I gave a presentation today about companies increasingly being recognised for their sustainability initiatives. One of the (MBA) students in the audience - which included execs from companies - asked how we get around the fundamental problem that companies need to you to consume and consumption underlies all our problems.
Growth capitalism in my view, is indeed a problematic paradigm. But let's go with a thought experiment - what does it mean not to have growth? In the property or equity markets, it means your house or your superannuation is worth the same today as it is next year or the year after - or (and we're not talking about collapses here) maybe less, cos the paint starts peeling and the kitchen is a year older and more battered. As investments, these things would need to rely on the income they generate (rent or dividends) making them far less subject to speculation.
It also means that savings (eg super savings) wouldn't grow over time, except through the compounding
of interest and other income. You'd retire with much less, and wouldn't have as much to spend through your walking on a beach or red sports car driving twillight years. But then, you might not need as much, because I don't think inflation would eat up part of what you had each year.
We couldn't expect - as a whole - expect to have a bettter standard of living in the future than we do today, although individuals or families or groups may do better or worse relative to others over time.
Inflation is the only reason I can think of that economic gfrowth serves any useful purpose in an already - affluent society and inflation is caused by demand exceeding supply. Demand only exceeds supply because a) we insist on overpopulation in order to prop up growth (witness the "need" for immigration and fertility rhetoric of the current Federal government and b) because it is the target of the whole marketing, advertising and sales industries.
In fact (and I'm not an economist) I'm not really sure why the goal for an affluent country is economic growth at all.
Leaving growth aside, let's return to the question of companies and what they need. They don't need us to buy goods, they just need us to give them our money. My first answer to this is that a large proportion of companies in our economy are service companies. They don't sell us widgets, but banking services, telephone services or insurance.
My second point was that even among the companies where you hand over some money and walk away with a physical good, it is rarely (for the company) the good that is the point. They derive their value from being able to meet a need - and if they were smart about it, they could use fewer resources to meet the same need. To use an old chestnut, I've never desired to own a fridge or a hot water tank - I just want cold milk and hot showers. I don't want a car - I just want something on call that gets me, the kids and the shopping from A to B (carshare anyone?). And I don't want cardboard boxes (let alone plastic packaging) - I just want robust items that won't break easily.
I'm far from the first person to note this, but a radical rethinking of what a company delivers can really shape a successful future. Old ways of thinking, inherited from when resources were plentiful, cash was hard to come by and transaction costs were high (info was scarce, comparisons difficult, etc) are no longer appropriate. I don't want a new damn mobile phone. I want someone else to take my clients' calls after hours. I don't want to own lightbulbs, stereos, whitegoods, computers or anything else really. I'm certainly not paying for the resource consumed when I have to buy any of this stuff - I'm paying for a sound reputation for reliability, a decent warranty and maybe some service guarantees (like a helpline). If a company can figure out how to meet my need while using less of the resources to do it - I'm all for it.
I don't have many readers here, in fact I think I pretty much know you all by (user) name but I know you guys are pretty smart with this stuff. What don't you want that you currently have no option but to buy
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3 comments:
"What don't you ..."
The last bit doesn't come up on the page
This sounds very much like the ideas in Natural Capitalism, which have been taken further in the more recent book, The Natural Advantage of Nations, which I am trying really hard to stay awake long enough to read more than a page at a time.
Maybe someone more commercially minded would be able to make sense of it well enough to distill its complexities into one page of a blog? Hmmm, let me think who could do that?
Gauntlet retrieved. Challenge accepted. And the very generous invitation also accepted.
An interesting book is Cradle to Cradle by William McDonough. (You can hear him talk on www.ted.com)
He talks about the limits of aiming to be "less bad". McDonough is an architect, and in conjunction with his partner, a chemist, looks at designing for cradle to cradle, rather than the traditional cradle to grave model of industrialisation. He urges us to rethink recycling, which he calls downcycling, and design for infinite reuse. He talks about service models where you don't own the TV but you use it for as long as you want. the manufacturer owns the TV and all the heavy, valuable metals etc that go into making it. The manufacturer then owns the "technical nutrients" which can be reused because the product has been designed with recapture/reuse in mind. This has wide imlications for consumption as we know it.
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