Natural capitalism
Encyclopedia
Natural Capitalism: Creating the Next Industrial Revolution is a 1999 book co-authored by Paul Hawken
, Amory Lovins
and Hunter Lovins
. It has been translated into a dozen languages and was the subject of a Harvard Business Review
summary.
In Natural Capitalism the authors describe the global economy as being dependent on natural resource
s and ecosystem services that nature provides. Natural Capitalism is a critique of traditional "Industrial Capitalism", saying that the traditional system of capitalism "does not fully conform to its own accounting principles. It liquidates its capital and calls it income. It neglects to assign any value to the largest stocks of capital it employs- the natural resources and living systems, as well as the social and cultural systems that are the basis of human capital."
Natural capitalism recognizes the critical interdependency between the production and use of human-made capital and the maintenance and supply of natural capital. The authors argue that only through recognizing this essential relationship with the Earth's valuable resources can businesses, and the people they support, continue to exist.
Their fundamental questions are: What would an economy look like if it fully valued all forms of capital? What if an economy were organized not around the abstractions of neoclassical economics
and accountancy
but around the biological realities of nature? What if Generally Accepted Accounting Principles
recognized natural and human capital not as a free amenity in inexhaustible supply but as a finite and integrally valuable factor of production? What if in the absence of a rigorous way to practice such accounting, companies started to act as if such principles were in force.
The Authors of Natural Capitalism say that these choices are possible and "such an economy would offer a stunning new set of opportunities for all of society, amounting to no less than the next industrial revolution. The book has many practical suggestions for companies interested in a sustainable future.
According to the authors, the "next industrial revolution" depends on the espousal of four central strategies: "the conservation of resources through more effective manufacturing processes, the reuse of materials as found in natural systems, a change in values from quantity to quality, and investing in natural capital, or restoring and sustaining natural resources".
While traditional industrial capitalism primarily recognizes the value of money
and goods as capital
, Natural Capitalism extends recognition to natural capital
and human capital
. Problems such as pollution
and social injustice
may then be seen as failures to properly account for capital, rather than as inherent failures of capitalism
itself.
The fundamental assumptions of Natural Capitalism are as follows:
1) The limiting factor to future economic development is the availability and
functionality of natural capital
, in particular, life-supporting services that have
no substitutes and currently have no market value.
2) Misconceived or badly designed business systems, population growth, and
wasteful patterns of consumption
are the primary causes of the loss of natural
capital, and all three must be addressed to achieve a sustainable economy.
3) Future economic progress can best take place in democratic, market-based
systems of production and distribution in which all forms of capital are fully
valued, including human, manufactured, financial, and natural capital.
4) One of the keys to the most beneficial employment of people, money, and the
environment is radical increases in resource productivity
.
5) Human welfare is best served by improving the quality and flow of desired
services delivered, rather than by merely increasing the total dollar flow.
6) Economic and environmental sustainability
depends on redressing global
inequities of income and material well-being.
Paul Hawken
Paul Hawken is an environmentalist, entrepreneur, and author.-Life:Paul Hawken had a Swedish grandmother and a Scottish grandfather with a farm. His father worked at UC Berkeley...
, Amory Lovins
Amory Lovins
Amory Bloch Lovins is an American environmental scientist and writer, Chairman and Chief Scientist of the Rocky Mountain Institute. He has worked in the field of energy policy and related areas for four decades...
and Hunter Lovins
Hunter Lovins
L. Hunter Lovins is an author and a promoter of sustainable development for over 30 years, is president of Natural Capitalism Solutions, a 5013 non-profit in Longmont, Colorado and the Chief Insurgent of the Madrone Project...
. It has been translated into a dozen languages and was the subject of a Harvard Business Review
Harvard Business Review
Harvard Business Review is a general management magazine published since 1922 by Harvard Business School Publishing, owned by the Harvard Business School. A monthly research-based magazine written for business practitioners, it claims a high ranking business readership among academics, executives,...
summary.
In Natural Capitalism the authors describe the global economy as being dependent on natural resource
Natural resource
Natural resources occur naturally within environments that exist relatively undisturbed by mankind, in a natural form. A natural resource is often characterized by amounts of biodiversity and geodiversity existent in various ecosystems....
s and ecosystem services that nature provides. Natural Capitalism is a critique of traditional "Industrial Capitalism", saying that the traditional system of capitalism "does not fully conform to its own accounting principles. It liquidates its capital and calls it income. It neglects to assign any value to the largest stocks of capital it employs- the natural resources and living systems, as well as the social and cultural systems that are the basis of human capital."
Natural capitalism recognizes the critical interdependency between the production and use of human-made capital and the maintenance and supply of natural capital. The authors argue that only through recognizing this essential relationship with the Earth's valuable resources can businesses, and the people they support, continue to exist.
Their fundamental questions are: What would an economy look like if it fully valued all forms of capital? What if an economy were organized not around the abstractions of neoclassical economics
Neoclassical economics
Neoclassical economics is a term variously used for approaches to economics focusing on the determination of prices, outputs, and income distributions in markets through supply and demand, often mediated through a hypothesized maximization of utility by income-constrained individuals and of profits...
and accountancy
Accountancy
Accountancy is the process of communicating financial information about a business entity to users such as shareholders and managers. The communication is generally in the form of financial statements that show in money terms the economic resources under the control of management; the art lies in...
but around the biological realities of nature? What if Generally Accepted Accounting Principles
Generally Accepted Accounting Principles
Generally Accepted Accounting Principles refer to the standard framework of guidelines for financial accounting used in any given jurisdiction; generally known as accounting standards...
recognized natural and human capital not as a free amenity in inexhaustible supply but as a finite and integrally valuable factor of production? What if in the absence of a rigorous way to practice such accounting, companies started to act as if such principles were in force.
The Authors of Natural Capitalism say that these choices are possible and "such an economy would offer a stunning new set of opportunities for all of society, amounting to no less than the next industrial revolution. The book has many practical suggestions for companies interested in a sustainable future.
According to the authors, the "next industrial revolution" depends on the espousal of four central strategies: "the conservation of resources through more effective manufacturing processes, the reuse of materials as found in natural systems, a change in values from quantity to quality, and investing in natural capital, or restoring and sustaining natural resources".
While traditional industrial capitalism primarily recognizes the value of money
Money
Money is any object or record that is generally accepted as payment for goods and services and repayment of debts in a given country or socio-economic context. The main functions of money are distinguished as: a medium of exchange; a unit of account; a store of value; and, occasionally in the past,...
and goods as capital
Capital (economics)
In economics, capital, capital goods, or real capital refers to already-produced durable goods used in production of goods or services. The capital goods are not significantly consumed, though they may depreciate in the production process...
, Natural Capitalism extends recognition to natural capital
Natural capital
Natural capital is the extension of the economic notion of capital to goods and services relating to the natural environment. Natural capital is thus the stock of natural ecosystems that yields a flow of valuable ecosystem goods or services into the future...
and human capital
Human capital
Human capitalis the stock of competencies, knowledge and personality attributes embodied in the ability to perform labor so as to produce economic value. It is the attributes gained by a worker through education and experience...
. Problems such as pollution
Pollution
Pollution is the introduction of contaminants into a natural environment that causes instability, disorder, harm or discomfort to the ecosystem i.e. physical systems or living organisms. Pollution can take the form of chemical substances or energy, such as noise, heat or light...
and social injustice
Social injustice
Social injustice is a concept relating to the claimed unfairness or injustice of a society in its divisions of rewards and burdens and other incidental inequalities...
may then be seen as failures to properly account for capital, rather than as inherent failures of capitalism
Capitalism
Capitalism is an economic system that became dominant in the Western world following the demise of feudalism. There is no consensus on the precise definition nor on how the term should be used as a historical category...
itself.
The fundamental assumptions of Natural Capitalism are as follows:
1) The limiting factor to future economic development is the availability and
functionality of natural capital
Natural capital
Natural capital is the extension of the economic notion of capital to goods and services relating to the natural environment. Natural capital is thus the stock of natural ecosystems that yields a flow of valuable ecosystem goods or services into the future...
, in particular, life-supporting services that have
no substitutes and currently have no market value.
2) Misconceived or badly designed business systems, population growth, and
wasteful patterns of consumption
Consumption (economics)
Consumption is a common concept in economics, and gives rise to derived concepts such as consumer debt. Generally, consumption is defined in part by comparison to production. But the precise definition can vary because different schools of economists define production quite differently...
are the primary causes of the loss of natural
capital, and all three must be addressed to achieve a sustainable economy.
3) Future economic progress can best take place in democratic, market-based
systems of production and distribution in which all forms of capital are fully
valued, including human, manufactured, financial, and natural capital.
4) One of the keys to the most beneficial employment of people, money, and the
environment is radical increases in resource productivity
Resource productivity
Resource productivity is the quantity of good or service that is obtained through the expenditure of unit resource. This can be expressed in monetary terms as the monetary yield per unit resource....
.
5) Human welfare is best served by improving the quality and flow of desired
services delivered, rather than by merely increasing the total dollar flow.
6) Economic and environmental sustainability
Sustainability
Sustainability is the capacity to endure. For humans, sustainability is the long-term maintenance of well being, which has environmental, economic, and social dimensions, and encompasses the concept of union, an interdependent relationship and mutual responsible position with all living and non...
depends on redressing global
inequities of income and material well-being.
Other editions of Natural Capitalism
- Zi4 ran2 zi1 ben3 lun4, Chinese (simplified characters) edition of Natural Capitalism (2000, Shanghai Popular Science Press) ISBN 7-5427-1846-0
- Capitalismo naturale (2001, Edizione Ambiente, Milano), ISBN 88-86412-80-0
- Japanese edition of Natural Capitalism (2001, Nikkei, Tokyo) ISBN 4-532-14871-5
- Chinese (complex characters) edition of Natural Capitalism (2002, CommonWealth, Taipei) ISBN 957-0395-61-3
- Öko-Kapitalismus: Die industrielle Revolution des 21. Jahrhunderts (2002, Riemann, München) ISBN 978-1400039418
- Loodus-kapitalism: uue tööstusrevolutionsiooni algus (2003 [Estonian]) ISBN 9985-62-131-X
- Capitalismo Natural (Editora Cultrix, São Paulo), ISBN 85-316-0644-6
- Natural Capitalism: Comment réconcilier économie et environnement (2008, Scali, Paris) ISBN 978-2-35012-221-2
- Korean edition of Natural Capitalism (~2011, Gongjon, Seoul)
See also
- Climate CapitalismClimate CapitalismClimate Capitalism: Capitalism in the Age of Climate Change is a 2011 book by L. Hunter Lovins and Boyd Cohen. It presents positive stories and examples of how profit-seeking companies are helping to save the planet...
- Merchants of DoubtMerchants of DoubtMerchants of Doubt is a 2010 book by the American science historians Naomi Oreskes and Erik M. Conway. It identifies parallels between the climate change debate and earlier controversies over tobacco smoking, acid rain and the hole in the ozone layer...
- Climate change controversy
- Climate change policy of the United States
- Media coverage of climate changeMedia coverage of climate changeMedia coverage of climate change has significant effects on public opinion on climate change, as it mediates the scientific opinion on climate change that the global instrumental temperature record shows increase in recent decades and that the trend is caused mainly by human-induced emissions of...
External links
- Book Excerpts and Downloadable Chapters
- Natural Capitalism — Mother JonesMother Jones (magazine)Mother Jones is an American independent news organization, featuring investigative and breaking news reporting on politics, the environment, human rights, and culture. Mother Jones has been nominated for 23 National Magazine Awards and has won six times, including for General Excellence in 2001,...
article on book. - Global List of Natural Capitalism related Organizations