“How hard do we want to make it on ourselves? It’s a matter of choice. We can hit up against the limits, fail to enjoy life. Give ourselves a hard time. Collapse a number of the ecosystems services and then make the change. Or we can use this unique human institution called foresight, and make the change now when it is profitable to do so.”
Do you like your stuff? Do you want more? Do you feel being a fiscally responsible citizen entitles you to more when you are in the mood to buy that new flat screen plasma TV, or the shiny red car with all the works?
What if I told you that you couldn’t have that car (at a price you can afford) because somebody 10,000 km away wants it and there is only enough metal, glass and oil out there for one of you to have the vehicle? Sounds crazy, right?
Earlier this year, Klaus Toepfer, the head of the UN Environment Programme (UNEP), made headlines around the globe when he explained that should China, Indonesia and India start buying cars like we do, that would be a staggering 200 million new cars to assemble. Toepfer said that China’s plan to quadruple their GDP by 2020 is simply impossible, unless developed countries, such as the US, dramatically alter their consumption habits and China adopts radically different consumption and production models.
While Toepfer attempted to backtrack on some of his remarks, they are clearly in line with the World Wildlife Fund’s Living Planet Report 2000,which states that if everyone on the planet consumed resources and emitted CO2 at the rate of Europeans or Americans, we would need at least two additional earths to compensate.
This isn’t the first time the alarm bells have rung. The millennium has turned without the doomsday predictions of Armageddon that environmentalists were making in the 70’s when Rachel Carson published Silent Spring.
The George Bushes don’t seem to be too alarmed. In 1992,George Sr. said "the American way of life is not up for negotiation." Recently, George Jr.’s spokesmen Ari Fleisher, repeated the same line.
Bushes aside, we are now reluctantly waking to a reality in which we are using up our natural resources at a dramatic rate. It is these resources that have allowed us to maintain and grow both our society and our economy.
Case in point: There is no substance more vital to human life than water. With water a constant issue in Middle-East peace negotiations, with typically rainy Vancouver going bone dry over the summer, and with social groups fighting tooth and nail against the privatization of water in the arena of the UN and WTO, we now have real experiences to examine potential fuel for conflicts.
So, what now? What do we do when there are not enough trees to make enough paper to produce the magazine you are reading, and leave enough of those trees in the forest to produce our ever-priceless oxygen? Will technology solve all our problems or do we have to make green production a mainstay activity?
The Interview
JG:
Do you feel capitalism in its current form will be unsustainable over the long-term?
HL:
It appears to be, absent a surprise. What is really galling about it is that [today’s] form of capitalism is violating the internal logic of capitalism—which is to value capital. We are [violating the logic] because we only count two of the four forms of capital.
We count, manage, and account for financial and manufactured capital and that is what balance sheets are all about. On no one’s balance sheet do we count natural and human capital.
As a result, we are liquidating both. No sane capitalist liquidates his or her capital, but we are, so this is a form of capitalism that grew out of a time when it made sense. In the first industrial revolution there were relatively few people, there were new machines coming in and abundant and apparently free or cheap nature.
So, all the profit-maximizing capitalists economized on their scarce resource and substituted their abundant cheap resource and we developed an economic industrial model in which we subsidize the use of resources and penalize the use of people.
We thought to increase labour productivity at any cost—and we did, by 100 fold in the last couple of centuries. Today, 10,000 people are born every hour. We’re not short of people. What we are short of are the ecosystem services, the natural capital. Things like a stable climate. The ability of the world’s resources to absorb and de-toxify our waste.
Therefore, profit-maximizing capitalists will economize on their scarce resource, the natural capital and substitute their plentiful resource. Now we need systems of managing our economy that use resources more productively and use more people.
We have an economy in which we tax income and employment and we dramatically subsidize the use of energy. We also subsidize the use of water and extraction of minerals. It is not good capitalism. The future of capitalism is to eventually sort this out by itself.
How hard do we want to make it on ourselves? It’s a matter of choice. We can hit up against the limits, fail to enjoy life. Give ourselves a hard time. Collapse a number of the ecosystems services and then make the change. Or we can use this unique human institution called foresight, and make the change now when it is profitable to do so.
JG:
What role does government play in bringing companies in line with proper valuation of natural capital?
HL:
We currently have a very perverted market. I personally favour a market-based approach in which you de-subsidize the economy and let technologies fight it out on their own merit.
Take energy, for example. Worldwide annual subsidies of $240 billion make various forms of energy, like coal and nuclear, look cheaper than they really are. That is our tax dollars going down a rat hole. But if we are not going to get rid of those, then there is a very important role for regulation in trying to help level the playing field, so that you have something more approaching an honest market.
There are a lot of market-based forms of regulation. For example, if you are going to encourage more people to drive the sorts of dramatically more efficient cars that are now entering the market you can introduce what is called a fee-bate. I like to rodeo and I haul a 6- horse trailer down the road with a big Ford F-250 pick-up truck. Not real efficient. When I go to register my truck, I would pay a fee that at least approximately captures the damage to society I am doing by driving an inefficient car. When you go to register your Honda Insight you would get a rebate taken out of my fee. This is not a tax. This is simply a way of signaling to the various actors within the market the sorts of costs or advantages that they are levying on the rest of the market.
You can do that with buildings. You go to build an efficient house, get a rebate. Go to build an energy hog and you pay a fee. It takes regulation to get that in place. The market typically won’t implement fee-bates by itself, although the only way that car dealers are able to sell any cars at all is by heavily subsidizing, for example, interest rates and inventory reduction. These big car companies are essentially giving away cars.
JG:
What can business learn from nature?
HL:
The second principle of Natural Capitalism is biomimicry. That is, how does nature do business? Nature manufactures many things differently than we do. Nature uses, in general, low energy flows, near-body conditions, no persistent toxins, nature recycles everything, and everything is in a closed loop. Compare that to the way we do manufacturing.
Take for example the Abalone. It assembles (at the molecular level) an inner lining better than our best ceramics, right next to the creature’s body by excreting a protein in an electrically charged field that causes various compounds in sea water to deposit out, layer by layer, building up this layer that is the inner lining of an abalone shell. It is also very beautiful. The guys at the lab have said that, ‘well, if nature can do it, it obviously has to be possible,’ and so they tried dipping electrically charged silicon wafers into alternating baths of calcium carbonate and a polymer and got the stuff to self-assemble at the molecular level, just the way it does for the Abalone. No high temperature kilns, no toxic materials. And it got them a material to make scratchless eyeglasses and breakless windshields and even the nose cone for the space shuttle.
Innovation inspired by nature is the future of industry that wants to hang around. [Industry that] wants to have a home on this planet.
JG:
Can we protect nature and still be extravagant in our lifestyle?
HL:
Nature is incredibly extravagant. Look at the number of baby sea horses a single sea horse father produces: a jillion of them, because various things are going to come along and eat them up. This is hardly what you would call an efficient strategy.
We can be extravagant, we can consume a great deal, as long as we learn to do it within the rules that nature has set down.
If you look at the hundreds of artificially manufactured substances that are showing up in mothers’ milk, it will chill you. Aldehydes, ketones, pentanol, the basic ethyl metal bad stuff. We’re putting this into our most basic reproductive capacity. What on earth are we doing to ourselves?
We can have a high material standard of living if we just do it in a more sensible way. We need to learn to do it somewhat more along the lines of the greatest design laboratory in history: nature. It has been around for 4.55 billion years.
JG:
Many countries often tax good things like income and jobs, and subsidize things like pollution. Are there any exceptions?
HL:
The Netherlands is doing a pretty good job. Sweden has just implemented a national system called tax shifting, where you shift how the government gets its revenue, from taxing what we want more of (like income) to taxing what we want less of (like pollution). That is just good common sense. But only a few countries in Europe are serious about implementing it.
JG:
Right now, 20 per cent of the world’s population has 80 per cent of the wealth. Is inequality sustainable?
HL:
I think it is critical that the vast majority of the world’s people have a decent standard of living, have access to opportunity. So, yeah, there is going to be some redistribution of income. It will either be done voluntarily under our control or through a very unpleasant, nasty sort of future of which we got a taste during 9/11. There are people out there who hate us. And a very small investment in disruption can wreak havoc on a modern economy; particularly in a globalized world. We have transferred the ability to be extremely disruptive to well-organized small groups of people empowered by the Internet and other modern technologies. In a sense I think that is a good thing, though. We have had to come to grips with how are we going to meet the needs of all the world’s people in ways that are sustain- able.
JG:
How do we get the public to buy into natural capitalism?
HL:
There is a high level of cynicism throughout society and it is actually one of the more serious problems facing us. Growing out of the Fueling the Future book, the CBC had an exercise a month back where a dozen people sat down for a day to design an energy strategy for Canada. It ran on CBC over a couple of weeks. I’m not sure if it made very good television. But it was interesting in that people from a diversity of backgrounds— environmentalists, business people, energy company people, industrialists, academics—all essentially agreed to the same underlying framework. Things like: we need to use energy dramatically more efficiently, we should have a market-based approach with a set policy of zero CO2 emissions to get the most new energy from the various renewable sources of energy.
If the government was to start implementing that strategy, I think the public would start buying into it, and we would, by the way, deal with most of the causes of the blackout last August.
This has been done in Sacramento, California. The people voted to shut down the then operating, but not well-operated nuclear power plant.
The city lost half its capacity all at once. Instead of investing in any kind of conventional supply, they invested heavily in energy efficiency, and the supply of distributed renewable generation.
They bought every piece of technology they could lay their hands on so that they would get experience with it. Fuel cells, micro-turbines, wind machines, solar hot water heaters and solar electric. They replaced the capacity they needed. They were able to keep rates level for a decade including during the California blackout which did not affect them.
Had they kept running the existing plant, rates would have gone up by 80 per cent.
Because rates did not go up, they were able to keep 2,000 jobs in the economy from companies that would have otherwise moved. They generated over 800 new jobs and created millions of dollars of new economic growth in that area just from investing in a sensible energy policy. This is something that any community can do.
The cartoon character Pogo once said we are confronted by insurmountable opportunity. The more I look at the challenges facing the world, indeed facing capitalism, I think that it is true. Jordy Gold is a sustainability expert and columnist for Corporate Knights. You will find his work online at www.jordygold.com
