Reasonable men and women have said that the economy is a subset of the environment. Clearly, the human activities that comprise a modern economy -- extraction, processing, manufacturing, transportation, distribution, sales, and disposal -- depend upon the healthy functioning of natural systems. Collectively, these natural systems can be thought of as “ecology,” the pattern of relations among organisms and their environment.
And who are all these organisms? Why, you and me, of course, along with all the other current end products of the evolutionary process. That process -- natural selection -- is one of variation with selective retention. We keep on trying stuff, and the stuff that works (or just gets lucky) gets retained over time. This affects our appearance, of course, but it seems like the same principle applies to our ideas as well.
And what governs what gets retained? Well, the idea of survival -- that of the most successful individuals and ideas. This is the whole notion of evolution.
Adam Smith said it plainly in his 1776
An Inquiry into the Nature and Causes of the Wealth of Nations: “Every individual ... intends only his own security, his own gain. And he is in this led by an invisible hand to promote an end which was no part of his intention. By pursuing his own interest he frequently promotes that of society more effectively than when he really intends to promote it.”
It seems highly likely that the invisible hand he was referring to is in fact the evolutionary principle at work. Survival and reproductive success, in the form of perceived self-interest, are being played out in a way that leads to a balance of selfish and altruistic behaviors.
So: we exist as part of a larger ecology, a set of relationships that results in services that keep us alive -- and at the same time the ecology itself consists of self-interested individuals and groups, working to maximize survival and reproductive success.
Smith’s idea, of course, was that “marketplace” behavior, while “unplanned” by any government agency, is self-regulating -- a form of homeostasis that results in what economists call Pareto efficiency, the state that exists when no individual gain can be made without concomitant loss for another individual.
This all suggests that evolution and business are governed by the same ultimate force: an Invisible Hand that guides us toward survival.
Yet we continue to talk about “business vs. the environment.” This is actually the title of a panel I’m to speak on next week, at a conference hosted by Fortune Magazine. The common notion is that environmental protection is a cost of business, a “minus” on the balance sheet, which needs to be looked at in straight cost/benefit terms.
And our reliance on GDP growth, corporate growth, and so on, belies the very notion of homeostasis. These forms of growth, underlain of course, by population growth and consumption growth per capita, drive behaviors which are truly destroying the natural systems on which human well-being depend.
To modern extractive industries, the natural environment is thought of in terms of “natural resources.” Thus, a forest is a place to go get stuff for your lumber mill; a mountain is a place to go get stuff for your steel furnace or power plant; and so on.
From this point of view, it’s easy to see why the Kyoto Protocol makes no sense to some reasonable people. It limits carbon emissions, imposing an additional cost of business, perhaps a competitive disadvantage. American utilities put 2.3 billion tons of CO2 into the atmosphere each year from coal burning alone, approximately half the worldwide target for emissions reduction under Kyoto. Obviously, compliance with a cap on CO2 emissions would require a shift in fuel mix, investment in efficiency measures, and investment in substantial carbon offsets, such as reforestation projects, as well.
From the point of view of the leading environmental scientists, however, the natural environment is the source of the services that sustain human and other life. This flow of services, called “ecosystem services,” includes air and water purification, nutrient cycling, flood and drought protection, pollination, detoxification and decomposition of wastes, pest control, and climate stabilization.
The key challenge of the next decade, and indeed the next century, will be to align business behavior -- the production of goods and services -- with limits that natural systems can sustain. Profit, that exquisitely symbolic manifestation of survival and reproductive success, must be attached to means of production that can be carried out sustainably.
The current Bush administration is not “out of touch” with the American people when it crafts an energy strategy based on increased production and pollution. The American people, like any other part of the larger ecology, expand consumption to fill their niche until limits cause them to pull back. Consider SUVs cruising interstates as a perfect expression of a primeval instinct thriving in an industrial age.
There is an increasing sense that we are reaching endgame. That calm acceptance of the current expressions of these forces is impossible for anyone who appreciates the insights of the environmental science community -- that is, anyone who appreciates the objective realities we face as mammals on a planet surface.
As the expression of spontaneous mobs in Seattle, Prague, and Genoa tell us, in their incoherent yet compelling way, we must harness the inescapable forces of variation with selective retention and the Invisible Hand. We must learn how to provide plenty in fundamental alignment with the natural systems that keep us alive.
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Adam Davis is a principal and co-founder of Natural Strategies LLC, a management consulting firm specializing in strategic approaches to decision making using sustainability as a key driver.