Is Capitalism Sustainable?

In his CNN editorial, Is Capitalism Sustainable, Kenneth Rogoff, a Professor of Economics and Public Policy at Harvard University, debates if capitalism will continue to be successful in its present form given the rising health, environmental, and financial challenges.

At Sustainable Industrial Solutions, we are on a quest to redefine sustainability. Our motto starts with a play on our name, “Sustainable IS…”, so addressing if capitalism is truly sustainable in its present form, seemed a necessary challenge and fun dialogue to have as a team.

The sad truth is that capitalism in its present form is not sustainable. Sustainability arises from a balanced system, where all the costs and risks are exposed, carefully evaluated, and used to determine the best course of action. It is the process of stepping out into the light, allowing a complete picture can be seen and analyzed, before drawing conclusions.

For the work that we do at SIS, sustainability means making carefully determined choices with our clients based on large quantities of data. We work hard to ensure that the choices we make with our clients will have the greatest impact and long-term benefit for their businesses. In order to achieve this, we start with a holistic audit that evaluates everything from energy and water usage, waste disposal, transportation, personnel, and present investments. By acquiring all of these pieces of information that we are able to determine which efficiency technologies will have the greatest environmental impact and financial benefit.

For the work done in a capitalistic system, sustainability means having the freedom to make choices once all of the costs and risks have been exposed to market forces. Unfortunately, American capitalism, which was founded on the ideals of freedom, is not a free market. Thanks to layers of loopholes, lobbying, selective regulation, and government incentives, America lacks a truly market-based capitalistic system. The real cost of energy is not exposed to market driven conditions due to the byzantine layers of subsidies granted to fossil fuel producers.  That is not to mention the risk of pollution and environmental concerns, such as resource scarcity and climate change, which are not factored into our present capitalistic market equation. Instead, we look to developed tactical adjustments such as tax incentives or punitive carbon taxes, which give an incomplete picture of the challenges we face.

To achieve greater levels of sustainability, capitalism is the answer but not capitalism, as we know it today in the US. We need a true free market system where all the cost and risks are exposed to the market place. As Rogoff mentions, these include costs of clean air and water, costs of inequality, medical care, future generations, and ethical considerations.

Ultimately, sustainability involves answering the question: How do we better prepare for future generations to   live and prosper? This is a complex, multi-faceted challenge, and all angles must be addressed in well-lit, open market. Only then will we have truly sustainable capitalism.

Perhaps we will even hear Gordon Gekko say “Sustainable is Good.”

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