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         [  Review of 'Natural Capitalism'  ]     [  By Eric Chaet  ]


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Review of "Natural Capitalism" by Hawken, Lovins and Lovins.
by Eric Chaet


              "Natural Capitalism: Creating the Next Industrial Revolution"
              by Paul Hawken, Amory Lovins, and L. Hunter Lovins (Boston:
              Little, Brown and Company, 1999).


The importance of this book will fade in 10, 20, or 30 years, I suppose, as
there are more and greater ecological catastrophes, and as there is more and
wider understanding, and as people change what they do in relation to
"natural capital" - preventing other catastrophes. But right now, it's one
of those rare books that really re-focus and mentally "arm" its readers -
more than just outlining either the problem or possible solutions.

It presents the necessary, possible, and practical changes - the new kinds
of cars, homes, communities, factories, farming, cities - the altered use of
water and electricity - current and altered financial accounting ("whole
system life-cycle costing") and political out-look - new materials and new
designs.

The authors are technically, commercially, financially, politically,
ethically astute, and communicate with precision, clarity, and elegance.

"The loss of natural capital services [what we get from nature without
accounting for or paying for it] is already imposing severe costs. Despite
the convoluted economic theories and accounting systems that have been
devised to persuade ourselves that they aren't a significant problem, those
costs are starting to become apparent, undeniable, and unavoidable..."

"By current economic definitions, most industrial, environmental, and social
waste is counted as gross domestic product right alongside TV's, bananas,
cars, and Barbie dolls. Growth includes ALL expenditures, regardless of
whether society benefits or loses... the experts reassure us that more of
this type of growth will save us from the very ills this type of growth
creates."

"A stable oak-hickory forest['s] economy sustains a high stock of diverse
forms of biological wealth, while consuming relatively little input.
Instead, its myriad niches are all filled with organisms busily sopping up
and remaking every crum of detritus into new life."

"...[O]nly one percent of the total North American materials flow ends up
in, and is still being used within, products six months after their sale.
That roughly one percent materials efficiency is looking more and more like
a vast business opportunity....  The next business frontier is rethinking
everything we consume:  what it does, where it comes from, where it goes,
and how we can keep on getting its service from a net flow of very nearly
nothing at all - but ideas."

"America has $6 trillion worth of houses whose thermal efficiency rests on a
methodological design error."

"... [S]uperinsulation, superwindows, ventilation heat recovery... deep
daylighting..."

Waste, per Taiichi Ohno, as articulated by Womack and Jones: "...mistakes
which require rectification, production of items no one wants so that
inventories and remaindered goods pile up, processing steps which aren't
actually needed, movement of employees and transport of goods from one place
to another without any purpose, groups of people in a downstream activity
standing around waiting because an upstream activity has not delivered on
time, and goods and services which don't meet the needs of the customer."

"...[E]very input had to be presumed waste until shown otherwise.  Once
Interface started measuring its inputs, it discovered that most of them were
indeed waste.  The more the company learned about the potential for
radically simpler processes, the larger the fraction of apparent waste
became.  Workers throughout the company started mining the newly visible
waste....  Lean production makes people happier[,]...people...feel best when
their activity involves a clear objective, intense concentration, no
distractions, immediate feedback on their progress, and a sense of
challenge."

"In the face of this relentless loss of living systems, fractious political
conflicts over laws, regulations, and business economics appear petty and
small. It is not that these issues are unimportant but that they ignore the
larger context. Are we or are we not systematically reducing life and the
capacity to re-create order on earth? ... [I]t is ultimately the capacity of
the photosynthetic world and its nutrient flows that determine the quality
and the quantity of life on earth."

Revise tax codes, which embody "perverse incentives" to eliminate labor and
savings, and to ravage the environment.

Selling a service - for instance, warmth or "coolth" - rather than a product
- for instance, a furnace or air conditioner - therefore, having the
incentive to reduce the cost by every possible efficiency measure, and
pocketing the resulting saving as profit.  Better processes and more
efficient uses.

"The goal of natural capitalism is to extend the sound principles of the
market to all sources of material value, not just to those that by accidents
of history were first appropriated into the market system. It also seeks to
guarantee that all forms of capital are as prudently stewarded as money is
by the trustees of financial capital."

Markets "... allocate scarce resources efficiently over the short term...
[N]atural capitalism changes the list of which resources are genuinely
scarce..."

"Because neoclassical economics is concerned only with efficiency, not with
equity, it fostered an attitude that treated social justice as a frill,
fairness as passe', and the risks of creating a permanent underclass as a
market opportunity for security guards and gated 'communities.' Its
obsession with satisfying nonmaterial needs by material means revealed the
basic differences, even contradictions, between the creation of wealth, the
accumulation of money, and the improvement of human beings."

"Some market theologians promote the fashionable conceit that governments
should have no responsibility for overseeing markets... The latest
illustrations of that principle include the Wild West wreck now looming in
Russia, mad-cow disease, savings and loan fraud, phone scams, and crash-by-
night airlines... A dose of empiricism is in order."

"The chief engineer of a huge chip-plant design firm was once told by phone
about such proven technologies as a cleanroom that uses manyfold less energy
yet performs better, costs less, and builds faster. His rapid-fire reply:
'Sounds great, but I pay a $100,000-an-hour penalty if I don't have the
drawings for our next plant done by Wednesday noon, so I can't talk to you.
Sorry. Bye.' The sad and ubiquitous result is 'infectious repetitis' - the
copying of old drawings - which leaves huge savings untapped."

"How much do you pay... for a kilowatt-hour of electricity, and how many
kilowatt-hours does your refrigerator - typically the biggest single user in
the household - consume each year?  If you don't know, because you're too
busy living to delve into such minutiae, then you're part of [a] market
barrier..."

"One of the best methods to start reducing the self-deception that
accompanies subsidies and other distortions is to account scrupulously for
the factors that economists call externalities.  Nobody knows exactly how
much value to place, say, on the effects of air pollution on human health or
on ecosystems.  But...zero is not the right number....  Until the 'polluter
pays' principle...is actually implemented in energy pricing, however, prices
will continue to reflect the tacit assumption that, as...Randy Udall puts
it, 'the future is worthless and the environment doesn't matter.'
Calculations of cost-effectiveness based solely on private internal cost
will continue to be 'a value system masquerading as mathematics.'"

"For every activity there is an abatement, arguably meriting a value and a
market in which to express it. Few of those markets yet exist, but creating
them can make traders prosper and all of us better off. Making markets in
saved resources and avoided pollution can support powerful entrepreneurial
innovations that can turn each obstacle to resource productivity and loop-
closing into an opportunity. The bigger the problem, the bigger the
potential gain..."

"Conceptual tests of new ideas lead quickly to their application. Risks are
taken in the expectation that mistakes will be made, quickly detected and
diagnosed, and corrected. When budgets can't support an entire new program,
it's launched anyway so that learning can begin while more resources or
economies are sought. Failures are frequent, hard lessons constant,
struggles to improve unrelenting... persistent application of whole-system
thinking..."

"...[A]s [Jaime] Lerner [mayor of Curitiba, Brazil] insists: 'If people feel
respected, they will assume responsibility to help solve other problems.'
Closing the broken loop of politics, this principle recycles the poor and
hungry, the apathetic and illiterate, into actively contributing citizens."

"...[W]hat is worth producing, what will make us better human beings, how we
can stop trying to meet nonmaterial needs by material means, and how much is
enough."

"How is it that we have created an economic system that tells us it is
cheaper to destroy the earth and exhaust its people than to nurture them
both? Is it rational to have a pricing system that discounts the future and
sells off the past? How did we create an economic system that confuses
capital liquidation with income? Wasting resources to achieve profits is
far from fair, wasting people to achieve higher GDP doesn't raise standards
of living, and wasting the environment to achieve economic growth is neither
economic nor growth."

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