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Is sustainable capitalism an oxymoron?

Article Excerpt
Marx says that revolutions are the locomotives of world history. But the situation may be quite different. Perhaps revolutions are not the train ride, but the human race grabbing for the emergency brake

--Walter Benjamin

The subtitle of Joel Kovel's The Enemy of Nature (Zed Books, 2007) states his thesis bluntly: The End of Capitalism or the End of the World? Kovel thinks we need a revolution--although he is fully cognizant as to how remote that prospect seems.

Growing numbers of people are beginning to realize that capitalism is the uncontrollable force driving our ecological crisis, only to become frozen in their tracks by the awesome implications of this insight. (p. xi)

Paul Hawken, Amory Lovins and Hunter Lovins also think we need a revolution, but of a different sort than the one envisaged by Kovel. Natural Capitalism (Little, Brown, 1999) is subtitled Creating the Next Industrial Revolution. President Clinton is reported to have called it one of the five most important books in the world today.

Hawken and the Lovinses agree with Kovel that the current model of capitalism is problematic. "Capitalism, as practiced, is a financially profitable, non-sustainable aberration in human development" (p. 5). But they do not see the problem as residing in capitalism itself. They distinguish among four kinds of capital, all necessary for production: human capital, financial capital, manufactured capital and natural capital. The problem with the current form of capitalism, they argue, is its radical mispricing of these factors. Current market prices woefully undervalue--and often do not value at all--the fourth factor: the natural resources and ecological systems "that make life possible and worth living on this planet."

All economists recognize that market transactions can involve "externalities"--costs (or benefits) that are not paid for by the transacting parties. All agree that there is a role for governments to play in rectifying these defects. The standard remedies tend to be taxation (for negative externalities) and subsidies (for positive externalities). More recently, "cap and trade" schemes for carbon emissions have been added to the list.

Hawken and the Lovinses argue that these remedies--properly applied--n work. The first step, they say, is to eliminate the perverse incentives now in place. They document the massive subsidies that governments currently provide for ecologically destructive behavior, e.g. highway construction and repair that encourages suburban sprawl and the shift away from more efficient modes of transportation, agricultural subsidies that encourage soil degradation and wasteful use of water, etc.

Second step: impose resource and pollution taxes so as to reflect the true costs of "natural capital." Sweeten the pie by phasing out all taxes on labor: the payroll tax, which increases unemployment, and income taxes as well. The point is to level the playing field so that more sustainable energy technologies and more energy efficient processes can compete fairly with the destructive practices of "industrial capitalism." We might even want to go further and subsidize, at least initially, the technologies that reduce the negative environmental impact of our production and consumption choices.

Natural Capitalism is chock full of examples...

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