Sustainability / CAPITALISM
Can the free market be used to jump-start the switch to
In the packed ballroom of a glittering downtown hotel, Amory Lovins is working his magic. Calmly and confidently, the mustachioed guru of eco-efficiency explains how ‘natural capitalism’ can save money and the planet both at the same time. An enthusiastic standing-room-only audience of businesspeople, environmental activists, municipal politicians and university students is lapping it up – hook, line and ‘powerpoint’ presentation.
Along with everyone else, I am swept up in the logic and common sense of it all. But I wonder why we haven’t been doing this before? And why aren’t we doing it now?
After the presentation there are questions and comments from the audience. The head of a national NGO exults that finally she won’t have to feel guilty about driving a car. A local councillor steps up to the microphone to share the city’s own efficiency success stories. The buzz in the air is palpable. It is an Amory love-in.
There is no denying the appeal of Lovins’ message. In his recent best-selling book Natural Capitalism (co-authored with his ex-spouse L Hunter Lovins and eco-entrepreneur Paul Hawken) he describes how an enlightened form of capitalism, retuned to seek eco-efficiencies, would save the environment, stimulate the economy, increase employment and bridge the gap between rich and poor.
What’s not to like? Similar concepts calling for ten-fold or four-fold gains in resource efficiency (‘Factor Ten’ and ‘Factor Four’) have been embraced in Europe as ‘the new paradigm for sustainable development’. It is an attractive vision of the future that is rare in its appeal to environmentalists and the business community alike.
There is no denying the credentials of the messengers either. The Lovinses are co-founders of the Rocky Mountain Institute in Snowmass, Colorado, a nonprofit think tank. They are also among Time magazine’s ‘Heroes for the Planet’ for Earth Day 2000. A dynamic speaker and writer, Amory Lovins has been a prominent critical voice in energy policy and resource use for more than 20 years. Co-author Paul Hawken is both an entrepreneur and an environmental activist – and a thoughtful writer on the nexus between the two worlds. Together these three have set out to save capitalism from itself – to ‘harness the talent of business to solve the world’s deepest environmental and social problems’.
The central premise behind ‘natural capitalism’ is that we have the technical capacity to use the planet’s resources much more efficiently, allowing us to maintain and even enhance our material well-being while sharply reducing resource extraction, waste discharge and associated damage. Businesses would operate more like biological systems, recycling waste into new raw materials and providing services rather than products. The motivation for ecologically sound ways of doing business would be economic rather than altruistic because efficiency measures would also save money. In effect, we could have our cake and eat it too.
Lovins illustrates his hypothesis with many real-life examples from the business world, where companies found that ‘greening up’ was good for the bottom line. His public presentation and the book abound with success stories: $2.8 million saved here, 81-per-cent reduction in resource extraction there. The stories are numerous and attractive.
But they are more the exception than the rule. Eco-efficiency is not what drives most of real-life capitalism. ‘Natural capitalism’ may be reasonable and desirable. And certainly it is a refreshing notion for environmentalists weary of being the continual bearers of bad news. But it is not the way the world runs at the moment. In general business has blithely ignored and vigorously denied its role in degrading the environment.
So how do we get the market to favour eco-efficiencies? How do we achieve a ‘natural capitalism’ that is also equitable, given the free market’s tendency to deepen the gulf between rich and poor? And given the rampant consumerism that dominates Western culture and is quickly spreading around the globe, how do we ensure that the savings from eco-efficiencies are not simply spent on more consumer trinkets?
The market is undeniably powerful and it does seek efficiencies. Traditionally the ‘efficient’ way of dealing with wastes was to dump them, cost-free, into the air or water. But if efficiency could be harnessed to reduce resource use and waste, capitalism could be made to work in the service of the environment.
Lovins and company are not alone in exploring this possibility. Eco-sensitive economists have long advocated the use of market mechanisms to encourage anti-pollution measures. And activists have for years lobbied for removal of the subsidies that support unsustainable energy projects and industrial agriculture. There is also a growing international movement for ‘green’ taxes. These would remove taxes from ‘goods’ (things like jobs and income) and instead put them on ‘bads’ (things like pollution and resource extraction).
Grains of sand
‘It’s a mystification,’ says Joel Kovel, professor of Social Studies at Bard College in New York. ‘They are using a popular, easy-to-assimilate and apolitical definition of capitalism. The whole weight of evidence is that this is not what real capitalism is about.’
Kovel argues that virtuous small businesses can exist but that they play no role in the overall workings of society. ‘A couple of grains of sand on the beach’ is how he puts it. One should not imagine that the realm of exchange is neutral. ‘The real forces of society are dictated by the accumulation of capital. The inherent nature of capitalism is to expand, and it sucks everything into its orbit.’
There are examples of businesses saving money while operating in a more environmentally friendly manner. But this doesn’t mean that most businesses could follow suit. For most, absorbing the ecological and social costs of their operations would be expensive and perhaps suicidal, unless their competitors did the same.
To counter this, ‘natural capitalism’ boosters advocate ‘a fundamental rethinking of the structure and the reward system of commerce’. Only by overhauling the entire system can we ensure that it is competitive to be environmentally friendly. But where does this overhauling begin? And how far does it extend?
Virtually any country would find it difficult to make these changes on its own. If Australia, for example, were to attempt such a turnaround it might conceivably find a way to equalize the increased costs for Australian business competitors in the domestic market. But an integral part of the present market system is the globalization of trade. With the increasing reliance on exports to international markets, encouraged by the World Trade Organization, Australia would find it impossible to attempt economic reforms such as these in isolation. Australian corporations would be immediately outbid in foreign markets by competitors from other countries with lower costs and fewer restrictions. Such a transformation could only be successful on a global scale, through international treaties and agreements imposed on the now virtually lawless world of global corporate finance.
Maybe they do understand the US public well. And maybe they’re right to assume they’ll have more success if changes are wrapped in the cloak of neutral economic logic. But the reality is that the conditions for Lovins’ brand of ‘natural capitalism’ are unlikely to arise from the market itself. They will have to be imposed by co-operative, collective action – by governments and other organizations of civil society hip-deep in politics.
And that’s not all. If the market won’t deliver eco-efficiency without substantial political intervention, it certainly won’t deliver an equal distribution of the benefits or ensure that the savings aren’t squandered on more consumption. These changes won’t happen without strong government intervention in the workings of capital. Self-regulation, based on the record to date, just won’t do it.
An appealing package
That said, ‘natural capitalism’ is a programme for change that is at best partially developed. Very little that it advocates will emerge from capitalism as it’s currently structured. Both the core of its agenda – aggressive pursuit of eco-efficiencies – and the associated objectives of equity and overcoming consumerism, demand ambitious political action. When Lovins and company avoid discussion of political or cultural change they are not telling the whole story.
Maybe their restraint on the political aspects is strategic. Quite possibly the Lovinses and Hawken are trying to get North Americans to buy into the concept first. Then they will slowly introduce the scarier parts about political and cultural change.
Whether this strategy is appropriate or not is an open question. As Joel Kovel says, ‘natural capitalism’ presents lots of good technocratic ideas but ‘we shouldn’t think of it as a substitute for genuine political engagement’.
([email protected]) is a masters student in environmental studies. This article was produced in consultation with Robert Gibson, an associate professor of Environment and Resource Studies. They are both at the University of Waterloo in Ontario, Canada.