Towards a Green Accounting: What's Externalized Could Kill Us

A striking aspect of the nature of the corporation is its single-minded focus  on profit, that is, taking in more money than it spends, salaries and expenses, plant and materials  included.

Profit- lots of it- makes for growth- and not so much because the company can then use the new capital to expand it's plant or give it's employees a raise- but because rising profits will boost share value, which acts as a a multiplier effect providing the company with enormous further capital; at the same time management is mightily rewarded, through millions in stock options.

Now, to boost the profit end of the equation you can, for example, avoid new infrastructure expenses as long as possible, avoid employee pay raises as long as possible,  lay off  workers, lay off plant safety and quality control personnel,  outsource work and services in India, cut benefits, and close plants showing less than optimal returns.

All these are pretty bad, but two profit-amplifying accounting dodges lying yet deeper in the history of industrial capitalism  have resulted in a real and growing threat to our civilisation, and all life on earth.

The first is the externalization of the costs to the community- the local area or the earth community at large- caused by the industrial processes employed in pursuit of growth; costs which, if properly accounted for in the corporate ledgers, would have sapped the "profits" margin, and  possibly put them  in the red.

OK, so this blind-spot of the capitalist logical sequence was ignored by everyone for two centuries, everyone assuming the seas and atmosphere and soils were unlimited, and you could dump your garbage, your industrial effluents, your toxic by-products in the air, the water, and the earth without repercussion. Perhaps the externalization of these costs in corporate accounting underlay the fantastic growth of the corporate industrial empires of the 19th and 20th centuries. It was only in the late 20th century, when we stopped bombing each other long enough to pay attention again to Nature, that we noticed the disappearance of other earth-life from our environment- the Silent Spring of Rachel Carson.

But even the dawn of this awareness did not stop us- or rather, stop the corporate industrialists- from polluting and destroying our habitat, on a more and more pervasive and massive scale. As the new millennium began, these costs were still externalized.

One of these pollutions, just one of many, is atmospheric CO2 pollution, ubiquitous because it arises from the burning of fossil fuels, which are far and away the principal source of energy and power of our very civilization. This one pollution alone could do us in, as it threatens to unbalance the one atmosphere in which we all live  and breathe.

The second accounting dodge: not valuing the finite resources of our planet which are being exhausted  faster than Nature can replenish them. Like spending your capital rather than living off the interest it accrues, this is the other disastrous practice of current accounting methods. And here too, a hundred years ago, few worried that we might ever run out of fresh water, arable soil, forests, or fish in the sea. But we know better now.

So not only do industrial corporations not account for the cost of dealing with their biocidal by-products, they pay no price for the finite natural resources which they use up faster than Nature can replace. It's no wonder corporate industrialism grew so rapidly in the last 150 years. The accounting was rigged.

These days it might  seem like a near-impossible leap, to move to full green accounting.  And yet, quite obviously, we must make this change, sooner or later, and the sooner the better. Here are some resources to look further into this revolution called  Green Accounting.

Green Accounting: A Virtual Resource Center, UN Environmental Program

Encyclopedia Of Earth: Green accounting


Apropos:
Riane Eisler, author of The Chalice And The Blade and The Real Wealth Of Nations, wrote the cover article in December's Tikkun magazine, titled Roadmap To A New Economics: Beyond Capitalism and Socialism. Here is an audio interview at Tikkun about her article.

The Network of Spiritual Progressives has published a "Global Marshall Plan- A national security strategy of generosity and care". Download the PDF here.