Guest Room
As an investment banker with “another life” built over the years around my passion for the economics of nature, and now even more serious with my leadership of the study on ‘The Economics of Ecosystems and Biodiversity’, I am often asked how I reconcile my commercial “day-job” with my commitments to nature and our environment.
I give my stock reply: “I don’t reconcile them – I am a total capitalist”. And usually, the conversation ends there!
Sometimes however, a rare, curious mind will go on to ask the next question, some version of “So … you see nature as a form of capital? Now, that does deserve an answer!
At a recent environmental conference in Aspen, Colorado, I heard Prof. Richard Norgaard speak about “Economism”, the unstated but underlying ideology of economics. Perhaps that unstated ideology of economics can be summed up as “Money Matters Most”. But must we so confuse money with capital that we fixate solely on one dimension of capital, i.e. financial or man-made capital, and ignore human capital and natural capital?
Markets enable us to value goods and services that are traded in markets, such as air-tickets, ad-space, cars and houses. We value these things, we conserve them, and we would not voluntarily destroy them – whether they belong to us or to someone else. But what about public goods & services which belong to everybody and nobody? Where are the “markets” to buy and sell clean air, fresh water, law and order, communal harmony, species diversity? And are we not collectively guilty of assuming “no price = no value = no need to conserve “? For capitalism to work, it must be recognised in all its dimensions – Physical capital (financial assets, other man-made assets), Human capital (education, health, social fabric, etc) and Natural capital (freshwater, forests, biodiversity, etc).
This actually is not a new thought. It goes right back to Adam Smith’s concepts of “land, labour and capital”. But in his days, land and labour were plenteous, and if not, then colonisation expanded supply. Energy was not even a major factor of production. The scarce input was financial capital. How times have changed! We now need three-dimensional capitalism, we need more sophisticated economics. However, as it was then, enterprise must lead the way and seek new rules and behaviours, which will be regulated by governments, and will be observed, analysed, and summarized by some new-age Adam Smith – and perhaps written up as “An inquiry into the nature and causes of the three dimensional wealth of nations” ?
Pavan Sukhdev
October 2008
DISCLAIMER: Views expressed in this section are those of our guests and do not necessarily reflect the editorial position of the European Commission.
October 12th, 2008 at 11:54 pm #
‘When the last tree is cut down, the last fish eaten and the last stream poisoned, you will realize that you cannot eat money.’
Prophecy of the Cree Indians.
With respect, I find any mention to Adam Smith’s concepts of ‘land, labour and capital’ an offence to society, this type of political argument is OK if you are very rich, a so-called three-dimensional capital is just another PR hype.
You ask the question ‘Where are the “markets” to buy and sell clean air, fresh water, law and order, communal harmony, species diversity? And are we not collectively guilty of assuming “no price = no value = no need to conserve “? For capitalism to work, it must be recognised in all its dimensions – Physical capital (financial assets, other man-made assets), Human capital (education, health, social fabric, etc) and Natural capital (freshwater, forests, biodiversity, etc).’ Why do we need this obsession with ‘markets’ for clean air, fresh water, species diversity with out these we do not exist – it should be explicit that these are protect from greed (market forces), society needs to exist in harmony with itself and the environment. As for Human capital is shaped by enlighten Politicians and Trade Unions and Business usually follow grudgingly.
With respect we are not ‘collectively guilty of assuming no price = no value= no need to conserve’, this type of argument as been going on for to long, politician’s of all parties are guilty of not protecting – but allowing market forces take on an insidious identity, no matter what the cost to society (its people) or the environment. When will politician learn the Market Place is an unruly place and does nothing to further society or the environment?
‘However, as it was then, enterprise must lead the way and seek new rules and behaviours, which will be regulated by governments, and will be observed, analysed, and summarized by some new-age Adam Smith’. We have seen this in action with Genetically Engineered Food to be honest it scares the hell out of me.
These are just views from an extremely concerned citizen.
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My country: United Kingdom
August 27th, 2009 at 7:04 pm #
Dear Charles:
My English is not good enough to express myself properly BUT I CAN SAY VERY HIGH….. VERY WELL SAID , YES. I TOTALLY AGREE WITH YOU.
Unfortunatelly for us, there are lots of people does not understand what is happening round us yet with our Ecosystems and Biodiversity.Being positive, this is changing. We are not bling nor stupid any more.
We can see everyday the consecuencies of nature´s answer to our long term devastating policies and mean vision of our futures resources and our lack of responsability for them.
I only wanted to thank and to share my agreement with your comments Charles.
We forget Nature is like a mather, we ask and ask and ask, and she always gives us whatever we think we need . But Now, we have to be responsable for what we have done with her tools . WE forget Nature is in our side and we are part of it too, we are committing suicide in long terms. What is meaning of economics or markets if we see other side to drough, water supplying problems, to storms which destroy towns and cities, to floods which destroys countries, etc. etc..? Are profitable to markets or governments all these desasters? Let´s open our eyes and minds, please.
With Warmest Regards
Sönam Chödrom
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My country: Spain
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