Review of the Book

Natural Capitalism: Creating the Next Industrial Revolution
Co-authored by Paul Hawken, Amory B. Lovins
and L. Hunter Lovins

Vivian Hutchinson

[Reviewed by Vivian Hutchinson. Reprinted from the CED-Network-Digest, 22 February, 2000, Vol. l, No. 165. Originally posted in The Jobs Letter, No. 118, 18 February, 2000]

In the long-anticipated new book Natural Capitalism, by Paul Hawken, and Amory and Hunter Lovins, the authors present a manifesto that asks us to transform our fundamental notions about how business is done in this new century.

The book charges traditional capitalism with always neglecting to assign value to the natural resources and ecosystem services that make all economic activity, and all life, possible. Natural capitalism, in contrast, asks us to take a proper accounting of these costs. As a first step toward a solution to environmental loss, it advocates resource productivity -- doing more with less. The book also shows how industry can redesign itself on biological models that result in zero waste, and recommends more investment in sustaining and expanding our environmental capital. It contains numerous examples of innovative and profitable businesses which are putting these principles into practice -- while also gaining a decisive competitive advantage.

Also woven throughout the book is the consist ent message: Moving the economy toward resource productivity can increase overall levels and quality of employment, while drastically reducing the impact we have on the environment. Natural Capitalism argues that there is no justification for the waste of people, through unemployment, when there is also so much urgent and good work to do.

"We cannot by any means --monetarily, governmentally, or charitably --create a sense of value and dignity in people's lives when we are simultaneously creating a society that clearly has no need for them ..." Natural Capitalism

"Just as overproduction can exhaust topsoil, so can over-productivity exhaust a workforce. We are working smarter, but carrying a laptop from airport to meeting to a red-eye flight home in an exhausting push for greater performance may now be a problem, not the solution ..." Natural Capitalism

With nearly ten thousand new people arriving on earth every hour, a new and unfamiliar pattern of scarcity is now emerging. At the beginning of the industrial revolution, labour was overworked and relatively scarce (the population was about one-tenth of current totals), while global stocks of natural capital were abundant and unexploited. But today the situation has been reversed: After two centuries of rises in labour productivity, the liquidation of natural resources at their extraction cost rather than their replacement value, and the exploitation of living systems as if they were free, infinite, and in perpetual renewal, it is people who have become an abundant resource, while nature is becoming disturbingly scarce. Because of the profligate nature of current industrial processes, the world faces three crises that threaten to cripple civilization in the twenty-first century: the deterioration of the natural environment; the ongoing dissolution of civil societies into lawlessness, despair, and apathy; an d the lack of public will needed to address human suffering and social welfare.

All three problems share waste as a common cause.

Learning to deal responsibly with that waste is a common solution, one that is seldom acknowledged yet increasingly clear. There is nothing original in this record of national waste; what is novel is that each of the three types of waste is presented as interlocking symptoms of one problem: using too many resources to make too few people more productive. This increasingly expensive industrial formula is a relic of a past that no longer serves a present or a future.

In society, waste takes the form of people's lives. According to the International Labour Organization in Geneva, nearly a billion people (about 30 percent of the world's labour force) either cannot work or have such marginal and menial jobs that they cannot support themselves or their families. In China, it is predicted that the number of un- and underemployed will top 200 million by the year 2000, a situation that is already leading to protests, addicted youth, heroin use, drug wars, violence, and rising criminality. Globally, rates of unemployment and disemployment have been rising faster than those for employment for more than 25 years. For example, unemployment in Europe in 1960 stood at 2 percent; in 1998 it was nearly 11 percent. In many parts of the world, it has reached between 20 and 40 percent. In the United States, in 1996, a year when the stock market hit new highs, the Fordham University "index of social health" did not.

The index, which tracks problems like child abuse, teen suicide, drug abuse, high-school dropout rates, child poverty, the gap between rich and poor, infant mortality, unemployment, crime, and elder abuse and poverty, had fallen 44 percent below its 1973 high.

The United States is proud of its relatively low 4.2 percent unemployment rate (1999), and should be. Yet official U.S. figures mask a more complex picture. According to author Donella Meadows, of the 127 million people working in the United States in 1996, 38 million worked part-time, and another 35 million, though working, weren't paid enough to support a family. The official unemployed rolls of 7.3 million do not count an additional 7 million people who are discouraged, forcibly retired, or working as temps. Of those counted as employed, 19 million people worked in retail and earned less than $10,000 per year, usually without any type of health or retirement benefits.

Unemployment percentages also mask the truth about the lives of inner-city residents. In When Work Disappears, W. Julius Wilson cites fifteen predominantly black neighborhoods in Chicago, with an overall population of 425,000. Only 37 percent of the adults in these areas are employed. While there are many reasons for the high rates of unemployment, the dominant cause is the disappearance of jobs: Between 1967 and 1987 Chicago lost 360,000 manufacturing jobs, and New York over 500,000. When reporting corporate restructuring, the media focuses on jobs lost. When covering the inner city, the emphasis is more on welfare, crime, and drugs; the attrition of meaningful work is rarely mentioned. The irony of urban America is that fifty years after World War II, parts of Detroit, Philadelphia, and Newark look as if they were bombed, while Dresden, London, and Berlin are livable and bustling.

People are often spoken of as being a resource -- every large business has a "human resources" department --but apparently they are not a valuable one. The United States has quietly become the world's largest penal colony. (China ranks second --most Americans have probably bought or used something made in a Chinese prison.) Nearly 5 million men in the United States are awaiting trial, in prison, on probation, or on parole. In 1997 alone, the number of inmates in county and city jails increased by 9 percent. One out of every twenty-five men in America is involved with the penal or legal system in some way. Nearly one of every three black men in his twenties is in the correctional system. Is there a connection between the fact that 51 percent of the prison population is black and that 44 percent of young black men grow up in poverty? While crime statistics have been dropping dramatically since 1992 due to a combination of economic growth, changing demographics, and more effective policing, we are still so inure d to criminality that rural counties seek new prison construction under the rubric of "economic development." Indeed, despite the drop in crime, during the period 1990- 94, the prison industry grew at an annual rate of 34 percent, while crime and crime-related expenses rose to constitute an estimated 7 percent of the United States economy.

Is this level of crime really caused by Colombian drug lords, TV violence, and lack of family values? Is there not something more fundamentally amiss in a society that stores so many people in concrete bunkers at astounding costs to society? (There is no cost difference between incarceration and an Ivy League education; the main difference is curriculum.) While we can reasonably place individual blame on each drug-user, felon, and mugger, or anyone who violates civil and criminal law, we should also ask whether a larger pattern of loss and waste may be affecting our nation. Our right to assign individual responsibility should not make us blind to a wider, more comprehensive social cause and effect.

In a world where a billion workers cannot find a decent job or any employment at all, it bears stating the obvious: We cannot by any means --monetarily, governmentally, or charitably -- create a sense of value and dignity in people's lives when we are simultaneously creating a society that clearly has no need for them. If people do not feel valuable, they will act out society's dismissal of them in ways that are manifest and sometimes shocking. Robert Strickland, a pioneer in working with inner-city children, once said, "You can't teach algebra to someone who doesn't want to be here." By this he meant that his kids didn't want to be "here" at all, alive, anywhere on earth. They try to speak, and when we don't hear them, they raise the level of risk in their behavior --turning to unprotected sex, drugs, or violence --until we notice. By then a crime has usually been committed, and we respond by building more jails, and calling it economic growth. Social wounds cannot be salved nor the environment "saved" as long as people cling to the outdated assumption of classical industrialism that the summum bonum of commercial enterprise is to use more natural capital and fewer people.

When society lacked material well-being and the population was relatively small, such a strategy made sense. Today, with material conditions and population numbers substantially changed, it is counterproductive. With respect to meeting the needs of the future, contemporary business economics is the equivalent of pre-Copernican in its outlook. The true bottom line is this: A society that wastes its resources wastes its people and vice versa. And both kinds of waste are expensive. But it is not only the poor who are being "wasted." In 1994, several hundred senior executives from Fortune 500 companies were asked for a show of hands based on the following questions: Do you want to work harder five years from now than you are today? Do you know anyone who wants to work harder than they are now? Do you know anyone who is or are you yourself spending too much time with your children? No one raised a hand. Just as overproduction can exhaust topsoil, so can over-productivity exhaust a workforce. The assumption that greater productivity would lead to greater leisure and well-being, while true for many decades, may no longer be valid. In the United States, those who are employed (and presumably becoming more productive) find they are working one hundred to two hundred hours more per year than people did twenty years ago.

From an economist's point of view, labour productivity is a Holy Grail, and it is unthinkable that continued pursuit of taking it to ever greater levels might in fact be making the entire economic system less productive. We are working smarter, but carrying a laptop from airport to meeting to a red-eye flight home in an exhausting push for greater performance may now be a problem, not the solution.

Between 1979 and 1995, there was no increase in real income for 80 percent of working Americans, yet people are working harder today than at any time since World War II. While income rose 10 percent in the fifteen-year period beginning in 1979, 97 percent of that gain was captured by families in the top 20 percent of income earners. The majority of families, in fact, saw their income decline during that time. They're working more but getting less, in part because a larger portion of our income is paying to remedy such costs of misdirected growth as crime, illiteracy, commuting, and the breakdown of the family. At the same time, we continue to overuse energy and resources -- profligacy that will eventually take its toll in the form of even lower standards of living, higher costs, shrinking income, and social anxiety.

While increasing human productivity is critical to maintaining income and economic well-being, productivity that corrodes society is tantamount to burning furniture to heat the house. Resource productivity presents business and governments with an alternative scenario: making radical reductions in resource use but at the same time raising rates of employment. Or, phrased differently: Moving the economy toward resource productivity can increase overall levels and quality of employment, while drastically reducing the impact we have on the environment. Today companies are firing people, perfectly capable people, to add one more percentage point of profit to the bottom line. Some of the restructuring is necessary and overdue. But greater gains can come from firing the wasted kilowatt-hours, barrels of oil, and pulp from old- growth forests, and hiring more people to do so. In a world that is crying out for environmental restoration, more jobs, universal health care, more educational opportunities, and better and affordable housing, there is no justification for this waste of people.