Review of “The Ecology of Commerce” by Paul Hawken

The Nation, February 7, 1994

IF YOU THINK creating enough well-paying jobs to retain America’s current living standard is challeng­ing, it’s child’s play compared to what Paul Hawken says we must do next: Convert to an economy that sustains rath­er than destroys the earth.  This next con­version is not just a matter of shifting government priorities, of spend­ing less on missiles and more on job training or civilian infrastructure.  It’s a matter of re­designing the way we do business.


Paul Hawken

Hawken—who’s played the business game with some success—defines a sus­tainable economy as one in which the de­mands placed upon the environ- ment by people and commerce can be met with­out reducing the capacity of the environ­ment to provide for future generations.

That’s far from the economy we have today.  At the rate we’re burning fossil fuels—and moving carbon from beneath the ground to the atmo­sphere—we’ll double-glaze the planet by early next cen­tury, with unknowable conse­quences.  By about the same time, our heirs will be dealing with greatly increased levels of ultraviolet radiation and a vast accumu­lation of man-made toxins and nuclear wastes.  We’ll also have harvested most of the forests on earth, depleted most of the topsoil and dried up most of the aquifers.

The root cause of this march toward ecological oblivion is our much-hailed market system, which does a fantastic job of churning out goods but fails to pay the social and environmental costs of this production.  Now that statist economies have been exposed as inefficient, ugly and demoralizing, no one dares challenge the primacy of the market.  What, then, are we to do?

Hawken’s answer is to preserve what’s best about the market system—its relent­less drive to innovate—and fix what’s wrong: its habit of ignoring “external” costs, or shifting them to taxpayers and future generations.­  He would correct this flaw by gradually replacing our current cacophony of income, payroll and corpo­rate taxes with virtuous taxes on non­renewable resources, emissions, toxins and other “bads.”

The real purpose of these “green taxes” would not be to raise revenue for govern­ment (although they would do that) but to make the prices we pay for everything reflect the full social and environmental costs of production.  These newly inter­nalized costs would be like trim-tabs, steering private economic activity toward sustainable prac­tices.  Businesses would do the right thing, ecologically speaking, not out of altruism but because it would be in their bottom-line interest to do so.  Jobs would sprout in energy conservation and renewable energy, organic farming, recycling and remanu­facturing, and other nondestructive activities.  Human inge­nuity would be applied to living lightly on the earth instead of devouring our natu­ral inheritance.  In Hawken’s blueprint, green taxes would be phased in over twen­ty years to give businesses time to adjust and innovate.

I LIKE Hawken’s vision a lot.  It has uto­pian undertones, but is just pragmatic enough to offer long-term hope.  Indeed, I can’t find any other way to envision the future that doesn’t lead quickly to de­spair.  Yet, as with most grand visions, the problems lie in getting from here to there.  Green taxes are not a new idea.  They were proposed in 1920 by English economist Arthur Pigou, touted by many (includ­ing Amory Lovins, Herman Daly and Vice President Al Gore) since then and tried just enough to reveal how much op­position they arouse.

Consider President Clinton’s proposal in early 1993 for a modest B.T.U. tax on non­renewable energy.  The tax was quick­ly clobbered by lobbyists for the oil, nat­ural gas and coal industries.  Or consider tobacco, lethal not just to future genera­tions but to millions living today.  A Uni­versity of California study estimated the social costs of tobacco in that state—mostly lost wages and higher health care costs—at $3.43 per pack.  After many months of calling “sin taxes” an ideal way to pay for health care reform, the most Clinton dared ask for was a tax of 75 cents per pack.

Problem #1, in short, is that our political system suffers from the same myopia as the economic system we’re asking it to fix.  Taxes don’t get enacted because they are morally or ecologically right; they get en­acted because those who back them have economic power.  Since trees and unborn children don’t write checks, they tend to be out-lobbied by businesses that do.

Problem #2 is that before we can arrive at a new economic order, we must pass through a transition.  Transitions—even the gradual kind envisioned by Hawken ­are never painless.  Jobs in old industries disappear faster than jobs in new indus­tries can replace them—and the new jobs usually pay less than the old.  Moreover, as we start paying costs that until now we heedlessly ignored or deferred, standards of liv­ing will fall, perhaps dramatically.  Absent military threats, democracies don’t willing­ly absorb short-term pain, even if there’s a credible promise of long-term gain.  Thus the herculean challenge: how to navigate a transition that is (a) op­posed by powerful economic interests and (b) not very appealing to the masses.

Problem #3 is other First and Second World countries—our competitors and poten­tial competitors in the global econ­omy.  As Hawken notes, capital now flies without a whit of ecological concern to anywhere on the planet that offers a mi­nutely superior rate of return.  It’s there­fore hard to imagine the United States going down a green path if China, Thai­land, Mexico, et. al., don’t tag along.  Which means the fight for green taxes must be waged not only in Washington but also in Beijing, Tokyo, Mos­cow and scores of other capitals at the same time.  The difficulty of such a global battle both daunts the mind and supports the notion that international efforts aimed at harmo­nizing economic policies, such as NAFTA and GATT, are essential building blocks to a sustainable world economy, however misguided they seem at the moment.

Problem #4 is the Third World—the human majority—which is rightfully re­sentful that the First World, having built its wealth at the expense of the environ­ment, now asks those playing catch-up to preserve their forests and leave their cheap coal in the ground.  A wealth trans­fer of some magnitude will be necessary to “sell” sustainable development to the poorer regions.  But that raises the cost—and the political unpala­tability—to the First World.

Problem #5 is the sheer scale of the costing changes that will be needed.  To make the transition seem manageable, Hawken points out that a $2 per gallon tax on gasoline, which is less than most Europeans already pay, would replace about half of what Americans now pay in income taxes, and that other green taxes could easily make up the difference.  But the very fact that Europeans already pay high energy prices and are still plun­dering the environment, albeit somewhat less profligately than Ameri­cans, under­scores the reality that green fees will have to go far beyond the level needed to re­place current tax revenues if they are truly to promote sustainability.

HAWKEN’s eloquent, often poetic book thus leaves many questions unanswered—but what visionary work does not?  It is the point, primarily, of such books to inspire, and Hawken’s does that job well.  What remain are the messier de­tails of building political coalitions, plot­ting tactics, growing socially responsible businesses and alter­ing life styles.  It is from the combined momentum of such messy details that history advances.

Despite all the problems enumerated above, I do believe the economy of the late twenty-first century will resemble Paul Hawken’s vision.  We probably won’t get there smoothly or intentionally or even willingly, but if we don’t get there at all it will be because we’ve sunk into a deep collective tragedy.  My guess is that things will get worsemuch worse, but not irreparably worse—before there’s suf­ficient political will to adopt serious green taxes.  A defining event, like the collapse of the Soviet Union, may also be neces­sary—and it may be an event of tragic proportions.  But capitalism is a living sys­tem that cannot stand still.  It will not be overthrown, as Marx predicted; it will evolve and survive with better rules and calculi to guide pro­ductive behavior.  That is the logic of nature and of history.