Capitalism as if the World Matters
Reviewed by Christopher Wood for the London Monitor Spring 2007
The disintegration of the Soviet Union and its planned economy is generally taken as evidence that the only economic system that will work effectively is that which is described as capitalism. One may search in vain for the definitive description of this system of economic arrangement but most will agree that one characteristic that is notably absent is the moral or ethical dimension.
In view of this it is most encouraging to contemplate the title of Jonathan Porritt’s stimulating and timely book, Capitalism as if the World Matters.
The freedoms that we enjoy in the West come about largely as a result of our being willing to accept limitations upon what we can and cannot do. Inherent in the title of Porritt’s book is the recognition that there is a broad constraint within which a freewheeling and unbridled market-based economy should operate if it is to move us towards a more just and equitable world.
The key constraint in this well researched enquiry is simply that of the World mattering or to put it another way, a capitalism that is capable of sustaining itself. Porritt notes the chronic failure to recognize the differences and linkages between sustainable growth (if one believes there is such a thing), sustainable development and sustainability. He succinctly argues that the only intellectually coherent basis upon which to transform contemporary capitalism is through sustainable development.
The book is divided into three largely self-contained but connected parts. The first sets the scene and is essentially a report card on where we are. It demonstrates clearly why our current system operates as a framework for unsustainable capitalism. Porritt confronts us with the notion that we have to live within non-negotiable biophysical limits and points out that the need for this is obscured by a great deal of confusion over terminology and definitions.
To establish the context for the second part of his book, a template if you will against which to assess sustainability, Porritt draws on a variety of sources including the work of The Natural Step and HM Government. The four system conditions for a sustainable society and five principles of sustainable development are noted as useful criteria. From the business perspective attention to the economic bottom line is a given but in a move towards sustainability corporations have embraced the additional responsibilities of environmental and social considerations.
This broadly based introduction leads naturally into Part II of this work – the development of a framework for sustainable capitalism. Since capitalism is predicated upon the existence of capital Porritt develops a more critical way to examine the traditional Classical economic factors of land, labour and capital. Forum for the Future, the UK’s leading sustainable development charity, of which Mr. Porritt was co-founder, conceived of the Five Capitals Framework which takes the Classical three and produces five. Natural Capital is what we broadly understand as land but now expressly includes much more than merely the soil beneath our feet.
Human Capital is a development of traditional labor and now embraces a number of features including health, knowledge, skills and motivation. Also included are the emotional and spiritual dimensions – an interesting development in the context of the widening view that materiality is not the all.
The third category of Social Capital could be seen as an outgrowth of Human Capital since it encompasses the institutions, networks and relationships that underpin how our societies are stitched together.
Next is Manufactured Capital which is a sub-set of traditional capital and as one might expect this includes plant, machinery and infrastructure.
Lastly we have Financial Capital the other component of traditional capital and this facilitates the operation of the other forms of capital. As Porritt reminds us this form of capital has no intrinsic value and is purely representative of the other four forms. It is well to be reminded of this and especially in the light of a system of capitalism that operates as if the world does not matter.
Porritt’s exploration of these five capitals is a key element of this enquiry since it is by virtue of a fuller understanding of them that one can see what is likely to be sustainable and what is not. It is here that the non-negotiability of the planet’s biophysical limits may be properly understood.
With that understanding under one’s belt it is possible to move to Part III to investigate how to move to a more sustainable form of capitalism. At no stage does the author argue for overturning the present system. Indeed, he recognizes its benefits and looks to identify a way to transform what we enjoy today into a system that will stand us in good stead tomorrow and beyond.
To permit the transformation the first and perhaps the most important point is that we have to confront denial. As one’s temperature rises so it indicates that the body is unwell. The refusal to acknowledge the rising temperature, if left untreated, may well give rise to a much aggravated condition later. We need to fully appreciate that the present system is unsustainable.
Beyond this and to allow transformation to proceed we need several things. A new system of metrics is vital since the old measurement systems and indices do not really address the current situation. Business and the consumer need to re-orient themselves and come to a better understanding of what citizenship truly embraces. We need some different visions of the future and the values that are attendant upon them.
Porritt, by virtue of his experience and track record, occupies a singular position from which it is possible to see more than is available to many of us. He has been generous enough to devote time and energy in articulating his view of things in this remarkable book. Whatever one’s perspective on the sustainability of the current economic system it behooves us to not just read this book but to fully understand the issues. Whether one agrees with Mr. Porritt’s argument is not the issue. It is whether we are sufficiently well informed to take the appropriate decisions. This offering is a most useful step in the educative process.
Chris Wood is head of the Economics Department at the New York City School of Practical Philosophy.