Natural Capitalists' indictment of traditional capitalism: A reappraisal

In Natural Capitalism, the best seller by Paul Hawken and Amory and L. Hunter Lovins (1999), the authors summarize widespread beliefs on earlier economic development and indict past practices as inherently wasteful. In building their case, the authors allegedly identify a number of the failures of traditional capitalism. This article contends, however, that a number of these reflect more the mischaracterization by Hawken and the Lovinses of technology, economic and policy history than real shortcomings of past private‐sector behaviour. The first section of this paper deals with traditional capitalism's alleged sins of omission and provides evidence showing how the characteristics that Hawken and the Lovinses desire did indeed hold in the market system: (i) substantial resource‐productivity gains; (ii) generalized success in ‘closing the loop’ on industrial waste and (iii) a long‐term productive outlook. The second section illustrates how politicians, far from being the benevolent actors that Hawken and the Lovinses envision, typically engaged in obstructionist policy dynamics that tended more to hamper rather than facilitate the adoption of more efficient and environmentally friendly business practices. While there is much to be said on behalf of some of the insights contained in Natural Capitalism, a better understanding of past successes and failures in the area of business–environment interactions might have led the authors to different policy prescriptions. Copyright © 2002 John Wiley & Sons, Ltd. and ERP Environment.