A Capital Idea

Imagine for a moment a world where cities have become peaceful and serene because cars and buses are whisper quiet, vehicles exhaust only water vapor, and parks and greenways have replaced unneeded urban freeways. OPEC has ceased to function because the price of oil has fallen to five dollars a barrel, but there are few buyers for it because cheaper and better ways now exist to get the services people once turned to oil to provide. Living standards for all people have dramatically improved, particularly for the poor and those in developing countries. Involuntary unemployment no longer exists, and income taxes have largely been eliminated. Houses, even low-income housing units, can pay part of their mortgage costs by the energy they produce; there are few if any active landfills; worldwide forest cover is increasing; dams are being dismantled; atmospheric C02 levels are decreasing for the first time in two hundred years; and effluent water leaving factories is cleaner than the water coming into them. Industrialized countries have reduced resource use by 80 percent while improving the quality of life.

Among these technological changes, there are important social changes. The frayed social nets of Western countries have been repaired. With the explosion of family-wage jobs, welfare demand has fallen. A progressive and active union movement has taken the lead to work with business, environmentalists, and government to create "just transitions" for workers as society phases out coal, nuclear energy, and oil. In communities and towns, churches, corporations, and labor groups promote a new living-wage social contract as the least expensive way to ensure the growth and preservation of valuable social capital. Is this the vision of a utopia? In fact, the changes described here could come about in the decades to come as the result of economic and technological trends already in place.

Our new book, Natural Capitalism: Creating the Next Industrial Revolution, is about these and many other possibilities.

It is about the possibilities that will arise from the birth of a new type of industrialism -- which we call natural capitalism -- one that differs in its philosophy, goals, and fundamental processes from the industrial system that is the standard today. In the next century, as human population doubles and the resources available per person drop by one-half to three-fourths, a remarkable transformation of industry and commerce can occur. Through this transformation, society will be able to create a vital economy that uses radically less material and energy. This economy can free up resources, reduce taxes on personal income, increase per-capita spending on social ills (while simultaneously reducing those ills), and begin to restore the damaged environment of the earth. These necessary changes done properly can promote economic efficiency, ecological conservation, and social equity.

Capitalism As If Living Systems Mattered

Natural capitalism and the possibility of a new industrial system are based on a very different mind-set and set of values than conventional capitalism. Its fundamental assumptions include the following:

• The environment is not a minor factor of production but rather is "an envelope containing, provisioning, and sustaining the entire economy."


• The limiting factor to future economic development is the availability and functionality of natural capital, in particular, life-supporting services that have no substitutes and currently have no market value.


• Misconceived or badly designed business systems, population growth, and wasteful patterns of consumption are the primary causes of the loss of natural capital, and all three must be addressed to achieve a sustainable economy.


• Future economic progress can best take place in democratic, market-based systems of production and distribution in which all forms of capital are fully valued, including human, manufactured, financial, and natural capital.


• One of the keys to the most beneficial employment of people, money, and the environment is radical increases in resource productivity.


• Human welfare is best served by improving the quality and flow of desired services delivered, rather than by merely increasing the total dollar flow.


• Economic and environmental sustainability depends on redressing global inequities of income and material well-being. The best long-term environment for commerce is provided by true democratic systems of governance that are based on the needs of people rather than business.

Our book introduces four central strategies of natural capitalism that are a means to enable countries, companies, and communities to operate by behaving as if all forms of capital were valued. Ensuring a perpetual annuity of valuable social and natural processes to serve a growing population is not just a prudent investment but a critical need in the coming decades. Doing so can avert scarcity, perpetuate abundance, and provide a solid basis for social development; it is the basis of responsible stewardship and prosperity for the next century and beyond.

1. Radical Resource Productivity

Radically increased resource productivity is the cornerstone of natural capitalism because using resources more effectively has three significant benefits: It slows resource depletion at one end of the value chain, lowers pollution at the other end, and provides a basis to increase worldwide employment with meaningful jobs. The result can be lower costs for business and society, which no longer has to pay for the chief causes of ecosystem and social disruption. Nearly all environmental and social harm is an artifact of the uneconomically wasteful use of human and natural resources, but radical resource productivity strategies can nearly halt the degradation of the biosphere, make it more profitable to employ people, and thus safeguard against the loss of vital living systems and social cohesion.

2. Biomimicry

Reducing the wasteful throughput of materials -- indeed, eliminating the very idea of waste -- can be accomplished by redesigning industrial systems on biological lines that change the nature of industrial processes and materials, enabling the constant reuse of materials in continuous closed cycles, and often the elimination of toxicity.

3. Service and Flow Economy

This calls for a fundamental change in the relationship between producer and consumer, a shift from an economy of goods and purchases to one of service and flow. In essence, an economy that is based on a flow of economic services can better protect the ecosystem services upon which it depends. This will entail a new perception of value, a shift from the acquisition of goods as a measure of affluence to an economy where the continuous receipt of quality, utility, and performance promotes well-being. This concept offers incentives to put into practice the first two innovations of natural capitalism by restructuring the economy to focus on relationships that better meet customers' changing value needs and to reward automatically both resource productivity and closed-loop cycles of materials use.

4. Investing in Natural Capital

This works toward reversing worldwide planetary destruction through reinvestments in sustaining, restoring, and expanding stocks of natural capital, so that the biosphere can produce more abundant ecosystem services and natural resources.

All four changes are interrelated and interdependent; all four generate numerous benefits and opportunities in markets, finance, materials, distribution, and employment. Together, they can reduce environmental harm, create economic growth, and increase meaningful employment.

This is an excerpt from Natural Capitalism, used courtesy of Time Warner Bookmark. © 1999 by Paul Hawken, Amory Lovins, and Hunter L. Lovins.