The Sustainable Adam Smith

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The triple bottom line of planet, people and prosperity is not a modern day notion. In fact it was written about more than 250 years ago. Adam Smith, best known for his book, The Wealth of Nations, published in 1776, is widely considered to be the father of modern capitalism. However, few people are aware of the book he wrote 17 years prior called The Theory of Moral Sentiments.

Moreover, each book has a markedly different view of the three forms of capital – natural, human and financial – that lead to decidedly different conclusions. I view Wealth of Nations as the masculine side of Smith, and Sentiments as his feminine side. Let’s take a quick look at their differences. In Wealth of Nations, Smith’s primary thesis is “Consumption is the sole end and purpose of all production.” It is at the core of every capitalist endeavor; someone has to buy what we produce. In Wealth of Nations the three forms of capital are organized in the following formula: Financial + Natural = Human. The first question any capitalist asks is, “Will we make money” or there’s no reason to continue the investments in production. “Do we have the resources” is the next logical parameter as we must have the raw materials to create the products, and finally “Who will buy it,” which is where the human element comes into play, for without customers there is no market. This equation places FINANCIAL capital as the starting point of any discussion. Natural capital is in the middle of the equation and serves only a role of subjugation to Financial. This is a model of masculine dominance.

Let’s examine how these same three forms of capital might be arranged by Smith according to his core tenets from the Theory of Moral Sentiments. Smith writes, “The produce of the soil maintains at all times nearly that number of inhabitants which it is capable of maintaining.” Smith viewed the limits of the ecosystem as affecting not only animals and nature, but humans as well. This same thesis was brought to light in the book The Limits To Growth in 1972. In this scenario the basic formula is Natural + Human = Financial. We begin with the question of natural resources, and then the “effect” this has on the soil, followed by the potential it has to create “value” to humans. Herein we see that humans determine the value AFTER the production of goods or services, not prior as in the capitalist view. This is a model of female thoughtfulness.

I began my career in the natural and organic products industry 18 years ago as the VP of Marketing for Traditional Medicinals, one of the core companies of our industry, and subsequently worked with market leaders including Spectrum Organics, Strauss Family Creamery, Lundberg Family Farms and Numi Organic Tea. All of these companies embrace a Sustainabilist view of capitalism by bringing a decidedly nurturing and respectful view of the role of natural capital in their business models. Clearly, their customers have rewarded them for their stewardship and promotion of sustainable business practices, as well as recognition of human capital. These are model companies that are surviving in a fiercely competitive marketplace against much better capitalized mainstream companies. Nevertheless, they have stayed true to their principles and have become beacons of well-run companies with high ethical standards. Unfortunately, they are among a small minority.

My belief is that both views of capitalism can co-exist and balance each other out over time. For the past 200 years we’ve been operating under a more masculine-dominant form of capitalism with many side effects including global warming, financial instability and strained natural systems. If we begin to view our decisions through the lens of a Sustainabilist we could restore our natural systems to balance and thus create a longer lasting value for all, and bring a more motherly approach to how we leverage the natural capital of our shared Earth.

More on this topic can be viewed on SlideShare.

--Nils Michael Langenborg

Nils-Michael Langenborg is President and CEO of Whole Health Marketing, a marketing consultancy for triple-bottom line brands. He received a green MBA from Dominican University of California, focusing on the total enterprise and its requirement to adopt sustainable business practices throughout the organization.