sentence. “What is needed in the world is to give humans a space to be good,” she emphasizes. “That has to do with health, well-being, and education. Nobody really wants to destroy the earth.”
As a human being, she says the biggest challenge is not to give up. “The only way I can live is looking at the future as something that I want to create, and that can be different from current reality. And feel responsible and inspired in helping to create this.”
Watch the video interview below:
Thank you to the wonderful team of Randi and Hannah for the interview, video, and editing!
