Sustainable capitalism is a conceptual form of

capitalism Capitalism is an economic system based on the private ownership of the means of production and their operation for profit. Central characteristics of capitalism include capital accumulation, competitive markets, price system, priva ...

based upon sustainable practices that seek to preserve humanity and the planet, while reducing

externalities In economics, an externality or external cost is an indirect cost or benefit to an uninvolved third party that arises as an effect of another party's (or parties') activity. Externalities can be considered as unpriced goods involved in either co ...

and bearing a resemblance of capitalist economic policy. A capitalistic economy must expand to survive and find new markets to support this expansion. Capitalist systems are often destructive to the environment as well as certain individuals without access to proper representation. However, sustainability provides quite the opposite; it implies not only a continuation, but a replenishing of resources. Sustainability is often thought of to be related to

environmentalism Environmentalism or environmental rights is a broad philosophy, ideology, and social movement regarding concerns for environmental protection and improvement of the health of the environment, particularly as the measure for this health seeks ...

, and sustainable capitalism applies sustainable principles to economic governance and social aspects of capitalism as well. The importance of sustainable capitalism has been more recently recognized, but the concept is not new. Changes to the current economic model would have heavy social environmental and economic implications and require the efforts of individuals, as well as compliance of local, state and federal governments. Controversy surrounds the concept as it requires an increase in sustainable practices and a marked decrease in current consumptive behaviors. This is a concept of capitalism described in

Al Gore Albert Arnold Gore Jr. (born March 31, 1948) is an American politician, businessman, and environmentalist who served as the 45th vice president of the United States from 1993 to 2001 under President Bill Clinton. Gore was the Democratic no ...

and

David Blood This is a list of recurring characters in the British teen drama ''Skins (British TV series), Skins''. It does not include the main characters of the show, who can be found at List of Skins characters, List of ''Skins'' characters. Supporting cha ...

’s manifesto for the Generation Investment Management to describe a long-term political, economic and social structure which would mitigate current threats to the planet and society.https://www.genfound.org/media/pdf-wsj-manifesto-sustainable-capitalism-14-12-11.pdf According to their manifesto, sustainable capitalism would integrate the environmental, social and governance ( ESG) aspects into risk assessment in attempt to limit externalities. Most of the ideas they list are related to economic changes, and social aspects, but strikingly few are explicitly related to any environmental policy change.

Governance and economic aspects

Economic aspects are clearest, perhaps because the economy is most easily associated with capitalism. Sustainable capitalism, as a policy outline, is an attempt to address and tackle the use of admittedly insufficient tools used today to measure the economic growth and the real value of countries, such as

GDP Gross domestic product (GDP) is a monetary measure of the market value of all the final goods and services produced and sold (not resold) in a specific time period by countries. Due to its complex and subjective nature this measure is ofte ...

or GO. Criticism of this form of growth measurement is centered on the fact that GDP fails to account for labor conditions and other environmental factors which have a long-term influence on the value which it measures. This concept follows recent trends that see forms of

sustainable business A sustainable business, or a green business, is an enterprise that has minimal negative impact or potentially a positive effect on the global or local Natural environment, environment, community, society, or economy—a business that strives to m ...

as the preferred method for development, because of the way that these types of businesses offer a positive influence to their environment. Many of these stem from business-led corporate responsibility coalitions which aim to mitigate ESG impacts through mobilization of resources. These business are not limited to the traditional non-profits we associate with corporate responsibility, but also can be independent, non-profit, for-profit, led by a board of directors or core-funded. The wide spectrum of business types shows the gradual turn towards socially and environmentally responsible corporate governance. Sustainable capitalism challenges the common model of the capitalist economy by its linear frame. Raw materials, either natural resources or intellect, when combined with a capital increasing mechanism, like worker power, create marketable products that are sold for money and waste. In the concept of sustainable capitalism, it appears to be necessary to shift to a more circular economy where the end product would be reinvested not only to the capitalist business or financial institution but into the basis for raw materials, and people who support this business. This type of circular economy would require more responsibility on corporate governance to reduce externalities. China has made advances in this area, increasing renewable energy industries, with an estimate that fossil fuels will no longer be the main source of energy by 2030; these steps toward change were forced in part by high pollution and population. In their manifesto, Gore and Blood propose key economic measures to change from the current form of capitalism:. # Identify and incorporate risks from stranded assets. # Mandate integrated reporting. # End the default practice of issuing quarterly earnings guidance. # Align compensation structures with long-term sustainable performance. # Encourage long-term investing with loyalty-driven securities. # Reinforce sustainability as a fiduciary issue. # Create advisory services for sustainable asset management. # Expand the range and depth of sustainable investment products. # Reconsider the appropriate definition for growth beyond GDP. # Integrate sustainability into business education at all levels. The first five items are most related to economic changes, while the last five are actions more related to social aspects. Of these ten, only two are directly related to environmental aspects, and none explicitly suggest environmental policy changes.

Environmental aspects

As explained by Bruce Ledewitz, sustainable capitalism is the adoption and development of sustainable practices that protect natural resources, instead of spending it as capital. Ledewitz claims that in traditional capitalism,

natural capital Natural capital is the world's stock of natural resources, which includes geology, soils, air, water and all living organisms. Some natural capital assets provide people with free goods and services, often called ecosystem services. All of t ...

", meaning natural resources, will continue to decline and will limit monetary capital success, lifting the value of natural resources and replacing the definition of prosperity. He proposes that sustainable capitalism would institute policies and regulations to protect natural resources in addition to investing back into the environment in attempt to reverse the degradation.

Social aspects

Social aspects of sustainable capitalism involve a positive reception toward climate change. Author Mohan Munasinghe explains that two specific ways that humans can respond to climate change are through adaptation and mitigation. First, adaptation is aimed at reducing the vulnerability of human and natural systems in the face of climate change stresses, while mitigation is aimed at lowering or removing greenhouse gas emissions to reduce radiative forcing of the atmosphere and the intensity of future climate change. Economist John Ikerd claims that environmental degradation happens under modern capitalism because the economy is divorced from ethics. According to him,

classical economists Classical economics, classical political economy, or Smithian economics is a school of thought in political economy that flourished, primarily in Britain, in the late 18th and early-to-mid 19th century. Its main thinkers are held to be Adam Smith ...

like Adam Smith had always intended for market economics to be tempered by property owners' moralities, and

neoclassical economists Neoclassical economics is an approach to economics in which the production, consumption and valuation (pricing) of goods and services are observed as driven by the supply and demand model. According to this line of thought, the value of a good ...

put undue faith in the ability of markets to automatically adjust to physical and moral imperatives. Ikerd concludes that a system of

environmental regulations Environmental law is a collective term encompassing aspects of the law that provide protection to the environment. A related but distinct set of regulatory regimes, now strongly influenced by environmental legal principles, focus on the manage ...

founded on a popular, ethical consensus is necessary and sufficient to prevent excessive

climate change In common usage, climate change describes global warming—the ongoing increase in global average temperature—and its effects on Earth's climate system. Climate change in a broader sense also includes previous long-term changes to ...

. Sustainable capitalism is also viewed as a non-transcendent, regulated commodity to humanity due to the ever-increasing demands of environmental regulation. Geoffrey Strickland emphasizes that current discussions on economic development are led by the notion that human reproduction is a commodity that must be regulated and improved in order to encourage market efficiency, which is a phenomenon that counteracts the growth of capitalism.

Criticism

Marxist view

According to the Marxist understanding of capitalism as production for profit, it is impossible to prioritize environmental sustainability without abolishing capitalism.

Ernest Mandel Ernest Ezra Mandel (; also known by various pseudonyms such as Ernest Germain, Pierre Gousset, Henri Vallin, Walter (5 April 1923 – 20 July 1995), was a Belgian Marxian economist, Trotskyist activist and theorist, and Holocaust survivor. He f ...

claims that when profit maximization requires a business to pollute the air, "the simple right to clean air is abolished". Under his conception of capitalism, profit necessarily subjugates the environment, and properly accounting for the social costs of production requires some form of socialist planning. Any attempt to adequately protect the environment within such a capitalist framework is doomed to fail, so the argument goes, because society simply is not structured to be willing to sacrifice private profits for public endeavors on this scale.

Sustainable capitalism as an oxymoron

The Capital Institute describes the concept of sustainable capitalism as an oxymoron. They argue that modern capitalism is not designed for cooperation and much of the proposed measures in the manifesto are insufficient. Regeneration, cooperation, and well-being are aspects of sustainability that do not coincide with what capitalism has evolved to be. Efforts may be made to reform current capitalistic practices, but mass movements focusing on environmental concerns that do not create a radical change of the system are not likely to succeed as they go against what capitalism was designed to achieve. Capitalism and sustainability are mutually exclusive ideas given the current model.

Government reluctance

Critics such as Neil E. Harrison argue that the government would likely be resistant to sustainable changes for the current capitalist model. Since the capitalist government was built upon capitalist ideals and business interests, he argues, the government is dependent on the system. Often, the government is most focused on overt crises rather than long-term solutions to problems that are not readily apparent. His main argument is that beyond the current structure, authority is not enough to control the social and economic aspects enough to truly impact the environmental needs.

References

{{reflist Capitalism

Capitalism Capitalism is an economic system based on the private ownership of the means of production and their operation for profit. Central characteristics of capitalism include capital accumulation, competitive markets, price system, priva ...