What is the price tag we would put on our ability to breathe clean air? What about clean air for our children?
“Externalities” is a term thrown around a lot in climate and economic circles. It essentially refers to factoring in the “price” of polluting the planet into the price of making shoes. Or lumbar. Or energy. It is meant as a well-intentioned deterrent for destroying our planet in the process of doing business. The logic goes that if businesses must pay more to account for the harm they are doing, then they will find ways to not cause so much harm. In our economy where the only “real” form of wealth is money, we find it difficult to intrinsically value life for life’s sake.
There is an inherent disconnect in this logic. It implies, correctly apparently, that our institutions and corporations don’t inherently value life without it having a price tag on it. The term in and of itself also implies that the harm businesses are doing to our planet is “external” to the health of their own business. In reality, the health of their own business is directly tied to the health of the planet.
When businesses add the monetary price of “externalities” into their products, it also makes the sustainably made products more expensive. It becomes a luxury to not destroy the planet; a luxury that those affected most by the destruction can not afford.
That should give us all serious cause for concern.
The externalities we’re talking about always involve harm to someone else, hence the reason they are called “external”. It is another community and someone else’s children left to breathe polluted air. It is other species that are pushed towards extinction. It is forests that we would never walk through being cleared. And apparently, the reason for caring about this is the price tag they carry for us.
A price tag will indeed come through the form of supply chain shortages, wildfires, rising sea levels, etc. which will, in turn, affect all businesses as well as communities. We all know that story, but why do we need that story to make us care? As John Fullerton puts it, “What is the ‘right price’ for…destroying life as we know it on planet earth?” (Finance For A Regenerative World, pg. 40).
Anyone that has had any kind of sustainability job knows the mantra “make the business case for sustainability”. That might be necessary when talking to those that are pressured to guard the short-term bottom line, but in a world where the only thing of “real” value in our macro-economic system is money, everything is for sale and everything has a price tag. For some the price is death and called an “externality”. Life is made cheap when we have to make the “business case” for protecting it.
Whether we are a billionaire or not, we don’t consider asking about the “business case” for our own children’s clean air. We don’t consider how much a forest could be sold for when it’s in our backyard. We don’t consider how much we should pay to pollute the lake where our family swims. We don’t consider these questions, because we love our kids, our homes, and our families. They are not external to us, they are us.
Some have made the case that this is exactly the reason we should strengthen local economies. It shortens the feedback loops. We see the effects of destruction almost in real time, and local businesses want to stay in the good graces of their communities. That is true, but while we should strengthen local economies from their almost non-existent state in many parts of the world, the global economy is not going anywhere any time soon. And if it did, it would have massive repercussions for employment, food security, and other basic needs.
While we build local economies, we also need a deep paradigm shift in how we think about the global economy. When we think about the global economy through a systems-lens, we are going beyond preventing harm – we are approaching the global economy as a living system to be participated in, contributed to, and renewed. Ultimately, a natural byproduct of this approach is creating “positive externalities”, or benefits that are results of someone else’s action. For example, transitioning to organic farming reduces chemicals thereby benefiting the health of the environment, farmers, and consumers. If our global economy recognized the interconnected nature of life itself, collective wellbeing would inherently emerge. We are all active participants in, and affected by, the global economy; so are these benefits really “external”?
Maybe we shouldn’t be calling these “externalities” after all.