Several prominent economists weigh in on our March/April cover story, Paul Hawken's "Natural Capitalism"; one reader takes on hypercar hyperbole; a liberal explains why he is a member of the NRA; and George Carlin doesn't play well in Arizona. Also: Ludmilla Pavlichenko, the world's most dangerous woman.
Environmental economics has been an established branch of economics for perhaps 30 years. It's full of writings on such topics as the proper pricing of natural resources, the use of market mechanisms to control pollution, the general problem of externalities, and the limitations of the GDP as a measure of human welfare. I therefore read Paul Hawken's prescriptions ("Natural Capitalism," March/April) with a distinct sense of déjà vu.
Hawken's writing is marred by misunderstandings. To take just one example, it is true that expenditures on home-building and on recovery from a mugging both count toward the GDP. It doesn't follow from this, however, that a rise in GDP generally fails to make people better off. The simple fact is that when the GDP grows, home-building increases more than muggings do, and most people are better off.
The serious problem is not with the accounting but rather that, after 30 years of talk, writing, and small-scale experimenting with market solutions to environmental problems, it is not clear such solutions have much to offer. Granted, large increases in energy prices stimulate conservation. But tradable pollution rights, organic agriculture, recycling, debt-for-nature swaps in the Third World, and so on hold very little prospect of ever having much to do with environmental problems on a large scale. Old-fashioned laws, treaties, and regulations, on the other hand -- such as speed limits, the Montreal protocols banning CFCs, the Clean Water and Clean Air acts, and the Endangered Species Act -- surely have to be credited with such environmental progress as we have, in fact, made over the past 30 years.
Laws and regulations may be inefficient, but they are, comparatively speaking, simple and clear. They are also often easier to monitor and enforce than market schemes. For these reasons, they remain the weapon of choice for serious environmental policy.
JAMES K. GALBRAITH
LBJ SCHOOL of PUBLIC AFFAIRS
UNIVERSITY of TEXAS at AUSTIN
If Hawken would take time out from his potshots to listen to a few economists, he would discover that most of them are actually on his side.
Let me quote from the textbook I used teaching Economics 1 at Stanford last year: "When a firm pollutes a river, it uses up some of society's resources just as surely as when it burns coal. However, if the firm pays for coal but not for the use of clean water, it is to be expected that management will be economical in its use of coal and wasteful in its use of water.... Because no one pays for the use of dissolved oxygen in a public waterway, that oxygen will be used wastefully." The textbook's answer -- the same answer given in just about all textbooks -- is to make people pay for the burdens they impose on the environment. Isn't that exactly Hawken's point?
A number of economists have gone beyond analysis to advocacy. Recently a group called Redefining Progress circulated a letter advocating emission taxes to limit global warming. The letter was sponsored by Robert Solow and Kenneth Arrow (Nobel laureates); Dale Jorgenson (investment and growth expert); William Nordhaus (environmental economist); and yours truly.
I guess the letter's sponsors -- and the more than 2,000 economists who signed it -- forgot that economists are not supposed to understand that the environment is a scarce resource.
MASSACHUSETTS INSTITUTE of TECHNOLOGY
I read "Natural Capitalism" as I traveled through the Northeast corridor on Amtrak, looking out the window at mile after mile of decaying midcentury industrial infrastructure, now the detritus of a global economy.
What a strange juxtaposition! Hawken prescribes a capitalism informed by ecological knowledge, guided by environmental ethics, delivered by enlightened entrepreneurs -- a "new resource revolution" fueled by ecological design.
I have no quarrel with the logic of natural capitalism, but I wonder whether such a change will occur without extraordinary perceptual shifts. Natural resource extraction must be transformed from a multinational plunder and a consumer grab bag to a deliberate, wise, and ecological approach to the commons.
Natural capitalism is meaningless without ecological citizenship. And the path to ecological citizenship entails a broad, integrated view of the commons: one that is ecological (the ecosystem is the commons), political (it is subject to collective decisions and personal actions), psychological (one must perceive and comprehend its existence), and ultimately ethical -- one must take responsibility for it.
AUTHOR, ECOLOGICAL IDENTITY
ANTIOCH NEW ENGLAND GRADUATE SCHOOL
Paul Hawken makes a good case that we can increase the efficiency of our economy by modeling it on living systems, and by including natural capital on the balance sheet.
But he seems to equate the good life with productive and profitable throughput of material flows without waste. To achieve the dignity of work, stable communities, and healthy relationships between society and the natural world, however, will require more than the increased efficiency of our economic system. The prodigious waste that Hawken describes is, in part, driven by the logic of capitalism -- efficient or otherwise -- which can only grow by generating hunger for goods and services we do not need.
Stable human communities require positive and engaged attention to human health and nutrition, eco-nomic security, human rights, reasonable levels of social and individual autonomy, elimination of violence, and constructive expression of identity. Sustainability requires healthy respect for activities such as raising children, taking care of old people, good conversation, laughter, and solitude, which are also gifts of creation. Such activities lie outside the logic of capital accumulation.
As important as their contribution might be, it will take more than smart businessmen to help us make the needed changes in our economy. It will require asking who the economy is for, as well as what it is for.
CARL ANTHONY, PRESIDENT
EARTH ISLAND INSTITUTE
SAN FRANCISCO, CALIF.
Paul Hawken implicitly poses, but does not confront, the following problem: In our society two systems exist side by side -- worse, intertwined. One is the system of ecology; the other, that of economics, e.g., capitalism.
The requirements of these systems are often at variance. Ecology requires that outputs not endanger the biosphere; economics requires that outputs yield profits.
To achieve a compatibility of systems requires: (1) a means of blocking outputs that endanger the bio-sphere -- that is, a means of policing all economic systems; and (2) a means of reconciling the huge differences in ecological needs and economic capabilities of the world's nation-states.
No such means exist today nor are any likely to come into being in the near future. Therefore, I expect ever-more serious problems of both an ecological and an economic kind. The hope is that this conflict will produce the needed remedies. The realistic expectation is for a time of increasingly severe dysfunction on both fronts.
THE NEW SCHOOL FOR SOCIAL RESEARCH
NEW YORK, N.Y.
Paul Hawken's analysis is based on a linguistic confusion between two meanings of the word "waste," which he defines as "money spent where the buyer gets no value," citing trash -- "newspaper, paint cans, potato peels, cigarette butts, chicken bones," etc.
Hawken confuses (a) that which can be avoided at no cost, simply by working smarter, with (b) that which is not avoidable, but which is called "waste" nevertheless, such as chicken bones. It is very difficult to eat chicken without producing bones.
The human body serves as an example. Our excrement, urine, carbon dioxide, and even the heat we produce are called "human waste." But by emitting them we do not "waste" them; they are a necessary byproduct of living. Anyone who calculates the cost of dealing with sewage and treats that as an avoidable cost errs grievously.
Another crucial error in Hawken's thinking is calculating the negative effects of individuals and groups on other individuals and groups -- for example, the "negative externalities" of industries that put harmful pollution into the air and water -- and stopping there. One must also take into account positive externalities. Indeed, the positive externalities generally outweigh the negative, as proven by the fact that humanity progresses in every material sense, living longer and with more wealth with every passing decade. The positive externalities are omitted from Hawken's article, which is why he offers a negative assessment of our situation, when, in fact, everything is coming up roses.
JULIAN L. SIMON
UNIVERSITY OF MARYLAND
COLLAGE PARK, MD.
While I generally agree with Paul Hawken, I have to ask: What will the "hypercar" do to ease congestion in our cities? We have seen many times in the past that anything that facilitates driving creates more, not less, congestion. In effect, the hypercar would negate the restraint that would be brought about by another of Hawken's favorite ideas, carbon taxes. The lesser of evils -- which is what the hypercar is -- is rarely a good solution to a problem, as the last election showed.
LOS ANGELES, CALIF.
Paul Hawken responds: I deeply appreciate Paul Krugman's work on global warming, tax shifts, and other critical issues. But I believe he and James Galbraith are confused about "environmental economics." Natural capitalism is about ecological economics, including resource flows and resource productivity; ecosystem services as a limiting factor (not resources, as Galbraith implies); and using the waste of the current system to pay for the transition to the next. Environmental economics still sees the environment as external to the economy, essentially another input. (Julian Simon's narrow logic is the result of such thinking.) Ecological economics is cross-disciplinary, incorporating the work of biologists, physicists, and other scientists. It points out the obvious: that the economy is an output of the environment, that economic outcomes are always affected by living systems. Until cyclicality, entropy, and other basic concepts regarding planetary functions are integrated into modern economic teachings, those teachings are inadequate.
I agree with Galbraith that the measures proposed by environmental economics have failed and will continue to fail. I propose a tax shift -- a market shift in the trillions of dollars -- not the micromanagement or rainforest marketing he refers to. It's the system that needs changing, not the pieces. His assertions about the GDP lack supporting data. My point: We don't know if the GDP is giving us good information or not because it is a hodgepodge of self-canceling numbers which belong in two columns, not one. As to laws, they work to stop the most egregious acts, but do nothing to re- imagine and redesign the system.
Robert Heilbroner goes to the very heart of the relationship between industrial and living systems. He is absolutely correct that the existing industrial order will dead-end. The question is: What will replace it? Can we design and build new industrial systems that not only sustain flows of natural capital services, but also enhance them? That is where the excitement is, and that is where there are breakthroughs, innovations, and a future we can all work toward.
Julian Simon is the mail-order economist from the University of Maryland who has written that we can make copper out of other metals, that population can grow infinitely, and that all environmental trends are positive. He is right about chicken bones, though. No bones, no chicken.
To Mitchell Thomashow and Carl Anthony: Natural capital(ism) is only part of an overall solution to social and environmental ills. We can accomplish a lot of good in the areas of production, resource policy, and tax policy, and we shouldn't overlook these possibilities until some measure of ecological citizenship is reached by a plurality.
I agree with Richard Risemberg. A new type of car cannot fix the problems cars have created in terms of sprawl, waste, congestion -- the "geography of nowhere," in James Kunstler's memorable phrase. That is why I also applaud the work of the "new urbanists," who are designing cars right out of our lives. Again, it is the possibility of systemic change that is exciting, not a particular tax, technology, or company. If I'm not mistaken, these changes are beginning to form the rough outline of an extraordinarily different economy, one that will surprise all of us.
I had a very tenuous connection to Pavlichenko around '45. My aunt was visiting, and at one point I lifted her handbag; it nearly toppled me with its unexpected weight. I said, "What the hell do you have in here, a .45?" That's exactly what she had -- a Colt .45 automatic. Her husband was an organizer for the United Electrical, Radio, and Machine Workers at the Colt armament plant in Hartford, Conn., which made .45s issued for our GIs. He was designated to present the pistol to Pavlichenko at a war-bond rally in Madison Square Garden that night.
I have no idea what Pavlichenko did with the gun -- probably used it as a paperweight. Our guys used to say it was such a notoriously inaccurate weapon that the most effective way to employ it was to throw it at the enemy's head.
ROGER P. KOVACH
LINE OF FIRE Barbara Grizzuti Harrison's essay on her talks with NRA lobbyist Tanya Metaksa ("Cease Fire," March/April) was welcome. I agree with her that the NRA is reminiscent of a cult. Nonetheless, I'm an NRA member.
Why we, the hated "liberals" of so many NRA diatribes, have taken up the notion of banning guns is something I have never understood. Like so many other material things, guns are dangerous when ill-used, and banning them will merely create an illegal market. Right now, there are basic federal laws against gun purchase and possession by minors, convicted felons, and those declared mentally incompetent by a court. Whom else should we restrict, and why?
The NRA's late former president Harlon Carter once suggested creating concentration camps for anyone merely suspected of involvement in illegal drug use. Somewhere there lurks a similar specimen of authoritarian who thinks we ought to do the same with gun owners, and that is why I will maintain a cautious membership in the NRA. I refuse, however, to support the NRA's PAC, the Institute for Legislative Action, as it provides support almost exclusively to conservative Republicans.
As for the jamming problem Harrison had with the .22 semiautomatic: Go back and try the .38 revolver. Revolvers don't jam.
STEPHEN M. JONES
CAVE CREEK, ARIZ.
IT'S A JUNGLE, GEORGE The recent interview with George Carlin ("Outspoken," March/April) was a waste of good space. While other pieces in the issue dealt with people who try to make a difference for good or for ill, such as Planned Parenthood's Gloria Feldt and the NRA's Tanya Metaksa (respectively), here was this interview with a man who doesn't vote, doesn't seem to be politically involved in any way, rails against private property yet owns a BMW and a flotation tank, and seems to be as "whiny, sarcastic, narcissistic, self-indulgent, cold, and bloodless" as the baby boomers in his jokes. Other than Carlin's hopes for Mickey Mouse's demise, there was little redeeming in the piece.
REED L. WADLEY
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