From the pages of Z Magazine

Natural Capitalism?

By Michael Albert

I remember debating the potential of the environment as a radical focus back when it was first becoming visible. Most early 1970s radicals felt environmentalism would be the next big spur to activism. Being fried by ozone depletion or gassed by industrial pollutants could certainly yield important activism. But there were skeptical. Elites also suffer environmental decay and could address environmental problems without addressing other social ills. Environmentalists might try to convince elites to make changes instead of organizing public militancy. They might even seek clean up for the rich at the expense of everyone else, as in cleaning up their beaches, their air, their resorts, and their water, while the rest of us wallow in toxic effluvium until we drop.

Decades later, there are indeed some approaches to addressing environmental problems that deal with many injustices in society, some that carefully skirt non environmental injustices even pandering to the interests of pollution’s main perpetrators, and some that brazenly enhance the situation of elites at the expense of everyone else.

The cover story of the April issue of Mother Jones by Paul Hawken is titled "Natural Capitalism." Hawken finds symptoms of illness, describes the full disease, explains its cause, and proposes a remedy. The trouble is, Hawken confuses the issue more than he clarifies it.

Hawken’s thesis is that something called industrialism and its associated wrong-headed habits causes over-utilization of resources, inefficient squandering of productive potentials, and loss of the benefits of natural systems. He writes, "Commercial institutions, proud of their achievements, do not see that healthy living systems—clean air and water, healthy soil, stable climates—are integral to a functioning economy. As our living systems deteriorate, traditional forecasting and business economics become the equivalent of house rules on a sinking cruise ship." Hawken reveals many symptoms. For example:

Part of the problem is that Hawken has a limited view of what is wrong. For example his waste list doesn’t include lost work due to worker recalcitrance to deliver for bosses, investment in otherwise unproductive tools to disempower and control workers, education to limited social slots instead of for human fulfillment and development, losses due to racist and sexist assumptions about whole populations, bureaucratic waste, advertizing and packaging to sell regardless of need, over production of private goods and under production of public ones, duplication of efforts, or anything else that points inexorably toward oppressive social relations and particularly oppressive class, race, or gender relations.

Additionally, Hawken seems clueless as to the real underlying causes of the misallocation problems he perceives. He writes "one is tempted to say that there is nothing wrong with capitalism except that it has never been tried. Our current industrial system is based on accounting principles that would bankrupt any company." And "industries destroy natural capital because they historically benefited from doing so."

Hawken thinks the big problem is that modern industry and technology have untracked the minds of entrepreneurs, causing them to become habituated to ignoring the intrinsic value of natural systems and the importance of husbanding resources. Because of this (a) we are destroying the ecology and suffering grave hardships and dangers, (b) we are immensely wasteful, leaving little for important social expenditures, and (c) we fail to utilize human labor sufficiently, always preferring to use resources instead, causing unemployment. The upshot is that we (in this case presumably meaning those who make corporate decisions) need to re-attune ourselves to the importance of husbanding natural systems and using our technical intelligence more wisely, and Hawken is optimistic this will happen because he thinks it will be in capitalists’ interest to wake up—Hawken says that it will be "profitable."

It is a comforting framework. Hawken can plead loudly and even militantly for change, yet never once indicate that anyone is doing anything oppressive. Ignorance and outmoded habits are the only problem. More, there is no need to take on the rich and famous. The change sought is in their interest, too. We don’t have to force elites to relent to our agenda, we just have to converse with them and they will see the light and do business right—the natural way. Yes, there will have to be wiser use of taxes to provide proper incentives, but there is no need to mention redistributing wealth or power, much less changing defining institutions such as private ownership or allocation by means of market competition. We just have to give capitalism plus ecological wisdom a chance. Capitalism will do fine for us all, once we remove the crusty anachronistic habits of resource profligacy that the age of steam engines hoisted on our entrepreneurs.

There was one sentence in the article that hinted at an alternative understanding. I think it was a bit of a slip. Hawken never indicates that some people owning billions in capital and property and others owning less than zero is a problem, and, indeed, the idea of private ownership of productive assets is never questioned at all, but about allocation Hawken does write: "The value of natural capital is masked by a financial system that gives us improper information—a classic case of `garbage in, garbage out.’ Money and prices and markets don’t give us exact information about how much our suburbs, freeways, and spandex cost."

True enough, but why? Is this due, as Hawken argues, to holdover ideas from the golden age of industrial growth limiting our perceptions in a wildly altered context? Or is it because, as more radical ecologists contend, our allocation system structurally imposes just these results? Let’s take it a step at a time.

First off, is it old habits dying hard? In fact, one of the few positive attributes of capitalist systems is dynamism. Habits of mind or behavior which are not institutionally enforced and which become anachronistic from the perspective of system maintenance simply disappear. An individual habituated to writing with a pen or a typewriter might well continue to do so even against the wave of new options that computers offer. But no capitalist workplace will stick to old ways the minute superior new ways for fulfilling their corporate aims exist. Crusty old approaches won’t live beyond their time because market pressures ensure a continuous compulsion to reduce costs and increase revenues while simultaneously being sure not to do anything that will endanger long term profits.

Suppose an auto plant undertakes a study of a new way to make cars. Suppose the study comes back and shows that with the new approach the cost of production of each car will drop a few percent. Is the new approach immediately adopted? Well, how much will it cost to renovate? Suppose it isn’t much compared to the return, then will the new approach be adopted? Not so fast. Will the new approach spew poison into the ground water or dirty air into the local park? Actually, it doesn’t matter what the answer to this question is because the answer has no direct bearing on the buyer or seller and therefore does not affect costs or revenues or the decision about the technology. So is the new approach enacted? There is one more consideration for the capitalist. Will instituting the new approach affect social relations over the long haul to endanger the proper rewarding of the difference between revenues and costs to owners alone? If so, and this can be because it empowers workers or it could be because it makes such an ecological mess that it will turn the neighborhood into an army of activists attacking the firm, forget it. The capitalist understands that it doesn’t do any good to increase next week’s profits by a new production process that makes workers in the plant, or the union, or the entire local community, or even the whole working class so much more powerful a bargaining agent, that down the road they will accrue for themselves the productivity gains of the firm, perhaps even to the point of severely threatening capital’s dominance.

In light of the above, there are many problems with Hawken’s analysis.

First, Hawken ignores that the reason markets and prices do not account for ecological impact is that markets account only for the direct effects of transactions on the immediate buyers and sellers. This is all the agents involved learn about or have reason to care about, given the behaviors their roles dictate. And Hawken also fails to understand that a real effort to seriously address this weakness of markets would counter capital’s retaining and expanding its dominance, though modest interventions to prevent calamities that would hurt capital, are, of course, what the state is economically for.

Second, Hawken fails to recognize that each individual plant is not in the business of doing good for consumers, much less for society, but is in the business of making a profit for its owners and maintaining their dominant position, and that each business will continue to do this with a vengeance (or go out of business), short of being redefined into an entirely new mold, or coercively restrained.

Third, there is no understanding that the allocation of resources and energies to useless production rather than to socially beneficial production is not a horrible by-product of stupid holdover habits, but an important virtue of the system, at least from the perspective of those who run it. Allocation to waste and warfare instead of social wages and welfare does not happen because capitalists are sadists or mired in some outdated mindset of the past. They do not spend money on useless missiles, or on systems to thwart their workers’ initiative, or on cleaning up preventable messes, because they enjoy seeing poor people suffer for want of proper housing, health care, or education, or because they are in the habit of doing it and can’t break out. By the same token, there is no way that they are interested in seeing all these funds applied to mitigating social ills. A self-centered, socially oblivious outlook is imposed by nearly every aspect of corporate life. As a result, capitalist care about everyone else’s condition only insofar as everyone else’s condition bears on their profits and power. To give the public good housing, education, health care, and protection against want would make society’s worst off much better off, and it would, as a by product, dramatically alter the balance of power between labor and capital, threatening capital’s ability to scarf up profits.

It’s just like unemployment. Anyone who works knows that when unemployment is high and the fear of losing one’s job is overwhelming, workers run scared and overtime will increase, conditions will worsen, and pay will drop. But when unemployment is low, and the threat to move on to a new job and leave the owner saddled with a hard-to-fill slot is real, workers get uppity, conditions improve, and pay increases. Social programs have the same effect on bargaining power and thus on the distribution of wealth, and this means their impact goes way beyond their immediate effect on recipients. That is why useless waste production is so much better from capital’s perspective than production that betters the lot of the worst off. It doesn’t even matter if socially beneficial production can be done with short term profits higher than the short term profits of cleaning up spillage or making weapons, or that social production can be done employing more people than high tech waste production (actually, this is a debit from capital’s perspective). What matters is the effect not only on immediate profits, but also on the conditions of being able to continually accrue more profits in the future. Indeed, this is what most things economic are ultimately about – how much of the social product will go to capital, how much to the intermediary class of managers and other "coordinators," and how much to labor, and what will happen over time to the balance of power between these classes and thus to future allocation of product among them. It isn’t industry—meaning, presumably, that we use steam engines or computers or assembly lines—that establishes the criteria of judgement behind allocative decisions. It is the criteria of judgement imposed by our economic institutions of ownership and allocation, that determines what type industry we will have, at what scale, with what products, distributed in what manner.

Take another example, technology. There is no such thing as a technological imperative any more than there is such thing as an industrial imperative. There is no anti-social bias that comes inexorably from thinking about technical options any more than there is an anti-ecological bias that derives from using industry. Neither using high tech nor thinking about it imposes any bias toward or away from accounting for ecological impacts. (Indeed, this is pretty obvious from Hawken’s own article, as he spends lots of time recounting and admiring how folks are trying to turn technological cleverness to the task of environmental cleanliness.) The negative trajectories of engineering consciousness and technological artifacts alike derive instead from the defining impact of markets and private ownership. It’s the economy stupid, doesn’t mean that it is human curiosity, or productivity, or the desire to have lots of output—it means it is the roles associated with our production, consumption, and allocation institutions, and the effects they have on our behavior and interests.

When I was a student at MIT I noticed something interesting. The school’s design, ethos, and pedagogy were as much geared to a social outcome as an intellectual one. The aim was to graduate brilliant and capable problem solvers who would apply themselves wholeheartedly to any sufficiently demanding and interesting technical task they were assigned. To use an example Chomsky proposed at the time, if the government or a big corporation asked MIT grads to design a hand gun that a peasant soldier could use to shoot down a B-52 (then carpet bombing Vietnam) the grads would be just as happy to comply as when they were asked to design a smart bomb that could be dropped from the fast moving B-52 to blow up a dam to flood the Vietnamese countryside. What would ensure that all their technological creativity was always put to system serving rather than subversive ends was that the paymasters employing the engineers and providing their funds would only finance the former undertakings. The problem, therefore, isn’t that thinking about technology and science or using technology creates an anti-social bias, it is that pedagogy provided by capital elevates to engineer level only those who are largely undiscerning and won’t rebel, weeding out the rest, and that the market system guarantees that investments in engineers’ talents will only elicit products that reproduce social relations, not disrupt them.

Hawken doesn’t seem to understand any of this. Not private ownership, not the market system, not the state’s role, not the educational system. Nothing structural. And so even leaving aside the fact that Hawken ignores gender and cultural relations, the result of his article is that he proposes a strategy for gaining a better economy that may yield an occasional minor positive adjustment, if it isn’t totally bought out by corporate sponsorship, and that will help forestall some catastrophes (which capitalists would work to do even without Hawken’s entreaties), but that will do little beyond that.