10 Ways The Profit Motive Drives Sustainability.

Time for some heresy today.

Most people are given to thinking that the profit motive in a capitalist economy can only drive environmental destruction, but I am here to say that the profit motive has been acting as a massive bulwark against the kind of environmental destruction which was seen in the communist nations during the 20th century which far outstripped the damage done to the environment here in the west.

The idea that the desire for profit is ripping apart the environment seems so intuitive that you’d think it were beyond dispute. People take resources from the earth to make products and draw a profit, right?  And because corporations are only motivated by profit they will destroy the environment in pursuit of profit, right? Obviously.

Well, this is not the full story, lets investigate what it unseen.

1) A forest, fishery or grazing land is a renewable resource if properly managed. Keeping it in pristine condition will not only preserve (or even increases) the value of the land but will allow the owner to profit from it indefinitely. Laying waste to it for a quick buck would be like slaying a goose which laid golden eggs for a single dinner. This is why loggeries that are privately owned are handled sustainable whereas when land is leased out to firms by the government they usually mistreat the land for short term profit and leave the taxpayer to pick up the tab. Renters don’t take as good care of their stuff as owners do.

2) Companies are always trying to decrease the cost of their inputs because the lower their costs of production the higher their margin of profit. This gives firms and active incentive to constantly find innovative ways of stretching the same amount of resources further. An example of this, often cited, is Coca Cola cans becoming thinner but there must be countless ways this happens every day. There is no comparable incentive in a centrally planned economy.

3) Those with the knowledge of how to stretch limited resources the furthest are the most likely to acquire them on a free market because, owing to their larger profit margins, they are able to pay more to acquire them. This leads to copper mines, oil well, &c. ending up in the hands of the most competent custodians – so long as the state does is not in charge of who gets what, a more competent owner will be able to buy out a less competent owner.

4) On a free market the price system values resource inputs in proportion to how scarce they are and how many people want to use them. Therefore the most environmentally friendly way to produce something also becomes the cheapest. As resources become more scare the laws of supply and demand push the price of those resources up driving innovation to find alternatives and use those which are still left better – the best alternative being a renewable alternative. There is no comparable defense against the overuse of resources under socialism where the central planners can continue to dish out the goods to cronies long after they have become scarce. (In fact the only defense against this is the potential killing the central planners can make by selling those scarce resources to capitalist economies that actually have a price system.)

6) On a free market the mechanism of profit and loss minimises the production of goods and services that no one wants limiting waste. In a planned economy central planners have to best-guess what people want, the often will guess wrongly and lots of production will simply go to waste.

7) Because consumers have to choose what products to buy with their limited resources on the free market they have to be discerning. Because resources are held privately rather than in common there is no “tragedy of the commons” where everyone has the incentive to take as much as they can in the short term to stop other people from taking it first.

8) Much of what we consider waste could be considered a free resource to one entrepreneur or another: food waste as slop for livestock, aluminium and tin cans, glass bottles, electronic, etc. A market in trash disposal, which we don’t have, people would be charged for waste in proportion to how expensive that waste was to dispose of and maybe even remunerated for waste to the extent that that waste could be reused. The companies who were most effective at recycling waste would be able to pay the most to acquire that waste and reprocess it in an environmentally friendly way. This would change the whole face of the economy eliminating many non-biodegradable forms of excess packaging and would present a massive incentive for companies to make their goods easy to reuse, recycle, or repair as consumers faced real financial incentives for choosing sustainable purchases. Planned obsolescence would also be heavily discouraged by a system where people had to pay not only the cost of buying goods but disposing of them as well.

9) The profit motive provides an incentive for companies to devise ways to turn their waste into useful biproducts that people can actually use, for example standard oil invented thousands of biproducts such as paraffin wax, lubricating oils, chewing gum, and fertilizer out of resources that other companies were simply wasting. This incentive would also be far more pronounced of a true free market where companies had to pay for waste, not in the abstract, but directly in proportion to how difficult it was to dispose of – and potentially get paid for waste in proportion to how valuable it was to people who could recycle it.

10) The profit motive is constantly driving capitalists to creating innovations which are better for the environment and more sustainable than previous technologies. Memory sticks invented by capitalists have saved billions of trees. A 15 watt fluorescent LED light provides the same luminosity as a 60-watt incandescent bulb. Burgers grown in a lab from cloned meat will be solving our factory farming crises by reducing the massive ecological impact of meat production. The average smart phone has a camera, radio, television, sound recorder, music player, gps, flashlight, board and card games, computer games, video player, maps, encyclopedia, dictionary, thesaurus, access to textbooks, compass, photo album, thermometer, scientific calculator, dematerialising the need for the production of many goods and saving the environment.

A recent innovation in progress designed with the third world in mind is high-tech toilets that burn feces for energy and flash evaporate urine rendering everything sterile. No pipes are required under the floor, no leach field under the lawn, no sewer systems required to run down the block. These may have been invented decades and decades ago had the state not been responsible for getting rid of our sewage; removing the necessity to innovate. Rather than waste anything, these toilets give back packets of urea to be used as fertilizer, table salt, volumes of freshwater, and enough power to charge a mobile phone. If users can sell the energy back into the grid they will literally be being paid to poop!

So, on that note, allow me to end by saying: I’m not shitting you when I say the free market can be good for the environment

There is reams more to say on this topic and I intend to expand upon it in my book The Free Market Hippy. If you would like to be notified when it is finished download my previous book free and you will automatically be informed when it is available.

Source: Seeing Not Seen

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