Sacred Economics: Chapter 10, The Law of Return

The following chapter is from Sacred Economics: Money, Gift, and Society in the Age of Transition, available from EVOLVER EDITIONS/North Atlantic Books. Return to the Sacred Economics content page here.

Socialism failed because it couldn’t tell the economic truth; capitalism may fail because it couldn’t tell the ecological truth.–Lester Brown

Here is a certainty: the linear conversion of resources into waste is unsustainable on a finite planet. More unsustainable still is exponential growth, whether of resource use, money, or population.

Not only is it unsustainable; it is also unnatural. In an ecology, no species creates waste that other species cannot use-hence the maxim, “Waste is food.” No other species creates growing amounts of substances that are toxic to the rest of life, such as dioxin, PCBs, and radioactive waste. Our linear/exponential growth economy manifestly violates nature’s law of return, the cycling of resources.

A sacred economy is an extension of the ecology and obeys all of its rules, among them the law of return. Specifically, that means that every substance produced through industrial processes or other human activities is either used in some other human activity or, ultimately, returned to the ecology in a form, and at a rate, that other beings can process. (1)  It means there is no such thing as industrial waste. Everything cycles back to its source. As in the rest of nature, our waste becomes another’s food.

Why do I call such an economy “sacred” rather than natural or ecological? It is because of the sacredness of gifts. To obey the law of return is to honor the spirit of the Gift because we receive what has been given us, and from that gift, we give in turn. Gifts are meant to be passed on. Either we hold onto them for a while and then give them forward, or we use them, digest them, integrate them, and pass them on in altered form. That this is a sacred responsibility is apparent from both a theistic and an atheistic perspective.

From the theistic perspective, consider the source of this world we have been given. It would be a grave error to say, as some evangelicals have told me, that it is fine to use nature destructively, because after all God gave it to us. To squander a gift, to use it poorly, is to devalue the gift and insult the giver. If you give someone a present and he trashes it right in front of your face, you might feel insulted or disappointed; certainly you’ll stop giving gifts to that person. I think that anyone who truly believes in God wouldn’t dare treat Creation that way but would instead make the most beautiful use possible of life, earth, and everything on it. That means we treat it as the divine gift that it is. In gratitude, we use it well and give in turn. That is the theistic reason why I call a zero-waste economy sacred.

From an atheistic perspective, a zero-waste economy is the economic realization of the interconnectedness of all beings. It embodies the truth that as I do unto the other, so I do unto myself. To the extent that we realize oneness, we desire to pass our gifts forward, to do no harm, and to love others as we love our selves.

On a very practical level, this vision of sacred economy requires eliminating what economists refer to as “externalities.” Externalized costs are costs of production that someone else pays. For example, one reason vegetables from California’s Central Valley are cheaper to buy in Pennsylvania than local produce is that they don’t reflect their full cost. Since producers are not liable to pay the current and future costs of aquifer depletion, pesticide poisoning, soil salinization, and other effects of their farming methods, these costs do not contribute to the price of a head of lettuce. Moreover, the cost of trucking produce across the continent is also highly subsidized. The price of a tank of fuel doesn’t include the cost of the pollution it generates, nor the cost of the wars fought to secure it, nor the cost of oil spills. Transport costs don’t reflect the construction and maintenance of highways. If all these costs were embodied in a head of lettuce, California lettuce would be prohibitively expensive in Pennsylvania. We would buy only very special things from faraway places.

Many industries today can only operate because their costs are externalized. For example, statutory caps on liability for oil spills and nuclear meltdowns make offshore drilling and nuclear power profitable for their operators, even as the net effect on society is negative. Even if BP goes bankrupt trying, there is no way the company will, or can, pay the full costs of the spill in the Gulf of Mexico. Society will pay the costs, in effect transferring wealth from the public to the company’s investors. (2 )Any industry with the potential for catastrophic losses is essentially enacting a transfer of wealth from public to private hands, from the many to the few. Those industries operate with free insurance. They get the profits, we assume the risks. It is also so in the financial industry, where the largest operators can take huge risks knowing that they will be bailed out if those risks fail. Externalized costs render economical things that are actually uneconomical, such as deep-sea oil drilling and nuclear power.

The elimination of externalities thwarts the business plan of the ages: “I keep the income and someone else pays the costs.” I fertilize my field with nitrogen fertilizer, and the shrimp fishermen pay the cost of eutrophication downriver. I burn coal to make electricity, and society pays the medical costs of mercury emissions and the environmental costs of acid rain. All of these strategies are variations on a theme I’ve already described: the monetization of the commons. The capacity of the earth to absorb various kinds of waste is a form of commonwealth, as is the richness of the soil, the seas, and the aquifers. The collective leisure time of society might be considered a commons as well, which is depleted when polluters make messes for everyone else to clean up.

“I keep the income, and someone else pays the costs” reflects the mind-set of the separate self, in which your well-being is fundamentally disconnected from mine. What does it matter what happens to you? If you are poor, or sick, or in prison, what does that matter to me, as long as I sufficiently insulate myself from the social and environmental toxicity out there? What does it matter to me if the Gulf of Mexico is dying under an oil slick? I’ll just live somewhere else. What does it matter to me that there is a thousand-mile-wide gyre of plastic in the Pacific Ocean? From the perspective of separation, it doesn’t matter — in principle we can insulate ourselves from the effects of our actions. Profiting by externalizing costs is part and parcel of that perspective. But from the perspective of the connected self, connected to other people and to the earth, your well-being is inseparable from my own because you and I are not fundamentally separate. The internalization of all costs is simply the economic embodiment of that principle of interbeingness: “As I do unto others, so I do unto myself.”

Internalizing costs also reflects the perceptions of a gift culture. In the circle of the gift, your good fortune is my good fortune, and your loss is my loss, because you will have correspondingly more or less to give. From that worldview, it is a matter of common sense to include damage to society or nature on the balance sheet. If I depend on you for the gifts you give me, then it is illogical to enrich myself by impoverishing you. In such a world, the best business decision is the one that enriches everybody: society and the planet. A sacred economy must embody this principle, aligning profit with the common weal.

Understanding this principle, some visionary businesspeople have attempted to realize it voluntarily through concepts like the “triple bottom line” and “full-cost accounting.” The idea is that their company will act to maximize not just its own profits, but the aggregate of people, planet, and profit — the three bottom lines. The problem is that these companies must compete with others who do the opposite: export their costs onto people and the planet. The triple bottom line and full-cost accounting are useful as a way to evaluate public policy (because they include more than just economic benefits) but when it comes to private enterprise, the first two Ps often run counter to the third. If I am a fisherman trying to fish sustainably, competing with industrial trawlers with hundred-mile-long nets, my higher costs will render me unable to compete. That is why some means is needed to force the internalization of costs and integrate the triple bottom line into a single bottom line that includes all three. We cannot merely hope that people “get it.” We must create a system that aligns self-interest with the good of all.

One way to bring externalized costs (and externalized benefits) onto the balance sheet is through cap-and-trade systems and other tradable emissions allowances. (3) Although such systems have borne mixed results in practice (sulfur dioxide ceilings have been relatively successful, while the EU’s carbon credits have been a disaster), in principle they allow us to implement a collective agreement on how much is enough. “Enough” depends on the capacity of the planet or the bioregion to assimilate the substance in question. For sulfur dioxide, Europe and America might have separate ceilings to control acid rain; Los Angeles might have its own ozone or nitrous oxide ceiling; the planet might have a single CO2 and CFC ceiling. Enforcing aggregate ceilings circumvents Jevon’s paradox, which says that improvements in efficiency don’t necessarily lead to less consumption but can even lead to greater consumption by reducing prices and freeing capital for yet more production. (4)

Considerable controversy surrounds present-day cap-and-trade proposals, and by and large, I agree with their critics. A truly effective emissions allowance program would be an auction system with no offsets, no free credits, no grandfather clauses, and strict sanctions on noncomplying countries. Even so, problems remain: price volatility, speculative derivatives trading, and corruption. Enforcement is an especially critical problem because cap-and-trade gives a big advantage to manufacturers in places with lax enforcement, which could result in more total pollution than the present regulatory regime. (5)  Another problem is that in a cap-and-trade system, individual restraint frees up resources or allowances to be used by someone else, leading to a feeling of personal powerlessness.

The problems with cap-and-trade suggest a different approach: direct taxes on pollution, such as Paul Hawken’s carbon tax. Fossil fuels could be taxed on import, and the proceeds rebated to the public. This is another way to force the internalization of costs, and would be especially appropriate in situations where the social and environmental costs are easy to quantify and remedy. As with cap-and-trade, international enforcement is a big problem, as manufacturing would become more profitable in countries that refused to levy the tax or collected it inefficiently. It might also require frequent rate adjustment in order to attain the desired ceiling.

For those readers who recoil at the suggestion of another tax, consider that the two mechanisms I have described, cap-and-trade systems and green taxes, are not actually new levies upon society. Someone is going to be paying the costs of environmental destruction regardless. In the present system, this “someone” is either innocent bystanders or future generations. These proposals merely shift these costs onto those who create them and profit from them.

However it is accomplished, when the costs of pollution are internalized, the best business decision comes into alignment with the best environmental decision. Suppose you are an inventor and you come up with a great idea for a factory to cut pollution by 90 percent with no loss of productivity. Today, that factory has no incentive to implement your idea because it doesn’t pay the costs of that pollution. If, however, the cost of pollution were internalized, your invention would be a hot item. A whole new set of economic incentives emerges from the internalization of costs. The goodness of our hearts, which want to cut pollution even if it isn’t economic, would no longer have to do battle with the pressures of money.

While both cap-and-trade programs and pollution taxes have a role to play in the internalization of social and ecological costs, we could also integrate them into the structure of money itself, an intentional kind of money that embodies our reverence for the planet and our emerging sense of the role and purpose of humanity on earth. It unites the internalization of costs with the rectification of the great injustice of property described in Chapter 4, returning the commons to the people while nonetheless giving free rein to the spirit of entrepreneurship. It implements the principle of Chapter 9: to make money sacred by backing it with the things that have become sacred to us. Among them are precisely the same things that green taxes and the like aim to preserve. While the details of cap-and-trade, currency issue, and so forth may have a technocratic feel to them, the underlying impulse, which the next chapter will flesh out, is to align money with the things we hold sacred.

Whether it is accomplished through traditional taxation or cap-and-trade, or by integrating it into money itself, we are embarking on a profoundly different relationship to Earth. In the days of the Ascent, the story of the growth of the human realm and the conquest of the wild, in the time of humanity’s childhood, when the world seemed to have infinite room to accommodate our growth, there was no need for collective agreements on how many fish to catch, how many trees to cut, how much ore to dig, or how much of the atmosphere’s capacity to absorb waste to use. Today, our relationship to the rest of nature is changing on a fundamental level, as it is impossible to ignore the limits of the environment. The fisheries, the forests, the clean water, and the clean air are all obviously close to depletion. We have the power to destroy the earth, or at least to cause her grievous harm. She is vulnerable to us, as a lover is to a lover. In that sense, it is no longer appropriate to think of her only as Mother Earth. A child, in his wanting, does not take his mother’s limits into account. Between lovers it is different. That is why I foresee a future in which we maintain local, regional, and global ceilings on the use of various resources. Fishery catches, groundwater use, carbon emissions, timber harvests, topsoil depletion, and many more will be carefully monitored and held to sustainable levels. These resources — clean water, clean air, minerals, biota, and more — will be sacred to us, so sacred that I doubt we will refer to them as “resources,” any more than we refer to our own vital organs as resources, or dream of depleting them.

Actually, we do deplete our own vital organs, for purposes analogous to those for which we deplete the vital organs of the earth. As one would expect from an understanding of the connected self, what we do to the earth, we do to ourselves. The parallels run deep, so for brevity’s sake I’ll limit myself to just one: the parallel between our drawdown of the earth’s stored fossil fuel and the depletion of the adrenal glands through chemical and psychological stimulants. In traditional Chinese medical thought, the adrenal glands are part of the kidney organ system, which is understood to be the reservoir of the original qi, the life force, as well as the gateway to an ongoing supply of acquired qi. When we are in harmony with our life purpose, these gateways to the life force open wide and give us a constant supply of energy. But when we lose this alignment, we must use increasingly violent methods (coffee, motivational techniques, threats) to jerk the life force through the adrenals. Similarly, the technologies we use to access fossil fuels have become more and more violent — hydraulic fracturing (or fracking), mountaintop removal, tar sand exploitation, and so on — and we are using these fuels for frivolous or destructive purposes that are evidently out of alignment with the purpose of the human species on earth. The personal and planetary mirror each other. The connection is more than mere analogy: the kind of work that we use coffee and external motivation (e.g., money) to force ourselves to do is precisely the kind of work that contributes to the despoliation of the planet. We don’t really want to do it to our bodies; we don’t really want to do it to the world.

We want to become givers and not just takers in our relationship to Earth. With that in mind, I will touch upon one more aspect of the law of return and the cosmic unity of giving and receiving. It would seem that there is a flagrant exception to the law of return in nature, something that ecosystems do not recycle, something that enters constantly anew and exits always as waste. That something is energy. Radiating out from the sun, it is captured by plants and converted along the food chain from one form to another, moving irreversibly toward its final destination: waste heat. Sooner or later, all the low-entropy electromagnetic radiation from the sun is radiated back out from the earth as high-entropy heat. (6)

I am not surprised that ancient people worshiped the sun, the only thing we know that gives without expectation or even possibility of return. The sun is generosity manifest. It powers the entire kingdom of life, and, in the form of fossil fuels, solar, wind, and hydroelectric power, can power the technosphere as well. Marveling at this virtually limitless source of free energy, I can touch upon the utter, almost infantile, gratitude that ancient sun-worshipers must have felt.

But there is more to the story. A vein runs through spiritual tradition that says that we, too, give back to the sun; indeed that the sun only continues to shine through our gratitude. (7 ) Ancient sun rituals weren’t only to thank the sun — they were to keep it shining. Solar energy is the light of earthly love reflected back at us. Here, too, the circle of the gift operates. We are not separate from even the sun, which is why, perhaps, we can sometimes feel an inner sun shining from within us, irradiating all others with the warmth and light of generosity.

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1. That means that certain substances, even if they are biodegradable, violate the law if we produce them in excessive quantities.

2. Even if the company goes bankrupt and wipes out current stock- and bondholders, past investors have already profited.

3. In such systems, a total emissions ceiling is set, and the right to emit allocated among countries or enterprises. Pollution rights may be bought and sold, so that if a factory reduces its emissions, it can sell its unused quota to someone else.

4. For example, when the cost of lighting drops due to the introduction of CFC bulbs, some facilities respond by increasing their use of outdoor lighting. When computer memory gets cheaper, developers write software that requires more memory. When any resource is used more efficiently, the demand for it goes down and lowers the price, thereby increasing demand.

5. Polluters in lax-enforcement countries could sell allowances to polluters in countries with good enforcement, allowing the latter to pollute at low cost and the former to pollute beyond the total emissions ceiling.

6. “Later” could be hundreds of millions of years, for example when we burn coal.

7. Interestingly, as the age of ingratitude has reached its peak over the past thirty years, the sun’s radiation has apparently changed, and the strength of the heliosphere has decreased significantly. It might be my imagination, but I remember the sun being more yellow when I was a child. And from 2008 to 2010, sunspot activity diminished to unprecedented levels (see, e.g., Clark, “Absence of Sunspots Makes Scientists Wonder If They’re Seeing a Calm before a Storm of Energy” Washington Post, 6/22/2010). Could it be that the sun, the epitome of generosity, is entering a turbulent phase mirroring the financial crisis on earth, which is after all a crisis of giving and receiving?

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