Sustainable Civil Society Is the Economy's Immune System
Paul Hawken and John Elkington discuss the ethics of capitalist value creation and life at the bottom of the pyramid.
This interview republished from Value with kind permission.
John Elkington: Paul, trying to prize you away from your new project reminded me of the poor producers who tried to get Garbo into films in later life, but your comments on an early outline of Value were too provocative to ignore!
Paul Hawken: I would love to be pulled away, but I'm writing a new book—and every author knows that writing a book is like carving a totem pole with your thumbnail.
JE: After earlier works like The Ecology of Commerce and Natural Capitalism, I feel guilty for pulling you and your thumbnail away. But let's come back to that in a moment. First, you had some pretty challenging things to say about the concept behind this magazine.
PH: This is a wonderfully ambitious project, and you have a great team to do it with. But let me raise a provocative question around the title, Value. The magazine is wrapped around a concept of "inclusive capitalism." Does this mean a variant of capitalism? And if so, I'm curious to know what the "keepers" are and what is being put aside. I'm also more than a little concerned about the thinking that there are three billion new consumers out there, that the next big thing is the "bottom of the pyramid." From the view of the global south that is not trained in corporations and business schools, it smacks of colonialism and imperialism all over again. From their point of view, the concept of pyramid is in itself a problem.
JE: Go deeper.
PH: From their point of view, as I understand it, it is the top of the pyramid that needs radical revision, as its appetite is unquenchable when it comes to the world's resources. That is not to say that billions don't deserve and need more, or that the Millennium Goals are not desperately needed. But I remember talking to Teddy Goldsmith [gadfly older brother of the late billionaire Sir James Goldsmith, and founder of The Ecologist] about a program he was proposing that would "train" the poor in development, and I asked him very sincerely about whether or not it might be just as important to train the rich to not over-develop. He was somewhat peeved and dismissive, but I think it is a valid point. In other words, physician heal thyself.
JE: I can picture Teddy under a full head of steam not wanting to switch rails, but his 1972 "Blueprint for Survival" edition of The Ecologist was all about the need to rein in rich-world appetites. So where is your own thought-train taking you?
PH: Well, to put it another way, what is it that we want to export? Is it a short-term fix—or do we collaboratively want to develop a true model of resource flow that will allow the quality of life for the majority world to develop sustainably? By making the "world problematique" an opportunity (which it is), but an opportunity only, we risk spreading a mindset that says that capitalism just needs a mild course correction and then everything will be fine.
JE: As one of the founders of garden tools firm Smith & Hawken, once described as "the gold standard in outdoor living," it's clear you're highly entrepreneurial and not exactly anti-markets. But some of this might make full-blooded capitalists a little nervous.
PH: It was Gorbachev who said that markets are not an invention of capitalism, but an invention of civilization. Markets and capitalism are two different animals. Someone who sets up a shop to sell something is not a capitalist per se, no more than a farmer who sells his grain or a joiner who sells furniture. Corporations believe that financial capital has a right to grow and that those rights can take precedence over the rights of cultures, of place, of what has been historically known as the commons. Once you believe that capital has a "right" to grow, and you couple it with the concept of "fiduciary responsibility," it is, "Katie, bar the door" [meaning trouble or disaster is coming]. As Wendell Berry writes, corporations act as if they deserve to be immortal, with the "single purpose of becoming a bigger pile of money." I don't think there can be a serious discussion of value without discussing the assumptions, and in a thermodynamic sense, the physical illusions, of capitalism itself. What has happened is that if you are critical of capitalism—you are seen as recidivist, antediluvian, a nut. There is no ideology in the world that gets a freer ride right now, and you can tell a dominant ideology because no one is allowed to question it without scorn, as if that debate was settled long ago. I don't think so.
JE: And your reaction to Jed Emerson's notion of "Blended Value"?
PH: In Jed's analysis, he says that "all organizations create value," which consists of three components—social, financial, and environmental. If he meant that organizations could in theory create value in all three sectors, I would agree. But in fact he says that value is what gets created whenever investors invest and organizations pursue their mission. Investing capital does not in itself create value. Capitalizing what? I investigated a logging company once in Indonesia. By corruption and payoffs, they were able to get a license to cut primary forest in Sarawak from a corrupt government that had no interest in the well-being of its people. The company's workers were horribly exploited. The local tribes were badly treated, young indigenous girls were raped, while others were lured into becoming camp prostitutes. The dipterocarps and other ancient hardwoods were used to make tchotchkes for firms like Pier One and Cost Plus. The owners were wealthy beyond reckoning. I don't understand where the blended value is in any of the three sectors. Everything this company touched, it destroyed and harmed. I don't believe we can understand value unless we understand the concept of disvalue, how we can remove and destroy it. Approaching business with no minus signs is the same as measuring GDP as an aggregate, without looking at what parts of GDP represent loss of value: crime, cancer, corruption, and so on.
JE: Let's name names. Take Hindustan Lever. Here is a giant multinational company offering its products in smaller packages to break through to poorer would-be consumers. So a woman can now wash her hair using modern products or sell them to make a profit for herself and her family. Good news?
PH: The shampoo example makes my point. The shampoo is made by Unilever. You don't have to be Marxist to question who owns the means of production. That woman should be involved in its production, not just selling little foil packets for a few rupees. Making that Indian woman the Hindu equivalent of the Avon woman is using self-esteem as a way to entrench economic power. It smashes entrepreneurship, localization, new enterprise. This is known as "poor-washing." For example, C. K. Prahalad writes in Foreign Policy about the benefits of a Dalit street sweeper's being able to buy skin-whitener. I think Unilever is a fine and almost always ethical company, so this is not about them. It is about this idea that we can open up the bottom of the pyramid to a flood of Western-made goods that will vault them into the lower to middle classes. But then what? What the poor want are rights, not foil packets. I hope that you take these issues head on. We can't assume that it is an unalloyed good that micro-enterprise in Gujarat feeds the $20 million a day after-tax profits of the world's biggest food and personal-care company.
JE: And what about the notion that cell phones and the Internet will help pull hundreds of millions out of poverty—and create vast new markets along the way?
PH: Communication is a liberating and vital technology. No question. But the jury is out as to whether communication technologies disperse power or concentrate it further. Look at media, look at Murdoch and Fox. The most concentrated sector is media, even more so than the days of yellow journalism and the Hearst empire. Look at steel, look at banking, look at industry after industry, and power is being concentrated in fewer hands, not more. The same is happening with new IT channels and tools. It doesn't mean the technology is not useful. But it does imply that corporations getting gargantuan is not in the public interest.
JE: In terms of feedback loops, civil society—particularly nongovernmental organizations—will be key. Isn't that the theme of the new totem pole you're carving?
PH: I believe that we are seeing the growth of a type of civil society. I call it Sustainable Civil Society, but in fact it has no name at all. My sense is that the environmental sectors, the social justice organizations, and the expression of indigenous culture are morphing, unknowingly, into the world's largest movement. It represents humanity's immune response to political corruption, economic disease, and ecological degradation. It is hard to say how big it is. We are creating a database of it at my institute, but we will not know for several years. We know it is at least 140,000 organizations, but it could be over a million. It is the movement that doesn't know it is a movement.
JE: And what about the folk who convert all of this into investment analysis and advice?
PH: What the world of investing needs is a nuanced, complete Consumer Reports type of research on every publicly held corporation, with a real ranking system in at least one hundred different categories. In turn, every institution that has stakeholders—universities, foundations, churches, pension funds, unions, etc.—should make their portfolio transparent and the scoring of the individual companies and their combined portfolio visible. This would provide stakeholders a more objective way to provide feedback to equity holders. Right now the process is opaque and old-boy, even, or I should say especially, in the field of socially responsible investment. That is the piece that needs doing next, but it will have to wait until I finish with the totem pole.blog comments powered by Disqus