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July 13, 2007

Book Review--Ethical Markets: Growing the Green Economy
    by Bill Baue

Author Hazel Henderson's exhaustive survey of the sustainable business landscape serves as a perfect primer on green economics and tracks lesser-known trends and developments. -- The implicit goal of Ethical Markets is to push the green economy toward the tipping point and supplant our current unsustainable economic models with socially and environmentally responsible practices, such as fair trade and green building.

Author Hazel Henderson, a futurist (which really means she is an astute observer of past and present trends), is uniquely qualified to “tip,” as she combines all three qualities described as essential components of tipping by Malcolm Gladwell in his book on the topic. She is a “connector” with wide and diverse social circles, a “maven” with broad knowledge about sustainability issues, and a salesperson with charismatic persuasive abilities.

These qualities propel the book. Following the format of the television show on which the book is based, Ethical Markets (co-authored by show host Simran Sethi) conveys information primarily through the voices of experts, lending a living room discussion feel. Many of the experts interviewed serve on the Ethical Markets Research Advisory Board (the appendix list of members runs two full pages in tiny font!), which adds authority.

This format ultimately serves the mission of the book best, as readers unfamiliar with sustainability will find comfort in the book’s talkative nature, while those toiling in the field of sustainability may find some of the information old hat to them. For example, the information on socially responsible investing (SRI) will likely inspire many readers who do not already screen their portfolios to do so, but SRI veterans should not expect to discover new angles or strategies.

The breadth of Henderson’s expertise, however, practically ensures that all readers will encounter some novel information. For example, in a tangential discussion in the SRI chapter, she questions the central assumption of economists--that self-interest trumps altruism.

“Psychologist and futurist David Loye’s Darwin’s Lost Theory of Love (2004) finds that the great explorer and biologist was widely misinterpreted by Victorian elites in Britain who seized on the phrase, “the survival of the fittest” (actually coined by Herbert Spencer, not Darwin), to justify their own privilege,” Henderson writes. “As David Loye points out, Darwin only used Spencer’s phrase and mentioned competition less than ten times in The Descent of Man and The Origin of Species, while referring to human cooperation hundreds of times.”

“Darwin actually believed that human survival was largely due to our genius for cooperation,” Henderson states.

This point circles back to her earlier critique of standard economic yardsticks such as gross national product (GNP) and gross domestic product (GDP), which ignore many vital aspects of our economy and creating disincentives for positive action, such as health maintenance. She points out that the “love economy,” encompassing work such as home-making, parenting, and eldercare that traditional economists ignore as unpaid work, accounted for $16 trillion globally according to the UN Human Development Report in 1995. That figure was missing from the official global GDP calculation of $24 trillion. (Of course a more current statistic would be preferable.)

Henderson provides a long list of alternative measures of economic vitality and wellbeing, including the UN Human Development Index (HDI), WWF's Living Planet Index, Redefining Progress’s Genuine Progress Index, and Ecological Footprint Analysis. Of course she mentions the Calvert-Henderson Quality of Life Indicators, which, as the name suggests, she created in conjunction with Calvert, one of the leading SRI mutual fund companies in the US. She also stresses the importance of taking into account what money can’t buy--namely contentment--which is a key component of the country of Bhutan’s Gross National Happiness measurement and the Happy Planet Index from the New Economics Foundation in London.

While the mainstream press focuses on whether or not carbon offsetting is a viable solution to climate change, Henderson highlights less publicized, but more innovative and equitable (and perhaps even more effective) solutions to lowering carbon emissions.

“[T]he Contraction and Convergence plan of the Global Commons Institute, based in the UK, . . . calls for globally shared ‘emission rights’ for every man, woman, and child, so that poorer people could sell theirs to the richer--thereby converging on equitable reductions of CO2,” Henderson writes.

In the “Clean Food” chapter, Henderson remains even-handed in contrasting Stonyfield Farms, which was bought out by global giant Group Danone, and ClifBar, which remains fiercely independent. She quotes Stonyfield Farms founder Gary Hirshberg discussing the positive impact he can have by transforming a huge global corporation toward sustainability from the inside, and also quotes Clif Bar founder Gary Erikson about the benefits of retaining private ownership. In other words, she does not impose her judgment that one is better (or “greener”) than the other, but that both represent valid strategies for shifting toward a more sustainable economy and world.

In the preface, Natural Capitalism guru Hunter Lovins perfectly sums up how Henderson’s book transforms apparent contradictions into sustainability solutions.

“The primary instrument of the [ecosystem] destruction is business as it seeks to meet our increasingly rapacious appetite for goods and services,” writes Lovins. “But business is also the most likely instrument of our delivery.

“Hazel is among the leaders of those proving . . . that there is a very good business case for behaving in ways that not only generate profit but that also protect people and the planet,” Lovins concludes.

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