Ed. Note: We are happy to share this reader response, which is part of a series submitted by undergraduate students at Loyola University Chicago from a course called ENVS 363: Sustainable Business Management.
How can we create a successful economy without continuous economic growth? The starting point is revamping how we define success.
When sitting down as a business major in a sustainability course at Loyola University Chicago, one of the first things you hear is that the concepts and worldviews you will be taught will likely be in direct contrast to the economic ideas you have been learning in the business school. And it’s true—almost every business course relates to growth as an accepted and understood chief metric for success, while sustainability courses showcase its dangers.
The business course offerings culminate in the final year of study with the Strategic Business Management capstone course, in which students compete against one another in a simulation geared towards leading their own multinational corporation to the most growth possible. As a business major also studying sustainability, the dichotomous nature of performing this simulation while learning about the looming socio-environmental issues surrounding continued economic growth can be quite disorienting.
But why is there such a massive conceptual disagreement within the same university? Why is it that seemingly no major politicians in America come even close to suggesting that continued growth is dangerous, harmful, and impossible to sustain given our finite planetary boundaries? Why does the inclusion of any alternative economic model in discussion in the public sphere feel so far removed from our current status quo that bringing them up almost seems like an illicit subject? Our measurements of progress and success are fundamentally flawed, and this has led us down a dangerous path.
Our status quo mindset breeds a culture of hyper-consumerism. The goal of continuous economic growth tries to instill the ideal that more consumption leads to happier consumers, and in turn these happy consumers will demand even more – thus adding more dollars into the economy. But there is no evident correlation between happiness and economic growth. GDP per capita has skyrocketed in the United States since the 1950s, but our country is no happier than it was during the 1970s.
Moreover, basic economics as it is currently taught to business majors spends only a very small portion of time discussing the negative social and environmental effects that can result from capitalism and GDP growth. These include the overconsumption of the already deteriorating resources, the disparate impact of consumption in the western world on the economies and lives of people in third-world countries, pollution and other environmental damage, etc. These so-called “negative externalities” are brushed off as mere side effects, but they’re issues that showcase the holes in the structure of the system entirely. Shouldn’t the externalities be the focus of our models? Shouldn’t we start to think of social and environmental determinants as being measures of development and success instead of just economic growth?
Hyper-consumerism feeds these negative externalities. Consumers in developed countries don’t stop to think of the environmental and social impacts of their purchasing because they’re largely unaffected by its effects. So, they consume more, causing more extraction of resources, greater energy usage, and massive amounts of waste. What is needed is a proactive mindset adjustment to mitigate the risks of overconsumption prior to their negative effects being realized. Frankly though, it’s irrational to expect to be able to change the lifestyles of millions of consumers in the developed world quickly enough to reverse the damage already done – and unfair to put this burden all on the consumer. For many, our current consumption-driven mode of life is comfortable, and it’s incredibly difficult to change an entire populace’s way of thinking. So, what we need to do is to rethink operations on the business side – alter the design of the products we’re consuming and the business processes surrounding them to create circular, closed loops of production.
The first step is enhancing durability of goods. Consumerism drives companies to produce goods cheaply that are intended to break down rather than last long, in an effort to drive an opportunity for future sales - a phenomenon referred to as planned obsolescence. But companies can mitigate loss of potential future sales and simultaneously reduce negative impact by creating alternative sources of revenue via alternative circular design. They can create higher-quality, more durable products initially with a service-oriented plan for maintenance/repair instead of entire replacement. Design goods to be more modular with changeable parts – so that if a piece breaks down or a new upgrade comes out, the one single part can be replaced instead of the whole product. Create products specifically with plans for reuse – utilize materials and processes that allow them to be reused in production once more instead of scrapped.
What’s holding us back from already committing to these circular adjustments? Many companies currently take baby-steps, using post-consumer recycled materials in production, investing in corporate social responsibility, etc. But the ideals present in sustainable operations directly contrast the ultra-competitive nature of our growth-driven, consumerist society. Durability and modularity fly in the face of the consumerist status quo. Repurposing materials for reuse requires extra effort and money. And no one will lead the first step into unfamiliar, economically regressive territory because of fear of lagging behind in the competitive sphere.
Circularity and consumerism don’t need to conflict though. To realize the potential for design overhauls, we need to look at industry leaders who have already been making innovations to make their products/services more circular/sustainable. Tesla Motors provides a stellar example for the beneficial possibilities of alternative design even within our current hyper-consumerist economic way of life. By creating an innovative alternative electric car built on the ideals of making travel more sustainable, they essentially created and monopolized their own market for electric cars – an industry segment that was struggling to gain footing before they came in.
Their product design allows for a more closed loop with regards to the effects of car travel, with substantially less non-renewable energy usage and fewer pollutants. But their innovations aren’t just limited to their product development; it applies to their business’s operations as well. They have essentially created a microcosm of a circular economic model for themselves through their buyback program. As their technology develops, Tesla comes out with new models frequently – so they offered their customers a guaranteed buyback rate on their Model S vehicles starting 36 months after their purchase. This allowed them from a business standpoint to exercise complete control over the secondary market and generate an additional source of revenue if they wish to sell the used vehicles again - while allowing them to reuse the resources and parts from their older models in the production of their newer ones. They were able to satisfy demand and generate revenue while at the same time reusing their resources.
Innovations like Tesla’s are just an initial step, though. They’re small, imperfect steps towards a more circular economic model – but still don’t solve all the problems related to growth. However, while status quo economic thought lags behind, we must use such examples to guide adaptations of design to take account for the fact that the economic principles of scarcity apply on a global level.
Published on 8 December 2017