Six Premises for Harmonizing Prosperity with the Environment
Fusing Free Market Capitalism and Environmentalism to Create a New Era
1998 by Richard Warren
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Premise One ‑ The Current Crisis of Success
Free Market Capitalism has celebrated its victory over Communism (actually over command economies run by centralized government bureaucracies). In a more subtle way, Capitalism is also celebrating a three hundred year “victory” over the environment. Humans may believe they have harnessed nature with technology. But that second “victory” is an illusion. Nature, which is really a set of complex chemical and physical interactions creating our environment, has fundamental rules which impose themselves one way or another. And though Capitalism has proven itself to be the superior economic system for creating material wealth, a fundamental flaw in the current Capitalist system has created a crisis of success—material wealth abounds, but the by‑products of its creation threaten to suffocate us. Commonly featured manifestations of this crisis of success are global warming, and other forms of environmental degradation.
Premise Two ‑
Identifying the Fundamental Flaw
The fundamental flaw in the operation of Capitalism today is that society's “true costs” (called “externalities” by experts in this field) and “true benefits” of various production and consumption patterns are not factored into the actual costs of production and the prices charged. For example, the car driver who pays for gasoline does not pay for the cost to society of releasing a greenhouse gas, and air‑fouling smog. The provider of that product also does not pay. But this environmental degradation costs society. Wastes pile up as the economic system fails to account for their accumulation, and fails to reward those who do not create wastes with their consumption and production choices. The consumers who decide to purchase environmentally helpful products, such as solar panels for their homes, have made a decision that benefits society. The environment will be a little less degraded because of that choice. But there is no economic reward to the purchaser or provider of that product. The Capitalist system runs on incentives. But there are no incentives to limit “externalities,” except bureaucratic regulations. There is a more Capitalistic way to approach the problem of “externalities.”
Premise Three ‑ The Mid Course Correction: Economic Activism
“Economic Activism” involves the government stepping in to make sure that society's costs and benefits are factored into price and profit. The main method of "Economic Activism" is to use the taxation system to assess costs for detrimental patterns of production and consumption, and to pay benefits to those who choose patterns of consumption and production beneficial to society.
This is not a new idea. In fact, government has given subsidies to industries offering products that generate “externalities.” The Oil Depletion Allowance was designed to encourage the petroleum industry to spend money to find new sources of oil. This is “Economic Activism” at work. Government decided that cheap, portable fuel was in the best interests of its citizens, because that fuel would accelerate material prosperity. The benefits to society as a whole were rewarded by government. But what was once a wise use of “Economic Activism” no longer makes sense, especially when a major argument against the widespread use of renewable energy sources is their lack of competitiveness in the marketplace. This is a particularly unfair argument when we realize the non‑renewable resources still enjoy many of their subsidies.
True Capitalists resist government involvement in the marketplace. But even Adam Smith knew that government cannot be completely neutral. Government has to step in and ensure fairness in the marketplace. If an industry can offer its products without paying the full costs of their production, that industry has an unfair advantage in the marketplace. And, if another industry offers benefits not quantified through market interactions, this is detrimental to society’s prosperity.
So far, the approach to “externalities” has been to assault industries producing them with bureaucratic regulations. This puts producers in conflict with the government, and is very un‑Capitalistic. Some regulations are essential. But we need to remember that government edicts were not the way Capitalism produced the wealth and prosperity of this era. (In fact, the command economies just defeated by Capitalism tried unsuccessfully to create wealth and prosperity using bureaucratic edicts.)
The conscious, systematic use of “Economic Activism” would serve to account for society's costs and benefits, ending the inherent moral conflict corporations face between profit and the public welfare. To maintain prosperity, they should be phased in, with outdated subsidies phased out. This would give industries and consumers a chance to adjust to the new era. Best of all, the incentives of the marketplace would now reward producers and consumers of the most environmentally beneficial products.
Premise Four ‑ The Coming Era: The Regenerating Biosphere
What constitutes a detrimental or beneficial mode of production and consumption? The goal of a “Regenerating Biosphere” answers that question. A “Regenerating Biosphere” is essentially an ecological perpetual motion machine, where wastes are recycled and energy is renewable. The current fashionable term for the idea of a clean environment in our modern society is “sustainable world.” I offer “Regenerating Biosphere” as a more exciting term to describe an inspiring future.
Perpetual motion machines are impossible because of the Second Law of Thermodynamics. So reference to an “ecological perpetual motion machine” is not technically correct. But there is a clean, external source of energy that can give the illusion of a perpetual motion machine. It is a huge nuclear fusion reactor positioned a safe 93 million miles away—the sun.
The “Regenerating Biosphere” era is nothing less than a new adaptation for humans. During the Hunting and Gathering era, humans wandered from place to place, taking what nature provided. The Agricultural era came from the revolutionary idea that humans would create their own food, and not wait for nature’s processes. This led to the birth of civilization. But the energy to fuel this new adaptation was either animal or human. Slavery, and other exploitive methods of harnessing human labor were an essential component. In the Industrial Revolution era, inanimate sources of energy were harnessed. This led to a huge increase in the shear power at the control of humans, for production, transport, and communication. But this has led to the evolution of the “fundamental flaw” mentioned in Premise Two.
The “Regenerating Biosphere” era will bring us full circle. By using the technological knowledge accumulated during the previous eras, including a rediscovery of nature’s processes that provided humans with sustenance for most of their existence as hunter‑gatherers, we can design a world that does not require reservoirs of human and animal power, or the extraction and burning of pieces of the planet, to sustain us.
In fact, consumption will become cyclical, and economists will design models to measure the efficiency of these consumption cycles to determine the health a of “Regenerating Biosphere” economy, rather than using the outdated Industrial Revolution measuring sticks, like Gross National Product. In the linear production/consumption pattern of the Industrial Revolution, a raw material is torn from the earth’s crust, shaped into a product, sold, utilized for its purpose, then discarded. It starts in the earth’s crust, and ends in the dump. In the cyclical production/consumption pattern of the “Regenerating Biosphere” era, the raw material is optimally discarded trash, molded into a product, sold, utilized for its purpose, but with the waste materials reused for a new product.
So the basic material elements of the planet are simply rearranged and reused. The sun provides most of the power for these rearrangements. (If new, clean sources of energy, like a clean nuclear fusion reactor that does not use more energy than it creates, are discovered, that would be a bonus. But they are not essential to arriving at the “Regenerating Biosphere” era.) To make the transition to the new era, two Industrial Revolution assumptions about energy and raw materials must change.
Premise Five ‑ Rethinking Energy: Decentralization
In one minute, enough solar energy hits the surface of the earth to supply the current world energy demands for an entire year (source: Solar Today magazine). But that energy is distributed in diffuse amounts all over the planet. During the Industrial Revolution era, huge power plants generated society’s energy, which was then beamed to the locations where it was needed. But those power plants make no sense in the “Regenerating Biosphere” era. Each structure should exist as its own power plant, with solar cells, windmills or any renewable energy system that makes sense in that particular area, set up to harness the solar energy available. That includes homes and apartment buildings. Excess power would then be stored at local, much smaller power plants. Solar energy could be used to create hydrogen fuel from water, right at the point of consumption, or even used to distill alcohol fuels from organic wastes.
Also, energy decentralization is more viable with the additional concept that the cleanest and most efficient way to produce energy is to save it. Smart energy systems using cheap computer power could be programmed to heat and air condition only the rooms in use. They could also mastermind all of the power‑generating functions of the building, determining when to store, or transfer excess power to the local power plant, or whether to tap the local power plant or the building’s own power reserves when extra power is needed.
Premise Six ‑ Rethinking Consumption: Wastes as Raw Materials
Conventional economic analysis examines a society and how thoroughly it utilizes its natural resources to determine how “advanced” that society is economically. But studies show it takes less energy to utilize materials already mined from the earth, through recycling technologies. And, studies also show that the recycling process creates more jobs, and more desirable jobs, than the extractive industries. With these two facts in mind, it is time to rethink the priorities for where our raw materials come from. We should consider the use of virgin, irreplaceable materials torn from the earth’s crust as an option to be avoided whenever possible. The more raw materials we can take from the trash pile, the closer we will get to the “Regenerating Biosphere” era.
There are two potential obstacles to pursuing the ideas outlined in this essay. If humanity fails to address overpopulation, or engages in a major, destructive military conflict, these ideas have no chance of ever succeeding.
Concluding Remarks: There is much more to say about these topics. Skeptics will disbelieve some of the assertions made here. And I admit, a number of these assertions challenge the ingrained assumptions of our Industrial Revolution culture. So this essay is intended as an overview.
It will take a book‑length examination of these ideas to document the facts stated, and offer enough support to have a chance of convincing skeptics. But here is a short discussion, digestible in one reading, that lays out the concepts, giving the reader a basic understanding of the ideas quickly.
(There is a similar, slightly more detailed treatment of these ideas posted on Richard Warren Field's Internet Column.)
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