Review of Amory Lovins et al., Natural Capitalism

Even today, most environmental activists and U.N. types preach environmental responsibility on bended knee, as a matter of conscience. We “should” care about the distant future, we “should” practice social responsibility, we “should” act as if there’s a warm and fuzzy Second Bottom Line.

But a very different argument is ringing out now loud and clear. It’s that businesses can make more money in the long run (and sometimes even in the short run) by learning to be environmentally less wasteful and more efficient.

Environmentalists began taking to this new gospel in 1992, when the World Business Council for Sustainable Development (a consortium of nearly 50 corporations including Chevron, Dow and Du Pont) made a big splash at the Earth Summit in Rio. But the gospel is less new than many activists might think. For three decades, a small band of visionary scientists, architects and entrepreneurs has understood that environmentalism can be a boon to the economy.

So in the mid-1970s you had a young physicist named Amory Lovins writing in Foreign Affairs that the “soft energy path” (a radical turn to renewable energy use) would save us money.

You had the young founder of Erewhon Natural Foods, Paul Hawken, writing a popular book -- The Magic of Findhorn -- that appeared to be about a commune in Scotland but was really about what entrepreneurs needed to understand in order to take full advantage of the new world we were entering.

You had “green architects” like William McDonough setting out to convince clients -- real clients -- that ecologically intelligent design would be good for the bottom line.

While environmentalism went through its bended knee phase, people like Lovins, Hawken and McDonough spent their time establishing their credentials.

With his wife, Hunter (an attorney), Lovins started a major research institute in Colorado; Hawken founded a high-end catalog company and a knowledge management software company. Today their corporate clients include not just the usual suspects (Ben & Jerry’s, Odwalla), but AT&T, Bechtel, Citicorp, GM, Honda, IBM, Lockheed, Monsanto, Nike, and Xerox.

McDonough, meanwhile, designed one of the most ecologically alive buildings on Earth -- an office complex for The Gap, in California -- and became Dean of Architecture at the University of Virginia.

Two manifestoes

With the coming of the hard-headed new environmentalism, big-government rhetoric lost its cachet, and people like the Lovinses, Hawken and McDonough took their rightful place as credible, relevant visionaries.

McDonough’s manifesto, “The NEXT Industrial Revolution,” was the cover story in the Atlantic Monthly for Oct. 1998 (www. theatlantic.com, online archives). And next month the Lovinses and Hawken will publish their own manifesto, Natural Capitalism: Creating the Next Industrial Revolution (Little, Brown, 416 pp., $27).

Both texts are extraordinarily ambitious attempts to prove that an ecologically benign industrial society (going well beyond anything imagined by, e.g., Vice President Gore) is possible and even feasible. Now.

Toward “regenerative” industry

When he’s being diplomatic, McDonough likes to say that “eco-efficiency” -- drawing down our resources as slowly as possible -- is not a bad thing. Read him closely, though, and you’ll see that McDonough is actively hostile to the concept.

“[Eco-efficiency] presents little more than an illusion of change,” he writes. “Relying on [it] to save the environment will in fact achieve the opposite -- it will let industry finish off everything quietly, persistently, and completely.”

McDonough’s deepest objection to eco-efficiency takes him light-years beyond the limits-to-growth crowd: “Eco-efficiency tells us to restrict industry and curtail growth -- to try to limit the creativity and productiveness of humankind. But the idea that the natural world is inevitably destroyed by human industry . . . is a simplification.”

Instead of eco-efficiency, McDonough wants what he calls “eco-effectiveness . . . human industry that is regenerative rather than depletive.” And he claims it’s achievable now and in the immediate future so long as we follow four design principles:

1.) Waste equals food. There would be only two kinds of waste, as follows:

a. Biological nutrients would be designed to “return to the organic cycle -- to be literally consumed by microorganisms and other creatures in the soil.” For example, most packaging should be composed of biological nutrients. So should upholstery. (McDonough’s team has already designed a fabric so compostable that the water coming out of the factory where it’s produced is as clean as the water going in!)

b. Technical nutrients would be designed to go back into the industrial cycle. For example, Interface -- the world’s largest commercial carpet company -- doesn’t sell carpets but leases and maintains them, “providing customers with the service of the carpet,” as McDonough artfully puts it. When a carpet wears out, the customer gets another one -- and Interface reuses the original carpet’s materials “at their original level of quality or a higher one.”

McDonough’s other design principles:

2.) Respect diversity. Design would respect the uniquenesses of a place, and would be flexible -- for example, office buildings would be easily convertible into apartments.

3.) Use solar energy. With the right technology, most buildings could produce more energy than they used!

4.) Strive for equity and economy. The relevant questions here: “Does a design depreciate or enrich people and communities?” “Does a product reflect the needs of producers and consumers for affordable products?”

Toward a firmer foundation

McDonough’s vision is wonderful, but that’s all it is -- a vision. His article doesn’t begin to tell us how to get from here to there, and his main points (though beautifully expressed) are not developed enough via argument and example to convince anyone who doesn’t already share his instincts.

Natural Capitalism, by Hawken and the Lovinses, thoroughly develops all of McDonough’s points. Plus it doesn’t toss the imperfect baby (eco-efficiency) out with the bathwater (short-term thinking), and it does not shirk from political issues.

Toward “natural capitalism”

“Natural capitalism” isn’t a new ideology. It’s deeper than that: It’s a new way of organizing production.

Natural capital includes resources like water, minerals and air. But it also includes “living systems” like grasslands, oceans and forests, and the “services” those systems provide (e.g., a forest provides such services as water storage and flood management). If you try to put a price tag on all the resources and services natural capital provides, you’ll come up with around $35 trillion a year.

The authors’ point is that, since we’re phenomenally dependent on this often free capital, and since much of it is disappearing, we need to learn to operate “as if all forms of capital were valued” -- natural no less than “human” or “financial” capital.

Their further point -- equally important in the real world -- is that valuing natural capital would save us money. They estimate that all the improvements in U.S. energy efficiency, vehicles, buildings, etc. suggested in the book would add up to a cool $1 trillion a year.

Most of the book describes four “strategies of natural capitalism,” four ways to bring the Next Industrial Revolution to life:

1.) Radical resource productivity. This is eco-efficiency with a vengeance -- eco-efficiency squared. The authors trace the “clarion call” for radical resource productivity back to 1994, when a group of 16 prominent European scientists, government officials and businesspeople came together as the Factor Ten Club. Already, the authors tell us, the Factor Ten or Factor Four concept -- the idea that we can reduce energy and materials consumption by 90% or 75% -- is “common parlance for most environmental ministers in the world, [and at] such leading corporations as Dow Europe and Mitsubishi Electric.”

To help the process along, the authors offer up an astonishing array of living examples and practical suggestions. Their obvious favorite: development of the ultralight, ultra-fuel-efficient “Hypercar.”

2.) Biologically inspired production (aka closed-loop manufacturing). This is similar to McDonough’s principle of “waste equals food.” Hawken and the Lovinses even use a similar phrase: “In nature, nothing edible accumulates; all materials flow in loops that turn waste into food. . . . Technologists should aim to do the same.”

In fact, say the authors, businesses have already begun doing the same -- largely because they’re becoming smarter about the bottom line. Xerox, for example, expects to save $1 billion by remanufacturing its new, entirely recyclable line of copiers.

3.) “Services” business model. The authors would have companies lease and service major products (rather than sell them outright). Like McDonough, they cite the example of Interface -- which doesn’t sell carpets but leases and maintains them, and recycles the spoilage; and everyone comes out better in the end, buyer, seller, and nature. The same basic principle, the authors write enthusiastically, “could likewise be applied to computers, cars, VCRs, refrigerators. . . .”

4.) Reinvest in natural capital. This is the political part of the authors’ message. They want us to “transform the sticks and carrots that guide and motivate business. This means, in essence, revising the tax and subsidy system.”

In the short run the authors would have us create a level playing field for the clean technologies. For the medium run, they propose a host of “market-based tools,” everything from accounting innovations to creating markets in saved energy (“negawatts”). For the long run, they’d radically overhaul the tax system, shifting taxes away from personal (and corporate) income and almost entirely onto use of natural capital.

Generation at work

One reason Natural Capitalism is so fascinating is you can tell the authors packed everything they had in it -- all their knowledge, all their passion. So I’d like to report that it’s an unadulterated success, my generation’s version of previous generations’ great summings-up like Herbert Croly’s Promise of American Life (1909) or John Kenneth Galbraith’s Affluent Society (1958). But like so much else about my generation, it still needs work.

To begin with, it’s incoherent. Although I present the authors’ argument systematically above, in real life it’s almost impossible to follow. Perhaps anticipating this reaction, the authors defend their presentation in the preface: “If the book seems more like a tapestry than a straight-line exposition of theory and fact, it is because the subject itself is far from linear.” C’mon, guys: Any rich subject is far from linear, and there’s no reason to make like Proust or Faulkner when you’re trying to convince policy analysts and other concerned citizens to adopt unfamiliar ideas.

There’s a running caricature of professional economics that will only discredit the book in the eyes of those who need it most. There are occasional bursts of sophomoric rhetoric. And oh, my God, those last two chapters.

One of them touts a Houston-sized city in Brazil -- Curitiba -- as the site of a wildly successful effort at socially conscious civic reconstruction. Curitiba may well be a place to learn from, but the authors’ 20 pages of ga-ga prose will remind you of the Panglossian stuff we used to read in the Sixties about the noble North Vietnamese and munificent Maoists.

The other chapter is full of wild political haymakers -- e.g., the one-paragraph attack on world trade cites no facts or figures but features an emotional couple of lines from a cultural critic.

I have no idea what may have happened here. My guess is that the authors wanted to make all their colleagues feel included (over 100 people are listed in the acknowledgements), so at the end they tossed in everyone’s greatest hits.

Instead of the last two chapters, the authors should have written a brief Epilogue. In it they should have said that the political moral of their book (still the political moral of the first 90% of the book) is that our problems are not the product of the market or the big, bad corporations. They are, instead, the product of poor thinking. Natural Capitalism is a treasure-trove of breakthrough thinking that’s so practical and bottom-line-oriented that we’ll never have to say “Please, Mr. Capitalist?” again.

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