Natural Capitalism: Better or Worse?

Energy-saving devices like new windows can help reduce costs overall, as part of the overall system. Putting coffee grounds in a compost pile at work can reduce wastes. Cutting down trees for the retrieval of paper is a means to sell goods. Making sure to replace  the trees by a replanting program is part of the restoration of the ecosystem.  All of these are methods in the new Natural Capitalism concept.

Natural Capitalism: Better or Worse?

Natural Capitalism was written about and coined as a term in a 1999 book written by Paul Hawkins, Amory & Hunter Lovins.  In this critique of traditional “Industrial Capitalism” the authors  suggest that problems to the environment or socio cultural human systems as failures to properly account for natural and human capital, rather than as inherent failures of capitalism itself.


Human capital grows when workers have further training than just what they’ve earned from graduation of high school.  For example, vocational training, workshops and certifications.  Other areas of human capital involving welfare, which is  where there is an improvement of the quality and ease of flow of services rather than just a total number of dollars.


If a company, field of business, or country will account for human capital, then social and cultural needs of the workers’ lives are met through initiatives and certain welfare programs. Natural capital grows when the biosphere and thus, local ecosystems, is properly valued, as part of the business model. This is that the businesses use techniques for making products more effectively and with minimal damage to the environment.  There are four main guiding posts in the road map for natural capitalism.


The first guidepost is to reduce the waste from depletion to pollution.    Through production design and technological changes, finding ways to make resources stretch further than even ten years ago.  The second guidepost is to follow  production models inspired by biologic designs.  For example, closed – loop systems, where the output  wastes  are rendered harmless and then returned to the environment like a nutrient returned to a compost pile.  The third guidepost is to move to more of solutions, solving client’s problems from a system wide perspective. So, instead of focusing on selling  goods, this new model places greater  stake in more of the services provided.  The fourth guidepost is about restoring and sustaining the planet’s ecosystems. For example, if a paper company tore down five trees to turn into paper  then this model states that the company should plant five new trees.


It’s basic logic is to replace the resources when you have taken them from the environment, so that you can access that resource at some point in time in the future. It  also makes sense to install energy saving devices, as well as windows that are energy-saving.  One company from the Harvard Business Review article was able to reduce how much air conditioning they needed by 75% by the mere fact of replacing old windows with energy saving windows.


The traditional industrial capitalism, as we know it, primarily focuses on the value of money and goods as two pillars of the capital. But the natural capitalism seems to add two more components; natural capital and human capital. It has been argued that the natural capitalism approach is mainly capitalist in its essence, and it just helps industrial capitalism to breathe in an environmentally problematic world. Its recognition of nature and human as “capital” has also been met with widespread criticism. On the other hand, the defenders of natural capitalism have themselves stated that while they continue to support the spirit of commerce and entrepreneurship, they don’t endorse the “sicknesses” inherent in pure industrial capitalism.