During these last months we've witnessed the implosion of capitalism as usual. In the process some basic assumptions have gone kaboom, for instance, the notion that you can repackage and sell highly questionable  loans, and that as long as you keep them moving from one owner to the next, they'll never come back and bite you in the assets.

 

 

Over the course of the centuries, countless opportunists and ne'er-do-wells have based their lives on the proposition that "I may be worthless in this town, but in the next town I'll be okay." Ironic as it seems, a similar intuition appears to have been fueling the titans of Wall Street. Just keep on moving that debt downstream and everything will be fine!

Only it's a small world now, and the frontier isn't limitless, and the bucks have stopped here and brought down the house.

It's not entirely a bad thing when a system collapses. The destruction of the old makes room for the new: you can't have a phoenix without ashes.

We now have a once-in-a-lifetime opportunity to erect a sustainable economic system—which is to say, an economic system that's dramatically different from the one that we're witnessing in its death throes.

Kudos to the Obama Administration for pledging to make clean tech and green jobs centerpieces of the new economy.

However, a truly comprehensive sustainability makeover would do more than that. It would address all the deep structures of our current economy that have made it so unsustainable.

Here's my starting list of what would be required to create a truly sustainable economy.

Make It Real. Assets need to have real value. This is a complicated subject, too complicated for a post of this length (never mind my easily boggled brain). The basic point is this: don't pass off junk as having value. Sustainability requires assets to have verifiable worth.

Make It Sustainable. The economist E.F. Schumacher said it years ago: small is better. Local is also almost always better, too—it builds community, and it also reduces the financial and environmental costs of shipping things around the globe. In an increasingly carbon-challenged world, that's no small matter.

The current economic system favors the big, global players. We need to do more than support clean tech and green jobs. We also need to tilt the playing field to favor the small and local.

Police the Bad Actors. The last few news cycles have been dominated by stories about fraud on a massive scale. The financier Bernard Madoff was arrested for running a $50 billion Ponzi scheme, while prominent New York City lawyer Marc Dreier was arrested for a $100M fraud that involved, in the words of The New York Times, "selling phony debt to hungry hedge funds looking for deals." By today's $700 billion bailout standard, $50 billion is chump change, and $100 million is even chumpier. Still, scandals like these say a lot about the culture of corruption on Wall Street.

While there will always be criminals and con men, we seem to have been doing an especially good job these last years of creating a culture (in the sense of a petri dish) for bacteria like these to thrive in. In a sustainable economy, we'd throw the book at the crooks, and we'd also work night and day to put an end to the culture that sorta kinda makes it okay to betray people's trust in the first place. Corruption and sustainability are incompatible.

Transform the Story. Capitalism isn't only about externalities--the free market, or the rules and regulations (or lack thereof) that govern it. It also has an internal aspect: it's an idea that inhabits our minds.

For years, our story about capitalism has been what Professor Ed Freeman of the University of Virginia has called "cowboy capitalism." It's a model that "conceptualizes business as a competitive jungle resting on self-interest and an urge for competition in order to survive." 

As Freeman himself has pointed out, that's not the only possible story about capitalism. The free market can also be tethered to the greater good. Why not a more ennobling story about capitalism that brings an end to the historic schism between greed and service? Why not a narrative about capitalism that positions it as the engine of green and ethical change?

A softer, more gentle capitalism is not necessarily a weaker capitalism.

And this isn't just talk: models are emerging. There is the ascendance of socially responsible business, which we might think of as "greener business," and there is also the still bolder concept of the social enterprise, which marries the wealth-creation mission of business with the service mission of the non-profit sector. The leaders of the Obama Administration should use the bully pulpit to espouse both of these approaches and in the process help to foster the emergence of a new narrative about the nature and purpose of capitalism.

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Are these idealistic views realistic? Are these things achievable? In my view, yes. It wouldn't cost a lot of money to tilt the playing field toward small and local. As for propagating a new story of capitalism, the total cost of that would be a few well-chosen sentences at an Obama press conference plus whatever time it takes to develop favorable legal and financial incentives for socially responsible businesses and social enterprises.

Nor should we forget that this appears to be a time of rare consensus, when people at all points along the political continuum agree that we can only get out of our current mess by pursuing dramatic change. The diem is here and it's ripe for the carping.

The one thing that's required to push the "go" button on all this is a slight but crucial shift in focus. Instead of simply applauding the Obama Administration for its laudable eco-plans, we need to also be asking, Are clean tech and green jobs alone enough to make our economy truly sustainable? If not, what's missing? What else do we need to do?

You get the right answers by asking the right questions, and you get the right questions by looking through the right lens.

The lens is the first step.

The lens is everything.

 

Image courtesy of Wikimedia.