Is it possible for someone to be a capitalist and environmentalist? Well, many people get confused between economic development and the environment. People imagine that economic development always involves destroying the environment because our economy currently consists of how fast we can turn raw materials – a.k.a stuff from the environment – into trash and the velocity at which we can do that. And other people think that all money-makers have ill-intentions.
According to the EPA, the average person in the U.S. produces around five pounds of trash per day, overall about 300 million tons per year; about 30% is recycled. Our economy likes when we buy things and drive companies’ success, but we can have a good economy and a healthy world.
Capitalism isn’t flawless. A lot of the problem with the economy and how we measured it is that it’s measured by Gross Domestic Product, and it’s exactly that: gross. Though it’s gross in the sense that it’s crude, it’s the brute movement of growth. All growth is not good. GDP is subject to the law of averages; averages often can skew statistics. Moreover, it doesn’t give you an accurate measure of how well your population is living.
GDP was proposed in 1937 after the Great Depression. But in the 1950s, people started to question the measure, saying that there’s a difference between economic growth and social progress.
Arthur Okun, an economist for President Kennedy’s Council of Economic Advisers, continued to support the use of GDP, saying for every increase in GDP, there would be a corresponding drop in unemployment. But is the employment rate the only way to decide progress?
Let’s think about GDP. For example, take a cornfield. If you farm it so intensely that you destroy the land, it will never produce crops again. If you cut up the forest in northern Canada to the point that no trees will ever grow back, Canada’s GDP will go up that year. But the next year, that very track of land which is now rendered useless. It will never produce another dollar forever because we’ve rendered the land useless. That’s really the problem with GDP; it’s only a crude snapshot of what is going on.
Some economists try to fix this problem by measuring the GDP per capita. Sure, this metric helps us in one sense: If a GDP per capita is growing with a stable population, that tells us a lot about the economy. But this measure doesn’t take into account how expensive it is to live in a certain country.
Even the amount of money your average citizen brings in is not technically a great indicator of how they live. There are alternative measures, such as human development index (HDI) developed by the United Nations. (That has its own flaws, and that’s a different conversation.)
Capitalists and environmentalists are always pitted one against each other. But EarthX founder Trammell Crow and Future 500 CEO Bill Shireman joined Follow the Profit Podcast to discuss if it’s possible to have a capitalist perspective that also minds the environment. As they’ve both been entrenched in the entrepreneurial world, they know the dangerous force of profit motive. Dollar signs have blinded plenty of people with greed, which creates negative ripple effects everywhere. But they also know the negative side effects of viewing money and business as inherently evil.
When you prioritize one or the other, you’re not really seeing the full picture of how things are interconnected and how sustainability, capitalism, economics and conservation of our environment are all tied together. In the case of Crow and Shireman, capitalists and environmentalists don’t have to be enemies.
*Hannah Buczek contributed to this article.