Enough Is Enough

by Rob Dietz

  In recent years, cooperatives have seen a renaissance in economic life. In the United Kingdom, John Lewis, a cooperatively owned department store, recovered from the 2009 recession more quickly than many of its rivals.23 Membership in The Co-operative, the United Kingdom’s biggest farming operation, is increasing.24 The Mondragon cooperatives in Spain, established in the mid-1950s, employ 83,000 people.25 In Germany, cooperative laws were overhauled in 2007. And a new legal form, established in 2006 under the Latin name Societas Cooperativa Europaea, makes it easier to set up and administer cooperatives in multiple European countries.26

  The second type of business structure that may be particularly well suited for a steady-state economy is the public interest company. In the past, social enterprises were stuck between the choice of forming as for-profit businesses (which limited their ability to achieve social or environmental objectives), or as nonprofit organizations (which limited their ability to achieve commercial objectives). But recently a number of new legal forms have emerged that combine features of both profit-seeking and not-for-profit organizations.27 These include the:

  • Low-profit limited-liability company, or L3C (United States)

  • Benefit Corporation, or B-Corp (United States)

  • Gemeinnützige GmbH, or public interest limited company (Germany)

  • Gemeinnützige Kapitalgesellschaft, or public interest corporation (Germany)

  • Community Interest Company, or CIC (United Kingdom)

  These new legal forms allow social enterprises to prioritize social and environmental aims, while still pursuing profit as a secondary goal. CICs have been particularly successful. The legal structure has existed only since 2004, but more than six thousand CICs have opened for business in the United Kingdom.28 Two important restrictions distinguish CICs from standard companies: (1) dividends to shareholders cannot exceed 35 percent of total company profits, and (2) a CIC must be able to demonstrate that “its purposes could be regarded by a reasonable person as being in the community or wider public interest.”29 These two requirements represent a radical departure from conventional corporations. And although CICs must still pay taxes, some countries grant tax breaks to public interest companies. In Germany, for example, public interest companies do not pay income tax, creating an additional incentive for social enterprise.30

  Adopt New Measures of Success for Business

  In Chapter 9, we proposed new measures of progress for the overall economy. Indicators such as the ecological footprint, income inequality, and happy life years would replace GDP as measures of progress. This change in the economic landscape would require new measures of progress for businesses, too. As businesses increasingly seek to create social and environmental value, they will need indicators to track their performance. New indicators would provide valuable information not only to managers but also to investors, who would be able to direct funds to firms that seek a balance between social, environmental, and financial returns.

  A vast accounting infrastructure already exists to measure profitability within a firm. But there is no such infrastructure for measuring a firm’s social and environmental impacts. Still, some standards are being used by companies, and others continue to emerge. For example, the Natural Step is a nonprofit organization that helps businesses assess their performance on sustainability objectives.31 The International Organization for Standardization (ISO) has developed a standard that helps firms reduce pollution and protect the environment (ISO 14001).32 This standard includes guidance on how to evaluate environmental performance, while another standard (ISO 26000) contains guidance for corporate social responsibility.33

  These standards offer a starting point for businesses to measure their environmental and social performance. However, André Reichel, an economist and research fellow at Zeppelin University in Germany, proposes a radically different approach. He believes that instead of attempting to maximize and continually grow profits, firms should aim to achieve “right-size profits.”34 He argues that a firm’s revenues should be large enough to allow it to be financially viable, but not so large as to cause environmental damage. In order for firms to determine whether they are achieving right-size profits, Reichel proposes establishing two new pieces of information for businesses: (1) a measure of each firm’s total ecological impact, and (2) an ecological allowance to compare this impact to.35

  However, neither the ISO standards nor Reichel’s proposal address what could be the most important measurement challenge for businesses. As discussed above, firms in a steady-state economy would need to embrace a much broader concept of value creation and explicitly pursue social and environmental returns. For this to happen, both firms and their investors would require new indicators to measure the efficiency with which financial inputs were transformed into social and environmental outputs. Although there are currently no accepted standards for this sort of accounting, the SROI Network is developing and promoting a methodology for calculating “social return on investment.”36 Improved methods and accepted standards in this area would provide better guidance to investors, and in the process increase the amount of investment in businesses that create social and environmental value.37

  WHERE DO WE GO FROM HERE?

  It’s a fitting coincidence that a chapter about rethinking business happens to be Chapter 11. Chapter 11 is a section of the U.S. bankruptcy code that provides protection and reorganization rules for a business that is unable to pay its debts. The phrase “filing for Chapter 11” has made its way into the vernacular as a synonym for “business failure.” Some of the most prominent companies that have filed for Chapter 11 are Lehman Brothers, Enron, and WorldCom. These infamous corporate collapses represent the worst of the worst in traditional business, but as we’ve seen, there is a general problem with the way large shareholder corporations operate.

  Taken together, corporate impacts are overwhelming the capacity of the world’s ecological systems: the atmosphere can’t take the emissions; the soil can’t take the depletion; the forests can’t take the felling. At the same time, by focusing narrowly on profits, many businesses are squandering opportunities to create social and environmental value. We need to declare a Chapter 11 on the way businesses are currently operating.

  Confronting corporations and curtailing their power is a necessary step for new business models and structures to gain traction. But make no mistake: it’s not going to be easy to wrest power away from entrenched corporate interests. This may be particularly true in the United States, where the courts have granted corporations the power to spend virtually unlimited sums of money on political campaigns.38

  Fortunately, people are calling for measures to level the playing field. For example, David Cobb, a lawyer, politician, and activist, has initiated a movement to amend the U.S. Constitution to restrict the rights of corporations, particularly when it comes to campaign finance.39

  But confronting corporations will only get us so far. As Buckminster Fuller, the famous designer and systems theorist, said: “You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.”40 In the transition to a steady-state economy, entrepreneurs can follow Fuller’s advice by nurturing business models that create shared value, applying alternative business structures, and tracking social and environmental performance.

  Governments also have a role to play in the transformation of business. First, they can tax the excess profits captured by shareholder corporations. Second, they can provide incentives to set up (or change to) alternative business structures by streamlining administrative requirements or providing tax breaks. And third, they can mandate the use of measures of social and environmental performance to accompany measures of financial performance.

  With leaders in both the public and private sectors working together to overhaul the way business is done, positive changes will emerge. Businesses will adapt to the development of steady-state policies and flourish in the new economic landsca
pe. They will continue to generate employment, create new technologies, and foster innovation, but within a framework that respects ecological limits and promotes human well-being. Some inspiring businesses are already doing these things, even in resource-extracting industries.

  Much like the Once-ler, T. D. Collins saw an opportunity to build an enterprise based on logging. But Collins’s enterprise, which he started in 1855, couldn’t be more different from the Once-ler’s. To understand how, you need only read the core values championed by the Collins Companies today:

  [W]e believe that third party, independent certification of our forestland is the best way to protect the legacy of the total forest ecosystem—now and into the future. To achieve this, we have had to listen, learn, and change. We have.

  We also believe that integrating the principles of The Natural Step into our business operations will result in a sustainable society. Once more, it means we have had to listen, to learn, to change. And, again, we have.

  In some ways change is simple, in some ways it’s complex. But if your principles demand that you work to create a healthy, viable Earth, in addition to a healthy, viable business, then you must risk change. You must be change.41

  The firm, which sells wood products certified by the Forest Stewardship Council, is neither beholden to absentee shareholder-owners, nor hamstrung by a short-term profit motive. Over five generations, the owners have maintained a successful business and served as conscientious caretakers of both land and water. Their business creates far more than just financial value; it creates social and environmental value as well, and serves as a model for business in a steady-state economy.

  Business reforms, when combined with the other steady-state reforms introduced in Chapters 5 through 10, provide a pathway from the frantic and unsustainable quest for more to the desirable pursuit of enough. But putting these policy reforms in place will require additional work to change values, overcome entrenched interests, and get the word out. Part III of this book, Advancing the Economy of Enough, explores strategies to: (1) move past the culture of consumerism, (2) start a public dialogue about the downsides of growth and the upsides of a steady-state economy, and (3) expand cooperation among nations. Successful implementation of these strategies can help turn the steady-state economy from a hopeful vision into a hopeful reality.

  [ PART III ]

  ADVANCING THE ECONOMY OF ENOUGH

  [CHAPTER 12]

  ENOUGH MATERIALISM

  Changing Consumer Behavior

  In rich countries today, consumption consists of people spending money they don’t have to buy goods they don’t need to impress people they don’t like.

  CLIVE HAMILTON1

  WHAT ARE WE DOING?

  The stuff lying around in the workshop reveals that someone has been working on two distinct projects: building a wooden cabinet and repairing a bicycle. The warm smell of sawdust competes with the earthy odor of grease, and the tools of both the carpenter and the bike mechanic stake their claims on the workbench. Cardboard boxes of scrap lumber fight with crates of old bike parts for territory on the floor. For both projects (or any other conceivable project), there’s a bin containing several rolls of duct tape. And keeping guard over this scene are sanders and saws, wrenches and routers, and pliers and planes arranged on the racks and shelves that line the walls.

  Even though it’s been decommissioned for years, I can still see my dad down there, thumbing through drawers of nuts, bolts, and spare parts to find just the right doohickey to solve some mechanical mishap. It’s the workshop he kept in the basement of our house, and by any measure, it was overstocked. The tool usage rate was minuscule. Sure, he knew how to use (and even how to find) every item down there, but he had stuff you’d hardly ever need. He was clearly a tool addict. He’d buy an oscillating, pump-action, hot-glue demagnetizer if he could find a reason to justify the purchase.

  It’s both convenient and reassuring to have the right tool on hand for a job, and a well-provisioned workshop can be a source of creativity, fun, and empowerment. At the same time, it’s disconcerting to have tools that spend most of their lives collecting dust. The same goes for clothes, knickknacks, electronics, toys, and all sorts of other material artifacts that clutter the closets of consumers. But it’s beyond disconcerting—there’s something rotten at the core of a culture that places so much emphasis on the purchase, ownership, and display of stuff.

  The culture of consumerism, which values consuming over doing, being, or producing, dominates the modern economy in high-income nations.2 This dominance is not helping people reach their potential or lead more fulfilling lives.3 In the race for the latest and greatest, people are chasing iPods, iPads, iPhones, and plenty of other “I wants” instead of seeking true well-being. For many people, the accumulation of stuff, and always more and better stuff, has become the ultimate goal rather than a means to achieve a higher purpose. Where did this culture come from?

  Consumerism was on the rise in America, but still in its infancy, when Thorstein Veblen coined the term “conspicuous consumption” in the late nineteenth century.4 Wars and the Great Depression kept it in check, but it sprang into adolescence in the 1950s. That’s when the economist and marketer Victor Lebow wrote his article “Price Competition in 1955” in the Journal of Retailing. With stunning frankness, Lebow laid out this vision for the shopper society:

  Our enormously productive economy demands that we make consumption our way of life, that we convert the buying and use of goods into rituals, that we seek our spiritual satisfactions, our ego satisfactions, in consumption. The measure of social status, of social acceptance, of prestige, is now to be found in our consumptive patterns. The very meaning and significance of our lives today [is] expressed in consumptive terms.5

  Lebow pinpointed the emerging strategy of marketers, and since then consumerism has matured into a powerful force that rules over the economic household. The anecdotal evidence is everywhere. Terms like “Christmas creep,” “big-box retail,” and “mega-mall” have become commonplace. Phrases such as “When the going gets tough, the tough go shopping” adorn T-shirts and bumper stickers.

  Statistical evidence of consumerism’s maturity also abounds. U.S. citizens, on average, now consume twice as much as they did when Lebow published his article (and let’s not forget that there are almost 150 million more Americans to do the consuming). In addition, Americans today are exposed to more advertisements in one year than Lebow and his contemporaries saw in a lifetime.6 The story is similar in Europe. Sweden, for example, spends as much money on advertising each year as it does on education.7

  With calculated efforts to “make consumption our way of life,” it’s predictable that businesses would embrace planned obsolescence, a strategy to design products not for durability, but for rapid disposal (but not so rapid that a consumer’s “brand loyalty” might be affected). Stigma-based marketing is another objectionable, but unsurprising, hallmark of consumerism. According to business gurus Dan and Chip Heath, marketers deliberately cultivate insecurity and social stigma among consumers in the hope of selling a product that promises relief.8 As an example of this practice, they cite Procter & Gamble’s strategy to sell more shampoo in China. Dandruff is (or at least was) a nonissue in Chinese culture, but Procter & Gamble’s ad campaigns paint dandruff as a social stigma—a stigma that can be overcome by purchasing the company’s product.9

  The unholy alliance between consumers’ quest for novelty and the relentless (and sometimes dirty) tactics of marketers has put shopping and the rituals of consumption at the heart of today’s economy. Lebow, again, makes this point openly. His take on the incoming tide of materialism seems almost clairvoyant:

  We need things consumed, burned up, replaced, and discarded at an ever-accelerating rate. We need to have people eat, drink, dress, ride, live, with ever more complicated and, therefore, constantly more expensive consumption. The home power tools and the whole “do-it-yourself” movement are excellent examples of �
��expensive” consumption.10

  Lebow even foresaw the state of affairs in my dad’s workshop. Perhaps with the way the economy was developing in 1955, the materialistic program, complete with forlorn, under-utilized tools in the basement, was inevitable. But does it have to remain this way? The collection of steady-state policies detailed in Part II of this book, if enacted, would make for an entirely different sort of economy—one that favors sharing and sufficiency over shopping and insatiability. But the key phrase here is “if enacted.” For without sweeping changes to the culture of consumerism, there is little hope of enacting these policies and replacing the mania of more with the wisdom of enough.

  WHAT COULD WE DO INSTEAD?

  My dad’s basement workshop is very similar to another one. This other workshop has the same smells, the same collection of useful tools, and the same intense competition for shelf and floor space. It’s housed in a garage instead of a basement, but the only significant difference is the cast of characters who use it. Instead of one owner who rarely employs his assortment of tools, the garage workshop belongs to a community of thirty-four households. Feeling fortunate to have access to such a well-stocked workshop, one of the owners told me, “Without it, I’d be trying to do every single project with a hammer and a screwdriver!”