Third Industrial Revolution and Zero Marginal Cost Glossary Terms Definition

Length: 1 paragraph per entry (200-250 words),Instructions
At the end of the readings for each week you will find a list of (generally five or six) terms
associated with the weeks lecture. Each student will submit a glossary entry for two of these
terms drawing directly on required or supplemental course material.
Students should define the term by providing a supporting citation from one of the required or
supplemental texts listed on the fall or winter syllabus (or a text cited on the lecture slides) based
on a reading for that week (see sample entry below). In their definitions, students should
elaborate on the meaning of the term in relation to an issue of importance in the study of business
and society.
Minimum Requirements
For an entry to be considered complete, it must satisfy the following requirements:
-It includes a proper reference (“quote”) from a reading from either the Fall or Winter term.
-It includes a page reference to that text (e.g., Wright, p. 4). If it does not include a reference to
a reading, you will not receive a mark.
-The elaboration is in your own words, no plagiarism or any form of academic dishonesty of
course always apply!
-The text is 200-250 words in length
Sample Entry:
According to Wright, the dominant ideas about progress have become an ‘ideology of progress’:
“Our practical faith in progress has ramified and hardened into an ideology– a secular religion
which, like the religions that progress has challenged, is blind to certain flaws in its credentials.
Progress, therefore, has become ‘myth’ in the anthropological sense” (2004, p. 4). People think
progress always means things get better, especially with technological improvements. He
discusses this in connection with what he calls progress traps. Calling it a myth is like trying to
explain why the people of Easter Island continued to chop down trees to build monuments even
though this ultimately led to the collapse of their society. In a sense, he is saying that because
many people believe in the ‘ideology of progress’ it is really hard to get people to see that
something needs to get done to avoid falling into this trap. For example, a lot of people may see
that climate change is a big threat to our civilization, but the belief in progress means that they
expect some technological solution will be discovered that will save us. This relates to many
issues of importance to business and society because we need to do more to ensure our economy
and society are built on the idea of long-term sustainability. (John Simoulidis: 218 words).
Glossary Terms: Anthropogenic climate change, Environmental/climate justice, Climate
change adaptation, Climate change resilience, Sustainable development, Third industrial
revolution, Zero marginal cost, Degrowth
Required Readings:
Rifkin, J. (2016). How the third industrial revolution will create a green economy. New
Perspectives Quarterly 33(1): 6-10.
Jerneck, A, and L. Olsson. (2008). Adaptation and the poor: development, resilience, and
transition. Climate Policy 8(2): 170-182.
To Review:
Birch, K et. Al (2017). “Chapter 9- Global Environmental Change”, Business and Society. A
Critical Introduction. Zed Books.
Birch, K et. Al (2017). “Chapter 14- Ethics and Business”, Business and Society. A Critical
Introduction. Zed Books.
Copyright © 2017. Zed Books. All rights reserved.
To a large extent, this book has been concerned with positive issues – by which we
mean descriptive statements about what ‘reality’ is. While we might argue about
whether one theoretical perspective or another (e.g. neoclassical economics,
institutionalist, feminist etc.) describes reality better or not, we can assess all of them
on the basis of whether they create a coherent and consistent relationship between
theory and description. For example, if neoclassical economists argue that everyone
is self-interested, we can unpack that theoretical claim and test it in the ‘real world’
(e.g. are people actually self-interested?). However, and alongside descriptive claims,
people also make normative claims about a range of issues – by which we mean
statements about how we think society (or something else) should be organized or
managed or run or what-have-you. In contrast to positive claims, though, normative
arguments entail understanding the social values and norms that underpin social
and legal rules. It is here that we need to think about the ethics and morality of
business, markets and capitalism.
Positive and normative statements are frequently confused and conflated, leading
to what David Hume – a Scottish philosopher from the eighteenth century – called
the ‘is-ought problem’ (Herman 2003); that is, we often think that our positive
descriptions of the world (e.g. ‘people are self-interested’) also reflect normative
principles (e.g. ‘people should be self-interested’). We have already come across one
example of this is-ought problem in Chapter 5 with the discussion of Milton
Friedman’s (1970) perspective on the responsibility of business. He claimed that
business people only have one responsibility – which is to make profit – because that
is what is implied by the theory that says the business manager is the agent of
shareholders not society (who are the principals). From this ‘positive’ observation,
according to Friedman at least, we can derive the ‘normative’ claim that business
should only pursue profit. There are problems with Friedman’s framing of business
ethics, which we discuss in this chapter and elsewhere (e.g. Chapter 5), and the other
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principles that underpin the ethics of doing business.
Of course, there are many cases where positive observations (i.e. explanations and
descriptions) do not tell us what normative claims or prescriptions can be justified.
For example if we know why income inequality is increasing in our society, we have a
basis for designing policies to address that inequality, but such knowledge cannot
tell us how important it is to fight inequality or what priority those policies should be
given in comparison to other policies. From this perspective, normative inquiry is
really an attempt to fill the gap between our forms of knowledge that help us explain
the world and the moral controversies and ‘value choices’ we may face once we have
that knowledge. This gap has even led moral relativists to say that ethical claims
cannot be rationally grounded since they are based on subjective and arbitrary
choices among competing values. Whether or not one agrees with moral relativism,
this problem of the variety and pluralism of ethical perspectives will be important in
our discussion.
In this chapter, we consider the specific issues that relate to the field of applied
ethics called business ethics, which is the dominant perspective taught in business
schools around the world. Our aim in this chapter is to provide a brief introduction to
business ethics and then to criticize how it is applied to business practices. We then
discuss three key ethical perspectives – utilitarianism, rights theory and social justice
– in order to offer a range of normative viewpoints that can be used to analyse
business practices, business ethics and the social values that underpin societal
attitudes to business, more broadly.
Business ethics In order to understand business ethics, we need to consider ethical
theory in general and applied ethics in particular. Ethical theory itself is the
enterprise of engaging in moral reasoning and discourse aimed at justifying or
legitimizing certain practices, policies or actions. Ethical issues emerge wherever a
possible action or choice we face might lead to a violation of moral standards or harm
people in a way that could be avoided (Velasquez 2012: 11–12). Sometimes our
actions and choices appear not to have moral implications because we do not have
information about what those choices entail or we simply do not have the power to
influence other people’s lives in a given way. For example, if we lack information
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about the implications of using fossil fuels to generate energy then a decision
between using solar power or coal-fired electricity may lack a moral dimension. We
may agree that we have a responsibility to future generations, but we do not know
how our energy use relates to such a responsibility. In this way scientific inquiry and
technological progress have opened up many new types of moral problems because
they have extended human capabilities and made us aware of areas of responsibility
that did not exist before. See Chapter 9 on environmental issues and Chapter 18 on
technological ones.
Business ethics follows the familiar ethical principle of ‘ought implies can’, which
means that an agent’s moral responsibility is relative to – or conditional upon – their
capacity and power to act. This of course applies to the activities of businesses which
control a great deal of resources and exhibit a strong degree of power to affect the
lives of workers, communities and consumers. For example, it is noteworthy that
reports about the widespread use of child labour in hazardous underwater gold
mining in the Philippines do not blame the parents who send their children to these
mines, but rather the people who exploit those children and families (Human Rights
Watch 2015). Ethical inquiry often starts from abstract principles about our duties
and obligations to others, but it also requires concrete and even critical knowledge of
a given social context, such as an understanding of which groups have power over
As highlighted in Chapters 5 and 13, public attitudes to business have changed
numerous times throughout the last century and a half, almost certainly due to the
growth of corporate power and the understanding of the importance of business
decision-making over so many aspects of our lives. This is why so many ethical
controversies have developed over time with respect to business practices that are
quite long-standing such as child labour, discrimination against particular social
groups such as women, ethnic minorities, sexual minorities (see Chapter 15), or
environmental pollution (see Chapter 9). Consequently, it is evident that morality
and ethics are centrally implicated in the activities of business and decisions of
business people, since they relate to the so-called ‘social licence to operate’
(Gunningham et al. 2004). Without this social licence, businesses would find it
difficult to sell their products and services (because they might face boycotts), recruit
employees (because people might not want to work for them) and avoid stringent
restrictions on their activities (because politicians might find it wins votes to create
new regulations).
The risks to business of losing their social licence mean that business has to be
concerned with ethics and morality. As a result, business ethics has emerged as an
important area over the last hundred years or so (De George 1987; Parker 2002). Its
origins can be traced back to the corporate revolution – discussed in Chapter 3 – and
the attempt to bind public corporations to the social good, especially in countries
like the USA. For example, Rakesh Khurana (2007), a professor at Harvard Business
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School, argues that public fears about big business at the end of the nineteenth
century led business leaders to encourage the alignment of business with broader
social goals like employment, economic growth and so on. This was achieved through
newly emerging business schools and management programmes that emphasized
the importance of the social role of business, especially public corporations, as social
and public institutions in American society.
However, as the twentieth century progressed, especially during the 1970s and
1980s, business leaders asserted another view, that business should only be
concerned with profit – business school programmes soon followed suit. The idea
and form of business changed, in this sense. From this later perspective, the science
of management should focus on the firm’s bottom line, including how to improve the
firm’s market fortunes measured by its financial results or returns to investors. Yet
as Bowie (1986) and De George (1987) explain, it is also in the 1970s and 1980s that
business ethics itself began to emerge as an academic subfield of management
studies, as the field’s first scholarly journals were published, textbooks written and
specialized academic programmes set up. These business ethics scholars showed
how business decision-making has a large impact on society and ‘stakeholders’
(workers, consumers, community members), and therefore raises significant moral
implications that cannot be avoided in the study and practice of business
Understanding business ethics Today, we can, generally speaking, unpack business
ethics in at least two ways. First, in terms of the scale at which we might want to
understand the ethics of business; and second, in terms of how ethics is shaped by
economic theories of the market. We will deal with each in turn.
On the one hand, we can think of business ethics as operating on different levels or
scales. According to Velasquez (2012: 15), for example, business ethics can be used to
examine (1) systemic, (2) corporate and (3) individual issues. First, business ethics can
be used to produce normative analyses of social institutions and of capitalism in
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general; we might want to ask whether capitalism is moral or not, for example.
Second, it can also be used to focus on a particular organization, like a specific
business or corporation (e.g. Walmart, Nike, Apple). At this level, ethics relates to the
activities of the organization in question; we might want to look at whether a
particular decision adhered to certain principles or not. Finally, we can look at the
ethics of individuals in business; for example, we could analyse the decisions and
choices of managers and executives. We might want to ask how and why they made
certain decisions – that is, what is the motivation behind individual ethical choices.
While a range of issues might be open to discussion in business ethics in this line of
thinking, some academics like Martin Parker (2002: 97) have criticized business
ethics for adopting an individualistic and economistic approach to ethics – that is,
focusing on single issues (e.g. should a business sell certain products) and ignoring
collective or political considerations (e.g. should we simply ban certain products).
Consequently, no matter what level or scale is analysed, according to Parker,
business ethics does not lead to significant changes. Part of the reason for this is that
business ethics has emerged from and continues to form an important part of
business education, especially in business schools; it is important, in this context, to
understand how people learn ethics and not just what ethical principles might be
best suited to particular business activities.
When it comes to the influence of economic theories on ethics, we want to highlight
two positions: (1) the ‘strong’ position and (2) the ‘pragmatic’ position.
First, the strong position reflects the perspective that markets are the optimal
allocators and distributors of societal resources – we discuss this in Chapters 10 and
11. In particular, this position is associated with market fundamentalists – often
called ‘neoliberals’ – who contend that the market is the best and most moral way to
organize society – see Hayek (1944 [1994]) and Friedman (1962) for example. This
view is often traced back to Adam Smith and his contention that individual self-
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interest – or selfishness, generally considered to be immoral – can lead to a greater,
public good – in this case, economic growth (see Foley 2006). While the causative
relationship between individual actions and societal outcomes is contested, this
perspective forms the basis of a market-centred approach to business ethics.
In 1970, Friedman wrote a famous essay entitled ‘The Social Responsibility of
Business Is to Increase Its Profits’, which was published in the New York Times
Magazine, a publication with wide readership in the general public. In it he pleaded
against the growing chorus of claims that managers and executives should consider
their social responsibility when making business decisions (see Chapter 5). He
insisted that such an approach would not only ignore the responsibility of managers
and executives to act as ‘agents’ of shareholders, but it would also weaken the
contribution of business to society. According to Friedman, asking managers and
executives to be socially responsible is akin to asking them to do a job they are
neither authorized to perform nor qualified to do. People elect politicians to look
after the public interest and make laws accordingly. With those laws in place, and
market forces pressuring managers and executives to look after the interests of both
consumers and investors, there is no need to assign a special social or moral
‘responsibility’ to business other than to try to make a profit (within the limits set by
laws enacted by governments). A manager or executive who tries to promote social
values – like a clean environment – is really acting like a politician, who is supposed
to do those things, rather than looking after the money of investors, which managers
are supposed to do according to Friedman (1970: 122). Friedman even said that
managers and executives who pursue social interests with investors’ money are
actually doing harm to society by usurping the role of politicians who are elected and
accountable to the people in a democracy. As a market fundamentalist, Friedman
insisted that when businesses try to make as much profit as possible, and keep their
noses out of the democratic political process where social policy and priorities
should be determined, they will make the greatest contribution to the well-being of
There are others who take a more ‘pragmatic’ stance on business ethics, such as
Manuel G. Velasquez (2012), who has written a major textbook on the subject called
Business Ethics: Concepts and Cases. By pragmatic we mean that his position is not
driven by a set of first principles (e.g. people are self- interested, markets are optimal
allocators of resources etc.), but rather by what specific decisions will solve what
particular problems. In his book, for example, Velasquez argues that:
ethical behavior is the best long-term business strategy for a company – a view that
has become increasingly accepted during the last few years. This does not mean
that occasions never arise when doing what is ethical will prove costly to a company .
. . Nor does it mean that ethical behavior is always rewarded or that unethical
behavior is always punished . . . To say that ethical behavior is the best long-range
business strategy just means that, over the long run and for the most part, ethical
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behavior can give a company significant competitive advantages over companies
that are not ethical. (2012: 7)
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Velasquez’s position is very different from the likes of Friedman or other market
fundamentalists. For Velasquez, ethical decisions are advantageous for a business,
but ethical decisions are not always obvious; consequently, managers and executives
need help making those decisions, which is where business ethics plays an important
role. In a sense, business ethics helps managers and executives make decisions on a
case-by-case basis, ensuring that their decisions are principled and not simply selfinterested. Indeed, as Velasquez reminds us, ethics has an important function of
building trust, which in turn is an important ingredient in making organizations
Critique of business ethics As should be obvious from this brief summary, designing a
special type of applied ethics for business is particularly challenging due to the fact
that many actions that are praiseworthy in business can be seen as ethically
problematic in other contexts. For example, competition and competitiveness are
seen as a plus in the business world, but not necessarily in other parts of our lives
(e.g. personal relationships). Even within the same business organization there may
be competition for advancement and other rewards that give people an incentive to
be aggressive and ruthless (Boatright 2003). This might explain why business is an
arena for a specialized version of ethics. On the one hand there are good ‘business’
reasons for businesses to be ethical, if for no other reasons than that this will help
them gain the trust of consumers. On the other hand, managers and executives may
expect their employees to be aggressive in maximizing sales opportunities and to be
ethical mainly insofar as doing so reinforces those opportunities.
Alongside these issues, it is possible to make a number of critical comments about
business ethics as a specific form of applied ethics. Here we draw on Martin Parker’s
(2002) book, Against Management, to highlight a few of these criticisms. First, Parker
argues that business ethics is really a way to legitimate business, rather than a way to
encourage business to be ethical. Basically, he argues that business ethics is a way to
side-step serious scandals by offering to make business more effective by dealing
with the problems identified in each corporate scandal. Second and as already
mentioned, Parker argues that business ethics is dominated by individualistic rather
than collective conceptions of ethical behaviour; as a result, it does nothing to
challenge dominant economic ideas in business, like self-interest, which might be
ethically problematic. As a result, it reinforces the notion that morality is a private
decision rather than a political issue. This also entails something called the ‘loyal
agent’ argument which stresses that it is implausible to make employees accountable
for the socially beneficial and ethical outcomes of business within a hierarchy of
command. Indeed, there is controversy around whether we can make clear
assignments of responsibility within large and formal impersonal organizations like
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corporate bureaucracies (Michalos 1995). Third, Parker (2002) argues that business
ethics helps to establish the limits within which business and business people are
meant to operate (e.g. profit motive), it does not challenge those limits. For example,
when it comes to employment relations, we might see drug tests as violations of
privacy in non-business contexts, but in business a mandatory drug test might be
seen as a legitimate way to increase the performance of employees. Here, business
performance can legitimate certain actions that would not be acceptable otherwise.
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If business is a special kind of ‘ethics of economic relations’, as Boatright (2003)
claims, it is nevertheless strongly influenced by the general principles of ethics that
have been developed over many centuries by leading moral philosophers and
thinkers. Consequently, it is helpful, we would argue, to consider the leading moral
frameworks and theories that can be used to justify and guide ethical decisionmaking. We discuss three of these next – utilitarianism, rights theory and social
justice – before considering how to apply these ethical theories to the problems and
dilemmas which business ethics tries to address.
Utilitarianism Utilitarianism is based on the idea that the actions and choices that
are most ethical are those which contribute most to the overall good of society
(Velasquez 2012). The eighteenth-century philosopher Jeremy Bentham is the
original exponent of utilitarianism (Snoeyenbos and Humber 2002). Bentham
proposed that the best decision from a moral point of view is the one that produces
the ‘greatest good for the greatest number’. In other words, the goal of those
designing policies and making decisions is to bring about the greatest ‘net’
happiness. Utilitarianism starts from the assumption that it is not the job of moral
theory to tell people what kind of goals or preferences they should have or what kinds
of values are most important. Instead moral theory only needs to take people’s goals
and preferences as a given – much like economists typically do, as we discussed in
Chapter 11 – and try to satisfy the greatest number, with the knowledge that not all
can be satisfied. In this sense, utilitarianism is a ‘consequentialist’ ethical approach
because it does not rank actions and policies as morally good or bad based on the
quality of the actions themselves or what values those actions might promote, but
rather on whether they lead to the best results or consequences for individuals and
society. Utility is an impartial standard since the best result is not what satisfies my
goals or yours, but the most goals overall, no matter what those goals are (Velasquez
2012). In light of these qualities, utilitarianism is closely associated with liberal
pluralist ideas and society, where many of our moral challenges involve finding
effective approaches to social cooperation among people with different values.
Many of the attempts to defend the capitalist market that we have reviewed in this
book such as Adam Smith’s ‘invisible hand’ – discussed in Chapter 3 – rely on
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utilitarian reasoning, but utilitarianism does not necessarily support the market
fundamentalist view (Boatright 2003; Velasquez 2012). It is important to note that the
normative claims of Smith’s theory rest on a contestable descriptive claim, namely,
the assumption that the price mechanism of the market is the best way of ensuring
that society’s resources are put to their most valuable use. Alternative theories of
economic relations, however, might show that cooperative economic relationships
may produce more socially desirable results than market competition – see
discussion of anarchist economics in Chapter 12. In this case, then, utilitarian
reasoning might support policies that favour making available economic resources
as public goods or organizing economic relations using cooperative principles.
Rights theory The concept of a ‘right’ is another important basis for ethical theory.
One of the key proponents of the theory is Ronald Dworkin (1984) who argued that
rights represent ‘trumps’ over other ethical claims. We can say that rights are
entitlements for individuals and groups to be treated with respect in regard to their
interests, freedoms, capacities or choices. There are many types of rights: human
rights, natural rights, legal rights, rights created by contracts and so on. We do not
have the space to review all of these, but it is important to see that if someone has a
right to something it means that other people have a duty to treat that person in a
certain way. For example, if a customer has a right to privacy then that means a
business has a duty not to collect and share their information with others without
consent. Indeed, privacy rights have been used as a justification for policies that limit
the surveillance powers of large organizations such as businesses and governments.
As with other ethical principles outlined in this chapter, rights can be enforced
through regulations and laws (see Chapter 13), or they can be recognized and
affirmed through voluntary actions and decisions.
There are many types of rights as well. The seventeenth-century English
philosopher John Locke claimed that humans have a ‘natural right’ to property based
on what we create through our labour as individuals (see Chapter 18 for more
discussion of this). Locke’s approach has been used as a moral argument against
government interference with the economic choices and behaviour of individuals
and businesses, and even as an argument against the legitimacy of taxation. From the
libertarian end of the political spectrum, for example, property rights legitimate
‘negative’ rights of non-interference with each person’s freedom (Nozick 1974). Other
types of rights in liberal- democratic societies are characterized differently; for
example, as ‘positive’ rights to enable individual freedom. This includes the right to
be treated equally under the law, as provided by the Fourteenth Amendment of the
US Constitution and many other similar provisions in other societies, for example.
This right has been used to justify policies of non-discrimination or affirmative
action in hiring and recruitment. Equality under the law has also been cited as a
reason to roll back progressive income taxes on the grounds that high income
earners should not be taxed at a rate higher than low income earners.
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Rights-based ethics is not consequentialist, but rather ‘deontological’, which means
that the moral justification for an action has to do with whether it adheres to a rule or
obligation, and not whether its consequences are good or bad. Another important
feature of rights is that they often conflict with other rights. A good example of this
relates to employment rights. The political scientist David Ciepley (2004, 2013) points
out that workers, in the US context at least, give up their rights (e.g. free speech, free
association etc.) when they enter the workplace. A business can enforce workplace
rules that conflict with basic human rights. According to Ciepley (2013) this is not an
anomalous arrangement, rather businesses are legally given the authority to enforce
these rules, almost like government has delegated its power to them.
Justice A third major area of ethics involves theories of justice. At a general level,
justice means giving people what they deserve based on their status, situation or
circumstances. We often say that an ethical problem involves a question of justice or
fairness when there is moral pressure to address the inequalities and disadvantages
that certain groups and types of people have. Distributive justice deals with how –
and according to what principle – good or valuable things should be allocated among
people (Velasquez 2012). An early formulation of justice comes from the writings of
the ancient Greek philosopher Aristotle, who gave the most general formulation of
distributive justice by describing it as ‘treating equals equally and unequals
unequally’ (Aristotle 2014). In the nineteenth century, Karl Marx articulated a
radically egalitarian theory of economic justice expressed in the principle: ‘from each
according to his abilities, to each according to his needs’.
Many challenges arise, however, once we try to give concrete content to this abstract
principle. For example, should ‘unequal need’ be a basis for distribution? In many
cases we would say yes, but certainly not all. For example, most people would say that
a student who asks a professor for a higher mark on a test because they ‘need’ a good
grade average to get into law school does not deserve a positive response. On the
other hand, justice based on need may be warranted in contexts such as reversing
important types of social disadvantage or workplace policies that accommodate
people with illness or disability. Liberal justice, by contrast, is based on rewarding
people for their contributions or investments, which can lead to great inequality.
Affirmative action in hiring is one attempt to reverse historical disadvantage and
inequality. Based on these and other examples we can see that claims based on
theories of justice are powerful and compelling. At the same time they can be
controversial as they often challenge established economic patterns and institutions
and may require significant change to the priorities within organizations and society
more generally.
Equity–efficiency tradeoff? As we noted, Adam Smith’s concept of the invisible hand is
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an attempt to justify the market on utilitarian grounds (Foley 2006). Many
proponents of the invisible hand argue that inequality is morally acceptable on the
grounds that a successful and growing economy needs to reward the most talented
and productive people by allowing them to earn high incomes (Sayer 2015). This
creates a potential conflict with egalitarian justice: if society taxes the wealthy to pay
for redistributive policies then there might be fewer incentives for the most
productive people to contribute, undermining the economic growth from which even
the poor may benefit. Others have argued that this market incentives approach
ignores the fact that money has ‘declining marginal utility’ for individuals. In other
words, once people have a lot of income or wealth, further amounts of income
become less valuable to them. If the ‘declining marginal utility of money’ view is true,
then egalitarian justice would not be incompatible with a growing economy (Le
Grand 2002). Whether inequality and efficiency are convergent or divergent values
can partially be answered empirically. In fact, some recent studies give support to the
idea that societies which pursue egalitarian redistributive social policies can also be
more economically efficient and productive (Ostry et al. 2014).
Utility–rights tradeoff Many business ethics scholars have raised privacy issues
associated with online businesses like Google and Facebook and their social
networking and search engine technologies. The very qualities that give a Google
search its power depends upon the ability of those companies to share, link and sell
information about the users of their services. According to Rifkin (2014), the next
stage in this process is the so-called ‘Internet of Things’ (IoT) which will create
another level of connectivity and data sharing through embedded sensors and usage
tracking devices that are already pervading more of our everyday activities and
interaction with objects and technologies. The capacity of the IoT to profile and rate
users and their behaviours provides a basis for creating more efficient ways of
delivering services and allowing ‘on demand’ customization of those services to our
One concern has been that people will lose control over their personal information,
making it hard to know how to balance the loss of privacy against the convenience or
utility of customized services and richer connections that these technologies provide.
Clearly those concerned with rights have pointed to the privacy concerns mentioned
above while a utilitarian could make the argument that the value created by
improved services and products and new opportunities for collaboration and sharing
outweighs the privacy concerns. In practice utilitarianism recommends that we
search for optimal tradeoffs between different goals, and this concern about how to
balance these ethical considerations has been the subject of much regulation and
court challenges.
Justice–rights tradeoff The emergence of capitalism is associated with the breaking
down of status-based societies (e.g. feudalism) and the promotion of merit-based
Birch, Doctor Kean, et al. Business and Society : A Critical Introduction, Zed Books, 2017. ProQuest Ebook Central,
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ones (Herman 2003). Consequently, business is often assumed to be based on the
level of effort people put into it and rewards commensurate with that effort – this
assumption is used to justify, for example, inequality (di Muzio 2015). On the one
hand, and taking the Lockean view, this makes sense because people are rewarded
for their work and talents; that is, they can claim property rights to the results of their
labour and work. On the other hand, however, this claim ignores the social basis of
work in that all forms of human activity are the result of social inheritance and
context. As we noted in the Introduction and Chapter 12, anarchist thinkers have
argued that all human activity builds on the work of previous generations, which
means that we all benefit from this inter-generational investment in our social
systems, laws, norms, values, technologies and so forth that enables us, in the here
and now, to create something. Language represents a useful example. Without
language – which has developed over many generations – the content of books,
articles, magazines, blogs etc. would have no value, because we would not have a
common language to share our ideas. Consequently, any written work we create owes
a debt to previous generations of people who have helped to create and sustain the
language we use.
Copyright © 2017. Zed Books. All rights reserved.
In this chapter we have covered mainstream versions of business ethics, provided
some critical commentary on its underlying assumptions, and then introduced a
number of ethical theories in order to illustrate a range of normative issues in
business. We want to finish by emphasizing that normative analyses, like those we
discuss here, are an important part of any consideration of the relationship between
business and society. Moreover, normative assumptions can underpin a range of
supposedly positive claims, which means that it is important to consider what might
be a normative claim and what might not.
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How the Third
Industrial Revolution
Will Create a Green
is the author of The Zero Marginal Cost Society: The
Internet of Things, the Collaborative Commons, and the Eclipse of
Capitalism. Rifkin is an advisor to the European Union and to heads of state around
the world, and is the president of the Foundation on Economic Trends in Washington,
D.C.. For more information, please visit The Zero Marginal Cost Society.
The global economy is slowing, productivity is waning in every region of the
world and unemployment remains stubbornly high in every country. At the
same time, economic inequality between the rich and the poor is at the highest
By 2014 the wealth of the
80 richest individuals in the
world equaled the combined wealth of the poorest
half of the human race.
point in human history. In 2010 the combined wealth of the 388 richest people
in the world equaled the combined wealth of the poorest half of the human
race. By 2014 the wealth of the 80 richest individuals in the world equaled the
combined wealth of the poorest half of the human race.
This dire economic reality is now compounded by the rapid acceleration
of climate change brought on by the increasing emissions of industry-induced
global warming gases. Climate scientists report that the global atmospheric
concentration of carbon, which ranged from about 180 to 300 parts per million for the past 650,000 years, has risen from 280 ppm just before the outset
of the industrial era to 400 ppm in 2013. The atmospheric concentrations of
methane and nitrous oxide, the other two powerful global warming gases, are
showing similar steep trajectories.
At the Copenhagen global climate summit in December 2009, the European
Union proposed that the nations of the world limit the rise in Earth’s temperature to 3.5 degrees Fahrenheit (2 degrees Celsius). Even a 3.5 degree rise,
however, would take us back to the temperature on Earth several million years
ago, in the Pliocene epoch, with devastating consequences to ecosystems and
human life.
The EU proposal went ignored. Now, six years later, the sharp rise in the
use of carbon-based fuels has pushed up the atmospheric levels of carbon dioxide far more quickly than earlier models had projected, making it likely that
the temperature on Earth will rush past the 3.5 degree target and could top
off at 8.6 degrees Fahrenheit (4.8 degrees Celsius) by 2100—temperatures
not seen on Earth for millions of years. (Remember, anatomically modern
human beings—the youngest species—have only inhabited the planet for
195,000 years or so.)
What makes these dramatic spikes in the Earth’s temperature so terrifying
is that the increase in heat radically shifts the planet’s hydrological cycle. Ours
is a watery planet. The Earth’s diverse ecosystems have evolved over geological
time in direct relationship to precipitation patterns. Each rise in temperature
of 1 degree Celsius results in a 7 percent increase in the moisture-holding
capacity of the atmosphere. This causes a radical change in the way water is distributed, with more intense precipitation but a reduction in duration and fre-
What makes these dramatic
spikes in the Earth’s temperature so terrifying is that the
increase in heat radically shifts
the planet’s hydrological cycle.
quency. The consequences are already being felt in ecosystems around the
world. We are experiencing more bitter winter snows, more dramatic spring
storms and floods, more prolonged summer droughts, more wildfires, more
intense hurricanes (category 3, 4 and 5), a melting of the ice caps on the great
mountain ranges and a rise in sea levels.
The Earth’s ecosystems cannot readjust to a disruptive change in the planet’s
water cycle in such a brief moment in time and are under increasing stress, with
some on the verge of collapse. The destabilization of ecosystem dynamics around
the world has now pushed the biosphere into the sixth extinction event of the
past 450 million years of life on Earth. In each of the five previous extinctions,
Earth’s climate reached a critical tipping point, throwing the ecosystems into a
positive feedback loop, leading to a quick wipeout of the planet’s biodiversity.
On average, it took upward of 10 million years to recover the lost biodiversity.
Biologists tell us that we could see the extinction of half the Earth’s species by
the end of the current century, resulting in a barren new era that could last for
millions of years. James Hansen, the former head of the NASA Goddard
Institute for Space Studies, forecasts a rise in the Earth’s temperature of 4
degrees Celsius between now and the turn of the century—and with it, the
end of human civilization as we’ve come to know it. The only hope, according
to Hansen, is to reduce the current concentration of carbon in the atmosphere
from 400 ppm to 350 ppm or less.
Now, a new economic paradigm is emerging that is going to dramatically
change the way we organize economic life on the planet. The European Union
is embarking on a bold new course to create a high-tech 21st century smart
Now, a new economic paradigm is emerging that is
going to dramatically
change the way we organize
economic life on the planet.
green digital economy, making Europe potentially the most productive commercial space in the world and the most ecologically sustainable society on
Earth. The plan is called Digital Europe. The EU vision of a green digital
economy is now being embraced by China and other developing nations
around the world.
The digitalization of Europe involves much more than providing universal
broadband, free Wi-Fi and a flow of big data. The digital economy will revolutionize every commercial sector, disrupt the workings of virtually every industry, bring with it unprecedented new economic opportunities, put millions of
people back to work, democratize economic life and create a more sustainable
low-carbon society to mitigate climate change. Equally important, this new
economic narrative is being accompanied by a new biosphere consciousness, as
the human race begins to perceive the Earth as its indivisible community. We
are each beginning to take on our responsibilities as stewards of the planetary
ecosystems that sustain all of life.
To grasp the enormity of the economic change taking place, we need to
understand the technological forces that have given rise to new economic systems throughout history. Every great economic paradigm requires three elements, each of which interacts with the other to enable the system to operate as
a whole: new communication technologies to more efficiently manage economic
activity; new sources of energy to more efficiently power economic activity; and
new modes of transportation to more efficiently move economic activity.
In the 19th century, steam-powered printing and the telegraph, abundant
coal and locomotives on national rail systems gave rise to the First Industrial
Revolution. In the 20th century, centralized electricity, the telephone, radio and
television, cheap oil and internal combustion vehicles on national road systems
converged to create an infrastructure for the Second Industrial Revolution.
| Today, Europe is laying
the ground work for the Third Industrial Revolution. The digitalized communication Internet is converging with a digitalized, renewable “Energy Internet”
and a digitalized, automated “Transportation and Logistics Internet”” to create
a super “Internet of Things” infrastructure. In the Internet of Things era, sensors will be embedded into every device and appliance, allowing them to communicate with each other and Internet users, providing up-to-the-moment
data on the managing, powering and moving of economic activity in a smart
Digital Europe. Currently, billions of sensors are attached to resource flows,
warehouses, road systems, factory production lines, the electricity transmission grid, offices, homes, stores and vehicles, continually monitoring their status and performance and feeding big data back to the Communication Internet,
Energy Internet and Transportation and Logistics Internet. By 2030, it is estimated there will be more than 100 trillion sensors connecting the human and
natural environment in a global distributed intelligent network. For the first
time in history, the entire human race can collaborate directly with one another,
democratizing economic life.
The digitalization of communication, energy and transportation also raises
risks and challenges, not the least of which are guaranteeing network neutrality, preventing the creation of new corporate monopolies, protecting personal
privacy, ensuring data security and thwarting cybercrime and cyber terrorism.
By 2030, it is estimated
there will be more than 100
trillion sensors connecting
the human and natural
environment in a global distributed intelligent network.
The European Commission has already begun to address these issues by establishing the broad principle that “privacy, data protection, and information security are complementary requirements for Internet of Things services.”
In this expanded digital economy, private enterprises connected to the
Internet of Things can use Big Data and analytics to develop algorithms that
speed efficiency, increase productivity and dramatically lower the marginal cost
of producing and distributing goods and services, making European businesses
more competitive in an emerging post-carbon global marketplace. (Marginal
cost is the cost of producing an additional unit of a good or service, after fixed
costs have been absorbed.)
The marginal cost of some goods and services in a Digital Europe will even
approach zero, allowing millions of prosumers connected to the Internet of
Things to produce and exchange things with one another for nearly free in the
growing Sharing Economy. Already, a digital generation is producing and sharing music, videos, news blogs, social media, free e-books, massive open online
college courses and other virtual goods at near zero marginal cost. The near
zero marginal cost phenomenon brought the music industry to its knees, shook
the television industry, forced newspapers and magazines out of business and
crippled the book publishing market.
While many traditional industries suffered, the zero marginal cost phenomenon also gave rise to a spate of new entrepreneurial enterprises including
The near zero marginal cost
Google, Facebook, Twitter, YouTube and thousands of other Internet compa-
phenomenon brought the
nies, which reaped profits by creating new applications and establishing the
music industry to its knees,
networks that allow the Sharing Economy to flourish.
shook the television indus-
Economists acknowledge the powerful impact the near zero marginal cost
try, forced newspapers and
has had on the information goods industries. But, until recently, they have
magazines out of business
argued that the productivity advances of the digital economy would not pass
and crippled the book pub-
across the firewall from the virtual world to the brick-and-mortar economy of
lishing market.
energy, and physical goods and services. That firewall has now been breached.
The evolving Internet of Things will allow conventional businesses enterprises,
as well as millions of prosumers, to make and distribute their own renewable
energy, use driverless electric and fuel-cell vehicles in automated car-sharing
services and manufacture an increasing array of 3-d-printed physical products
and other goods at very low marginal cost in the market exchange economy, or
at near zero marginal cost in the Sharing Economy, just as they now do with
information goods.

Copyright © 2017. Zed Books. All rights reserved.
Nowadays we have a very romantic notion of nature, associating it with images of
forests, mountains, streams and the wildlife that inhabit these places. Our
understanding of nature is not only romantic, however; it also involves a series of
assumptions about what it means to be ‘natural’ and – as importantly – what it
means to be ‘unnatural’. For example, forests are natural, but plastic is not; moose
are natural, but cars are not; and humans are natural, but also not at the same time.
The reason we have such a complex relationship with nature and the environment is
because nature itself – and what it means to be natural – is constituted by a diverse
set of human practices and knowledges ranging from the findings of scientific
research through cultural representations of nature in film and other media to the
organization of business within capitalism. This has led a number of human
geographers to argue that, in a very real sense, our imaginations and our socioeconomic practices actively shape nature and the natural world, not only in our
minds but also in reality (e.g. Smith 1984 [2008]; Whatmore 2002). Thus, they argue,
humans are both products of nature and the producers of nature.
This influence or impact of humans on the environment – which we define, for
simplicity’s sake, as the world’s biosphere – has been well-documented over the last
few decades, but awareness of our human imprint on the world and the implications
this has for our livelihoods and survival has a much longer history. In fact it is
possible to identify environmental movements as far back as the nineteenth century,
when various peoples and groups sought to highlight the damaging impacts of
industrialization on society. Examples include: the Romantic poets like William
Wordsworth, Lord Byron and Percy Bysshe Shelley at the end of the eighteenth
century and start of the nineteenth century; the Sierra Club established in 1892 in the
USA; and the Garden City movement that sprang up at the start of the twentieth
century. The modern environmental movement, however, emerged in the 1960s and
1970s as a response to a range of environmental issues and crises like chemical
pollution, oil spills, anti-whaling campaigns, toxic waste, biodiversity loss, animal
extinctions and so on (Millington and Pickerill 2005). One particular driving force was
concerns about the ‘limits to growth’ – the title of an influential report in 1972 – of
the world. Since the 1960s and 1970s there has been a growing interest in
environmental change and human-environment interactions, leading many thinkers
to start calling our current era the ‘Anthropocene’ – or, age of humans (Castree 2014).
The Anthropocene is especially dominated by the impacts of human activity on the
world’s climate. As a result of these impacts, one of the key global challenges facing
us today is how to mitigate (i.e. stop) and adapt to (i.e. live with) anthropogenic
climate change, especially the significant shifts in global and local temperatures
(e.g. warmer winters, colder summers), increasingly violent weather events (e.g.
Birch, Doctor Kean, et al. Business and Society : A Critical Introduction, Zed Books, 2017. ProQuest Ebook Central,
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hurricanes, floods, storms etc.), melting ice caps and permafrost, and so on. How we
deal with climate change and its impacts is shaped by the assumptions we have
about the environment; this is not only in terms of romanticized visions of a pristine,
untouched nature, but also in terms of how nature is treated by the state and
businesses as a private resource and a common dumping ground for pollution and
waste. What we want to emphasize in this chapter is that capitalism has both created
the environmental problems with us today and is also proposed as the solution to
those problems by world leaders. It is important, in light of this contradiction, to
consider what other perspectives we might bring to bear to resolve these issues.
Copyright © 2017. Zed Books. All rights reserved.
We cover several issues in this chapter relating to global environmental change.
First, we look at mainstream perspectives on the environment, pollution, limits to
economic growth and concepts of sustainable development. We also outline the
main ways that capitalist businesses seek to resolve environmental problems.
Second, we present a critical take on understanding the environment called political
ecology. This approach incorporates notions of environmental justice and politicaleconomic change that challenges prevailing and dominant business solutions. Third,
we focus on climate change as an empirical example of a global environmental
problem, one which has become a seemingly intractable problem.
What is the environment? What are its limits? The natural environment can be defined
technically as the world’s biosphere, its biomes and its diverse and varied
ecosystems. The biosphere comprises three interconnected parts: the atmosphere,
which is the air cover around the Earth; the hydrosphere, which is the surface-level
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(e.g. oceans) and below surface waters (e.g. aquifers); and the lithosphere, which is
the upper levels of the Earth’s crust and includes the soil, plants and animals. Within
the lithosphere there are a number of different biomes; these are plants and animals
that inhabit distinct areas of the Earth’s surface (e.g. desert, grassland, rainforest
etc.). Within the biomes there are smaller ecosystems of interacting, self-regulating
animal and plant populations adapted to specific local climates, topographies etc.
(Robbins et al. 2010). As we have mentioned already, this technical definition
obscures the human shaping of the environment through economic actions and
decisions like pollution, waste production, biodiversity loss, climate change etc.
However, according to Barry Commoner (1971), there are four laws of ecology that
humans cannot escape, no matter what they do to the environment.
Mainstream approaches to the environment are often dominated by the
assumption that the natural world exists for humans to exploit and use as they see fit
and with little regard for the consequences. John Bellamy Foster (2002) argues that
this assumption is particularly strong in Western cultures (e.g. North America,
Western Europe) and stretches back several centuries. The reason that global
environmental change causes such concern nowadays is because the Earth is a finite
space with finite resources – the environment and its resources are scarce, in this
sense – while human population has expanded considerably in a very short period of
time, in geological timescales at least. For example, a hundred years ago the world’s
population was below two billion people, and yet there now are over seven billion
people on the planet, all of whom need resources to survive (e.g. food, housing, water,
tools, energy etc.). It is important to note that these population concerns are not new.
In the nineteenth century an Anglican priest from Britain called Thomas Malthus
argued that the world simply could not sustain the massive rise in the British
population following industrialization; in his view, the world was overpopulated and
this would lead to famines, poverty, disease and wars as humans fought over the
finite resources (Robbins et al. 2010). While Malthus’ views have been disproved by
subsequent events, such as the huge growth in the world’s population, it still holds a
strong popular and political appeal for its simplicity – that is, environmental
problems result from too many people chasing too few resources and producing
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increasing levels of pollution and waste. This appeal is still evident in the revival of
environmentalism since the 1960s and 1970s.
Recent environmental awareness and campaigns have led to growing international
concern with global environmental change. The global environment has become a
major focus of international policy debate and intervention over the last few decades
(see Table 9.1), especially around the issue of climate change (see Example below). It
is important to note, however, that these agreements and arrangements are not
always successful. In part, these moves to resolve environmental problems stem
from continuing fears about the limits of the natural world. For example, the Club of
Rome, a global think tank, produced an influential report in 1972 called Limits to
Growth in which they set out to examine the physical limits of continuing economic
growth. The report’s conclusions were that ‘resource scarcities would push prices up
and slow down the possibilities for future growth’ and that ‘the resource base itself
would collapse’ (Jackson 2009: 7). Similar concerns motivated the establishment of
the World Commission on Environment and Development by the UN in 1983. This
Commission produced a report called Our Common Future in 1987 – more commonly
known as the Brundtland Report – in which they set out to define ‘sustainable
development’ in an attempt to make capitalism and environmental sustainability
compatible with one another.
Timeline of major global environmental events and agreements
Copyright © 2017. Zed Books. All rights reserved.
Date Events and agreements
1968 UNESCO Biosphere Conference
1972 UN Conference on the Human Environment
Limits to Growth report published by Club of Rome
1980 IUCN launches World Conservation Strategy
1987 Our Common Future report (aka Brundtland Report) published by World Commission on
Environment and Development
1992 Rio Summit on Environment and Development
UN Framework Convention for Climate Change (UNFCCC) created
1997 Kyoto Protocols established
2000 UN launches Millennium Development Goals
2002 World Summit on Sustainable Development
2009 Copenhagen UNFCCC Conference of the Parties (COP)
2011 Canada withdraws from the Kyoto Protocols
2015 UN Sustainable Development Goals established
Source: adapted and updated from Millington and Pickerill (2005: 156)
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Solving environmental problems with capitalism Now, it is important to note that the
Anthropocene is not simply about the general impact of humans on nature (and vice
versa), especially where this assumes these impacts result from overpopulation. It is
about the specific impact of capitalism on nature and what this means for the
environment (Smith 1984 [2008]). A good way to illustrate this impact is through the
concept of ‘the commons’ (Ostrom 1990) – see Chapters 1, 16 and 18 for more
discussion of the commons. We can define nature and the environment as part of the
commons; this means it is something held in common by all peoples, since no-one
created it, and it has certain characteristics that ‘make it difficult to fully enclose and
partition, making it possible for non-owners to enjoy resource benefits and owners to
sustain costs from the actions of others’ (Robbins et al. 2010: 52). Capitalism entails
certain logics, processes and practices that erode the commons, meaning that our
common environmental heritage faces particular pressures to adjust to capitalist
imperatives. For example, since anyone can use the commons (e.g. graze common
land) without cost, this means that some people can exploit the commons (e.g. overgraze common land) without anyone else being able to stop them. This leads to
something Garrett Hardin (1968) called ‘the tragedy of the commons’. Hardin argued
that it is in the interest of each person to use as much of the common resource as
they can for their own benefit, leading ultimately to the destruction of that common
resource as everyone over-uses the resource.
These ideas, that there are limits to growth and numerous tragedies of the
commons, have provided theoretical and normative support for the claim that
capitalist markets and business are best able to provide solutions to various
environmental problems (Bellamy Foster 2002). In particular, neoclassical
economists argue that the market can and should be used to resolve environmental
problems because it is the most efficient way to price and value the cost of
environmental deterioration, degradation and destruction (Robbins et al. 2010). This
has been described as ‘market environmentalism’ by a number of scholars (see
Bailey 2007). The starting point for solving environmental problems with markets
and business is understanding why there are environmental problems in the first
place. For neoclassical economists and their ilk this requires an understanding of
externalities as examples of market failure. Closely related to the tragedy of the
commons, an externality is the effect of economic activity on everyone not directly
involved in that activity – an example is the pollution or waste from factories.
Neoclassical economists argue that environmental problems are simply externalities
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that can and should be incorporated into capitalist relations through a range of
market and business solutions we outline below.
This form of environmentalism involves promoting three main market and
business solutions to environmental problems, all of which are based on neoclassical
economic assumptions (Coe et al. 2007; Leonard 2010; Robbins et al. 2010). These
include privatization, commodification and marketization. We critique these three
solutions in the next section, but for now we simply define them as the following:
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• Privatization: this process involves turning the environment and natural resources into
private property through changes to the law and regulations. The rationale behind this
process is the assumption that only private owners (e.g. business) have an incentive to
protect their property because it is valuable to them.
• Commodification: this process involves creating commodities out of the environment for
sale or new technologies to improve resource efficiencies. The rationale here is the
assumption that profit motivates everyone and that the market will efficiently determine
how much everyone values the environment through their purchasing choices, and this
will drive innovations to solve environmental problems.
• Marketization: this process involves the creation of new markets to achieve environmental
goals (e.g. reducing greenhouse gas emissions). It is based on the assumption that markets
are the most efficient mechanism to achieve these goals because markets promote new
ideas and products through competitive pressures.
What these three processes illustrate is the emphasis on the market and business
as the determinants of the value – or, more precisely, price – of natural resources and
the environment, which ignores the environmental costs of many human activities –
e.g. pollution, biodiversity loss, deforestation etc. (Coe et al. 2007). For example,
while humans can extract oil from different places around the world, its extraction in
some of those places, like Alberta, Canada (see Case Study), entails significant
environmental consequences, now and in the future, that we cannot accurately
calculate. This explains why its use, wherever it is extracted, has had and continues to
have a significant impact on the world’s atmosphere which we have not been able to
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resolve (see Example below).
Environmental justice and political ecology Like most scholarly debates, we can
approach global environmental change from several different and distinct
theoretical standpoints. For example, it is possible to conceptualize something like
sustainable development on a continuum from weak sustainability to strong
sustainability (Hopwood et al. 2005), where the former reflects a more business- and
technology-centred view of the world and the latter a more egalitarian- and
ecological-centred one. Where people sit on the continuum reflects not only their
attitude to nature and the use of natural resources, it also reflects their attitude to
issues of social justice, equality, redistribution and forms of social action (see Table
9.2). For example, who benefits from the extraction of natural resources and suffers
from the resulting waste from production processes are ecological and socioeconomic issues, not one or the other. They reflect an important distinction between
environmental problems that involve the over-use of natural resources and those that
involve the over-burdening of ecological systems, or sinks, with waste outputs (Dicken
2011). Over-use by one group of people deprives others of access to that resource,
while over-burdening the environment with pollution and waste always entails
decisions about where those negative outputs go and which groups will be most
impacted. Understanding these human-environment interactions is critical for
Birch, Doctor Kean, et al. Business and Society : A Critical Introduction, Zed Books, 2017. ProQuest Ebook Central,
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understanding environmental justice and injustice.
Two views of sustainability
Characteristics Weak sustainability
Social justice
Social action
Strong sustainability
Can solve environmental
Causes environmental and socio-economic
problems through markets
inequality and injustice
Provides solutions to problems
Cause of problems as much as solution
Nature as resources for human useInherent value in nature and ecological
Largely irrelevant
Entwined with environmental problems
Market-based, individual
Collective, democratic decision-making
consumer choice
Green capitalism (e.g. ‘green’
Deep ecology
Source: adapted from Hopwood et al. (2005)
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Our aim here is to outline and illustrate one alternative approach that is critical of
neoclassical economics and the solutions business and economists propose to solve
environmental problems – as outlined in the above section. The approach we discuss
is called political ecology and it seeks to combine insights from political economy –
see the Introduction – with ‘an understanding that nature and society are produced
together in a political economy that includes humans and non-humans’ (Robbins et
al. 2010: 6). What this means is that to understand the environment involves
understanding (1) human socio-economic relations, systems, processes, practices,
knowledge claims and so forth – especially those related to business – and (2)
ecological processes, systems, forces etc. The main strength of the political ecology
approach is that it enables us to analyse the relationship between global
environmental change and socio-economic change, especially where this raises
normative questions about who is and who should be most affected by environmental
problems and who is and who should contribute most to their resolution. Political
ecology, therefore, provides a powerful tool to critique the claims of neoclassical
economists when it comes to finding solutions to environmental problems, as we
demonstrate below.
Rethinking environmental problems At the end of the previous section we identified
three ways that the markets and business seek to resolve environmental problems.
From a political ecology perspective, these solutions are deeply problematic for the
following reasons:
• Privatization: this implies that there can and should be no commons, and that
environmental protection depends upon turning all of nature into private property.
• Commodification: this depends on finding techno-fixes to turn nature into commodities
(e.g. how do we commodify a beautiful landscape?) or to improve resource efficiencies. The
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latter is subject to something called Jevons’ Paradox.
• Marketization: the creation of markets leads to the fragmentation of responses to
environmental problems since it is left to individual businesses and consumers to drive
First, transforming the environmental commons into private property involves
changing laws and regulations in a country or globally; we want to emphasize that it
is not an automatic or spontaneous process that magically happens when capitalist
markets are unleashed. Since the environment is not created by humans it can be
considered as another example of Karl Polanyi’s fictitious commodity – see the
Introduction. This is an important point because it means that any transfer of the
environmental commons to a private individual or business is, effectively, a ‘gift’ of
the state to that person or business (Bellamy Foster 2002). Two things are important
to note here. First, privatization is legitimated by a range of theories and claims,
including Garrett Hardin’s notion of the tragedy of the commons. Second, nature has
to be turned into a resource since resources are social categories, not natural ones; as
Bridge (2009) puts it, resources are ‘a primary social category through which we
organize our relationships with the non-human world’. From a political ecology
perspective this means that we have to examine how the state turns nature into a
resource and property, how it assigns or sells that resource, and how different
resources entail different processes of privatization because of their different
biophysical characteristics (see Table 9.3). Taken to the extreme, privatization
implies the total conversion of nature into private property, which raises serious
concerns about the potential for it to inflate conflicts over resource use between
countries – e.g. Global North versus Global South – and between social actors – e.g.
multinational corporations versus local social movements.
Classifying resources
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Source: adapted from Bradshaw (2008)
Second, mainstream approaches to environmental problems have gradually
incorporated a wider range of factors in their models since the 1970s, moving away
from a simple focus on population growth and resource use. For example, in the
1970s the ecologist Paul R. Ehrlich and others came up with something called the
IPAT formula (Jackson 2009). This formula seeks to explain environmental problems
as the outcome of three interacting elements:
Copyright © 2017. Zed Books. All rights reserved.
I (environmental impacts) = P (population) × A (affluence, or consumption) × T
The IPAT formula avoids the assumption that population drives environmental
problems, and highlights the role of consumption and technology – or what we
define as the commodification of nature. It is important to incorporate these two
factors because different countries consume different amounts of resources and
create different types of new technology. However, from a political ecology
perspective consumption and technology can simply reinforce environmental
problems and environmental injustice. On the one hand, the commodification of
nature produces new types of goods and services; for example, it might be possible to
turn certain environmental elements (e.g. landscapes) into commodities for sale.
However, this then limits access to the environment since consumption depends on
a consumer’s ability to pay. On the other hand, commodification might produce new
technologies that improve resource efficiencies, a techno-fix; for example, new types
of car that use less fuel. However, these efficiencies often entail Jevons’ Paradox,
which results from improvements in relative resource usage leading to increases in
absolute resource usage so that more resources end up being used overall (Robbins
et al. 2010). What these two issues illustrate is that commodification does not resolve
environmental problems, it merely shifts them around or reinforces the original
problem; for example, commodifying nature may mean certain groups end up losing
their access to nature and natural resources (Castree 2003), while new technologies
may end up increasing the overall use of natural resources (Leonard 2010).
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Finally, the mainstream emphasis on market and business solutions to
environmental problems – or ‘market environmentalism’ (Bailey 2007) – results in a
number of problematic consequences. After the global financial crisis starting in
2007/08, policy-makers around the world proposed a Green New Deal to get us out of
recession and address global environmental problems at the same time; an example
of this policy proposal was the UNEP’s Green New Deal (Jackson 2009). The
underlying aim was to transition to a more sustainable version of capitalism, based
on the assumption that replacing fossil fuels with renewable energy would solve
environmental problems like climate change. While there is some potential in this
proposal, it was never implemented. Why it was not pursued illustrates the problems
with market environmentalism more generally. It is based on the assumption that
the market will automatically and spontaneously promote new products and services
if the cost of environmental problems is incorporated into existing prices of products
and services. There are several criticisms we can make of this approach if we take a
political ecology perspective (Bellamy Foster 2002). First, market environmentalism
is based on a tension between individual, atomistic decision-making on the one hand
(e.g. consumer choice), and collective, coordinated action on the other (e.g. enforcing
environmental costs). Second, there is a lack of political agency as any collective
action tends to be arrogated to international institutions (e.g. UN, WTO etc.) making
‘technical’ decisions about whether something meets certain criteria, rather than
democratic deliberation amongst national electorates. Finally, the response to
environmental problems is left in the hands of individual consumers and businesses
as they make decisions about what to spend their money on. This reinforces existing
inequalities in access to and use of resources and environmental benefits, since
wealthier consumers can demand and receive better environmental conditions than
poorer consumers. What these criticisms should show is that environmental
problems are deeply bound up with human socio-economic institutions, practices
and knowledge claims – we cannot separate one from another. Trying to reduce all
actions to economic calculations misses the complexity of nature–society
We now turn to one example of a major environmental problem in order to
illustrate the complexity in nature–society relations we stressed in the previous
section. We focus on anthropogenic climate change because it is probably the biggest
environmental problem facing the world today and will have significant implications
for our futures. We can only provide a brief outline of climate change, and its causes
and effects, here; we suggest reading Robbins et al. (2010: Ch. 9) for a more detailed
discussion. Put simply, anthropogenic climate change is caused by the release of
greenhouse gases (GHGs), especially carbon dioxide (CO2), into the atmosphere as
the result of burning fossil fuels (e.g. oil, natural gas, coal). The release of CO2 into
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the atmosphere is not a problem per se, since this constitutes part of the carbon
cycle; what is a problem is the rising CO2 content of the atmosphere that has built up
as humans have burned more and more carbon – it is now at over 400 parts per
million (ppm). This means that it is important to understand both GHG emissions
and the GHG content in the atmosphere when discussing climate change. This is
because the GHG build-up in the atmosphere contributes to the greenhouse effect
which regulates global temperatures.
The build up of CO2 and other GHGs from human activity has led to an increase in
global temperatures of around 0.8 degrees Celsius since 1880 (see Figure 9.1), and
will lead to global temperatures rising between one and four degrees by 2100
(Robbins et al. 2010). While this does not sound dramatic, the rise obscures the fact
that some parts of the world will experience far more significant shifts in
temperature than others, resulting in major changes in the environment. For
example, predicted effects include drought, floods, declining sea ice and glaciers, sea
level rises, amongst others. This is why at the 2015 Paris UN Climate Change
Conference countries around the world agreed to limit global temperature rises to
below 1.5 degrees Celsius. However, to limit temperature rises to below 1.5 degrees
means that the world can only release a certain amount of CO2 into the atmosphere
before 2050, which we currently are not on target to meet. What is more, there are
major economic constraints on achieving this goal because to limit our CO2
emissions means ‘burning less than half of the oil, coal and gas in currently
commercial reserves’ (Berners-Lee and Clark 2013). Contrary to what many fear about
resource scarcities, especially when it comes to peak oil (Bridge 2013), our real
problem is too many fossil fuel resources and too much economic and financial
reliance on those resources. For example, if the world agrees to limit the burning of
those fossil resources, then that would wipe out the wealth of fossil fuel businesses,
governments reliant on fossil fuel incomes and individuals whose pensions and
savings are invested in those fossil fuel companies. According to McKibben (2012) it
would mean wiping out US$20 trillion of wealth, which ‘makes the housing bubble
look small by comparison’.
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It might seem sensible, in light of the potential catastrophe looming large in our
near future, that governments, businesses and people around the world agree on
ways to mitigate (i.e. stop) and adapt to climate change. This has not happened, nor is
it likely to happen in the near future. Why this has not happened is an interesting, if
depressing, example of how partisan government, business and personal interests
and ideologies can scupper collective attempts to find solutions for global problems.
There is a growing literature on how conservative think tanks, politicians and
business people, as well as certain businesses, have financed a campaign of climate
change denial (e.g. McCright and Dunlap 2010; Oreskes and Conway 2010). This
campaign against climate change has been very successful at convincing people that
climate change is not happening, is not a big deal or is simply an environmentalist
conspiracy to bring down capitalism (Klein 2014). It is, therefore, not surprising that
governments around the world have found it difficult to agree on a plan of action,
especially as the main polluter – the USA – is witness to the most vociferous climate
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denial. Instead, we are left with more versions of market environmentalism, such as
carbon trading (Robbins et al. 2010). However, there are numerous problems with
carbon trading which Lohmann (2010) outlines in his work. In particular, Lohmann
argues that it is, once again, another example of governments simply giving away
resources to businesses, and then letting the market decide the value of carbon
emissions – it does not, therefore, necessarily lead to a significant (if any) reduction
in the emission of GHGs. Moreover, Lohmann highlights the global disparities and
inequalities that result from carbon trading, especially in terms of the Global North
simply buying more carbon credits, thereby stunting socio-economic development in
the Global South.
In this chapter we sought to raise several issues to do with global environmental
change. First, we discussed the environment and how environmental problems are
framed in neoclassical economics and then resolved in capitalism. We presented
three key processes used to solve environmental problems: privatization,
commodification and marketization. Second, we sought to question this mainstream
perspective by introducing the concept of environmental justice and political ecology
as an approach to understanding the interaction between humans and the
environment. We then criticized the three mainstream solutions to environmental
problems by highlighting several tensions, inconsistencies or problematic normative
assumptions. Finally, we finished the chapter by examining climate change as a
specific environmental problem which persists despite the need for an urgent
response and despite several years of awareness of it as a problem and numerous
global conferences, treaties and so on. We suggested that climate change is unlikely
to be resolved precisely because it is being addressed through market-based
measures like carbon trading.
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• Ch. 2, Bellamy Foster, J. (2002) Ecology Against Capitalism, New York, Monthly Review Press.
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Bailey, I. (2007) ‘Market environmentalism, new environmental policy instruments, and climate policy in the
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