When will business care about the environment?
By David Bollier
If we are going to make serious progress against global warming and the myriad other environmental problems, we must begin by transcending standard economic thinking and start to recognize a vast terra incognita, the ecological commons.
The commons are those things we share and are obligated to pass on undiminished to future generations: the earth’s atmosphere, its rivers and lakes, wildlife, our genetic heritage, and much more. The commons are not just physical things, but things to which we are related by virtue of our human or economic relationships. Too many businesses and government, however, nature is simply inert, raw material for what is known as “the economy.” Nature has no intrinsic value; it is valued only insofar as its elements can command a price and generate profits.
This is largely why the grand narrative of conventional economics is so stunted and destructive. It relegates the ecological commons to the sidelines of the primary drama of “the marketplace.” In this worldview, the most hallowed moment is the market transaction, in which a buyer and seller meet and strike a deal to exchange money for a good or service. Under this narrative, “wealth” is created, human progress advances and happiness ensues.
Conversely, the byproducts of market activity, such as pollution and social disruption, are presumed to be modest or tolerable. After all, if something doesn’t have a price tag, why should we regard it as valuable? Economists have a revealing term for the unintended effects of market activity – “externalities.”
No one pays much attention to externalities because they don’t generate money – and indeed, could cost a company plenty of money to prevent. That said, if an externality rises to a certain threshold of disruption – say, a BP oil spill in the Gulf of Mexico – regulators and victims may try to force the company to “internalize” the costs. But this after-the-fact struggle tends to be politically and legally problematic, especially if causation is fuzzy. Externalities such as carcinogenic risks, for example, are hard to detect and so fester for years.
This is why it is so valuable to talk about the ecological commons. It helps us see through the systemic fallacies of standard economic thinking and fill in the blank spots of its mental maps. It helps us name, defend and reclaim our shared, non-market resources. In so doing, we can clarify how market activity depends on the commons as a source of unacknowledged subsidies and free dumping privileges.
For example, large companies in the U.S. enjoy free or cut-rate access to minerals and timber on public lands, and ocean fisheries, deep-sea mineral beds and countless other finite, depletable natural resources. About one-fifth of the human genome is now patented as private property, and nanotechnology companies are claiming patents in synthetic versions of the basic elements of matter. Meanwhile, businesses continue to dump vast amounts of pollution into the commons rather than absorb the costs of preventing such harm: another hidden subsidy for markets. All of this is a sweet deal for the companies involved because so few of the displaced costs show up in on corporate ledgers.
No wonder our ecological commons are in such bad shape. Markets understandably treat them as free and infinite. I call this the “tragedy of the market” – the over-exploitation that occurs when corporations act as free-riders on our ecological commons.
This is a systemic problem. The corporation as an institutional form is designed to exploit the commons as raw feedstock for its profit-making purposes. Then, once nature has been monetized, it has asserted itself politically to dispose what it cannot use or doesn’t want, back into the commons, as waste. From a narrow microeconomic perspective, this is “efficient” even if it is catastrophic for nature over the long-term.
With the commons unnamed and excised from the economic calculus – and government too compromised or corrupted to police the free-riders – companies have a free hand to maximize market activity without thinking about the actual ecological consequences. (And those companies who want to do the right thing will suffer competitively.) Political elites relentlessly seek to boost Gross Domestic Product even though it may cannibalize the commons. “Growth” is cast as a proxy for human well-being and progress even though it may result in a floodtide of “illth,” the opposite of wealth, in John Ruskin memorable coinage.
The “illth” produced by contemporary markets is growing vaster and more irreversible by the day. It includes the loss of biodiversity, groundwater depletion, unstable ecosystems, genetic damage, species extinctions and, now, the destruction of the fragile atmosphere. Yet markets do far too little to absorb the full dimensions of harm they generate.
That is why we need to talk about the commons: to rectify a profound epistemological error in economic thought that simply ignores the importance of the commons to ecosystems and human life.
We must remember: nature always bats last, remorselessly asserting its imperatives. Our complaisance is perilous and the hour is late. The unmet challenge of our times is to awaken from our illusions about self-regulating markets and recognize the rich, generative value of the commons.
About David Bollier
Talkback Readers: What’s your take on the “ecological commons?” Can business incorporate the ecological commons framework into the capitalist business model? Share your thoughts on Talkback!