Tuesday, November 10, 2009

Why do we need sustainable capitalism?

"The Gross National Product measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to country. It measures everything, in short, except that which makes life worthwhile." [Robert F. Kennedy]

The Keynesian system of "national accounts," which still serves as the backbone for determining today's gross domestic product, is incomplete in its assessment of value.... dangerously imprecise in its ability to account for natural and human resources.

We are too focused on the short term: quarterly earnings, instant opinion polls, rampant consumerism and living beyond our means. Short-termism results in poor investment and asset allocation decisions, with disastrous effects on our economy.

At this moment, we are faced with the convergence of three interrelated crises: economic recession, energy insecurity and the overarching climate crisis.

By challenging America to generate 100% carbon-free electricity within 10 years -- with the building of a 21st century Unified National Smart Grid, and the electrification of our automobile fleet -- we can encourage investment in our economy, secure domestic energy supplies, and create millions of jobs across the country.

We also need to internalize externalities -- starting with a price on carbon. The longer we delay the internalization of this obviously material cost, the greater risk the economy faces from investing in high carbon content, "sub-prime" assets.

Sustainability and long-term value creation are closely linked. Business and markets cannot operate in isolation from society or the environment. We need a more long-term and responsible form of capitalism. We must develop sustainable capitalism.

We Need Sustainable Capitalism

What is sustainable capitalism?

A new type of capitalist economy modeled on living systems -- capable of regeneration and renewal and ecologically sound, socially just and economically sustainable.

Since the fall of Communism, capitalism has been embraced around the world, even China. But the United States, in its seductive pursuit of wealth, has developed and is spreading around the world a competitive, exploitive industrialized system that is dependent on fossil fuels, heavy metals, plastics and pesticides. While the United States extracts resources from the earth, it doesn't put anything back for future generations, he said. At the same time, the economic system, he insisted, has abandoned the importance of relationships and ethics.

In its place, the country needs to build a sustainable capitalist society whose goal is "triple bottom-line management" -- where the bottom line isn't economic but ecological and the management is driven by ecological integrity, social responsibly and economic viability.

Author of 'Sustainable Capitalism' indicts U.S. society for failing to preserve resources for future generations