April 29, 2011

Summary from April 2011 KoosOlek

Natural capitalism
Author: Rainer Eidemiller

19th century industrial revolution laid foundation for modern capitalism, which consists of four components: human, financial, industrial and natural capital. The first three capitals are used to make the fourth (natural resource) necessary in our daily life: into cars, roads, towns, bridges, houses, food, medicines, hospitals, schools, etc. In doing so it is considered natural that the fourth capital essentially has no value.

Natural capital only appears to be low-cost (or even free); ignoring its real price, however, is not possible in a long term just as it was at the time of human resources. World has reached close to population explosion and exhaustion of natural resources. Even now natural capitalism may seem like an inhibitory idea for economic development, but in fact – just as human rights took place in the economic sphere and improved it – natural resources fairer assessment makes economy more sustainable.

Solutions offered by natural capitalism, which help economy to continue operating freely in the market, are:
1. Radical resource productivity. This means that the natural resources enable to derive more energy compared to current systems, which means that our energy needs does not actually need to spend more natural capital. To promote meaningful employment, wage taxes should be reduced and imported goods to be taxed at a greater rate, because oil will be wasted more.

2. Savings – to cease garbage production; maximum recycling. All garbage is waste and it is actually a sign of poor economic policies.

3. Service-based economy. This does not mean banking versus agriculture. This means that rather than selling goods, we should sell what people expect from those products. For example, people really do not want to buy a radiator or heating systems, as such, but they expect to receive – as a result – a warm room. Thus, in spite of selling these products, we should sell a complete solution, which would give the desired result.

Natural capitalism is not, therefore, conservative or liberal, nor left- or right-wing ideology. This practical way of thinking would help to guide economy to a completely new and sustainable market trends and particularly energises local economy. Natural capitalism believes in this, that a true market economy, where all forms of capital are treated equally, could perhaps be the best way to deal with the crisis. In other words: what if a free market economy would not only be based on profit, but people, environment and then profit?

Some reading: Natural Capitalism – Creating the Next Industrial Revolution (P. Hawken, A. Lovins, L.Hunter Lovis)

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