Economic stability=an action for sustainability
August 22nd, 2011
I love listening to social critics. Many critique capitalism (as it is perceived as one of our many interlocking systems of domination).
An economy consists of the economic system of a country or other area, the labor, capital and land resources, and the economic agents that socially participate in the production, exchange, distribution, and consumption of goods and services of that area.
A given economy is the end result of a process that involves its technological evolution, history and social organization, as well as its geography, natural resource endowment, and ecology, as main factors. These factors give context, content, and set the conditions and parameters in which an economy functions.
Also, how we interpret these factors set the parameter in which we function. Hence, the downward spiral into economic destruction and recession. How can we sustain our economy?
When reviewing the interlocking system of domination present in capitalism—yet receiving strong anti-socialist resistance—one must begin to ask more about the economy. Can one truly believe in a social advantage and actively change those dominating institutions without understanding economics? Definitely not. The way to create social change is not by hanging an awareness flag, it is by talking money. So, today I have asked my fiancé, Jonathan McKeon, an economist, his opinion in the matter.
Jonathan: Many solutions have been offered up by economists. I will focus on sustainability. It definitely involves a degree of change that can create a meeting place for social change and economic success in the capitalist market.
One Economist I agree with is Paul Hawken. Specifically, his essay “A Declaration of Sustainability.” Paul Hawken is one of the leading architects of corporate reform with respect to ecological practices. Hawken addresses the economic conditions of America from an environmentalist’s point of view and proposes his plan for American economy and the environment to achieve sustainability and balance.
In his Essay Hawken begins by stating he had just finished a social audit for the ice cream company, Ben and Jerry’s.
Me: What is a social audit?
Jonathan: A social audit is a form of social accounting where instead of the finances and production of a company is inspected, the company’s environmental and social impact is inspected. Hawken notes that Ben and Jerry’s establishes shops in low income neighborhoods such as Harlem, pays outstanding benefits, keeps a compensation ratio of seven to one from the top of the organization to the bottom, and seeks out vendors from disadvantaged groups. “They are publicly held, nationally recognized, and rapidly growing in part because Ben wanted to show that a socially responsible company could make it in the normal world of business.”(Hawken 667) By beginning this essay with a perfect model for a corporation that can eventually work towards sustainability, Hawken is able to note a standard that other corporations could follow.
Hawken also elaborates by saying that Ben and Jerry’s is just one of a growing vanguard of companies attempting to redefine their social and ethical responsibilities. These companies no longer accept the maxim that business is business. Their premise is simple: corporations, because they are the dominant institution on the planet must squarely face the social and environmental problems that afflict humankind. I find this concept interesting. Corporations are the perfect starting point to saving the environment because they have the most pull and in most cases are the direct causes of the degradation of the environment.
Hawken says, “even if every company on the environmental and social practices of best companies such as The Body Shop, Patagonia and Ben and Jerry’s—the world would still be moving toward environmental collapse. In other words if we analyze environmental effects and create an input-output model of resources and energy, the results do not even approximate a tolerable or sustainable future.” (Hawken 668) He argues that even if a tiny fraction of the world most intelligent companies cannot model a sustainable world then that tells us that being socially responsible is only one part of an overall solution and what America has is not a management problem but a design problem. I agree that Americas attitude to sustainability stems from a design problem due to a lack of priorities regarding the environment. It’s not just the corporations fault, it’s the consumers.
Hawken skillfully mentions that at present there is a contradiction inherent in the premise of a socially responsible corporation: to wit, that a company can make the world better, can grow and can increase profits by meeting social and environmental needs, Hawken regards it as a “have-your-cake-and-eat-it” fantasy that cannot come true if the primary cause of environmental degradation is over consumption. Hawken hits his point home by not necessarily pointing fingers at corporations but the nation’s overconsumption of resources itself.
Me: So how do we create a sustainable society?
Hawken points out that in order to approximate a sustainable society we need to describe a system of commerce and production in which each and every act is inherently sustainable and restorative. Because of the way our system of commerce is designed businesses will not be able to fulfill their social contract with the environment or society until the system in which they operates undergoes a mental change, a change that brings commerce and governance into alignment with the natural world. Hawken points out that not only do corporations need to change, but America’s overall system of commerce as well.
Hawken feels that a system of sustainable commerce would address these eight objectives:
- It would reduce absolute consumption of energy and natural resources among developed nations by 80 percent within 40 to 60 years.
- It would provide secure, stable and meaningful employment for people everywhere.
- It would be self actuating as opposed to regulated, controlled, mandated or moralistic.
- It would honor human nature and market principles.
- It would be perceived as more desirable than our present way of life.
- It would exceed sustainability by restoring degraded habits and ecosystems to their fullest biological capacity.
- It would rely on current solar income.
- It should be fun and engaging and strive for an aesthetic outcome.
The first in Hawken’s strategies for sustainability was to take back the charter. Corporations in their inception where originally chartered by and exist at the behest of, citizens. Hawken reminds us “Incorporation is not a right but a privilege granted by the state that includes certain considerations such as limited liability.”(Hawken 669) Corporations are supposed to be under our ultimate authority, not the other way around. The charter of incorporation is a revocable dispensation that was supposed to ensure accountability of the corporation as a whole. It was a deterrent to corporate abuse but implementing this would prompt accountability and citizen involvement and learning. Hawken uses facts and precedence to define the terms of which a corporation was originally intended to follow and be. Explaining the purpose of a corporation shows that Hawken has a deep understanding of how misconstrued current corporations are and informs the consumer by reminding them that corporations are supposed to be under their scrutiny not the other way around.
Second would be Hawken’s ideas to adjust price to reflect cost. The free market economies are excellent at setting prices but lousy at recognizing costs. Every purchase must reflect its actual cost and the direct cost of production including costs to the environment and future generations. Basically the marketplace is giving us the wrong information. Hawken uses the example of a plane ticket from a discount airline is considered cheap when in actual fact the airplanes effect on the environment is devastating. I find the example of the plane ticket effective because the amount of damage a plane does to the environment relative to the monetary cost of a ticket is astounding. The environment is degrading at bargain prices.
One of Hawken’s most important ideas is to throw out and replace the entire tax system. Paul Hawken points out that the present tax system sends the wrong messages to everyone, encourages waste, discourages conservation and rewards consumption. [His proposed idea is to tax] what we wish to encourage: jobs, creativity, payrolls, and real income while ignoring degradation, pollution, and depletion, “The entire tax system must be replaced over a 20 year period by “Green fees” taxes that are added onto existing products, energy, services, and materials so that prices in the marketplace more closely approximate true costs”(Hawken 670). These taxes are not a means to raise revenues or bring down deficits but must be revenue neutral so that the middle and lower class experience no real change in income just a shift in expenditures.
Hawken is thinking that eventually the cost of non-renewable resources, extractive energy and industrial modes of production will be more expensive than renewable resources such as solar energy. Basically under a Green fee system the incentives to save on taxes will create positive constructive acts that are affordable for everyone. With energy prices going up the natural inclination will to save money by bicycling and car pooling telecommuting and more energy efficient houses. When the taxes on artificial fertilizers and pesticides go up, organic farmers will find that their produce methods are truly the cheaper means of production and consumers will find that organically grown food is cheaper than its commercial cousin. With this tax model in play Americans will find themselves in a position where they pay no taxes but spend their money with practiced and constructive discernment that allows the cheapest product in the marketplace to be the best for the worker, the environment and the company.
Hawken also provides another solution by shifting from electronic literacy to biological literacy. An average adult can recognize hundreds of brand names and logos but recognizes fewer than ten local plants. We are moving not to an information age but a biologic age and technological education is equipping us for corporate markets, not the future. The computer revolution is not the totem of our future, it’s only a tool. Computers are great but they are not an uplifting or compelling vision for culture or society. We are moving towards an age of living machines not machines for living in. Understanding biological processes is how we are going to create a symbiosis with living systems or perish.
Me: Hawkins facts and figures coupled with his clear examples present a compelling and powerful argument towards sustainability. He identified the problem that our economy faces and forms of commerce are at the root of many of our environmental problems. The solutions such as shifting from electronic to biological literacy were good ideas. His example of discount planes tickets was particularly effective in explaining that the monetary cost of products doesn’t take into account the price on its effect of the environment. I enjoyed Hawken’s address on sustainability being essential to the survival of humankind and shouldn’t be taken lightly. Environmentalists don’t stress that concept nearly enough. Hawken was effective in stating arguments and convincing the reader that the current economic model and environmental attitudes need to be changed. I found his ideas inventive and potentially nation changing. Thanks Jonathan for letting us into your research of Hawken.
Paul Hawken “A Declaration of Sustainability” Utne Reader September/October 1993
Michael Minch/Christine Weigel “Living Ethics: An Introduction” Wadsworth, Cengage Learning 2009
[Notes: Paul Hawken is an environmentalist, entrepreneur, journalist, and author. Starting at age 20, he dedicated his life to sustainability and changing the relationship between business and the environment. His practice has included starting and running ecological businesses, writing and teaching about the impact of commerce on living systems, and consulting with governments and corporations on economic development, industrial ecology, and environmental policy.]
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