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Natural Capitalism
from the recurring-economic-ideas dept.
| Natural Capitalism | |
| author | Paul Hawken, Amory Lovens, L. Hunter Lovens |
| pages | 416 |
| publisher | Rocky Mountain Institute |
| rating | 9 |
| reviewer | Kevin Whilden |
| ISBN | 0316353167 |
| summary | Treatise on saving the Earth through enlightened capitalism |
Introduction to the book
Natural Capitalism is as important to the environmental movement as Eric Raymond's The Cathedral and the Bazaar is to the Open Source Software. Natural Capitalism describes a new philosophy of doing business that runs counter to the very-well-established capitalist establishment. The book that summarizes and integrates complex concepts into an easy to read, coherent, and convincing whole, with the ultimate effect of raising consciousness and discussion to an entirely new level. Those are strong words, but the book really is that good. As a bonus, there are many similarities between the state of natural capitalism today and the state of Linux and OSS two years ago. Natural capitalism is fighting for acceptance in the marketplace, much like Linux did, and environmentalists and would-be natural capitalists would do very well to study how the OSS movement "won" its marketplace victory.Natural capitalism is an alternative to so-called "conventional capitalism." They both share many aspects, and natural capitalism is nothing at all like Socialism or Communism. Natural capitalism is designed to fix some of the most significant problems with conventional capitalism. These problems are created because conventional capitalism takes a short-sighted approach to the environment and the value of the health and happiness of people that live within it. In other words, CC favors short-term profits at the expense of the environment and people's lives, while NC makes the contrary claim that short and long term profits can be equal if not greater when a higher value is placed on the environment and happy workers. Does anyone lose in the latter scenario?
The book itself describes various aspects of natural capitalism that must all work together to simultaneously protect the planet Earth and ensure that the global economy will not collapse. Capitalism and environmentalism are not mutually exclusive ideals, and the sooner everyone realizes this, the sooner we can all get to work on actively stopping global warming, ecosystem collapse, air and water pollution, and other environmental problems. Discussing the nature, magnitude, and urgency of these problems is the realm of many other books, scientific articles, non-profit action alerts, government and agencies -- Natural Capitalism (the book) discusses these problems only enough to talk about the revolutionary solutions that natural capitalism (the theory) provides. If you want to learn more about the problems, then you should check out my Web site Your Planet Earth, which is a slash-based site devoted to discussing environmental issues with a scientific perspective.
Part of the real attraction of natural capitalism is that some companies have implemented its principles with great success, so it is proven to work (much like OSS and Linux in the early stages). But the other half of the attraction is that it provides an essential piece of the solution to the world's environmental problems: market-based incentives to protect the environment. Our current economy will be crippled, if not destroyed, if we continue to ignore our present environmental destruction. This is because our current economic and social systems are based on obtaining resources from the natural world (e.g. food, air. water), and they cannot exist independently it.
Here are the four underlying principles of natural capitalism that can be developed into an environmentally friendly and profitable economic system.
The four tenets of natural capitalism
- Radical Resource Productivity
Just as the Industrial Revolution allowed one man to do the work of twenty with the help of modern machinery, so can we continue to improve processes and machinery that produce more work from less energy and resulting in less waste. This is not new concept, but the book describes a way to do this in an environmentally friendly way. What is more, it talks about how to achieve revolutionary gains in productivity vs. merely evolutionary gains using the so-called "whole-systems" approach to solving problems. An example of this is a building where the building was designed around the plumbing as opposed to the conventional practice of designing the plumbing around the building. This resulted in much smaller pumps and 90% lower energy use. This order of magnitude increase in efficiency constitutes a revolutionary gain in resource productivity. The book describes examples of how this was achieved in many ways, illustrating the contention that in natural capitalism, one gain always begets another.
Another cool concept of natural capitalism is that radical achieving resource productivity results in the counter-intuitive result of creating more highly paying skilled jobs. Jobs are not lost because manufacturing processes become more efficient. Rather jobs are created by trying to figure out ways to make these radical resource gains. Instead of raising the bottom line a little bit by slashing jobs, the principles of natural capitalism raise the bottom line dramatically by hiring people to make whole systems more efficient.
- Biomimicry
We still have a lot to learn from how nature produces advanced materials and solves problems with waste. For example, not even our most advanced chemistry or engineering processes, which typically use extremely high temperatures (1000+ C) and produce much toxic waste, can even come close to creating materials as strong and light as spider silk, or as tough as abalone shells. Spiders produce their silk at roughly room temperature, out of materials that are no more toxic than the juice of crickets and bugs; while abalones make their shells in 50F sea water. We would do well to set our industrial goals to mimic the spider and other natural processes.
Another important aspect of biomimicry is termed "closing the loop". This means creating circular recycling streams of materials in our society, because in nature, nothing is wasted, and everything is recycled. In nature, there are no toxic by-products that require superfund cleanup and no overflowing landfills that leach carcinogenic pollutants into our drinking water. Natural processes exist in a circular fashion such that the waste from one processes is the input to another process. Companies that develop these and other biomimicry techniques will produce better products from cheaper and more readily available materials, with fewer or no toxic by-products that would otherwise cost money to clean up. The book is filled with practical examples of how this works.
- Service and Flow economy
In the service and flow economy, the ownership of goods and services is reversed such that the company that produces a good owns that good throughout its entire lifetime. For example, when you buy carpeting for an office, you wouldn't own the physical carpet fibers, but you would own a contract that requires the carpet company to provide the service of carpeting in your office. After all, all you care about is having carpet to walk on and look at, and you would really rather not be responsible for repairing, replacing, or recycling it. The beauty of this service relationship is that the company that provides you with the carpet service has incentive to give you a longer lasting, higher quality product, because it costs them money every time they have to bring in a bunch of workers to replace it. The carpet company has incentive to innovate in its product design to follow the previous two principles of natural capitalism, because the problem of disposing of used carpet is its own problem. This principle can be extended in many ways, including recently designed "industrial ecology" business parks, designed to form a closed-loop mini-ecology: one business' waste output is another business' raw material input, just like in nature.
- Invest in Natural Capital
From the book:
"Natural capital can be viewed as the sum total of the ecological systems that support life, different from human-made capital in that natural capital cannot be produced by human activity. It is easy to overlook because natural capital is the pond in which we swim, and, like fish, we are not aware we're in the water. Natural capital comes about not by singular miracles, but as the product of yeoman work carried out by thousands upon thousands of species in complex interactions. These interactions between plants and animals, in conjunction with the natural rhythms of weather, water, and tides, provide the basis for the cycle of life, a cycle that is ancient, complex, and highly interconnected. When one of its components - say, the carbon cycle - is disrupted, it in turn affects the oceans, soils, rainfall, heat, wind, disease, and tundras to name but some of the other components. Today, every part of the earth is influenced by human activity, and the consequences are unknowable. As biologist E. O. Wilson has commented, the multitudinous diversity of obscure species don't need us. Can we say with certainty the same about them?"The above is a number of excerpts from chapter 6, pasted together seamlessly, because their words define natural capitalism better than anything I might describe. Implicit in their description is that humans are systematically destroying the many ecosystems of the earth, either to make a quick few bucks, and/or because we foolishly do not realize the destructive nature of our actions. Yet we are 100% dependent on the natural services that the earth provides, such as fresh oxygen from plant respiration, clean water produced from healthy watersheds, and food from the earth. These things are not trivial -- try to imagine life without them.
Yet in our messed up economy, the natural world remains valueless until it is chopped down, dug up, mined, drilled, dammed, paved, developed, and/or otherwise destroyed.
The services that natural capital provides are priceless, yet scientists have indeed tried to quantify their value. In a landmark paper, they calculated the value of biological services flowing directly into society from the stock of natural capital as $36 trillion in 1999 dollars (Costanza et. Al. "The Value of the World's Ecosystem Services and Natural Capital", 1997, Nature 387:253-260). Compare this with the gross world product of $39 trillion, and you get an idea of just how much of our economy exists because of the services nature provides.
Other neat ideas from the book
The book has some very interesting ideas on how our society can place a much higher value on natural capital that will eliminate waste and destruction of our ecosystems. One of these ideas is totally eliminating personal income tax, and instead taxing the use or waste of natural resource; the book does a great job of justifying that decidedly radical concept. The basic idea is that things have changed drastically since the early stages of the industrial revolution when labor was scarce and natural capital was abundant. Way back then, it made sense to tax what was scarce. Now however, labor is incredibly abundant (6 billion and counting), and natural capital is the resource that is becoming increasingly scarce. Considering that natural capital is ultimately priceless, we should tax those people and corporations that destroy it. This provides strong incentive to conserve and protect natural capital, which is what we all ultimately want and need. Currently, the U.S. gives away its natural capital for a song and dance (e.g. Mining Act of 1872, US Forest Service, etc ...) to corporations which then rape and pillage the environment to make a fortune for their shareholders.
Conclusion
This is a landmark book that summarizes and integrates many different theories about how to practically achieve an environmentally friendly economy. It describes the theory and practice of natural capitalism, including what it is, why we need it, and why and how it works. There are countless interesting ideas put forth in this book, with many chapters devoted to the " what, why, and how" questions in specific areas of our economy. These areas include automobiles, efficient building design, the pulp and paper industry, the farm industry, fresh water supply, and climate change. Best of all, it never loses focus on how to implement the changes proposed. People are not very receptive to "doom and gloom" predictions of impending catastrophe unless there are tangible solutions to prevent it. Natural Capitalism has so many real-world examples of its principles in action that it's hard to disbelieve the primary message: protecting the environment is damn good for business. As you read the book, you may end up shaking your head, as I did, wondering why this concept has taken so long to develop. You may also realize that these principles present an incredible business opportunity for those who are smart enough to become the early adopters.You can learn more about who these people are on the book's homepage, www.naturalcapitalism.org.
Capitalism (Score:3)
The problem is that even intelligent and concerned consumers cannot really understand the full implications of the products they buy...
IMNSHO, this makes the "free market" a foolish and destructive goal, since constrained markets can be adjusted to take into account social and environmental factors more practically.
Also note that once you start advocating eco-taxation, you're not really advocating a free market any more...
Re:Not possible! (Score:3)
Not at all. In fact, pure capitalism is both a very radical and enivornmental friendly concept. Don't forget that the free in "free market" is the same free as in "free software."
Several problems generally occur in the implementation, though, that work counter to the free market.
First, market participants learn that in a truly free market their profits are severely limited by competition. As a result, bad apples often try to subvert the system and establish monopolies or cartels.
Second, the free market rests on the supposition that market participants are rational agents. In reality, of course, rationality is only an approximation of human (and corporate) behaviour. One result is that short term gains are often over-emphasized, while long term gains are over-discounted.
Uninformed market participants are often not properly able gauge the value of long term assets such as the enivornment. There is nothing incompatible between the free market and environemntalism. Your demand for clean air is just like any other good, in a truly free capitalist system the market will work to meet the demand for a clean enivornment
Tragedy of the commons (Score:3)
The problem is that most environmental resources (clean air, uncharted mines, clean water...) don't belong to anybody in particular. So, a corporation has no incentive to not to waste these resources: indeed, if they don't waste them, their competitors will, and will have a slightly more efficient process. Why waste your own resources (money) when you can waste your neighbour's, or the community's for free? An individuum would still have his sense of morality to prevent him from behaving like a pig, but for a corporation, morality is spelled fiduciary responsibility to the shareholder.
The only solution to the problem is to bill the corporations for the wasted common resources, i.e. tax environment-unfriendly outfits. That way, impact on the environment becomes part of the cost-benefit calculations, and may sway those soul-less corps into the right direction.
Unfortunately, these taxes might be considered as a backdoor to socialism too :(
For an interesting take on this, read (Score:3)
Re:Capitalism (Score:3)
By your definition, there is no such thing as a free market, as our market is already constrained, both in terms of taxation of different products (including different tax rates depending on the source of the product, the type of product, and who the product is being sold to), and in terms of regulatory bodies which regulate everything from the quality of the products sold to what products I can sell.
An example of the tax rates: If I buy a solar heater for my house, I get a tax break in California which significantly reduces my income taxes. If I buy a car from Japan, I pay import taxes which I wouldn't pay if I bought a car from Detroit. If I try to sell wine to France, I pay an export tax, as well as France's import taxes, because France doesn't want California wine, only French wine.
Other regulations include low energy consumption regulations (so that's why all our computers are "Energy Star" compliant...), safety regulations (Hmmmmm... this baby toy was just recalled. And I just can't seem to buy a car today without airbags, even though airbags add about a thousand to the cost of the car.) And for the life of me I just can't seem to buy a slave on the open market any more, which is odd--they were sold openly just before the US Civil War. The last time I asked, my local grocery store doesn't carry marajuana.
A "free market" refers to the fact that within the constraints of various government regulations, you are free set up a company, manufacture products, sell products, and buy products as you see fit: the "free" refers to the freedom to act, again, within certain constraints. This is as opposed to socialism, where your right to set up a company is taken away from you, or communism, where your right to set up a company, manufacture products and sell products are all taken away from you. (A central body tells you what you can make and what price you can sell it at.)
Sometimes I don't think people know what socialism and communism is, at a practical level. That is, they think the theory of "equal distribution" is a good concept, but I don't think they realize that the practical upshot of this is that your right to act (again, within certain governmental constraints) is taken away from you, and your right to make products people may want and sell them at a price which maximizes your profits given the constraints of the market is replaced by a central body who doles out to you what it sees fit.
Haiku (Score:3)
Reduce, Reuse, Recycle
Where is Reinvest?
The inertial of capitalism (Score:3)
Enter the last hundred years where real damage has been perpetrated on the environment, particularly the last thirty years. Capitalism has so much inertia that we as a society do not quite know how to stem it. Add to that the science of the environment which is often unsure enough of it's postulates to be able to gain ground on capitalism. We can measure profit on a balance sheet, but it seems scientists cannot convince us about things like ozone depletion and deforestation through studies.
On the whole, we do a pretty lousy job of jibing capitalism with environmentalism, and judging by at least the American popular ideology, it will take severe environmental crises to change that reality. From day one, we have been a nation of minutemen who need to be struck in the face before we realize we are in a fight.
-L
Re:You're full of FUD (Score:3)
This is not an attribute of the market itself, but of the legal structure in which it exists. Many free-market advocates are fans of strict liability which would internalize those externalities. The process is not hard -- just remove the tragedy of the commons incentives through privitization.
Oh, so I should be happy with a volvo when my neighbor can use the cost offset of not buying enviro-friendly products to go buy a porsche? Great solution there! You might convince me of that, but not the 300 million other people who live on this slab of earth we call the United States.
If the externalized costs of resource wasting are internalized within the market, then there *is* no cost offset by buying non-enviro-friendly products. In fact, they would become more expensive relative to the value placed on the potentially wasted resources.
I think you mean the consumer. And no, because people follow the path of least resistance. The problem is not convincing the individual - with enough education that is possible. It is convincing society at large, people who are more than willing to ignore truths to have material and personal gain. It's a big, anonymous system out there - who's gonna complain if I buy styrofoam cups instead of wax ones? Nobody. Zero social incentive. Plenty of monentary incentive though.
You're half-right. It's a *systemic* change that is required. Not because of anonymity, but because of liability and accountability. No other mechanism devised by man has yet provided as effective a means of resource allocation than the market. But it is defined by the legal structure in which it exists. And as long as we have the US Department of the Interior allocating rather than individuals and corporations with vested interest in the property, we'll have more of the same.
Right now, there are very strong indications that the environmentalists are losing the war against capitalism. I rather doubt this book will change the balance much. To use your own dialect: the free market has spoken.
They are fighting the wrong battle. To the extent that the market is the problem, it is also the solution, by allowing the internalizing of those externalities.
I reaffirm my position that capitalism and environmentalism are at odds with each other fundamentally. You can't reconcile them and still claim to be a member of both.
Perhaps, but only because the defenders and detractors of each don't understand the argument.
see http://environmental.networkroom.com/
Slavery & Capital: Mineral, Plant, Animal & Human (Score:3)
Some really deep ecologists would object to my maximizing the value of certain grasses -- say by domesticating them and initiating the neolithic period -- or perhaps an enemy of mine would so object.
Some animal rights activists would object to my "playing god" by hybridizing and then intensively inbreeding various wild animal species to generate domestic breeds which are useful to humans -- or perhaps an enemy of mine would so object.
Quite a few human rights activists would object to my "playing god" by breeding humans, training them in valuable skills and selling them to the highest bidder (perhaps under contract to not use them for their own breeding programs so I can retain my genetic property) -- or perhaps an enemy of mine would so object.
I can maximize economic value in all of these things but the question remains, have I maximized moral value?
And, BTW, whose business is it to tell me what is moral and what is immoral?
Some theocrat or politician who can manipulate words and people's actions into meaninglessness? Someone who can kick the shit out of me? Someone who can talk others into kicking the shit out of me? Someone who exudes the right pheromones to trigger child-like imprint vulnerability in my limbic system as they talk to me? Someone who gets an intense injection of lutinizing hormone when a centralized technology for communication comes up for grabs, like, say, movies, radio and television?
These are questions even the Dalai Lama has trouble with -- and don't forget the first Dalai Lama was an heir of Genghis Khan -- sort of like the Popes are, in a sense, heirs of Ceasar.
Morality has its limits and those limits relate directly to genetic self interest. I don't want some bozo with a conflict of genetic self interest telling me what is right from wrong. I don't care if it is about loving my neighbor as myself, being a worker hero, avoiding racism, sexism and homophobia or turning Dolly in to mutton. Take your universalist religions and preach them to your next of kin. Dressing them up as "capitalism" is ineffective except to the extent that it becomes all the more noxious when you do so.
Of course, if you can make a convincing case to me that "we are the world" -- I might start listening -- but to be convincing, you'll need to make that "whole earth" perspective real. That means putting me and everyone else you want to influence out into space where the global perspective becomes our natural perspective. Then all this talk of "universal brotherhood" starts to make sense.
So, until you start pulling your weight in getting us all there, zip it.