the economics of sustainability

I attended a lecture at UW-Madison Grainger Hall this evening. The guest speaker introduced his theory of what could reverse the current trend of unsustainability while maintaining the use of capitalism as an economic system. He made the following points, among others:

• Values are disagreed upon; principles are not. The issue of capital punishment has those who support it and those who do not, based on their values; however, it is much more difficult to find someone who does not agree that honesty and fairness are important principles. If we agree to a small set of fundamental principles and commit to following them, we can fix what’s broken.
• The framers of the Constitution intended it to be a living document that would change with the new wisdom attained from the growth and maturation of the United States of America.
• The theory of the “invisible hand” introduced by Adam Smith was introduced in a context where fundamental ethics and morality were assumed to be present; such is not the state of modern capitalism. For trade to be truly free, all parties affected by a transaction must be aware of all of its consequences and free to trade or not based on their own best self-interest. The misnamed “free trade” agreements that currently govern global capitalism are based on coercion, threats of violence and embargo, and the like.
• Capitalism allocates resources with maximum efficiency, but without honesty and fairness to all parties, it results in the exploitation and disproportionate reallocation of resources.
• Given a foundation of mandatory openness and justice, capitalism would automatically correct the disastrous course of society, which is currently moving toward maximum resource extraction without renewal, isolation of individuals (the depletion of “social capital“)
• One proposal he offered is an amendment to the U.S. Constitution stating that future generations are entitled to the same rights as the current one. This would render unconstituional any law that allows the squandering of any resource for 5- or 10-year gain, which is the time frame many corporations — and investorys — use when making their decisions.

I really enjoyed the lecture. I wouldn’t call it revolutionary, but it did distill the argument for sustainability into a concise, easy-to-remember package.