Introduction

Jonathan Porritt’s book, Capitalism, as if the world matters, was published in 2005, so why review it in 2007? I think it is too important not to be reviewed and I have seen only brief reviews which don’t address the central question. How can we make capitalism part of the solution of sustainability.

Porritt provides a very detailed explanation of the crisis we’re facing and the ‘biological imperative’ to learn to live sustainably on this planet. This is an ‘absolute imperative in that it is determined by the laws of nature and, hence, is non-negotiable.’ He counters both the denial of the crisis and our complacency with a clear exposition of the evidence.

This he notes comes from government departments, the UN, other international agencies and independent academics, rather than non-governmental organisations (NGOs). How can these official sources be subverted to ‘falsify information, peddle untruths or generally seek to play games with the public, by exaggerating the seriousness of today’s environmental dilemmas’ he asks.

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....such a powerful book

What makes Capitalism, as if the world matters such a powerful book is not just the comprehensive evidence and the coherent arguments. It is his willingness to lay bare not only capitalism, but the role of fundamentalists in welcoming environmental destruction. Porritt addresses a European readership with debates modulated through the centrist, consensus politics across most of Europe. He thinks we seriously underestimate the combination of neo-conservative economic policies, aggressive unilateralism and the “mind boggling (to the average European at least) adherence of large numbers of Americans to various forms of religious fundamentalism, which pose perhaps the greatest single threat to the prospect of sustainable development gradually becoming the dominant political framework.”

This is in the context of America still being the largest and most powerful country where 5% of the world’s population consume 23% of the world’s energy resources. He suggests it is perhaps the excessive technocratic, regulation driven approach to protecting the environment that has allowed the neo-cons to win the battle for people’s hearts and minds.

In suggesting we need a modified form of capitalism he is not advocating a no growth economy, rather an evolved, intelligent form of capitalism. Our monetary system is based on debt. About 97% of the UK’s money supply is created by commercial banks as interest bearing loans. This money supply is not linked to real resource use or the amount of goods and services in a national economy. It is based entirely on the banks’ commercial judgement about the ability of an individual or enterprise to repay their loans; small ethical banks such a Triodos which only lend debt free money.. The remaining 3% is created debt free by the Bank of England and the Royal Mint. This is a highly radical change in our monetary system, but Porritt doesn’t adequately follow through the practical consequences of this.

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....often little more than green wash

Corporate social responsibility is touted as providing the answers to reforming capitalism, but in its current form it is often little more than green wash. Forum for the Future has developed the Five Capital Framework, (Human, Social, Natural/environmental, Manufactured/technical and Financial), which committed companies can match against their long term vision. But Porritt writes this is ‘selling sustainability in on the back of a business friendly approach’, while the non-negotiable imperative of sustainability can make this appear banal. In an ideal world all company activities taken to enhance their business success should also benefit society over and above the use of the company’s products or services. In a capitalist system disequilibrium – a new combination of technology, opportunity, information and shifting demand, is the real driving force and it has been suggested that governments shouldn’t intervene to protect sectors or companies unable to adjust and find ways of generating better returns.

Rather they should stimulate structural and technological change in an economy away from those damaging the environment. Prices rarely reflect the real environmental costs and environmental taxes are needed to internalise these costs. In this context the role of price in markets is fundamental and such price signals will stimulate technological change, consumer environmental awareness, strengthen incentives for increased environmental efficiency, offset the income effect of economic growth and change the structure of the economy in favour environmentally neutral or beneficial sectors.

The real value of sustainability must come from the value it generates for a company, for the ways in which it protects and develops that company’s strategic assets and the competitive advantage that flows from responsibility for all five forms of capital. Yet with the top 200 corporations accounting for 28% of global economic activity. They have no commitment to societies or countries and have a self interested perspective on corporate social responsibility in terms of corporate governance, taxation and ‘even macro-economic concerns such as overall levels of employment,” - they employ less than 0.25% of the global workforce. It will require a concerted approach from national governments and international organisations, with widespread public support, to create the disequilibrium to modify such manifestations of capitalism.

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....micro generation technologies

There are ways for governments trying to find a way to promote socially and environmentally responsible business practices, addressing ‘the base of the pyramid’, that is the needs of the 4 billion poorest people, may be more than just a capitalist ploy to ensnare more consumers. Markets are mature and infrastructures fixed in developed countries, so developing countries can be the test beds for many of the solutions to our environmental problems. For example distributed generation with micro generation technologies bringing low carbon and reasonably priced power to rural communities could have a major impact on the lives of the poorest people. Developing and installing the micro-generation technologies would create local employment; the reliable power source would stimulate local economic activity, with all the obvious benefits.

To ensure the benefits are retained locally and to avoid the disastrous consequences which resulted from privatising water supplies for example, he suggests a new way of companies and communities working together. “Coalitions of the willing” emerged from the World Summit on Sustainable Development in Johannesburg in 2002. Water and Sanitation for the Urban Poor is a coalition of companies and NGOs and uses international aid funding and in-kind contributions from consortium members to identify and develop projects with local communities and authorities. The emphasis is on building the capacity of local staff and on the sustainability of the service. External assistance is provided where necessary, but local staff fill key positions and non of the organisations in the consortium will seek long term financial involvement.

Porritt is not advocating a control and command economy, but concerted action by governments to legislate for sustainable development and for companies to widen their stakeholder base beyond shareholders with their short term interests. This is the business case, first proposed by Adam Smith that “Wealth creation should be organised as to simultaneously optimise both profits and social wellbeing.”

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...should be read by politicians, policy makers and business leaders

This is a book which should be read by politicians, policy makers and business leaders who have power and influence, but those of us working or campaigning for sustainable development should learn from it too. We need to engage hearts and minds, we should not be afraid to talk about values

Porritt goes much further; “If anything is going to make sustainable development genuinely desirable to very large numbers of people in such a compelling way that they come to embrace the necessity for change, it must surely be the possibility that sustainable development could change their lives by putting personal wellbeing and happiness at the very heart of its offer to citizens.”

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Capitalism, As if the World Matters. Jonathon Porritt. Earthscan, £18.99. 2005.

ISBN 1-84407-192-8

www.earthscan.co.uk

Paperback: 1 September 2007. £16.99

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