Peter Barnes has opened the dialogue of the 21st century. He takes the traditional concept of the commons and marries it to the institutions of modern capitalism. In so doing he exposes those who take from the commons without paying, then make the rest of us buy back what we already own.
Carl Pope, executive director, Sierra Club
The Limits of Privatization
It’s tempting to believe that private owners, by pursuing their own self-interest, can preserve shared inheritances. The reality, however, is that private corporations, operating in unconstrained markets, can allocate resources efficiently, but can’t preserve them. The latter task requires setting aside some supplies for future generations—something neither markets nor corporations, when left to their own devices, will do. The reason lies in their operating instructions.
This doesn’t mean people inside corporations don’t think about protecting nature, raising workers’ pay, or giving something back to society. Often, they do. It does mean their room for actually doing such things is too narrow to make a difference.
Corporate managers—even the most enlightened ones—are trapped in a cold-hearted system. At best, they can be public-spirited as long as they don’t harm the bottom line. This gives them some range to operate—for example, if using recycled paper adds minimally to their costs, they might use it. But if it adds substantially to their costs, they won’t—or more accurately, can’t—sacrifice profit for the sake of a few trees. What matters at the end of the day isn’t the managers’ personal values, but the difference in price between recycled paper and paper made from newly felled trees.
There are other reasons not to rely upon the voluntary benevolence of corporate executives. As The Economist has written, “The great virtue of the single bottom line is that it holds managers to account for something. The triple bottom line does not. It is not so much a license to operate as a license to obfuscate.”
As a businessperson, I find this argument compelling. Every large organization, to be managed well,needs a mission. That mission should be as clear as possible. It’s hard enough to manage to one bottom line; it’s more than thrice as hard to manage to three. How do managers know, much less quantify, the external consequences of what they do? And even if they know, what do they do when goals conflict? Does profit trump nature or vice versa?
It is possible for a company to pursue multiple bottom lines if it’s closely held by a group of like-minded shareholders—that was the case at my former company, Working Assets. But once a corporation goes public—that is, sells stock to strangers—the die is pretty much cast. Strangers want a stock that will rise when they plunk down their money, and profit is the sure path to doing that. It’s just a matter of time, then, until the profit-maximizing algorithm kicks in.
