4 Questions with Peter Tunjic, Founder, DLMA Labs

Peter Tunjic

Peter Tunjic works in corporate law and science theory. He's a commercial lawyer and founder DLMA Labs. His site is dedicated to the study of capital dynamics and corporate law where he examines the relationship between energy in its social form – value and the purpose of the modern corporation.

Since we met in 2000, Peter has helped me think differently about business. I've learned to appreciate how rare it is to meet people who are working on big ideas – and how hard it is to get down to first principles. Another bonus of our conversations is the frequent references to history and the classics of thinkers.

“To create value,” he says, “think like a physicist.”

Q: You started working on directorship several years ago. When did you see the need to reframe value?

Peter: About 10 years in. I was working with a software developer to create a program that would graphically represents flows of capitals within a corporation – financial, social, natural, etc. I had long recognised that capitals could be transformed from one form to another. For example, Google’s business model essentially transforms intellectual capital into financial capital (and a bunch of other capitals).

But when the developer asked me to describe how the process occurred, I was forced to literally go back to the drawing board to find a universal measure of equivalence between all capitals.

I had long dismissed neo-classical theories of value. Like everyone reading this, I know money can’t buy love. This is just another way of saying money can’t be transformed into all forms of capital.  A subjective theory of value that uses money as the measure of equivalence was a dead end.    

Likewise, classical theories of value never considered modern forms of capital and could only offer limited support to my theorizing.  Marx understood that labour could be turned into financial capital.  However, he made the understandable mistake of concluding a labour theory of value.  Value is now created without the involvement of financial or human capital and again the classical theories of value were not much help.

I set about to think through what all forms of capital had in common and eventually arrived at the idea that value was energy in its social form (interest in its legal form). At its most basic, value is equality of a form of a capital to do work. For example, I can use my financial capital and pay someone to walk my dog or I could use my social capital and ask a neighbour. Either way, Sooty gets walked.

From there I started work on capital dynamics – the relationship between value, work, the forms of capital in which value accumulates, the entropic and other qualities of each form of capital and the conversion of value between different forms. But don’t ask me to put a number on it (yet).

Q: How did you go about developing the big idea?

Peter: Slowly. I never set out to develop a big idea.

To use a metaphor, I set out to build a modest house and now find myself laying the foundations of a cathedral. Thinkers and stone masons have a similar jobs. I pick things up, examine it carefully for flaws and chip away to reveal form. I can overwork the material and break it just when I think it’s done. There is large pile of discarded ideas, concepts and connections. And, like the artisan, I put one idea next to another. Lots of little ideas became a modest concept and after decades I ended up with a theory of value and a new theory of the firm.

Of course, I inherited the cornerstone and much of the material from history. My contribution is simply to put it in a different order, redeem unpopular or misunderstood theorists and apply their insights to corporate law and by extension economics more generally. Though, being numerically challenged, I’m keen to stress that I am an accidental and reluctant economist.

The big difference between me and the artisan is gravity. The stone mason cannot build in the sky and work down to the foundations. I started with my head in the clouds (my critics would argue my head is somewhere else entirely). This was not a choice. The myth is that because ideas are reasoned they are produced in a logical order.

The part of my brain responsible for this bit of the work gets great pleasure from revealing the work out of sequence. But with time, and a disciplined imagination, I managed to make out the outline of the bigger concepts which then became solid.

Q: What surprised you, so far, and what delighted you with this work?

Peter: That corporate law has been so slow to take their inspiration from science. The idea that thermodynamics applies to law was first proposed in the 19th Century. It was called the “new science.” Sadly, for society Lawyer’s took their lead from mathematics and economics. Transforming the social purpose of company law from enlivening society to maximising profits. It is no exaggeration to say that lawyers metaphorically signed off on climate change.  

The idea that value is energy in its social form still blows my mind.

This one insight expands into a parallel intellectual universe in which concepts, impossible under orthodox economics and law, exist and make more sense than what we currently teach. History is transformed. The corporation and the steam engine are the product of the 19th century.

What we don’t realise yet is that they are both governed by similar energy laws. Both are energy structures. Prime movers that were invented to transform energy between its different forms. The wildest thing is that while the steam engine is inanimate, the corporation is thermodynamically alive. Able to exchange energy with its surroundings to sustain its perpetual existence. If that’s right, artificial life was invented in 1856. That’s a wild thought.

Q: You’ve always had the finger on the pulse, what’s now for business? What's next?

Peter: Each age is marked by its relationship to energy and the discovery of new ways to convert energy efficiently.

What marks this latest age is that having discovered a new prime mover in the form of a corporation, we used it to transform things with more value than money into money. We used the corporation to turn the planet into money and the money can’t buy the planet back. This is a key insight from capital dynamics, money cannot buy back what is destroyed in the pursuit of money.

We were decapitalising when we should have been capitalising. From a value as energy perspective, this is highly inefficient. The math is deceptively simple – VROI or value return on value investment. If a business is operating on a negative VROI it is doomed. When society is operating on a negative VROI we are all doomed.

What we should be doing in business is turning money into things with a greater value than money – human, intellectual and social capital. Put simply, the unique properties of these capitals mean they can bring about more positive change for longer.

Curiously, I feel somewhat responsible for decapitalisation. We were both co-ordinators for Fast Company Magazines readers network the “CoF” at the turn of the century. I recall I was in conversation with one of the authors of The Clue Train Manifesto and wondered out aloud why this age loves ideas but hates thinking. I was flagging a kind of intellectual materialism that distracts us from the real work of deep thinking.

Nearly twenty years on and the what now of business, was in the pages of the magazine I was championing. It was there on the cover – “Brand Me.” Simple self-executing therapies that appeal to our egos rather than reason. Curiously, I associate another Clue Train writer with this movement. In ancient Greece there were sophists. Today, we have “sethists” who are artful in their ability to simultaneously challenge and reinforce the model of turning everything into money.

The what now will continue until the chaos of the what next.

Mervyn King, former governor of the Bank of England warned this week warned of an impending “financial Armageddon” in the US. Can “Brand Me” survive a changing climate, species collapse and an economic crisis? How many of the ideas that inform our current business practices will stand up to natures feedback loop. In 2008 we doubled down. As king pointed out there was no fundamental questioning of the ideas that led to the 2008 crisis. We simply continued to decapitalise with little effective resistance from the distracted business community.

My hope is that my work in capital dynamics can rise out of the what’s next and offer a practical alternative to the “ism” that history tells us keeps chaos company. In the same way as the corporation can decapitalise, I have confidence in corporate law to lead the recapitalisation of society. As one of the first to connect law and thermodynamics reminds us, still the purpose of law is to enliven.

In the meantime, I’ll follow the path of the stonemason.

Cathedrals take centuries to build. The work continues through war, the rise and fall of fashion and power and nature’s worst. I see myself in much the same way. One stone after another. Without any expectation that I’ll be the one to finish it or that it will ever be finished, let alone rise above its foundations. The good thing for me, and anyone trying to get their head around the idea that value is energy in its social form, is that the metaphoric stones get lighter the more I think.

Post Script

I must acknowledge your help over many years. Your assistance reminds me of the story of Fredrich Engels and another big idea. When published, Marx’s Das Kapital was stranded on the shelves destined to be forgotten.

This is no surprise. The text is impenetrable and his brutal polemical style unappealing. In an incomprehensible sliding doors moment, Engels decides to write a series of glowing reviews of the book under various pseudonyms. And the rest is history. It’s a remarkable tale of fake news, the power of 19th century social media and why big thinkers need the faith of good friends.


When we encounter a new idea, at first we try to recast it as something familiar with a new spin. If it does, we take it in and are none the wiser. A new idea is quite different. It takes time to emerge, even in our own understanding.

But when it does, it changes everything – we start recasting what we thought we knew and what came before that we may have not recognized.

This is the kind of effect talking with Peter has had on me over the years. If this site has evolved, it's because of stone masonry. We're building cathedrals, rather than monuments to the ego.

Peter lives and works in Australia.


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