Can corporations be trusted to be guardians of our economy, society, and environment?

Question for Discussion: According to Hawken, can
corporations be trusted to be guardians of our
economy, society, and environment?

Readings: Hawken, pp. 161-199;
Hawken, "Dreams of a Livable Future" (2003);
Corporate Watch, "What's Wrong with Corporate
Social Responsibility"

Restoring the Social & Economic Guardian

Futuristic Scenario Websites for 2030 (in-class)
Global Trends Leading us to 2030 (in-class)
The Problem: Getting from Here to There (in-class)
Threats and Opportunities facing the U.S. (in-class)
Corporate Watch, "What's Wrong with
Corporate Resonsiblity"
Hawken, Restoring the Guardian (in-class)
Current threats to a Restorative Economy (in-class)
Hawken, Pink Salmon and Green Fees (in-class)
President Clinton's Carbon Tax Proposal (in-class)
Hawken, Most Sustainable Nation status (in-class)
Hawken, Dreams of a Livable Future (in-class)
RMI: What is Sustainable Development? (in-class)
RMI: What is Economic Renewal? (in-class)
RMI: Our Town is Growing Too Fast (in-class)

Threats & Opportunities facing Us

Paths to a Restorative Economy

Hawken's Vision
Hawken: Natural Capitalism
Hawken's Vision of a Restorative Economy
A Roadmap for Natural Capitalism
Paul Hawken: Basic Principles of a
Restorative Economy
Paths to Naural Capitalism
What is Sustainable Development?
What is Economic Renewal?

Hawken's Writing

Daly on Sustainable Economics

Rocky Mountain Institute

Sustainable Economic Principles

The Natural Step and Factor Four

Natural Capitalism Consulting

The Natural Capitalism Group: Consulting
Natural Capitalism Explained
Global Reporting Initiative
The Earth Policy Institute
Eco-Economy Indicators
Sustainable Development International

Restoring the Public Guardian

Futuristic Scenario Websites for 2030
Global Trends Leading us to 2030
The Problem: Getting from Here to There
(in-class)
Capitalism: The Remix (in-class)
Cost of Financial Bailout compared to the New Deal
$1 trillion Rescue not so fat-fetched (in-class)
Frank Sees Diaster if Auto Industry Fails
Reality Check for Detroit (in-class)
Paul Hawken: Basic Principles of a
Restorative Economy (in-class)
Hawken: A Declaration of a Sustainable Economy
(in-class)
Lewis, Government as the Ultimate Guardian
(in-class)
Hawken, Dreams of a Livable Future (in-class)
Threats and Opportunities facing the U.S.
Corporate Watch, "What's Wrong with
Corporate Resonsiblity" (in-class)
The Interface Corporation Sustainability Model
(in-class)
Hawken, Restoring the Guardian (in-class)
Current threats to a Restorative Economy (in-class)
Hawken, Pink Salmon and Green Fees (in-class)
The Failure of President Clinton's Carbon Tax Proposal as an example of the Problem (in-class)
Hawken, Most Sustainable Nation status (in-class)
RMI: What is Sustainable Development? (in-class)
RMI: What is Economic Renewal? (in-class)
RMI: Our Town is Growing Too Fast (in-class

The Problem: Getting from Here to There

Hawken doesn't sufficiently examine how we can go from our present economic and political system based on profits, lowest costs, environmental destruction, dependence on non-renewable resources, and pollution to one based on sustainability, restoring the environment, preserving scarce resources, and protecting quality of life. He provides a nice set of examples of how we could use green taxes and green fees to create new economic incentives to businesses to protect and restore the environment. But how do we get from where we are to where we want to go? If we can answer this question, we can begin to create a restorative economy and solve the global environmental crisis. But this is a very difficult question to answer. People like Paul Hawken and Amory Lovins are examples of environmental and energy consultants who get paid by cities and businesses throughout the world to help them answer questions like this.
.........................................................................................
Hawken, Restoring the Guardian

"The 50 million people who will be added to the U.S. population over the next forty years will have approximately the same global impact in terms of resource consumption as 2 billion people in India. If there is to be an ecologically sound society, it will have to come from the grass roots up, not from the top down. We have spent too much time and money making the world safe for upper-middle-class white men." (161)

"In principle and generally in practice, business is rewarded for producing the best product demanded by the market for the lowest price. In classical economics, this free market is an efficient system because the producer has every incentive to be as thrifty and innovative as possible. The market sorts out winners
and losers with democratic and sometimes draconian efficiency, relegating the ineffective producers to the economic margins, if not failure." (164)

"Business did not anticipate a time when those resources would diminish or run out. It was inconceivable that the vast plains and forests of the New World could be exhausted, or that the abundant new fuels of coal could produce enough waste to foul the air and the seas, or that the use of oil could eventually lead to global climate changes. So the system of rewarding lowest price, impelling companies to exploit the cheapest sources of labor and materials, could not anticipate a time when the lowest price would no longer actually be the lowest price, when seeking out the cheapest means to get a product to market would end up costing society in terms of pollution, loss of habitat, degradation of biological diversity, human sickness, and cultural-destruction. (164-165)

"Today, business is being asked by environmentalists to internalize some of the costs that were formerly externalized and largely invisible, and thus is being forced to respond to conflicting signals. On the one hand, it is asked to deliver goods to the marketplace at the lowest possible price; on the other, it is asked to assume the "new" costs of environmental stewardship. If it performs the first function too well, it is held accountable and punished by government, if not by public opinion, because it cannot achieve the lowest price without some or many forms of environmental and societal compromises. If it performs the latter function well, its costs may be raised so high that it suffers in the marketplace." (165)

"The role of government is to assume those functions
that cannot or will not be undertaken by citizens or private institutions....Politics was not intended to be the province of money, by the arena wherein individuals could collectively discuss and manage those elements of life that affected the whole of their town, city, or state." (Hawken, 166)

"[Government] can and must set the conditions under which commerce operates. It must establish the standards that help guide the planning and development of business...Government can and must be the guardian of human and natural systems." (Hawken, 168)

"At the same time, the guardian of human and natural systems must recognize its own limitations in relation to commerce. It cannot tell companies what to make and how. It does not have the ability to allocate resources in an efficient manner. It cannot set prices. But it can and must set the conditions under which commerce operates. It must establish the standards that help guide the planning and development of business. It must be willing to accept that the most important social unit in a democracy is not the biggest--a large corporation--but the smallest: individuals, families, and communities that are constantly being affected by the decisions of business to externalize their costs onto society and the environment." (168)

"The main function of green taxes is not to raise revenue for the government but to provide participants in the marketplace with accurate information about cost. They achieve both goals, of course, but their underlying purpose is to undo the distortions created by the relentless pursuit of lower prices, and to reveal true costs to purchasers. Green taxes would create, perhaps for the first time since the Industrial Age began, the closest thing approximating a truly free market, with many costs now externalized fully accounted for." (169)

"The whole key to redesigning the economy is to shift incrementally most if not all of the taxes presently derived from "goods" to "bads," from income and payroll taxes to taxes on pollution, environmental degradation, and non-renewable energy consumption. Because green taxes are incorporated into the price a company or customer pays for a resource, product, or service, they create powerful incentives to revise and constantly improve methods of production, distribution, and consumption, as well as a means to reconsider our wants and needs. The purpose of a green tax is to give people and companies positive incentives to avoid them. " (171)

"Green fees give people ways to respond, change, invent, and innovate. They create adaptive behavior instead of the maladaptive behavior seen in the present tax code. In terms of business, they profoundly affect strategy and growth. By imposition of incremental and eventually large green fees, businesses are positively encouraged not merely to meet regulations, but to embrace them, to exceed them, because the better the job they do in this regard, the lower the green fees, the lower their costs." (172)

"Although the imposition of green taxes must come from the people through their government, their overriding purpose is to restore economic scale and decision-making to local and regional levels where it belongs. As the highly centralizing and dominating effects of cheap energy and subsidized resources are eliminated, the competitive advantage of many corporations would be eliminated or reduced. Who needs a nationally advertised beer if the local beer is cheaper, tastes better, reuses its glass bottles, and employs locals? Or who needs imported pink, hard, pesticide-laced tomatoes if the local, hothouse tomatoes are red, ripe, and less expensive? We have to imagine green fees as a way to rearrange the economic game, a way that produces a better result for all. We are so battered by the insults of the existing system that we fail to see how creative are the alternatives." (175)

Current Threats to a Restorative Economy

Lewis, Government as the Ultimate Guardian

The recent financial collapse demonstrates that government must now be the ultimate guardian of the
economy, society, and environment. Government must
make the rules that govern our larger economy and social and political system. Unregulated, free-market capitalism, untamed by government, proved that it couldn't be trusted to manage the welfare and well-being of our society. Only a mixed economy that balances the needs of business, citizens, consumers, the environment, and future generations can be trusted
to be the guardian of our society and its future.

Hawken, Pink Salmon and Green Fees

"Given the time-honored definition of economy as the careful management of the wealth and resources of a community, we can find many areas of potential agreement between economists and ecologists. First, any time there is inefficiency in the form of pollution or waste, it is uneconomic and therefore more costly. Second, increases in efficiency not only will reduce global warming gases such as CO 2 , but also will save money and improve the economy. [f our economy was as energy efficient as that of Sweden or Japan, we would have been spending $200 billion a year less in energy during the past decade, an amount equal to the average annual budget deficit incurred by the federal government." (177)

"We must reunite the concept of efficiency to include both natural and human communities, a union that is inherent in the true concept of economy, but has been set aside in its present practice. Because efficiency should be the common ground between economics and ecology, it represents the bridge to a restorative economy." (179)

"Of all the possible green fees, taxing energy would be the most fruitful and beneficial, and it would provide the greatest short-and long-term benefit. A tax on the carbon content of fuels is a green tax that raises the price of energy sources proportionate to their emission of carbon, thereby providing users of those fuels with positive incentives to switch to more efficient combustion methods and, where possible, to less polluting forms of energy." (179)

"If the taxes on energy should go up overnight (as they did, in effect, during the oil embargo of 1973), they cause inflation, dislocation, and chaos. But if green taxes on energy are applied over a twenty-year period, producers and consumers have ample time to adapt, plan, and reinvent. Green fees on energy should gradually rise to the level where it is less expensive for individuals and industry to rely on alternatives to carbon-based fuels. Wind, water, and solar radiation provide permanent sources of energy, and they will always be available, while coal, oil, and gas are in finite supply." (180)

"Solar energy does not pollute, does not cause asthma and emphysema in the L.A. basin, does not destroy the forests of Europe or the northeastern United States with acid rain, does not run aground and spill into the ocean, does not seep into groundwater, pollute rivers, or create Superfund sites. These and other costs are what is missing from market prices when you pump your gas, turn on your heater, even buy your food. By relying upon an economy based on cheapest and lowest price, and in effect promising that more people can have more things, we will absolutely create a world where we will have less and less, and the imbalances between rich and poor will continue to grow more pronounced and inequitable." (181)

"If green taxes level the playing field for farmers and provide positive incentives to break chemical addiction, then the lowest-cost foods in the marketplace will in many cases be the highest-quality foods. The marketplace will be restored to its oft-praised purpose in life, which is to sort out the winners and losers. The winner will be' he farmer who best takes care of his or her soil, animals, and posterity, not corporate entities that are essentially mining and extracting fertility for short-term gains." (186)

"The revenue-neutral nature of the green taxes will assure lower-income people that they will have not less income, but better-quality food. It seems unfair if not unjust that the only people who can now afford foods grown without toxic chemicals are those high on the income chain, who derive the greatest amount of money, indirectly or directly, from the economy of degradation." (187)

"Green taxes can be applied to a wide variety of resources, products, and processes. Products that cause distinct, identifiable, and long-lasting damage should at least pay their way. These include cigarettes, guns, ammunition, and alcohol. Tobacco use alone costs society over $60 billion a year in health costs and in lost income and productivity. These are costs we are now bearing in increased medical bills, taxes, and reduced economic performance. Taxing tobacco to take on some or all of that $60 billion doesn't "cost" more, it simply shifts the costs to the marketplace, where everyone can see them, and where the person incurring the expense to society pays for his or her impact on the rest of us." (188)

"Green taxes can revolutionize an economy toward evolving natural systems of production and design. They are more complex than the "polluter pays" concept, although in many cases they will have that result. Because they would be instituted over a twenty-year period, no business or industry would be unjustly singled out or penalized. Every company affected, directly or indirectly, would have ample opportunity to reconsider and redefine its business, if necessary. It would have time to plan, to invest, to invent, and to innovate. At the same time, consumers and workers would be freed from the tyranny of inefficient markets and would begin to integrate their actions in the workplace and in the home toward positive and constructive changes in the world." (189)

"Any ecological model of commerce must not only mimic nature in recognizing that waste equals food, running off of current solar income, and protecting diversity, but it must also have firmly and clearly in place feedback that allows it to recalibrate constantly and quickly adjust its costs, supply, and demand. Instead of following the cyclical paradigm, most of our resource businesses today are linear systems that by their nature receive and give out the "wrong" information to themselves and the greater environment." (190)

"The pasture utility is a useful model for a mechanism to guard our own commons, whether local or global. Such a utility can maximize the strengths of both the private and public sectors, without succumbing to the failings of either. Utilities are hybrid enterprises because they combine two unusual features. First, they are regulated by their constituencies through public utility commissions or other forms of public sector input. In return for accepting regulation, they are given monopolies and are guaranteed a certain level of profit. In other words, by allowing some form of public control, they receive a guaranteed return on their investment, a relationship that allows them to create and execute long-term projects, and attract capital while paying low interest rates." (191)

"A salmon utility would recognize that existing market mechanisms do not operate in the best interest of the fish, the fishermen, the consuming public, or the salmon habitat. To support the utility, there would be a fee on salmon landed on the Pacific Coast . Those revenues would go directly to a central Salmon Utility or a number of smaller regional salmon agencies, whose sole purpose would be to increase the stock of salmon. To do this, the utility would spend its funds primarily on habitat restoration, but also on education, land acquisition, if necessary to protect key habitats, and research. As a utility, it would be allowed a guaranteed profit of 10 to 12 percent depending on performance. The salmon utility would issue stock just as a power utility does, but given its guaranteed revenue flow from the salmon tax, it would also have the capacity to issue bonds at favorable interest rates, which could be used to invest in long-term restoration projects. Because the corporation would be limited in its profitability, it would have the incentive--actually the requirement--to invest 88 to 90 percent of its revenue on a yearly basis into restoration." (193)

"We are losing those resources, because they are either controlled by private corporations or by the state, and neither has proved successful in establishing long-term strategies for ensuring the enduring well-being of the commons. Governments the world over give resources to corporations that are not required to take care of them, and therefore do not. The reason, as discussed in the previous chapter, is the failure of the market to internalize fully all costs. If the market is rewarded for externalizing costs and extracting wealth, then individual producers can be expected to leave to the state, wherever possible, the job of restoration and clean-up. On the other hand, it is quite impossible for a state agency to maintain ecosystem health when its main function is to deal with aftermarket degradation." (197)

" Business continues to push for programs and laws that maximize current means of production, continue despoliation, and expand their markets. At present, the GATT and NAFTA agreements are little more than thinly veiled blueprints for the expansion of trade by multinational corporations. They have little to do with small businesses, community concerns, or cultural diversity, and only in passing do they consider the environment. Restraints will be removed both in regulations and tariffs, giving these corporations free rein to seek production where they can get the cheapest resources and labor. The net effect is that the world becomes a large, non-union hiring hall, with poorer countries lining up for plum investments, willing to donate land, resources, environmental quality, and cheap labor as their cost of achieving economic "development. " The main accomplishment of both agreements is to extend to those companies that can afford to go overseas and that have markets sufficiently large to justify that expense the ability to continue to externalize costs onto human and natural communities. The biggest companies are rewarded for seeking the lowest common denominator of cost. " (197-198)

Most Sustainable Nation

"If corporations are sincerely committed to environmental restoration, as so many claim to be, they will reverse current regulations and propose a new tariff status called Most Sustainable Nation (MSN), replacing Most Favored Nation (MFN). This status would grant low or no tariffs to countries that practiced sustainable harvesting of resources, that did not despoil the environment, that did not allow worker exploitation, that did not have corrupt government officials selling off tribal forests to the highest corporate bidder. Such countries would be given the freest access to western markets. Nations that continue to harm peoples and ruin lands, would be penalized by significantly higher tariffs that would re-internalize those costs that they thought were being saved by taking social and economic short-cuts. Their products would become uncompetitive, and they would have little incentive to continue industrial degradation." (198)

Hawken: Dreams of a Livable Future (2003)

All publicly held corporations live a lie. They believe that we reside in a world where capital has the right to grow and that that right is a higher right than the rights of people to their culture and what we hold in common. There is something incalculably wrong with this view. You can't get to sustainability from an economic model that strives first and foremost to increase the amount of money large corporations have. You can't get there if you're destroying the world's local economies.

"Until corporations understand that they are spearheading a kind of commercial fascism, they're going to find that resistance will grow. It's fascist in the sense that it is an attempt to create a meta-order for people, with the assumption that a small group of people know better than the larger group; therefore, the large group does not have to be consulted. Whether it was Marxist Leninism or Mussolini, fascism has always been informed by the vanity that a few know more than the many—for their “own good.” What is the World Trade Organization trying to bring to the table? Rules, order. What is the Free Trade Area of the Americas treaty trying to do? Rules, order. But whose rules? Whose order? What process? ....Trade is great. Trade is civilizing. Trade is not the issue. The question is who sets the rules and who enforces them. What will the shape of the relationships be among nations, regions, peoples, companies, markets, and the commons which support all life on earth? "

It will come down to some very simple questions in the end. Do we want democracy and self-determination, or do we want oligarchic institutions? Do we want a world of uniformity where the road from every airport to every city center looks like every strip mall in the world? Do we want another world than the one envisioned by Monsanto, Wal-Mart, and Disney? Or do we want strong regional and native cultures proud of their heritage, devoted to their land, committed to true development and the future of their children?

"A world where 20 percent of its people get less than 1 percent of its resources, where nearly a billion go to bed hungry, a world torn by strife, riddled by greed, controlled by small, petty men bankrolled by large transnational corporations is not cheap. "

We know how to transform this world to reduce our impact on nature by several-fold, how to provide meaningful, dignified living-wage jobs for all who seek them, and how to feed, clothe, and house every person on earth. What we don't know is how to remove those in power, those whose ignorance of biology is matched only by their indifference to human suffering. This is a political issue. It is not an ecological problem. The way to save this earth is to focus on its people, and particularly those people who pay the highest price: women, children, communities of color, the localized poor. The sustainability movement—without forsaking its understanding of living systems, resources, conservation, and biology—must move from a resource flow model of saving the earth to a model based on human rights, the rights to food, the rights to livelihood, the rights to culture, community, and self-sufficiency. The environmental movement must become a civil rights movement, a human rights movement. Without that, it will simply be a failed white man's movement from the North.....

I was recently asked by a journalist, “Aren't you just dreaming?” I replied, “Absolutely I'm dreaming; somebody's got to dream in America.” The dreams of a livable future aren't coming from George Bush and Dick Cheney, and it is our right to dream. It is something we owe our children's children. A dream is a gift of the future, and the future is begging.....

I once gave a talk at an elementary school to third graders, and I told them that there are a billion people in the world who want to work and can't work. A girl raised her hand and said, “Is all the work done?”

Sustainability has to be about improving the quality of life of all people on earth and honoring all forms of life..... The Sufi poet Hafiz wrote, “Clever men place the world into cages, but the wise woman who must duck under the moon throws keys to the rowdy prisoners.” Let's throw keys to the rowdy prisoners. Sustainability is about freedom from tyranny, from empire, from corporate rule, the freedom to honor life. Let's create, in Janine Benyus' memorable phrase, “a world conducive to life.”

Corporate Watch, "What's Wrong with Corporate Social Responsibility"

"Defining the concept

Corporate Social Responsibility is...

...a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis. European Commission 1

...the commitment of business to contribute to sustainable economic development, working with employees, their families, the local community and society at large to improve their quality of life.' World Business Council on Sustainable Development 2

"CSR describes the principle that companies can and should make a positive contribution to society. CSR is the practice of managing the social, environmental and economic impacts of the company (dubbed by SustainAbility the 'triple bottom line' 3 ), being responsive to 'stakeholders' (those who are affected by a business operation) and behaving according to a set of values which are not codified in law. In practice the term can refer to a wide range of actions that companies may take, from donating to charity to reducing carbon emissions. "

"Corporate social responsibility (CSR) evolved as a response to the threat anti-corporate campaigns pose to companies' license to operate. But corporate social responsibility is a contradiction in terms. Companies are legally bound to maximise profits to shareholders. This duty to make money above all other considerations means that corporations can only be 'socially responsible' if they are being insincere. Any doubtful social benefits from CSR are outweighed by the losses to society in other areas. CSR is an effective strategy
for: bolstering a company's public image; avoiding regulation; gaining legitimacy and access to markets and decision makers; and shifting the ground towards privatisation of public functions. CSR enables business to propose ineffective, voluntary, market-based solutions to social and environmental crises under guise of being responsible."

"Since companies cannot act in any wider interest than the interest of their shareholders to make profit, CSR is of limited use in creating social change. Since CSR is also a vehicle for companies to thwart attempts to control corporate power and to gain access to markets, CSR is a problem not a solution. "

See full Report: Corporate Watch, "What's Wrong with Corporate Social Responsibility"

Let's look at what Amory Lovins of the Rocky Mountain Institute would tell a city that came to him for his advice on what they should begin to do to create a sustainable city and protect and restore its environment .( See The Rocky Mountain Institute's What is Economic Renewal webpage ):

What is Sustainable Development, and
is it really achievable?

Sustainable development means many things to many people. Indeed, the term has been so widely used that it has lost much of its meaning. Here's a definition from RMI's Economic Renewal Guide. Sustainable development:

1. Weighs community values and the environment alongside conventional business concerns.

2. Uses renewable resources no faster than they can be renewed.

3. Uses non-renewable resources understanding that someday a renewable substitute will be required.

4. Seeks ways to strengthen the economy without increasing "throughput."

5. Focuses more on getting better, less on getting bigger.

6. Seeks development that increases diversity and
self-reliance.

7. Puts waste to work.

8. Regards quality of life as an essential asset.

9. Considers the effects of today's decisions on future generations.

10. Considers the off-site effects of decisions.

11. Considers the cumulative effects of a series of decisions.

12. Measures whether actions actually do what they're intended to do.

Each of these concepts is discussed in detail in "Sustainable Development: Prosperity Without Growth," which is posted at this site. That paper is the first chapter of The Economic Renewal Guide, which you can look at the RMI's library webpage.

Achieving sustainable development is an incremental process, not an overnight transformation. Any local economy is likely to have some unsustainable aspects and some sustainable ones. A realistic goal is to gradually phase out unsustainable activities and, to the extent possible, phase-in sustainable (or at least more sustainable) ones to take their place. How to do this is the subject of the entire Economic Renewal Guide, but you'll find a number of ideas and examples in the book's second chapter, "RMI's Economic Renewal Program: An Introduction," which is also posted to this site.

RMI offers hands-on training and consultation on sustainable community development. For more information, see the Economic Renewal Program Guide to Services.

What is Economic Renewal?

Economic Renewal is both a philosophy of sustainable development and a step-by-step process for achieving it. Created by RMI, Economic Renewal has been field-tested in dozens of communities around the country.

Communities too often assume that the solution to economic problems is growth -- more industry, more commercial or residential development, more tax revenues, etc. In contrast, the underlying philosophy of Economic Renewal is do better with what you already have. Communities that try to grow (in the sense of expand) their way out of problems often find that the growth only brings more--and bigger--problems. By doing better with what they've got, communities can increase wealth while maintaining their quality of life and values, retaining control over their future, and reducing the risk of unintended consequences.

The following is a summary of "RMI's Economic Renewal Program: An Introduction," which is posted in full elsewhere at this site.

Economic Renewal stresses four principles:

1. Plug the leaks. Like heat from an uninsulated home, dollars leak from an inefficient community. Plugging unnecessary leaks puts money back into the local economy just as surely as if it had been earned through new industry--but it avoids many growth-related problems and costs.

2. Support existing businesses. Too many communities woo outside businesses while overlooking the wealth-creating power of their own entrepreneurs. Locally owned businesses tend to be more responsive to local needs and values, and more likely to stand by the community through thick and thin. Supporting them also keeps more dollars circulating in the local economy.

3. Encourage new local enterprise. As with existing businesses, new businesses will contribute far more to the local economy if they're locally owned. A town that's plugging leaks and supporting existing businesses is an exciting place to start a new one.

4. Recruit compatible new businesses. "Smokestack--chasing"-the indiscriminate courting of outside corporations--is a risky, high-stakes game that has left many a small town in the lurch. However, having pursued the previous three steps, a community will be in a stronger position to recruit new businesses that are compatible with its values and needs.

Nine Tools

In more than a decade of field-testing Economic Renewal, RMI staff have worked with dozens of successful, resourceful communities. Based on their inspiring experiences, here are nine tools for harnessing the above principles:

1. Ask why. Asking why shifts the focus from particular proposals, which may divide the community by appealing to entrenched positions, to the underlying goals that unite the community. Having asked why, you can then choose the best way to achieve those goals rather than narrowly focusing on one-size-fits-all solutions.

2. Manage demand. "Demand management" starts by asking what job the user wants done, and then determining the most efficient way to do it. It usually turns out that no kind of new supply can compete with the more efficient use of what you've already got.

3. Pursue development, not necessarily growth. Growth, in the sense of expansion, is an increase in quantity; development is an increase in quality. True, expansion creates jobs; but sustainable development puts people to work, too, without the problems often associated with physical expansion.

4. Seek small solutions. The bigger the solution, the harder it is to pull off, the longer it takes, and the greater the risks. Small solutions are usually faster, more flexible, less expensive, and more manageable than large ones.

5. Find problem-solvers who care. Entrusting your community's future to disinterested outsiders is likely to lead to delay, disappointment, and an unacceptable loss of control over the outcome. In contrast, local people--especially local business people--have a vested interest in seeing your community thrive.

6. Increase the "multiplier effect." When a dollar enters a community and is then spent outside the community, its benefit is felt only once. Keeping dollars recirculating multiplies their benefit, adding more value, paying more wages, financing more investments, and ultimately creating more jobs.

7. Find hidden local skills and assets. Virtually every community has some unique asset or skill that can be put to work creating wealth. The trick is to examine your community with a fresh eye. Opportunities may be right there for everyone to see but waiting for someone like you to recognize them and put them to work.

8. Build social capital. A community's most important strength is the capacity of its people to work together for the common good. Like more conventional forms of capital, this "social capital" is essential to successful development.

9. Organize regionally. The human scale of a community--which is its strength on a social level--can make for limited economic options and few opportunities to make business connections. A smart development effort looks for ways to tie in more fully to the regional economy.
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The Economic Renewal Process

Think of the principles and tools discussed above as the backdrop for Economic Renewal. The main event is an eight-step process of collaborative decision-making that's designed to bring together residents from all walks of life to develop projects to strengthen their community and its economy.

With the exception of the first preparatory step, the process consists of a series of town meetings, each building on the results of the previous one. The process is conducted by and for community residents, who, after all, understand their community's needs and assets better than any outside "expert."

This process is described in detail in RMI's Economic Renewal Guide, which you can order through our online catalog. Other Economic Renewal books on food and agriculture, energy, and business opportunities can also be found there.

RMI also conducts training seminars and consultations in communities interested in using Economic Renewal to develop sustainably. For more information, see the Economic Renewal Program Guide to Services.
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Our town is growing too fast. What can we do?

A community that's growing too fast will probably experience some or all of the following symptoms:

1. rising cost of living
2. higher taxes
3. traffic congestion and pollution
4. housing shortages
5. increasing crime
6. cutthroat business competition
7. increasing intolerance of differences
8. disrespect for traditional leadership

If you think your town is growing too fast, this list will probably sound familiar.

Before discussing what to do about growth, let's first look at why it so often happens even when it's not in a community's best interests. The following section is excerpted from "Sustainable Development: Prosperity Without Growth," which is posted in full at this site. For a more detailed analysis of community growth and what to do about it, order "Paying for Growth, Prospering from Development."

Clearly Amory Lovins and the Rocky Mountain Institute team approach creating sustainable cities as a complex, involved process of education, technology and design, and development of institutional reform. I want to give a clear example of how this process of creating a sustainable city can go wrong. Let's use the city of Boulder, Colorado, as a example of the real problems that can beset a city that doesn't properly think through the process of economic reform and renewal.

Since the late 1970s, the city of Boulder has had a growth management plan. This plan focuses on limiting the growth of old businesses and restricting the introduction of new businesses; limiting the construction of new housing and remodeling existing housing units; and purchasing "open space" around the city to prevent further business and housing growth. The goal of this plan is to limit the growth of urban sprawl, crowding congestion, and pollution. But does it work?

Last year, the city of Boulder estimated that 50,000 people drive to Boulder every day to work. These people are creating a massive traffic, congestion, and pollution problem. Boulder is in a valley and the smog and pollution collects and is trapped on the valley floor. In response to these growing problems, the city of Boulder has become even more committed to limiting new business growth in Boulder. But with Boulder's refusal to allow new manufacturing companies and their high-paying jobs to locate in Boulder, this makes it even more difficult for the people who work in Boulder to be able for afford to live here. As a result, Boulder has seen a growth in low-paying service sector jobs and increased commuting into Boulder, because Boulder will not allow any more industrial businesses to locate in Boulder. All this makes it even more necessary for the people who work in Boulder to drive long distances to work. As the few remaining building sites are developed around the edges of Boulder, the costs of housing keeps going up, because there is a limited new supply of housing. As the cost of housing in Boulder and in Boulder county continues to go up because of our commitment to open space and limiting development, more and more people find that they have to commute even longer distances to work in Boulder. As a result, Boulder feels more crowded, more polluted, more congested, and more populated than it really is. Boulder's growth control measures are not solving the problems created by growth and congestion but in some ways making them worse.

It is precisely complex, difficult problems like this that Amory Lovins and Paul Hawken and other environmental and economic consultants get paid thousands and thousands of dollars to try to solve. They are not easy problems. Often the very efforts you take to solve the problem, make it much worse. Given the difficulty and the political conflict that can result from such efforts to control growth and promote sustainable cities, many cities throw up their hands in despair and say it is out of their control. But this simply isn't true as Lovins and Hawken's consulting work demonstrates.

But just think if it is so difficult to create sustainable cities, how can we expect states, nations, and the global community to even begin to take the steps they need to to create sustainable human communities? In addition to the difficulties of design and overcoming divisive political conflicts, states and nations are faced with the increasing economic and political power of national and global corporations who are using their considerable power and influence to block these efforts to create restorative economies and societies. Currently, large corporations control and limit the power of governments to make these reforms by threatening to cut off the vast amount of money they give state and national politicians and political parties. Hawken argues that businesses should stop trying to corrupt the political process and allow government to function as "the guardian" of business and the larger society. Business should allow government to set the standards and limits that will make it profitable for business and citizens to protect and restore the environment. But how can government convince these powerful corporate interests it is in their interest to allow government to reform our economy and society so that the market and free enterprise will encourage everyone to protect and restore the environment? This is a very difficult question to answer.

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President Clinton's Carbon Tax Proposal

Let's look at a specific federal government effort to change the economic incentives in order to encourage business and consumers to reduce their consumption of fossil fuels. In 1993, President Clinton suggested that the United State put a carbon tax on all businesses and consumers who used fossil fuels. By increasing the costs of oil, gasoline, coal, and natural gas, the federal government would be encouraging business and consumers to reduce their consumption of fossil fuels and develop and purchase new, more energy-efficient technology. But the major energy companies and the automobile companies spent millions of dollars to kill this carbon tax arguing that it would reduce their profits and costs thousands of jobs; they were focused on the short-term costs to business, not the long-term costs to business and society of continuing to use increasing amounts of fossil fuel. As a result of pressure from business and consumers, President Clinton quickly backed off his carbon tax proposal. He discovered that American business and consumers were unwilling to pay "green taxes" in order to protect the environment and their society.

The failure of the carbon tax proposal raises an interesting series of questions: What could the government have done to convince American business and consumers that such a tax would benefit them both in the long- and short-term, that conserving energy and reducing pollution are real economic benefits that would make up for the burden of new taxes? Here Hawken begins to develop an answer. He argues that the government should gradually "phase-in" these green and environmental taxes over a period of twenty years. The taxes on energy consumption, use of material resources, pollution, environmental destruction, and consumption of products that aren't durable or recyclable should be slowly and gradually increased to allow business and consumers time to change their behavior and develop and buy new technology. In addition to phasing-in these new taxes, governments should slowly phase-out taxes on income and corporate profits. By convincing business and consumers that these new taxes are revenue-neutral, that is don't involve new, additional taxes but simply shift the tax burden from income and profits to environment and consumption, the government would be much more likely to convince them to accept these new green taxes. In addition, the government could give individuals and businesses tax breaks for buying new technology that would reduce their energy consumption. Finally, the government could give the energy companies tax incentives and financial support to move them from being in the fossil fuel business to being in the energy conservation and renewable energy business. These gradual, incremental changes, and the economic and environmental education about the true costs of our present system, would go a long way toward winning over business and consumer to accepting these new green taxes.

The larger immediate problem is that our political system is so corrupt and so overburdened with campaign contributions and financial support to politicians and parties that national and global corporations can use their economic power to prevent even small, initial steps to reform our economic and social institutions to create a restorative economy and society. ( See the Center for Public Integrity site for a number of studies of political and financial corruption in the United States.) It is at this point that many Americans throw up their hands and say: "The system is so corrupt nothing can be done about it." But if we don't accept the challenge of reforming our political, economic, and social institutions we must accept the horrifying conclusion that our global industrial civilization is doomed to destroy itself by undermining the environment that supports it. The large challenge that Hawken raises in The Ecology of Commerce is how we can collectively reform our institutions, recognizing the immense challenge and difficulty in trying to do so. Instead of giving up, people like Paul Hawken and Amory Lovins see this challenge as an interesting, exciting, and profitable venture for them. Those people who can provide real solutions and reforms that help us gradually move toward a sustainable, restorative economy and society will not only profit in doing do they will be helping to guarantee a future for their children and grandchildren. This is a real challenge, but it is not an impossible one.