Is Adam Smith The Founding Father of Sustainability?
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When I was working on my MBA in Sustainable Enterprise back in 2007 I remember the first time that Adam Smith popped into my consciousness. It was a typical Sunday afternoon class. We’d been in classes since Friday morning at … Continue reading
Why organic food isn’t as green as you think | GreenBiz.com.
I wonder, who’s behind this report? Sounds like something the Koch brothers would fund because it talks about the “staple crops” of wheat, rice, maize (corn), soybeans and so on…” which are either heavily GMO based crops (corn and soybean) or being developed for GMO varieties (rice in China, wheat in Eastern Europe). Beyond that fairly obvious bias towards GMO, the notion that these four crops are staple crops overlooks the role of corn and soybean in meat production, which is rising as world demand increases driven by China, and the role of fruits, vegetables, dairy, meat and fish in the larger food market. Furthermore, to conduct a meta-analysis of studies overlooks the individual study designs, vagaries in growing conditions, pest control, water issues and a host of other factors that effect yields. Finally, its a simplistic Cartesian approach to looking at the problem by trying to isolate it to yields while overlooking the larger external costs to environment, workers and consumers of any food production methodology. To couch it in terms of world hunger is a red herring, since the vast majority of food consumption is in the developed countries who tend to overeat — thus the rise in obesity globally.
Rodale has the longest study of conventional vs organic growing methods with over 30 years of side-by-side growing comparisons that factors many elements into the overall equation. The result? Organic is superior when you factor in many variables, including external costs. To read the study for yourself go here: http://www.rodaleinstitute.org/fst30years, or just search “Rodale study on organic” and it’ll be at the top of your search results. In 1942, Rodale started Organic Farming and Gardening magazine so their understanding of the subject is impressive and long-lived. They also publish Prevention magazine, one of the highest circulation magazines in the country.
To me the root problem isn’t about yields. It’s about consumption. Adam Smith writes, “Consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to only so far as it may be necessary for promoting that of the consumer.” So, shouldn’t the study be based on the consumer need? And, shouldn’t the consumer need include a metric that includes the external costs of conventional growing, harvesting, processing and distribution methods? The answer is yes. But, it’s seldom included. Why? Adam Smith tells us why in this passage that follows the “consumption” remark where he writes, “But in the mercantile system the interest of the consumer is almost constantly sacrificed to that of the producer; and it seems to consider production, and not consumption, as the ultimate end and object of all industry and commerce.” Smith made this point over 250 years ago and little has changed over time.
Constant and continual growth is unnatural in the material world. Yet, our business principles demand consistent and/or meteoric growth in order to meet quarterly goals or set up an attractive IPO. Nature abhors continual growth and in fact does everything it can to limit growth. The only continual growth in the natural world is cancer, which has a ravenous need to grow. The question facing us all isn’t yields, it’s consumption. Smith refers to “self-command” in the Theory of Moral Sentiments (1759) as a necessary quality of human expression as we seek the “approval” of others. He also writes, “the produce of the soil maintains nearly that number of inhabitants that it can maintain.” From a moralistic point of view it should cause those of us who over-consume to pause before swiping our card through the point-of-sale device. Americans throw away 40% of all food purchased. So, think about what you consume as satiating not only your own appetite, but your appetite for climate change, environmental degradation, fresh water availability and ultimately, your food choices.
Finally, look behind the headlines to the funding source behind studies to fully understand the motives behind the story. This particular report bears some scrutiny to see if the Koch brothers had some role in its creation and distribution.
The Turkish M.I.T. professor — who, right now, is about as hot as economists get — acquired his renown for serious advances in answering the single most important question in his profession, the same one that compelled Adam Smith to write “The Wealth of Nations”:
Why are some countries rich while others are poor?
Over the centuries, proposed answers have varied greatly. Smith declared that the difference between wealth and poverty resulted from the relative freedom of the markets; Thomas Malthus said poverty comes from overpopulation; and John Maynard Keynes claimed it was a byproduct of a lack of technocrats. (Of course, everyone knows that politicians love listening to wonky bureaucrats!) Jeffrey Sachs, one of the world’s most famous economists, asserts that poor soil, lack of navigable rivers and tropical diseases are, in part, to blame. Others point to culture, geography, climate, colonization and military might. The list goes on.
But through a series of legendary — and somewhat controversial — academic papers published over the past decade, Acemoglu has persuasively challenged many of the previous theories. (If poverty were primarily the result of geography, say, or an unfortunate history, how can we account for the successes of Botswana, Costa Rica or Thailand?)
Now, in their new book, “Why Nations Fail,” Acemoglu and his collaborator, James Robinson, argue that the wealth of a country is most closely correlated with the degree to which the average person shares in the overall growth of its economy. It’s an idea that was first raised by Smith but was then largely ignored for centuries as economics became focused on theoretical models of ideal economies rather than the not-at-all-ideal problems of real nations.
Howard Schultz
Recently, Howard Schultz has defined Starbucks’s mission even more broadly, creating programs that have nothing at all to do with selling coffee but are aimed at helping the country recover from the Great Recession.
In the speech, Schultz plans to make a direct link between Starbucks’s record profits and this larger societal role the company has embraced. He will make the case that companies that earn the country’s trust will ultimately be rewarded with a higher stock price. “The value of your company is driven by your company’s values,” he plans to say.
I bring up Schultz and Starbucks because this week we saw a different kind of American capitalism on display — the “rip your eyeballs out” capitalism of Goldman Sachs. In the corporate equivalent of the shot heard round the world, Greg Smith, a former Goldman executive, wrote an Op-Ed article in The Times as he was walking out the door in which he described a corporate culture that values only one thing: making as much money as possible, by whatever means necessary. According to Smith, Goldman views clients as pigeons to be plucked rather than customers to be valued. Goldman traders vie to see how much profit they can make at the expense of their clients, even if it means selling them products that are sure to “blow up” eventually. “It makes me ill how callously people talk about ripping their clients off,” Smith wrote.
Rothkopf argues that while for much of the 20th century the great struggle on the world stage was between capitalism and communism, which capitalism won, the great struggle in the 21st century will be about which version of capitalism will win, which one will prove the most effective at generating growth and become the most emulated.
“Will it be Beijing’s capitalism with Chinese characteristics?” asks Rothkopf. “Will it be the democratic development capitalism of India and Brazil? Will it be entrepreneurial small-state capitalism of Singapore and Israel? Will it be European safety-net capitalism? Or will it be American capitalism?” It is an intriguing question, which raises another: What is American capitalism today, and what will enable it to thrive in the 21st century?
Rothkopf’s view, which I share, is that the thing others have most admired and tried to emulate about American capitalism is precisely what we’ve been ignoring: America’s success for over 200 years was largely due to its healthy, balanced public-private partnership — where government provided the institutions, rules, safety nets, education, research and infrastructure to empower the private sector to innovate, invest and take the risks that promote growth and jobs.
