Schools for a Sustainable Future - The Next Reformation, Part 2 October 1999

Sarah: What is the direction of this shift?

Paul: The shift is profoundly biological. It's not about the celebration of nature, although that is certainly a part of it; it's about the incorporation of natural systems into our industrial life, into our way of making things, our way of processing things and deprocessing things. And the only reason it's going to happen is because it works profoundly better.

We are in the process of reinventing our entire system of making things, its relationship to living systems, our whole concept of waste, and in turn turning neoclassical economics on its head, reversing a 100-year process of emphasizing human productivity.

We are now heading down a centuries-long path toward increasing the productivity of our natural capital - the resource systems upon which we depend to live - instead of our human capital. We can no longer prosper by increasing human productivity. The more we try to do, the more poverty we will create.

We have spent the last century, and most of us, the last decades or so, working our tails off in order to make fewer and fewer people more and more productive using systems of manufacturing, distribution, and communication that use more and more stuff. We are all doing this precisely at a time when we have less and less stuff, and more and more people. Talk about speeding trains racing towards each other in the night.

So this next industrial revolution, a terrible term really, is about this great reversal. Not a reversal to little house on the prairie, but one to an elegantly designed and imagined interrelationship between human and living systems. We will do it because it's the only alternative that allows us to stick around as a species, which most of us want to do.

Sarah: You said to me in a conversation quite some time ago that global corporations aren't more efficient, they're just more able to externalize their costs. Could you say more about that?

Paul: We assume that everything's becoming more efficient, and in an immediate sense that's true; our lives are better in many ways. But that improvement has been gained through a massively inefficient use of natural resources.

That inefficiency is masked because growth and progress are measured in money, and money does not give us information about ecological systems, it only gives information about financial systems. Global corporations are measured by that one financial denominator. They can most easily buy financial efficiency because they have the most capital. They can go to the factory, mining pit, forest, or country where they can do the most for the least money and do so quickly and do so on a scale that makes it very difficult for smaller companies to compete.

What this means is that we are seeing a worldwide pattern of decapitalization. Capital, whether it be natural capital in the form of resources, or human capital, in the form of low-wage workers, or local capital in the form of functional and healthy local economies, is being extracted and converted to financial capital at an increasingly accelerated rate. The financial capital is being concentrated by corporations, institutional investors, and even our pension funds, and being reinvested in companies that repeat this process because it provides the highest return on that financial capital.

This makes it nearly impossible for local or regional companies who internalize their costs, i.e. companies that do not degrade their resources, or do not take advantage of local labor surpluses, to contend because they cannot compete on price. I don't know where the leadership will rise to turn this situation around.

At the same time, the globalization of the world economy is really due to the fact that energy has become increasingly less expensive for 119 years. Since oil was discovered, there have been some little price blips on the screen, but in constant dollars, energy is cheaper now per BTU than it ever has been in the history of the world. And at some point that will turn the other way. Interestingly, the oil companies know very well that in less than 30 years they will not only be charging very high prices, but that they will be uncompetitive with renewables.

When energy prices do go up and start to reflect their replacement value, you will also see some weakening of global transnational corporations. That's because their advantage comes overwhelmingly from centralization and mass production, and those things depend on distribution and transportation networks that are basically cheaper than local systems.

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	The Next Reformation an interview with Paul Hawken, by Sarah Van Gelder
	Part 2 Sarah: What is the direction of this shift? Paul: The shift is profoundly biological. It's not about the celebration of nature, although that is certainly a part of it; it's about the incorporation of natural systems into our industrial life, into our way of making things, our way of processing things and deprocessing things. And the only reason it's going to happen is because it works profoundly better. We are in the process of reinventing our entire system of making things, its relationship to living systems, our whole concept of waste, and in turn turning neoclassical economics on its head, reversing a 100-year process of emphasizing human productivity. We are now heading down a centuries-long path toward increasing the productivity of our natural capital - the resource systems upon which we depend to live - instead of our human capital. We can no longer prosper by increasing human productivity. The more we try to do, the more poverty we will create. We have spent the last century, and most of us, the last decades or so, working our tails off in order to make fewer and fewer people more and more productive using systems of manufacturing, distribution, and communication that use more and more stuff. We are all doing this precisely at a time when we have less and less stuff, and more and more people. Talk about speeding trains racing towards each other in the night. So this next industrial revolution, a terrible term really, is about this great reversal. Not a reversal to little house on the prairie, but one to an elegantly designed and imagined interrelationship between human and living systems. We will do it because it's the only alternative that allows us to stick around as a species, which most of us want to do. Sarah: You said to me in a conversation quite some time ago that global corporations aren't more efficient, they're just more able to externalize their costs. Could you say more about that? Paul: We assume that everything's becoming more efficient, and in an immediate sense that's true; our lives are better in many ways. But that improvement has been gained through a massively inefficient use of natural resources. That inefficiency is masked because growth and progress are measured in money, and money does not give us information about ecological systems, it only gives information about financial systems. Global corporations are measured by that one financial denominator. They can most easily buy financial efficiency because they have the most capital. They can go to the factory, mining pit, forest, or country where they can do the most for the least money and do so quickly and do so on a scale that makes it very difficult for smaller companies to compete. What this means is that we are seeing a worldwide pattern of decapitalization. Capital, whether it be natural capital in the form of resources, or human capital, in the form of low-wage workers, or local capital in the form of functional and healthy local economies, is being extracted and converted to financial capital at an increasingly accelerated rate. The financial capital is being concentrated by corporations, institutional investors, and even our pension funds, and being reinvested in companies that repeat this process because it provides the highest return on that financial capital. This makes it nearly impossible for local or regional companies who internalize their costs, i.e. companies that do not degrade their resources, or do not take advantage of local labor surpluses, to contend because they cannot compete on price. I don't know where the leadership will rise to turn this situation around. At the same time, the globalization of the world economy is really due to the fact that energy has become increasingly less expensive for 119 years. Since oil was discovered, there have been some little price blips on the screen, but in constant dollars, energy is cheaper now per BTU than it ever has been in the history of the world. And at some point that will turn the other way. Interestingly, the oil companies know very well that in less than 30 years they will not only be charging very high prices, but that they will be uncompetitive with renewables. When energy prices do go up and start to reflect their replacement value, you will also see some weakening of global transnational corporations. That's because their advantage comes overwhelmingly from centralization and mass production, and those things depend on distribution and transportation networks that are basically cheaper than local systems. Introduction Part 1 Part 3 Part 4 Part 5
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