Karl Henrik Robèrt & Paul Hawken, Special Lecture on Sustainability

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ISAACS: So, welcome. My name is Bill Isaacs and I'm part of the Center for Organizational Learning at MIT, for those of you who I don't know, which is some. I'm happy to have the privilege of introducing our two speakers this morning. And the way we'll do it is to have one speak first and then have an introduction for him. And then the second.

And the first speaker will be a man named Karl Henrik Robert, who is from Sweden and is an associate professor in medicine in Sweden and a cancer specialist, who some years ago started an environmental organization for sustainable development in Sweden. And this organization is called The Natural Step and it's had quite an impact in that country. And his aim, essentially, was to educate the nation about environmental concerns. And he's had some success in that, I would say. Essentially, what he's here to do is to talk about his experience and we'll hear from him in a moment.

We also have with us Paul Hawken, who's a writer and entrepreneur, and I'll introduce him more formally in a little while, after Karl is finished. So it's a great pleasure to have these two here with us. It's significant in my mind because we are interested in discovering ways that business and the environment could actually talk to one another, to have a conversation, even.

And I see what we're doing here as the beginning of that conversation as far as the efforts of the Learning Center at MIT go. And we'll see where we go from here. But I feel like it's a certain seed ready to be planted today. So without further ado, Karl.

ROBERT: Thank you so much. Does it work up there now? Can you hear my voice clearly? I'm a cancer scientist and a cancer doctor, as you just heard. And my scientific work has been entirely concerned with cancer cells from patients who have attended the clinic which I've been heading. So I've done both things, treating cancer-diseased patients and doing scientific work on their cancer cells.

And it has been a systems approach, trying to understand what goes wrong in this little micro cosmos, which is a cell. And this was the starting point for this environmental organization because on that level, economy doesn't mean anything. You can't argue with cells. You can't urge them to succeed in processing mercury or break down freons or survive without [? phosphate. ?]

Still, it turns out that also economists and politicians are constituted by cells. So it should serve as a rather neutral non-aggressive starting point for consensus. And the idea was to come beyond our tendency to fight when it is about environmental issues and economy. To reach beyond that point and try to build up very solid intellectual knowledge.

The idea was that one part of the fight in Sweden is that people pay Greenpeace and other organizations to do something and then they go on living like nothing has happened. So they leave it to pros to do something. But this, the idea here was to build up professional groups.

And the first group was scientists for the environment, to provide their professional skills for the environment. And after that, we have commenced and started and initiated and supported doctors for the environment, nurses for the environment, economists for the environment, industrial leaders for the environment, and so forth, 17 such professional groups. And what they do is that by idealistic reasons, they tried to find out in what way can our professional skills support the environment.

So instead of paying someone else to do something, they enter the environmental movement with their professional skills. This was the idea. We now have 7,000 such people involved in those 17 professional groups. And The Natural Step is a sort of federation to link them together, support them and help them and educate them.

And what we do is that we share the same system overview, which is elaborated by scientists for the environment. This was the first task, to see what we agree upon. Because it seems that everyone else is dealing about what we don't agree upon. And the newspapers and media is stuffed with what we do not agree upon.

But we turn that upside down. What do we agree upon? So I invited scientists all over Sweden to see what we could agree upon as to intellectual stuff which could be useful to business leaders and politicians. This was the task. And I explained to them that if we can not agree upon anything, it must be published.

Because we have been studying those issues in thousands of years. And if we haven't still reached any knowledge which is relevant and that we can reach a decision and consensus about, it should be published. It's astonishing. And they realized that this is an intellectual challenge.

So I succeeded to make them interested in this. And my point, my entering ticket was the cell, since I'm a cancer scientist. So I invited physicists and whatsoever, and together we explained the system. Ecology as superimposed on that economy, which belongs to the same system. What can we agree upon?

And I realized from an intuitive level that the only thing we can reach a consensus on is the core knowledge, the trunk and the branches, the general principles of the system, the time dynamics in it and so forth. But the details, or the leaves, we will leave to the specialists amongst those leaves to handle. And I had a feeling of that as long as we can see the trunk and the branches, all the specialists about the leaves can put them on themselves, opening up for creativity.

Now, all systems are constituted like that. There is a solid structure, the trunk and the branches, and there are all the detail, the leaves. For instance, your brains. The human brain is exactly organized, it even looks like that. And it functions in the way that it-- thank you-- it uses division of labor. So that part of the brain takes care of that, that part takes care of that, that part takes care of that.

And then this computer has an extraordinary capacity to communicate between those parts, particularly in females, unfortunately for me. They have it easier to comprehend the whole system in the same time. Therefore, they are also more worried about the environment that males are all over the world, because they can take in more knowledge in the same time without losing track of the whole. And we know why from an [INAUDIBLE] reason, too.

Now, the point is that in spite of that we are geniuses when it is about to handle complex systems as individuals, even the males are geniuses in comparison with the most complex computer we have. It is a silly toy in comparison with this computer when it is about handling complexity. In spite of that, we behave like idiots together, which is very sad.

And the reason is that we do the same as the brain. We implement division of labor, but we find it much more difficult to communicate between one another than it is within one genius, parts of the brain to communicate with one another. And the other part, which I think is much more important, is that we very often get very sloppy about the trunk and the branches.

So an organization generally don't train about what is the sole instruction of our purpose. Why do we exist? What is if we want to do? What are the non-negotiables parts of the structure of this company or this local authority is supposed to handle?

Or the other hand, here we find the challenge. Because if a company or an organization or a team starts really hard to train about the sort of structures, and then they do division of labor, an organization can become more intelligent than the individual players because a lot of people together master more skills and competence than any individual. One example of that is that when the Americans wanted to go to the moon.

They collected metallurgical specialists, fuel specialists, computer specialists, astronomers, whatever. And they trained over the same non-negotiable structure of the system. And they had exactly the same view of it, that the moon existed. For instance, the people who thought that it was some kind of psychological projection were not invited into that protective group. And they had exactly the same idea of all that and they trained over the same solid structure.

And after a while, this team could go run an electric car on the moon, which is a project so complex that no single human brain can comprehend or achieve that result. Our problem is that we can't run electric cars here where we live and where the socioeconomic benefit would be so much greater than to have it on the moon. And the reason is that we haven't done this. We haven't tried to study what is non-negotiable in the system that we are in charge of, so to speak.

So we have to move into a new house. Ecology means the knowledge about the house. Since you are geniuses as individuals, but have a tendency to become dumb together like all humans, particularly if the group is too large, we have to ask you as individuals, how do you run a project like that, moving into a new house? A sustainable one this time. And you all do the same.

You know that there were a lot of measures, thousands of small details that must be done to fulfill this. But you start to organize it immediately. And you have in your head, you have the time axis for the project. And let's say that you and your husband or you and your wife has got a new job. And it will be in Washington and you are going to start your new job in three years from now.

You know that there is a history haven given you a certain economy and a few other things, furniture, whatever, which will be implemented into the new house later. You have a present year where the telephone calls to banks, people selling houses, whatever. And then when the project is completed, your brains immediately, without any plan, identify four new non-negotiable branches.

The trunk is the project of moving to the new house. And the four branches are as non-negotiable, solid. The first is that the house must be in the neighborhood of Washington, close enough for both to travel to their jobs. This is the geographical one. The second one is that you must be able to afford a new house, living, non-negotiable.

The third is that it must fulfill the functions of your family. If you are alone or five kids and whatever, and there are more such things. Now, the fourth is that it must fulfill certain minimal criteria of house standard. Now you arrange thousands of things to converge into the fulfillment of all four branches. You put on the leaves without violating any of the major rules. And you do that automatically, your computers function just like that. You even find it easy, particularly females, to move to a new house.

Now, you do this so skillfully that it never happens that you only fulfill three of those. Because non-negotiable system conditions must be fulfilled, all of them. It doesn't happen that someone ends up in Florida trying to figure out how things could go so wrong or move into a house without a roof and so forth.

So you arrange the project so that it converged into that. And now the task is for the scientists, for the environment to see if this project can be defined in the same way. Could we identify so many major principles which are non-negotiable for sustainability? And then train over those and see to it that companies, local authorities, and whatever do the same? Put on all the details so that they don't violate the overall rules?

Now we must face what Earth is. It's a closed system with regard to matter. And you know, what we do is that we invite the heads of companies and heads of local authorities, together with middle managers. And we train them one full day and then they have a course book, and then we train them for two more days. Heads of major, big companies of Sweden, international ones like Ikea and Electrolux and so forth.

So they take this course together with our major heads. And after that, they are trained to train their employees. So the trainer goes home and trains their employees. And this is what they are trained with, this is the training material for the heads. And they have the same pictures that I'm showing you now when they train their employees.

So I don't show you this to teach you anything. I show you this to give you the pedagogics of what the heads of Swedish companies and local authorities get. And then when they go home, they find it a little bit embarrassing in the beginning to talk about thermodynamics and cellular biology because they have forgotten school. And one day, a book, and two more days is a little bit little in the beginning.

So they then have a video to make the lecture and then they have a training material with problems for their employees. So the employees are going to solve problems together based on the system thinking, that project which I've just described, moving into the new house. How do you do it in business? And all that is on the trunk and the branches.

And then we have also written an encyclopedia about the leaves. So scientists for the environment had also written an encyclopedia for those teachers so they can go home and look up all the leaves in the tree as well. And this is written based on the system conditions. I think that that will do so far.

We just tell them about thermodynamics in this closed system, which enters energy and what energy can do in it. And we have a metaphor-- elfs putting down in the big box with walls around it. And you have all the natural resources in the box. And you put them down and you close it and you isolate it. And you ask the business leaders, what do you think would happen in the box?

And they start to think. And then you ask, how many of you dare to open it after 2,000 years and look down into what it would look like. And they get an intuitive feeling that it doesn't gain weight nor does it lose weight, but its contents is a bloody mess of no value. They understand that and they can work their minds to it because they understand where they've eaten the seeds on the fields, they have.

When they have used the forest, they have, because the sun doesn't allow any more forest. And if they put lamps on the forest to make it grow and they use water from a pond to run electricity to the lamps, they understand that when the water is in the bottom of the box, it is, and the sun doesn't lift it up again. Now they start running fuel, biofuel from the forest.

And they figure out, if we run electricity devices with fuel from the forest, that will grow less forest than we have to burn because there are losses on the way. And suddenly they start to remember things from school which is relevant to this big box. And in their eyes, in the eyes of the elfs in the box, they would experience all these as bits, materialistic bits as dispersed, worthless matter. Because everything has a tendency to disperse.

And at the beginning, we don't talk about that as the second law of thermodynamics. We just give them a lot of examples of why they tidy up on Fridays because, you know, a mess has a tendency to appear spontaneously. And this is why they have to polish their car, to prevent it from dispersing. But no matter how they polish, it will eventually spread into a cloud of rust. And they know that. It's just a matter of time.

However, nothing disappears, and this is news to most of them, including the major politicians in the Swedish parliament. They think that things disappear. They think that when a gasoline tank is empty, the gas has disappeared. And you have to take some time to tell them that their realization or comprehension of the world or reality is due to the fact that it disperses.

So every atom in the gasoline is still there, but in a dispersed problem sort of shape. You know, as a bill to be paid, dispersed junk instead of concentrated structured value. So they understand after this, after having given them enough metaphors that the only thing that can be produced or consumed is values or quality. And quality is always constituted by concentration and structure, which can be measured in exogeny analysis and information value analysis.

As this matter and energy can not disappear, you can regard the company as a box. What comes in must come out. Do we consume more quality regarded as concentration and structure than we allow to rebuild, either by ourselves or together with nature? it's the whole box we look at.

And then we make them understand that the only true primary production unit we have in quality here is the green cell, which is good for them, and it's new. But they have it in their tummy. They understand that when you talk about it, they have had it in the stomach since they were children. But they have just not had an intellectual language to understand why we need the green cells.

So then we introduce the cell and explain to them how it is a cosmos of life events. And how complicated it is and how they completely dominate the quality on Earth. And that they are the primary production units, which is also called primary production, the photosynthesis. All other productions is secondary from that one.

For instance, the metabolism in our cells, which consume quality because we are not fueled directly by the sun. And they can see that, too. We are fueled by something which is fueled by the sun, namely those. Or indirectly, a cow, which is fuel from them. But since we are not directly fueled by the sun, we have to dissolve matter into dispersed junk, which they can visualize.

But the bills are paid because sun-driven water cycles and wind cycles bring the dispersed junk back to them and rebuild the quality. And therefore, we exist because they exist. And this makes it possible to draw a little first outline of the nature cycles, where the sun side of it all, through the plant cells, have the primary production of quality.

All other production is secondary to that and consume more quality than is produced, if you measure it exogeny. And they can understand and see that. However, as long as the bills are paid for, we and all other secondary production add quality because quality is not only exogeny. It is also information value.

So as long as our bills are paid for by the plant cells, we add value to nature and don't have to look upon ourselves as a burden to [INAUDIBLE]. And this is good for them, too. And then we give them the geophysical cycles, which are on thousands or millions of years, some of them.

And tell them how the deposits in the Earth's crust is also generated from the cycles on top of Earth. Which gives them a new comprehension of how it all evolves in this kind of everything-ology or whenever you would call it. That we can have a time axis where each part here is one billion years, and the first cell came after one billion years.

And it looked exactly like the end stage in the box by that time because there was nothing there to collect, concentrate and structure values. So it was dispersed junk. And the first cell came about, which has made many cellular biologists deeply religious, some of them crazy, but most of them quit thinking about how it could evolve against the second law of thermodynamics.

We have very, very [? cheap ?] models to understand how it occurred. Anyway, it did. Some fuel cells to divide and concentrate and structure value with dispersed junk as building blocks, what happens after billions of years when that has gone on? The natural resources evolve and it becomes cleaner and cleaner between the natural resources, since dispersed junk is concentrated on structures.

So what is here? The poisonous sulfurous compound is here, a sulfur bridge between two amino acids in a cell. Meaningful instead of poisonous. Then comes the animal cells, the dinosaurs, or whatever, and you get the idea. Now comes man. And we have added value and we have added culture and knowledge and everything in a wonderful history, and also sometimes very sad, of course, and dramatic.

But it has been overall sustainable, at least to the extent that we are here today to talk to one another. And this makes it possible for us to draw a chart of sustainability, seen as a flow diagram of quality. And they understand that it is quality which we are reusing.

Again, you recognize how the sustainable IKEA or Electrolux or local government must integrate itself in the whole system where the cyclic processes build quality for them. They can't live hanging loose in the air like today's economy thinks. It must be integrated, living from the continuous import of quality.

And the business leaders understand at this point that they can't even consume water because the water molecules don't disappear. What is it they're consuming then, since matter can not disappear? Each molecule they drink leaves their body. What is it? It is the quality cleaners which is a potential difference between dirty water and clean water. And the water that leaves their body is dirty.

But the sun shines on it, the green cells make carrots and salad from it. And again, the water is clean. And they can see now that we don't consume matter or energy, we consume its quality.

And we must live from importing quantity, which was non-quality, was just to dispersed junk, but now it is wood and wool and cotton and all that. And whatever they are buying and purchasing, this company. And downstream, they have to emit on the atom as much junk back to nature. The atoms are still there, but the quality is consumed with less structure and exogeny and less information about it for nature to rebuild its quantity again.

We also recycle minerals. Based on this model, you can identify, again, actually, four system conditions for sustainability, which are non-negotiable, which are intellectual, intact, solid, and which are easy to understand. The first is that when Electrolux and the world and US or Sweden has moved into this new sustainable house, we have quit living from deposits in the Earth's crust.

Namely, the reason is that we can not mine more than it takes nature to deposit back into the Earth's crust. Because since everything spreads, in such case, we will drown in junk from the Earth's crust. So every gram of mercury that we mine will end up in a dispersed shape in nature sooner or later. Even if we recycle 95% of the batteries, 5% in each cycle goes out in nature.

And it will cause ever continuing increases of concentration overall in the box where we live. And they understand that and visualize that. It means that if they want to do something about that, it is not sufficient to buy a recycling device for metals, unless you link that to a decrease of mining. If you don't link it upstream to what was the intention of it, it is no help for nature.

But this is done all over. They buy those recycling things, but they don't audit it upstream to what was the intention of it. And they don't because they don't see this. They think that the cyclic society, and I tell you, in spite of all the articles you write and all that, they still believe that the cyclic society is something with return bottles, the technical side, as you know. And if you can't put your own enterprise in a box for return bottles, the cyclic principle is [INAUDIBLE], probably something which has got to do with somebody else. This is what they think.

The second system condition, which is as non-negotiable is that when we have moved into our new house, we have quit producing molecular garbage and visible garbage to a higher extent than nature can recycle it into new quality. And it means that by that time, we have quit, completely phased out all persistent unnatural compounds. PCB, DDT, dioxins, freons, all that.

And the third is, of course, linked with our next interrelationship to the living systems or to the environment. We can not harvest more from nature than nature can rebuild. We can't take out more fish, we can't take more forestry that is rebuilt. We can't put asphalt on those surfaces. And why can't we do that? Because they pay our bills.

So if we poison these systems with carbon dioxide, which is in this context molecular garbage, in spite of that, it is a building block for life because it is left over and steadily increased. If we continue to do also with sulfurous compounds, phosphates, heavy metals, freons, PCB, DDT, dioxins, anti-flammables, at the same time as we take away the productive surfaces physically that pay the bills for us, they can see how we are destroying the branch we are sitting on from several positions at the same time.

Now, the fourth system condition, of course, is then about this flow. Within those boundaries, one, two, three, we have to succeed in implementing an efficient and just economy in the whole box. And it is not efficient and just if 1 billion people starve from a medical point of view because they do, and 1 billion people have an overproduction of plastic [? ducts. ?]

This is not efficient and just metabolism of the resources within those boundaries. And they understand they would rather earn money from doing something good for people with as few resources as possible than doing bad things with a lot of resources and still feel that they are going to work and earn money from it. And that is no problem to explain this. They don't refuse at this point, either, surprising as this might be.

However, our present unsustainable society functions like this. We violate all those conditions, which leads to an ever increasing build up of garbage and molecular garbage. And there are 10 times more molecular garbage than visible garbage. And it stays in the same box.

And the molecular garbage now functions as-- what do you call it? [INAUDIBLE], what is that? Or dirt in a machine head. And the concentrations continue to increase. This is very easy to visualize for them because if you have a big bathtub and you take ink and you put one drop of ink in it, and after a while, you don't see it anymore.

And you ask the industrial leaders, do you think it has disappeared? And they know, no, no. You know, they want to show they really, really comprehend it hasn't disappeared. And then we tell them, if you do it all over again and the bathtub turns slight, light blue, would anyone be surprised? No, no, no, they wouldn't be surprised.

But they are before this lesson because polar bears feed their puppies with milk containing anti-flammables. And the whole society gets surprised, you know? But matter can not disappear. But it disperses. How could it be otherwise if we allow ourselves to produce those compounds?

Now, we started to say that we are intelligent as individuals. We can visualize this. Even males can see it all in the same time and draw conclusions from it. And you want to turn off the taps upstream instead of just doing things amongst the leaves.

But what do we do together? This is so simple for a single brain. But what do we do together? We send out scientists with male-ish blinders amongst the leaves, and the society asks them the same stupid question over and over again. Is the threshold for damage already exceeded for your molecules?

And the greenhouse specialists, the carbon dioxide specialists say, yes, some of them. The greenhouse effect is already here and the ice storms of Florida and the ever increasing amplitude of hurricanes tell us this. And the other scientists, no, no, no, no, no. We can still take much more carbon dioxide.

And then we ask the same question to cadmium specialists, have the threshold for kidney disease in people already happened? And some of them say, for instance, the people in Belgium, the scientists there say, yes. And the Swedish scientists say, no, no, no, it's probably something else. While it all is increasing since the cyclic principle does not work due to violation of the fourth principle.

If a single individual would be that dumb, it would be like a housewife named [NON-ENGLISH SPEECH]. [NON-ENGLISH] is a name for Sweden. And we call this housewife extremely silly housewife, [NON-ENGLISH] in this case. She comes home to a flooded kitchen. And there is not one tap on, but four taps. And therefore, the water cannot go in the cyclic system because it can't take the time, this overflooding. So it goes down, and goes down to the floor.

So her kitchen is flooded. What does she do in this situation? You know what you would do, all of you. You turn them off upstream. But she doesn't. She's too dumb. She stands like this. I wonder where the water will sneak out first, if it will be in the dining room or into the kid-- no, into the hall or into the kid's, children's. Because that depends on the function of the [INAUDIBLE].

The higher [INAUDIBLE], the longer it will stay in the kitchen, she figures. But then, provided that the joints of the [INAUDIBLE] keep the water in-- and now she starts to become hesitant about the function of those [INAUDIBLE]. So she phones up [INAUDIBLE] specialists and asks them while the water is still flashing down the water on the floor.

And she finds out that they quarrel about this. They fight about it. Some of them believe that they can take the water all the way up to the surface, and some of them say no, it will start leaking in the joints. So she get a little bit hesitant, and start to ask ecologists about the damage in other rooms-- that is, floor specialists. And they fight.

Now, she is so dumb at this point that she feels comfort that they don't agree upon that it is going to hell already in our house while the problem is increasing. But she doesn't have to ask scientists about everything. Because she is wet on her feet. And acidity causes action. [INAUDIBLE] is going up. It looks strange on the bottoms of your summer house, in comparison what it looked like when you were young and all that. You don't have to ask anyone.

So what does she do in this respect? She kneels down, take towels, and start to dry, without asking herself, then what? Because soon all towels are wet. These are all the waste deposits, garbage dumps, filter deposits, which just increase. And nobody ask why. I mean, when does an individual become smarter than that? Two, three years of age.

If you take an infant-- no, it's true. I mean, with regard to system perception. Put a young being of that age and throw a stone over its head so it hits the wall behind the kid. Before this age, we are completely drawn or recruited into the effects long down the cause effect chain.

So a child before that age, something is [INAUDIBLE] and go up there and see what it was. And you see the stone rolling there. But above that age, they look upstream. If it hit here, somebody must have thrown it in that direction. Where did it come from? And what was the purpose? Will the next stone hit me, and so forth.

Now we have all the scientists, you know. Oh, what about the seals? And now we have here-- the waters don't feel bad. But don't they feel better? While the problem is increasing behind our back. And if we started to function as a group, as intelligently as it is in your brains, the decision makers would shout to the scientists, how is it out there amongst the leaves? And they would answer back, like in your brains, it's hell out here.

Four system conditions upstream cause an ever steady increase of molecular garbage where we are, and they would answer, that sounds horrifying. So we will turn off the taps then. But there is a problem. Due to the economic system, we need to know what is most dangerous, so that we can do the right thing in the right moment. And they would answer, the worst thing is that we are fighting all the time about that.

And then the decision makers would be even more worried to turn off the taps. Because there is no security in the system. They are out of control. So what we do is that we train those good examples listening to us, those companies, to become good examples. And we coach them by helping them to merge ecology and economies.

And we do it by helping them to apply the four system conditions in a checklist for whatever they do. All measures must be checked upstream to the very source of the problem. How else could they reach this level? And meanwhile, we help them to become strong from it. Because if the good guys continuously invest in sound business and become poor from it, because they do the wrong move in the wrong moment, we will systematically cause the good guys to become poor and the bad guys to become stronger economically.

And therefore, we must coach them together with economies for the environment, of course, comprehending the same concept to do the savings, to see the investments, which will pay off soon, in order to be able to do the long term investments along the line while they're failing in the [? crosses ?] on this chart. And we help them to improve their image as well by handing over prices in Swedish TV with the king and all that jazz. You can see how it functions.

And then we put ecology and economy together in exactly the same chart, so that the business leader out there, when he does his short term measures, see to that they don't violate his possibility to reach a full integration in those four system conditions.

Now, I would just like to-- yes, 40 minutes in 2 minutes. I'm just going to repeat what I've said, and then we have an open discussion. Because I would like to repeat it so you have the whole image of the whole lesson on one single chart.

Major functions like would be a quality machine, we tell them, where the green cell is the primary production unit, and the animal cell consumes the exogeny quality. But it is repossessed back into a new quantity. And this part of the diagram is sound driven. Integrated in this is the progressive business leaders, business or enterprise in a few years, living from a continuous import or quality from nature, and export back of known quantity. And he tries to save quality by recycling as much as possible. But a lot of other things along those lines of the four system conditions.

But we do not only recycle what we get from nature. We recycle minerals from the Earth's crust as well. And when we have moved into our new house, we can allow ourselves to do that a lot. But we must be extremely cautious so that we don't let too much rust away of metals and other things from the earth's crust because the redeposit is so slow. However, we can balance that flow. We can take-- also here, we can mine as much as can be redeposited, which is virtually almost zero in comparison to what we're doing today. And that was system condition number one.

Two was that we must not emit persistent unnatural compounds. Three, we must not systematically violate the physical conditions-- not only the chemical ones, but the physical conditions-- for the system which pays the bill for us. And within these boundaries, we must succeed to implement an ever increasing efficiency in a just economy and relate the efficiency to true human needs, which includes the rest of the nature. And they get the idea of this point.

We don't do that. We violate them all. And therefore, we must undertake measures to change that. And I will finish off by just giving you one example how it functions, one concrete model.

I overheard an economist and an ecologist at the local authority both having had this exercise for three days with an interval for book studies in between. And they appeared as an intelligent team, using the same solid structure when they talked to one another. And this is how it sounded like. This is also part of my new book now coming in September. This is one of the examples.

The ecologist. We have started to design a new-- what do you call those heating devices, heating plants?-- for a local authority, a distant heating plant where you can provide heat to the houses.


ROBERT: What do you call it?

AUDIENCE: Energy plant.

ROBERT: Energy plant.

AUDIENCE: Just a heating plant.

ROBERT: A heating plant.

AUDIENCE: Distant heating plant.

ROBERT: Distant heating plant.

AUDIENCE: --in America.

ROBERT: Oh, I see. But we can increase efficiency tremendously by using them. And you can use biofuel or whatever. But you just see how it sounds. We have started a project, such a thing, being run on nature gas, the ecologist say. And the economist say-- which they always do-- why? And he looked skeptical. And I got a little bit afraid. God, hasn't he understood anything?

But he says the following. Doesn't nature gas come from the Earth's crust? Doesn't that violate system condition number one? Is there any future in it? And the ecologist say, yeah, yeah, we have thought about that. So already at the planning stage, we are going to build it today, making it possible to convert it to biofuel later on, he says. So it's just one of the crosses along this line, which is exactly how you should use it.

But the economist goes on and say, why couldn't you skip the nature gas and go directly to biofuel? And the ecologist say, well you economists always get so damned annoyed when we suggest that, because the prices for biofuel is much higher than nature gas in Sweden today. And the economist say, for how long, considering this?

Because this is like a funnel. Mankind is running into a funnel where the walls are the system conditions. The prices will not be like that. How much does it cost to convert in relation to build it right from the beginning, run it with a high [? pressure. ?] Please don't do anything. I must count on it before. And then the environmental movement can go home and take a beer or whatever.

Because now intelligent people in their fields of expertise talk over the same system conditions. And this was exactly what we intended. And I have several such dialogues. And I have sent it over to them for acceptance. And they say, yeah, this is what happens. So it is a book about the good examples coming out using this [INAUDIBLE]. And that's all.

So now open for dialogue. We have another 20 minutes.

AUDIENCE: We could do, or we could have Paul speak and then--

ROBERT: Oh, is that what you wanted? I would prefer to take it directly because I would like to ask Paul also. And maybe we could-- if we only have a quarter then, we could have a joint thing together. Isn't that OK, Paul?


ROBERT: This is how I got [INAUDIBLE]. Sorry?

AUDIENCE: Just showing the slide with the four conditions [INAUDIBLE].

ROBERT: This is not how they are defined. This is an interpretation of the four system conditions to any entrepreneur or company in a checklist. But the first one is low enough concentrations of compounds from the Earth's crust. This is an absolute non-negotiable rule for nature. The second is low enough concentrations of persistent unnatural compounds. The third is maintained productivity and diversity of nature. And the fourth is just an efficient economy or metabolism or resources. Energy and all other resources.

And this is how they can check themselves to fulfillment of integration and the cycles of nature. However, if you recall, the index systems, the life cycle analysis, are stuffed with what is allogeneic, toxic, [INAUDIBLE] accumulative, and whatever, which is only an index system of trying to figure out today's impact in the system. But it doesn't give you any security whatsoever in the changing process. So you're not in control if you live from lifecycle analysis.

However, if you combine lifecycle analysis and such monitor systems with this, it is good. And this is one of the advantages with it. It is solid intellectually. You can audit yourself mathematically towards fulfillment of the four system conditions, which we do together with scientists for the environment. And it is easy and attractive to learn. It is easy to understand. So the leader of the company is not completely had to rely on specialists with a language he doesn't understand. The whole company understand the same thing and talk about it.

Secondly, you have a time axis here, which makes you dare look on how tough it will be. Because there is so much to do. And without the time axis, people say that you are a fundamentalist, an ayatollah, an idiot. But if you introduce the time axis, you dare to look at the goal. And if you don't dare to look at the goal, how can you ever reach it?

Finally, you put in your measures here, and you will profit from it immediately, not only when we have reached the goal. Because what happens here is non-negotiable. It is the funnel. And the ones who do this systematically already make very good profit from it, if they do the right thing and the right move.

It's also a wonderful way of communicating to your customers. Do you remember that we promised to do this? Look, here we have done it. Now we are doing this. Next year we are going to do this.

And some of these companies use it directly as a marketing device. This is all we are going to do. We are going to integrate the whole business into the cycles of nature. This is what we have already done. This is what we are doing. And then people feel, those we want to support. Because no one is so dumb that he thinks that it can be done with one leap overnight.

AUDIENCE: I'm interested in the [INAUDIBLE]


AUDIENCE: Do you find how these and public sector organizations really publishing, disclosing their progress and their goals in annual reports [INAUDIBLE] compensation-- does it really enter the organizational structure?

ROBERT: Yes, they are doing that. But so far, the last report has been on traditional lifecycle analysis and such monitoring. But that is now more and more abandoned by the companies we are working with. They are now using this for auditing. So I hope that they will start publishing that too. But it's too early. It would be next year, the first chance of that. Swedish McDonald's, IKEA, Electrolux, those companies. 20 of those.

AUDIENCE: I wonder if you'd give us some examples of how the third and fourth prinicples of life [INAUDIBLE].

ROBERT: Yeah, okay. ICA is the biggest-- I mean, playing down, the first example was local authority. This is ICA. This is the largest supermarket chain in Sweden. They run into the funnel just recently, hit the wall, boom. And this is much more expensive in comparison with investing yourself into adaptation of the funnel. But they hit the wall, boom.

How did it appear? [INAUDIBLE] were stuffed into their refrigerators, and customers started to ask questions about it. And there was a meeting in Copenhagen, as you recall, a couple of years ago, where we wondered if it was too late to phase it out. And [INAUDIBLE] has decided to have a deadline for production. And they felt the funnel coming for this particular compound.

So they phoned up Electrolux and said, we would like to buy some other kind of stuff to put in our refrigerators. And Electrolux said, we're sorry, but your device is married to hard fuels. How much will it cost them? Well, how many refrigerators do you have in your shops? And they got the number, and they calculated. Well, it's 1 billion Swedish kronas.

You know, it's completely merciless when you hit the wall. There is no Security Council there to take the bump for you, if you plan against the laws of nature. Because they are on top of all man made rules, you know. And they hit you one way or another, legislature, whatever. But this is how it looked to them.

So they said to Electrolux, what is it you suggest that we buy then? Well, this device is based on soft fuels, they said, happily. And the chairman of ICA said, does that violate system condition number two? And Electrolux said, system what? Because they hadn't got that education by that time. But they soon got it. I'll tell you the story.

ICA said, we would not like to make that affair on this point. We must have a seminar together with not just [INAUDIBLE] when we make the affair. So they did. And I did this. But when you have reached this point, never ever tell the specialists amongst their leaves how to handle the problem. Just give them the compounds. So I said the word is free. And the chairman stood on his feet and said to Electrolux, could you now please answer the question, if soft fuels, which you want us to buy, violate system condition number two or not?

Well, that's not the point, he said after a while. He looked a little bit-- that's not the point. The point is that there is less chlorine on the molecule. And it is chlorine which hurts the ozone layer. And it follows the following logistics.

Please, please. This is not what I wanted to know. I just want to know if it violates system condition number two or not. Is it a persistent unnatural compound that will build up, or isn't it? Well, it's unnatural, and it's good quality on the molecule.


So it will build up in concentrations. And then he said, yeah, but you have to have tight technical systems. And he said, like with hard fuels? They're not stupid. They start to talk like that. You mean like with the hard fuels? Yeah, yeah, well there will be a build up.

My next question. How long can it accumulate before it hit its wall? Because I don't want to make the same mistake once again. And there was silence. And why was it silent? Because when anything accumulates, it is impossible to foresee its [INAUDIBLE] due to complexity and time delay mechanism. So it was silence.

Then he got mad. He displayed his anger in an open session. And said, do you want to tell me that you want me to buy, for 1 billion kronas, something which I only know one thing of, it is doomed? And you can't tell me the time span, the lifespan, the life expectancy of this investment. And he was silent. They say thank you. Now we know at least what we shall not do.

And then they sent out people. Greenpeace in the same time threw off, shoved off, refrigerators outside the main office of Electrolux. They were very shaken at this point. They lost this 1 billion krona affair, and Greenpeace were there, and made them even more worried.

So now they phoned us up. Because we didn't say anything about the affair. We keep our hands clean from that. Just give them an instrument to think. They phoned us up and said, could you please come to our head office and explain all those system conditions and molecular garbage and all that junk, also to our think tank, the board, the president, everyone? So they collected the whole damn staff there.

And we were invited. And we did the same thing, and stopped here. Don't tell them how to make refrigerators. There are world's leaders, you know, at least in the minds of Swedes. They beat the General Electric there and all the others. Anyhow.

The head of technical development stood on his feet and said, now I'm going to teach you something that you don't know about refrigerators. And he wanted to pull me up amongst the leaves. And he did. He said, we use soft fuels to blow the isolation device of the refrigerators. This particular technique makes our refrigerators better isolated than any opponent on the market.

Since they are better isolated, they take less energy to keep cold. And energy is today on the global scenario produced by violation of system condition number one, that you call it, he said. Through a better efficiency, it goes down indirect and cause beneficial effects on system area number one, which in turn causes a lot of relief on the greenhouse gas problem.

Oh, I said, that's good. So you mean by violating system condition number two, you benefit on system condition number one. Yeah, yeah, yeah. But there is a trick, he says. And this is extremely important, what comes now. Because there are always-- not almost always, always-- contradictions amongst the leaves, if you don't see the whole. This is what he said.

When we produce a refrigerator, the impact is relatively small, because we only produce it once. After that day, it consumes energy day out, day in, weeks, years. So by violation of system condition number two a little, we benefit a lot on system condition number one. I said, that you can prove on a life cycle analysis. And I'm so happy to hear it. And you are in control then. Very nice. Congratulations. And then what? Then what? Because you see the time axis here.

And he said, what do you mean, then what? Yeah, well, when Electrolux has moved into its new house, you don't violate system condition number two either. What is it in today's planning that makes it easier to phase out soft fuels tomorrow? And there was silence again. And then he said, do you think it's easy to make refrigerators?


And I apologize for this impression on my talk, and I only said that this is the funnel. And it is not invented by me or Greenpeace or anybody. The laws of nature is the generous fundament for our existence and our economy. This is how it is. And you will be phased out if you don't follow. I don't know what to do. I'm sorry. I'm just a medical doctor.

Two weeks later on, they had filled in the complete chart, including all other things as well, including recycling of the minerals for production of the refrigerators. They move from R134a, which doesn't have any chlorine on it at all, which solves the acute problem amongst the leaves, he says on the phone to me. But it still violates system condition number two. But it functions as one of those crosses because it fits the same technology as [INAUDIBLE], which is a solution of tomorrow's Electrolux.

Now you probably want to know, he said to me, while we don't move to [? propane ?] [? butane ?] immediately. But the reason is that it is explosive. And if we apply the wrong technology and it explodes in the face of the customer, we haven't speeded up this process, as you might well understand. And I told them, if you put that in advertisements, tell the Swedish public that you are going through R134a to [? propane ?] [? butane ?] solutions, you will get our price.

And they immediately put it all over. And we handed the price over in Swedish television. So they wrote the contract with the Swedish public. This is what we're going to do. And it didn't take them one year to move from R134a to [? propane ?] [? butane. ?] And immediately phased out the hard fuels.

Because they had a plan. They saw the future. And they could move down from the leaves and enter the trunk and the branches. But I have a whole book of those examples and those dialogues and whatever.

Somebody must help me now, because yes, I have, according to my watch, three minutes. Short questions and short answers.

AUDIENCE: You are the first person to talk about [INAUDIBLE] within a social construct that I've heard at MIT. And I have been going to these kinds of things, because I'm interested in the environment, interested in the economy, for years. I heard Robert Costanza of the International Society for Ecological Economics a couple of weeks ago talking to the Department of Environmental [INAUDIBLE].

And when I asked him about exogenics, he didn't want to talk about it. Evidently [INAUDIBLE]. So I am really happy, ecstatic, to finally see someone talking not only about exogenics, but also information [INAUDIBLE]. These are two concepts that we in the United States are oblivious to. And we need to know about using these in a [INAUDIBLE].

ROBERT: That's a very nice thing to say. But you know, those people at Electrolux and whatever, they know a lot more about thermodynamics and exogeny than I do. But the point is, they have never drawn the conclusion what happens when you merges that with biology, economy, and the social structure. And it is the merging business, which we can only do in a transdisciplinary approach.

AUDIENCE: I guess my question [INAUDIBLE] Some reflection of a society has to be liked to be ready for your ideas. I think that we're a long way away here on Earth.

ROBERT: It is very, very important question. Because when Electrolux has reached this point, the whole society as such must also reach it, which in turn influences Electrolux. So it is very good for Electrolux to know, what does the society look like when the whole society has [INAUDIBLE]? And it looks like this. I'll just draw. Now I only went half a minute.

Here we have the main office. What do you call, the main office, or the-- HQ, headquarters, sorry. Headquarters. Or a main city, or whatever, a central staff. And then in tomorrow's society, it sends its concept, if it likes to export, to China, making refrigerators according to the Electrolux model.

And China does not mind to make it, if they take old refrigerators and make new ones from it on spot. And they benefit from it on a local ground. They earn money from it. And they sell the concept. And they checked with modern information technology, quality and everything. Because at the time when the whole society fulfills this, there is no way that we continue with fossil fuels, of course.

Now, how is the surface to produce only the private cars today with energy, if we go, for instance, to biofuel? Well in Sweden, the total sum of agricultural surface will not do, even for the private cars. So there will be heavy changes along that line.

Herman Daly has told a joke about it to remember this society. McDonald's does like this already, and now they are really improving on it. They have that concept. You buy a hamburger. They don't export them frozen from Washington or something. They have the local [? deeds ?] everywhere. Anyhow, Herman Daly says, the Americans love cookies and import them from Denmark. The Danish people love cookies and import them from USA. Why don't they switch recipes?


And this is an exchange of recipes society that we are entering, if we are managing to do this in an attractive way, which is system condition number four.

AUDIENCE: What is it about Sweden that makes it ripe for these ideas to grow? It seems to me that

ROBERT: First of all, I think they have built up a sort of traditional consensus. It is possible for enemies to enter a room and find out together, what are the mutual standpoint for the two enemies? We have a certain, I think, skills for doing that. We are writing up scientific consensus documents on that basis and draw conclusions of energy, agricultural systems, metal flows as a society, and whatsoever.

And former enemies who are fighting one another in debate articles and so forth put their names on the same radical document for change. Because we only go to the nucleus of knowledge, expand as long as we can, till we find the interface of where they don't agree anymore. And then we write a document about that, and give that to all the educated business leaders.

AUDIENCE: May I add-- [INAUDIBLE] so I can add something to that. [INAUDIBLE] So he is a main factor in why it's happening in Sweden.

ROBERT: No, no, no, no. This concept survives by itself. All those teachers make tremendous job.

AUDIENCE: [INAUDIBLE] this discussion here, I think that one of the factors that help is the ability of the Swedish people to use information to switch from being just an individualistic outlook on life to one that looks at the group, if that. And that helps to--

ROBERT: Could I take two minutes, and then Paul, could you give us that? Because we would like to proceed. We couldn't start on due time. Could you give us the time, and be seated? Is that okay with everyone? Just two minutes. What I did, this is the technique. I'm certain that it functions in US too, not only in Sweden.

I phoned up my scientific friends and all the others and said, this is the truth. I sent out the first document. They found all the errors in it, because a professor cannot resist the temptation to identify all the errors. He sent it back, and I wrote 21 versions until they all agreed on the first document.

Business people were so happy that scientists at last agreed upon something. So they paid enough money to translate it into a booklet and an audio cassette and sent it out to every household in Sweden, 4.3 million copies. This was the first project we launched. You see? Because they are starving for somebody to make joined forces. Because this is our lives we're talking about here.

The next thing is that when I had that going, I phoned up entertainers for the environment. I said, me and all those scientists are going to launch a continuous education effort in Sweden. Would you like to celebrate that on Swedish TV? And here comes an extremely important thing I think for US, if I succeed. And they said yes, if you succeed, we will. Because who would want to take part in a failure?

But they said, yes, if you succeed, we would like to celebrate that on Swedish TV. I did the same with TV. Me and all those scientists and the artists are going to launch. If we succeed, could you give us a broadcasting time on TV to celebrate the [INAUDIBLE]? They said yes, if you succeed.

I went to the Department of Government for Education, said the same, and then I approached the king and said me and all the scientists, the government, TV, entertainers, are going to launch. Would your majesty like to be the patron of this event, if we succeed? He said, if you succeed, we do that. And then I went to the sponsors. Not until then. I said me and the king--


So you take the ones that you think that you will win, because you know them. And then you build up from there, instead of going for the baddest, most retarded guys, backwards people that you can identify. Because this is the old traditional way. And then you boom your head into them. Instead of going to the good guys and try to help one another to do the good stuff, to coach the good example.


ISAACS: Thank you very much. Our next speaker is Paul Hawken, who I think you'll find will follow very beautifully what we've just heard. Paul has been working for many years in this same terrain in this country, among others actually. He is the author of a book called The Ecology of Commerce, as well as three others.

He's produced a PBS television series. He's started several businesses, including a company called Smith and Hawken, which he was wise enough or maybe not so wise to become the CEO of for a number of years, and is quite accomplished in a range of different things. I'm very happy to welcome you here.

And as was said, we will follow the laws of nature and go use as much time after when we were planning to end this as we took when we started. So Paul will have plenty of time and space to speak as well. And I'm hoping that'll work out for everyone. So Paul, thank you very much.


HAWKEN: Is this going to be okay for you up there? okay fine, thanks. No, if it's okay for everybody. Thank you. This is the first time I've heard Karl Henrik Robert speak. And you're going to notice some overlap. And one of the things that inspires me is that he did a three day lecture in an hour.

And since I'm at MIT, I'm assuming you're real smart. And so we're going to fly today. And then you can say stop when I'm going too fast, but I don't get to spend much time with you. It's nice to see you too, because I'm very intimidated about coming to MIT. Because I expected a roomful of people who look differently. First of all, it'd be mostly men. So it's nice to see women here.

But also, it's nice to see really human faces, which they always are in the end anyway. But I want to talk about-- instead of engineers-- I want to talk about this dialogue that Karl Henrik mentioned, that has not really occurred, is not well developed in this culture particularly, which is the dialogue between the two great systems that dominate our lives, which are natural systems and commercial systems.

And that is why the book is called The Ecology of Commerce, which is what I'm going to talk about today. There is no such thing, of course, which seemed like a worthy topic to address. And from my experience-- I didn't come from a cancer cell. I really came from a small business experience, which is trying for really over 20 years to do the sort of things that Karl Henrik talked about, and really coming up against repeated systemic obstacles in business itself that really prohibited, if not inhibited, my ability to be, if you will, an environmental company.

And it came to a head, I think, when we won the Council on Economic Priorities stewardship award, environmental stewardship award. It was the first time a small company had been given that award. And I realized, as I walked up to the podium-- George Plimpton was the master of ceremonies, and there was a sea of black ties and white pearls. And what happened is that my readings with [INAUDIBLE] and energetics and [INAUDIBLE] et cetera, had sort of been haunting me for the years as we became more environmentally-- what-- as our country became more of an environmental leader.

What happened is that my vestigial education started to haunt me. And I realized that as fast as we were going, that we weren't getting anywhere very fast at all. And in fact, that summation of all our environmental initiatives, when totaled up, had very little impact on the conditions that Karl Henrik mentioned. And that that was, as I said, reached a very bad point when we won the award. Because I realized that we didn't deserve it. And the good news was that nobody else deserved it either, so I accepted it.

And I had already actually sold, if you will, or the idea of The Ecology of Commerce to my publisher, which is very much a good news type of book about what we could do as businesses. And then after that I went back to my publisher and said, I can't really write this book. And I wanted to write something else. And which I did.

And what I wanted to write about, and what I want to talk about, is really the idea of design. It seemed to me at that point when I realized that if you took the best practices of the best companies in-- and I'm going to speak of the United States now, because I'm more familiar with those companies-- but if you took those practices, or take them today, and then you overlay them over the other 80 to 100 million businesses in the world-- and there's a lot of companies in the world, most of them small, of course-- but if you overlay them, that the fact of the matter is that the rate of environmental degradation, the rate of natural resource depletion, the rate of dispersal of molecular garbage, is really not going to diminish greatly at all. And that is, it's not going to have a big impact on our movement to environmental hell in this culture.

So it seemed to me that the good news was that we didn't have a management problem after all. And not to say that we didn't have uninformed managers of our companies. We do. It's not that we don't have some bad managers. Of course we do. It's the human condition.

But it seemed to me that what we had was really a perception and a design problem in business. And we didn't have the design tools to look at the problem together. And as Karl Henrik has pointed out, arguing about the leaves in a sense, basically one of the great problems in this culture is environmentalists-- and I'm one of them, I count myself as one of them-- have been extraordinarily effective at basically defining the problem and sort of coming literally, if not figuratively, from the wilderness into the urban environment, into the corporate environment, and says, guess what? You have a problem.

And this sort of began in the modern era with Rachel Carson. And she inspired a whole host of people in graduate school and college to follow her footsteps. And so what happened is that you have seen this acceleration of the ability of endocrinologists, of wildlife specialists, of biologists, of chemists, of all sorts of scientists, being able to really define with enormous specificity the problems, the breadth, and depth, and in a sense, some of the catastrophic implications of our production methods in Congress today.

The problem with that is that as environmentalists, we have raised money by scaring the wits out of people with our mass mailings and so forth. And in the process, not only have polarized people, produced an adversarial relationship, but we haven't really come and said, by the way-- which is true-- that in these problems are some elegant, elegant design solutions. That is to say that by presenting the problems in such a Chicken Little, Cassandra way, we have in a sense caused, I think, corporations and business to sort of look away from biology as a template, as a mentor, as a design motif, if you will, a leitmotif for us to in a sense reimagine how it is that we make, and how it is that we process material.

And so with that in mind, it seemed to me that, again, if we take the leaves, if you will, to use Karl Henrik's metaphor, but if we take the adversaries in any society-- whether it's a city, whether it's a corporation, whether the unions, teachers, corporation, corporate executives, we take the right wing, we take the left wing, we take Baptists and Hindus, it doesn't make any difference-- but if we get those people together, and we ask them what kind of world they want to live in in 50 years in terms of desired outcome-- their children, is it a peaceful world, how far do they have to drive to work, do they really want to inhale pollutants or not, do they really want to walk around as decentralized landfills with 3,000 unnatural compounds in their bones and milk-- do they really want to live this way, or would they rather live in other ways?

And it's remarkable. And that is, we all really agree how we want to live 50 years forward. And so if you do that, and you back cast, then you have a way of really looking at the problems today and trying to come up with solutions that are consensus based and collaborative, as opposed to adversarial. So I took that upon myself, lacking that roomful of disparate people. And it seemed to me that if we were going to redesign commerce in a way that was going to be work that was practical, that was implementable, that respected the laws of natural systems, but the same time did not throw the baby out with the bathwater, recognized that 90 plus-- and I don't know what that percent is-- but 90 plus percent of what corporations and Congress does, it does very well.

And it's really that last 10% which it does very poorly indeed. If we were going to redesign, what would we want to do? What would be the design criteria? Again, if we're moving, in this case, the metaphor is if we're going to build a house, what it's going to look like? How are we going to live in it? What are the functions going to be?

And I came up with some very simple ones, which is number one, that if we're going to have a sustainable restorative system of commerce, then we in the north and the OECD, industrial nations, have to reduce our throughput of material and energy by 80% in the next 40 to 50 years. And there's several reasons for this. The first one is, we have the technology to do it right now. That is, we don't depend on any breakthroughs-- not to say there won't be-- in order to do that.

Number two, we have to do that because what's happened in the West is that we are holding out to the rest of the world through our NAFTAs and through our GATS and other types of encouragement on trade policy. We're holding out a model of materialization, in other words, a bootstrap. And we're saying, listen, you can raise yourself up by this bootstrap just as we did.

And the fact is, this bootstrap is not attached to a boot. It's only the strap. There is no way that the rest of world can do what we did. Because in order to do so, their increase in terms of the inputs-- that is, the increase in terms of resource utilization-- would go up by a factor of 4 to 12 times, depending on whose figures you use in terms of the increase in the standard of living and the increase in the rate of population.

So we're talking about an increase in the impact on living systems on this planet that's absolutely impossible. We already know from the work of Ehrlich and others at Stanford that we're using 40% of Net Photosynthetic Production, NPP, on land. We actually don't have a real good fix on it in terms of the ocean. But 40% of NPP. So just a doubling of population, which is for ordained, is going to double that at that point.

You get some real crashes in terms of species, in terms of habitat viability. And that means that there is no change in standard of living whatsoever. If the rest of the world does change the standard of living, you're talking about 160%, 240% utilization of sunshine, net photosynthetic production every year, which of course, is impossible.

So that reduction of 80% means that we have to, in a sense, create a form, a method of materialization, a method to create a standard of living, that the rest of the world can replicate to its favor, and not to its disservice. That is to say, something that is viable, both for us and for them. And right now, we don't have that model. And so therefore, all our trade agreements are inherently corrupt. Because they're unachievable, absolutely unachievable, in terms of the stated goals for them.

The next thing though-- and this is where, again, being one would fault the environmental community-- and that is, it's no good talking about reduction of throughput unless you also talk, and you have a very practical and realistic way to increase the quality, level, meaning, and number of jobs worldwide. Otherwise, you're just simply exchanging one problem for another.

And to me, if you're not talking about jobs, you're not talking about the environment. You're just not serious about the question. Because there's 2 and 1/2 billion workers in the world today, a third of which are either unemployed or cannot support themselves, marginal jobs. And there are two billion more workers coming into the workforce in the next 10 years. 10 years. It's this-- I don't know why this isn't being talked about.

And the question is, what are they going to do? So unless we have a way of reducing throughput and increasing meaningful family wage jobs here and everywhere else in the world, we're not going to solve the environmental problems.

The next thing really is this word sustainability. And I'd like to just say that I will continue to use it, because it's come into popular-- it's the parlance of the day. But really, we do not want to sustain what exists. We have degraded our living systems and natural systems too far to even countenance the idea of sustainability. We're talking about restoration. We're talking about an economics of restoration. We're talking about economics that restores and rebuilds and returns natural systems to states that they were not so long ago, certainly within the last 100, 200 years. So we're talking about restoration as a sort of idiom, as opposed to sustainability.

The next thing-- and I want to say this guardedly-- is to respect market principles. What I mean by that-- and I'd paraphrase Chesterton when he said about Christianity, but he said there is nothing wrong with Christianity. He said, no one's tried it yet. And I would say the same thing about the free market, which is that we haven't really tried it out. In fact, I'd go further to say that we haven't really tried capitalism out yet either. Capitalism is only half a loaf right now, because it excludes all of natural capital in its balance sheet, in its accounting, in the way it figures cost, benefit, price, et cetera.

So what I'm saying is yes, let's have a capitalistic free market system, but only when it's complete. A half a system is no system at all. And so that means is that when a person goes into the marketplace, when they buy the lowest priced good, whether it's a tomato or an object, that they're doing the best for themselves economically, which is the natural tendency of human beings, for their community, for the people who produced that product, and for the environment, and for generations to come.

And in other words, that we have embedded into commerce itself restoration, as opposed to what we have now, which is only the rich can afford to conserve. And if you have discretionary income, you can go into a store, a Bread & Circus or something, and buy higher priced goods, and you feel good about yourself. And I'm saying that's absolutely not going to work. That's fine. It's good in terms of a trailblazing effort. It's to be lauded and praised. But as an economic construction, it's absolutely elitist. And it's upside down and backwards. It has to be from the bottom up, not from the top down.

So those are the criteria. And the question is, how do we do that? In other words, can we do that? Is that possible? Is this some sort of Arcadian pipe dreaming, or have I been smoking something? And I think that these things, rather than appearing to be distant visionary goals, are not only linked, but are actually much more possible and practical than the course that we're pursuing right now. So I don't see these, as I mentioned, as being opposite or in being opposition to each other, or in being opposition to a healthy prosperous economy worldwide.

Now it seems to me that if we're going to do that, we need then to design tools. We talked about what the criteria are, but what are the tools? What are we going to use? And it seems to me that's fairly obvious. Again, as Karl Henrik mentioned, the most productive system that we can possibly imagine is negentropic. It's the green plant cell.

When we study green cells, I can't say that we necessarily understand them. I don't think anybody can really say that. But what we do understand is that when it comes to energetics, when it comes to a system that is so elegantly efficient, there is nothing that even equals it, nothing that we have done as human beings that even approximates this elegance in terms of design.

And there are some simple principles, and I will offend every biologist in the audience when I mention them. Because they're oversimplified. But that we can use as, in a sense, tools or as standards to look at how we redesign and reimagine commerce. And the first one is that there is no waste in nature that isn't food for other living systems. Now, you can go right back at me and say, well what about the carboniferous period and oil and coal and so forth, and I'll get back to that.

But basically, in a dynamic sense, there is no waste that isn't food or isn't some form of nutrients for other systems. And this is very important, because what we have in our system is a industrial linear take, make, waste system in which the waste, the metabolic waste of industry, is not food for anything at all. There's nothing really that can eat it. That is not to say that we don't eat it. We do. It's in our food deliberately, and in some cases inadvertently, in many cases actually.

But the fact of the matter is that the persistent biocumulative substances that we make, the molecular garbage, is not food for any living system. We have not discovered one yet, anyway. And we're trying it on ourselves. But I don't think it's going to succeed as being food for a living system.

So the second principle is, we have to run off current solar income. And again, I'm not going to repeat what Karl Henrik pointed out, which is that in a closed loop system, the only input on earth is sunshine. And nature does not run off capital reserves. It doesn't mine. It doesn't have an Exxon working for it.

But it's important to understand that current income in its various forms, current solar income, is in a sense what creates these highly efficient metabolic pathways that we see in nature. So the last thing, of course, is it requires diversity, enormous biodiversity, in order to do the first two.

Now, if we take those principles, and then we sort of put them up there, then what does commerce look like that employs those principles, as opposed to the, if you will, the principles of industrialism, which are the principles of a sort of purported linear system that supposes somewhere that there is an infinite source of natural products, of inputs, of air, of energy, of water, of soil? And there's an infinite sink out there in order to put the metabolic waste, which is essentially how industrialism was organized.

Now, if you switch that, and you use these criteria, then we have to ask ourselves, what does commerce look like? What would we-- how would we make things? How would we drive around? What would we wear? What would we eat? What would our jobs look like? What would our factories look like?

And the fact of the matter is that when you take those, you start to parallel very similar-- and as I said, I have never heard or seen this lecture before. But you come up exactly to the same conditions that Karl Henrik mentioned. And they're probably the best work that's being done in terms of describing this, is probably Michael Braungart's work in Germany at the EPEA called the intelligent product system.

It's a 25 criteria. And I'm not going to give you all 25 today, because it's pretty exact. But it really boils down to a product typology, which is that if you're going to make things using biology practicing as a working metaphor, as a design template, for goods and services, then they're going to fall into three categories, and eventually only two. The first category is consumables. The second category is products of service. And the third category is unsaleables.

Now, what Michael means about consumables, or what he's talking about, is that a consumable is something that is food for a living system. That is to say, not just food that we eat, but it is when you literally throw it away, when you disperse it, then it becomes food for microorganisms or some other species. And that is to say with no persistent or biocumulative or toxic effects whatsoever. It doesn't disturb, that is to say that species or that life form.

And now, you would think then that much of what we have is consumable. That is to say, for example, we're all wearing clothes that came from cotton, linen, silk, raimi. There's all these natural fibers that we wear and that we pay so much for. But when you actually start to break down your clothing and you start to find out what's in it, what you find out is you're getting these natural products plus.

There's 7,000 different chemicals between you and your Calvins. And that's what it takes to get them on your hips. And most of those chemicals, almost all of them have been invented since World War II, the effects of which we do not understand on living systems, only in a very, very specific way.

The nickel on the clasp of your jeans, 20% of the women in this culture have nickel reaction, have nickel allergies that affects their thinking, their memory, short term memory loss, concentration, and so forth. Also comes from the findings in the earrings and your costume jewelry. But that's on your zippers and on the clasp of your jeans and so forth. So this coat, for example, has 40 grams of lead chromate, [INAUDIBLE], so forth. These shoes also have lead. They have chromium from tanning. They also have lead as a stabilizer in the polyurethane in the soles of the shoes and so forth.

So we can go on. What happens when we deconstruct what we should be able to just throw away when it's done and threadbare and not useful to anybody else, we find that the very things that we're buying and using and making, there's no place to put them. Where am I going to put this jacket? Salvation Army, great. But then who is the final user? Where are they going to put it? There is no place to put it. There is no metabolic system that we know of that can eat and metabolize this jacket.

And you think that's bad? The tie. Not only is silk, right-- and this is true of your silk blouses, so you women, you can't get away so easily. But this has tin and zinc to make it feel like expensive silk. It's cheap silk. Doesn't matter what the label is. But also has chrome and molybdenum. So basically, what you're wearing, all us men with our silk ties, is basically little heavy metal deposits. Right?

So then you can imagine, if you take a truck and you put Armani ties and Reebok shoes and DKNY blouses and Ralph Polo blazers and throw in 10 televisions, by EPA standards, you're a toxic waste hauler. And you need a permit to go on the highway. So what Michael is talking about in terms of consumables is, if you're not going to make things that you can literally throw away and become compost-- food for living systems-- then you have to make it as a product of service. And that's the second type.

And what he's saying is, if it's not a natural nutrient, then it has to be a technical nutrient. In other words, what he's saying is that you have to make it in such a way that you take all of it back when the user is done. And what he's saying is that a product of service like a refrigerator or a car or a television is something that we want the service of.

We want entertainment, cold food. We want to transport ourselves. We do not want to consume it. Because we can't. Nobody can consume a television that contains 4,300 chemicals-- cadmium, mercury, lead, explosive intervacuum tubes. It's not consumable.

So what he's saying is, if you make a product of service in this typology, then you have to make it in such a way that it has value to you because you own it forever. So if you're General Motors, it's your car forever. When the end user is finally done with it, it comes back to you.

And you can't throw it away. There's no landfills in this society. There's no carpet under which anything may be placed, because there isn't anyway. And that's Karl Henrik's point.

We can delay the understanding of that. We can pretend it isn't true. We can ship our LED batteries to Nigeria for recycling and poison people there. But the fact is there's no place to put it.

So what happens, of course, is when you think of your products as being truly cyclical, as being manufactured within a closed loop system-- which, of course, they are-- then the design criteria changes dramatically. How do you design it in such a way that when it comes back to you, it has value?

And what this is doing already in Germany in anticipation of the [INAUDIBLE] and these take back principles, which are being bandied about in Parliament and so forth, is producing real engineering technical breakthroughs. Hewlett Packard, for example, already designs for disassembly in Germany. And discovered when they design for disassembly, that it saved assembly time 70%, reduced assembly labor 70%. Of course, they went back to the engineers and said, well, why didn't you do this earlier? And they said, you didn't ask. Didn't ask the question.

But they're not just designing for disassembly. They're designing for disassembly and complete reuse of the materials. So they're going to the plastics manufacturer. BMW has done this. Other companies are saying, by the way, what's in this stuff? And they give them an ingredients list. And they say, my god, I don't want it back. Because if I remelt this plastic, it's useless. And I don't want to breathe what happens when I melt it anyway. It'll poison my workers.

So they're coming up with new thermal plastic resins, which are not only sulfur based, do not have heavy metal stabilizers, which can be reused 10, 20, 30, 40 times before they start to be no longer useful. So they're starting to push out on this chart the useful life of the materials that they're doing. So that basically, the raw materials for the auto industry are on the highway today, not in the chrome mines of South Africa, not in the Mesabi Range, not in Kuwaiti oilfields.

And the last category is unsaleables. And they're saying is, if you still want to make these persistent toxins, heavy metals, radioactivities, that's fine. But just like the products of service, you own them forever. You have to put your name on them. You have to molecularly mark them.

And what they're talking about here is we have, if you look, sort of a history of rights in this country-- not this country, in the world-- starting with Magna Carta, which is for rich white men, noble rich white men. And then we had the Declaration of Independence, which was for rich white men. And then we had the so-called Emancipation Proclamation, which didn't really do the job. But then we had suffrage. And then, of course, we had the civil rights movement, which did a little bit better.

And then we had, of course, the Endangered Species Act. We had the woman's movement. Excuse me. Then we had the Endangered Species Act 1973, which is the first time that we recognized that other living beings had rights as well. But what we don't have is the right to biological privacy.

So if I lick my finger, I have 20 to 30 chlorinated hydrocarbons right now on my index finger. And so do you, by the way. And we don't know the effects of those on living systems in real time, generations to come. So what the unsaleable category is saying is that you have to put your name on your chemicals, molecularly mark them, which is possible today.

So that if I go to my well in my farm and find dibromochloropropane in it, then I take it to the county agent, say listen, could you look this up and find out who it belongs to? And he says, oh, look, that's Occidental Petroleum, it's Hooker Chemical. There's an 800 number on it. I call it up and say, could you come get it? There must be a problem [INAUDIBLE].


I didn't put it there. It must be yours, right?

So again, we're talking about a cyclical economy. Cyclicality implies responsibility and accountability, and means-- and accountability is cyclical by definition. So in other words, if you want to make these things that will last for 10,000, 100,000 years, so forth, that are toxic for the day they're made until the day they degrade, and then even further, fine. But you own them, and you have to take responsibility for them. There's more to that.

Anyway, what we're talking about here, again, is a manufacturing system, of course, that gives very positive incentives for people to move away from those compounds. Right now we have these perverse incentives, which is it's really cheaper for manufacturers to use these compounds, as long as they don't have to take responsibility for it.

So we're not talking about a system that punishes corporations for what they do. We're trying to talk about a system that reimagines it, that rewards them for what they cannot do now and stay competitive. And that's very, very important. As I say, it's too late in the 20th century, in a sense, to make people wrong. It's not going to do us any good whatsoever. We have to find a way to make people right. We have to find a way to do this in a way that does not blame or excoriate or hold responsible in a way that produces fear, anxiety, and doubt in the commercial world. Otherwise, we're not going to get there.

Now, having talked about in a sense a product criteria, a product typology, then we also have to talk about another thing, which is information itself. And that is that when we go out into the marketplace-- and this is the so-called free market-- what money is, what prices are in a systems point of view is information. They give us information. They give us a lot of information. And it's a tremendous amount of complexity in [INAUDIBLE] 89.

And even though it's highly reductionist and so forth, it actually has a pronounced effect on what we do. And if there is any democracy, in some ways it is the marketplace and how we shop and how we buy. But it affects businesses as much as consumers. And because it does, what we can say in a sense is that what Karl Henrik is talking about, what sort of restorative economy is, is a movement, a transition, from a least priced to a least cost economy.

And that you can understand the arguments, sort of the adversarial positions. You can understand much of the disagreement in this context. And basically, when you have the argument, what you're seeing is the least price people, which is business, who are rewarded and punished when they stray from a least price strategy. And they're talking to environmentalists and citizens and so forth who are talking about a least cost outcome. And they're trying to have a conversation with each other. And usually the environmentalists have never written or met a payroll, and oftentimes people who meet the payroll are biologically illiterate.

And so what we're talking about is trying to create a conversation, a vocabulary, a ways to discuss how to make this transition. Because a least price economy, a least price system, is going to destroy itself. And I don't have to describe that. You know that very well. You wouldn't be here. The question is, how do we make it to a least cost system, really.

And what I mean by least cost, of course, is a natural capitalistic system, a system that takes into account all of the costs, both in real time and into the future, of what we use, what we metabolize, and the waste thereof. And a least cost system, interestingly, goes back to criterion number two, which is jobs. Remember in the beginning I said, well, you've got to reduce throughputs, but at the same time, you have to increase employment.

What happens when you move away from an industrial linear take, make, waste system to a cyclical closed loop, away from hydrocarbons to carbohydrates, away from oil soluble to water soluble, from linear to cyclical. We can go right down the checklist.

But what happens is, you're moving away from a system that has valued and made money by increasing human productivity, which is the present industrial system, to one who has very positive incentives to increase the productivity of natural systems. And then those incentives are far greater than the ones of increasing human productivity.

The industrial system as we know it was founded, in a sense, in a time when there was relatively few people and a super abundance of raw material. And we have now reversed that. We have a super abundance of people, and a decreasing amount of raw material and natural resources. And yet we're still using the same principles as if they still apply. And of course, they don't apply whatsoever.

And what we have to do in a sense is change the price system so that all the participants in the economy-- 5 and 1/2 billion people-- get the right information. Because as long as they get the wrong information, they're going to make the wrong choices inevitably. For example, when you talk about sustainable agriculture versus industrial agriculture, you're talking about one model which internalizes its costs, and one model which externalize its costs. I don't need to tell you which is which.

The fact is, when you internalize your costs, you have a higher price. So you go to the market, and your tomato or your lettuce is more expensive than the product where costs have been externalized. Now, those externalized costs, of course, are held to the worker-- groundwater depletion, soil depletion, pesticide runoff, the eutrophication of our lakes and our rivers and our oceans due to the runoff of free nitrates.

Now, when you compare them, and you go to the market, you say, well this is more expensive, and the industrial tomato is cheaper. Of course, it's upside down and backwards. The fact is, the organic and sustainably produced tomato is much cheaper than the one produced industrial, except you don't get that information in the marketplace.

Now, what's so interesting about this to me is that the analogy is to toxicity itself. We think of toxins as poisons. They are poisons. We don't necessarily understand how a toxin is poisonous. The way pesticides and herbicides poison things is they give the organism the wrong information. They are hormone replicants. That's one of the problems with them, is that we recognize them, our body, as hormones, which is why they cause endocrine disruption, cancer, et cetera.

But the fact of the matter is that a broad leaf recognizes an herbicide as a growth hormone. It makes it grow so quickly, it outstrips its capacity to take up water and nutrients, and it dies. And we say, oh, it's a toxin. It killed it. It didn't kill it. It made it grow so fast, it killed itself.

So we can look at our price system as basically the same thing. It's a toxic information. It's giving us the wrong signal. We are outstripping our capacity to take up nutrients and so forth. And we are going to kill ourselves and a lot of things with us.

So when we're talking about moving from a least price to a least cost system, we're not talking about an academic exercise. We're not talking about economics. We're talking about, how do you give people the right information so that they naturally make the right decisions? And how do you do that in such a way that you don't lower the real income, which is extremely important. Because if you lower their real income, they'll reject it.

So you have to do it in a revenue neutral way, which is why-- and I think Sweden will be the first country to do this. But you have to absolutely remove the taxes on people, all taxes on people, all income taxes, all Social Security, Medicare, everything that taxes a human being, get rid of it.

Because what happens now is we have an industrial system that not only devalues nature, but it devalues people. We're getting rid of people. We're downsizing. We're restructuring. All these euphemisms. But basically, we're getting rid of people very rapidly, producing this tremendous anxiety in the workforce and social dislocation. What we want to do is do the opposite.

And when you shift the tax system from people, and you shift it to energy, to virgin resources, to those things we want to preserve and save, then you produce incentives for companies to increase the productivity of their natural capital. And those incentives, when you increase the efficiency and the productivity of natural capital, you require more people to do it. If you compare the labor intensity of the carboniferous or the non-renewable energy systems as compared to renewable, renewable energy systems are two to five times more labor intensive, and yet they reduce dramatically the impact we have on natural resources.

And you go right down the line in terms of agriculture, the built environment, forestry, farming. What happens is when you shift the cost to natural systems, to natural capital, then the incentives are such that you need more people to make money. Isn't that interesting? Instead of less.

So what we're talking about here is not just saving species or saving natural resources or preserving forest cover. We're actually talking about an economy that is a new Industrial Revolution because it in itself will increase the amount and quality of employment while it decreases the impact on natural systems, the first two criteria.

And this is what we have to do, and this is what's waiting for us. This is the economy that we are on the threshold of, and this is the economy we're kicking and fighting and shooting ourselves in the foot about every day and trying to resist. Because too often the idea of going-- we talk about natural fibers, people think about hair shirts. They're talking about an economy that runs on current solar income, and they look backwards to Little House on the Prairie instead of ahead to an economy that's extraordinarily efficient and elegantly designed.

And this is what we have to do, and this is what we have to convince not only ourselves, but business. This is the economy that lies ahead. And the fact is that if you have a linear system, we know it's inefficient. Where does it show up? If you look at industrialism, it's so massively inefficient that it staggers the imagination.

Only 1% of the pesticides, 4 and 1/2 billion pounds a year, actually kill the insects. Only 1%. Only 2% of the energy used in automobile transports the person in the car. 14.6 billion tons of hazardous waste material are thrown away every year in the United States. According to the National Academy of Engineering, 93% of the material used by industry does not go into the final product. 80% of the things we make are thrown away after one use.

If you talk about incandescent light bulb fired by a nuclear power plant, the nuclear power plant is only 30% efficient. The light bulb is only 10% efficient. It's really a space heater. It gives a little light, of course. Talking about a 3% utilization of energy in a screw in light bulb from a nuclear power plant.

So what we're looking at when we talk about a restorative and sustainable economy is an economy that does what industry promised, which is create efficiency. And the opportunity that is before us is to extract, if you will, this inefficiency, this massive efficiency that is in the economy today. And we can start doing that right now. We don't need new taxes. We don't need new politicians. We do need new politicians, but we don't require them in order to do that now because the inefficiencies are so overwhelming and so massive.

And so it's important that at the same time, we do need some structural changes to our tax system and to our legislative system. But the fact is that every company, every city, particularly every region, every state, every institution, can start to do things today that basically transform and start to take advantage of that.

I'm going to give you just a couple of quick examples of what we're doing today, so you have a sort of a hands on example as opposed to a theoretical. One is that we are working in a city in America, two cities now, that have hot summers, cold winters. And what we're doing is working with a major manufacturer of super windows-- the R8, R10, which are usually more efficient in people's walls-- to build factories in the cities themselves, and to install windows directly to retrofit all of or most of all the residences and business structures in that city.

Now, the calculations are fairly simple, although they're still being done and modeled at Carnegie Mellon, which is this, which is that the number of kilowatt hours that's being exported out the windows is greater than the cost of the windows on an advertised basis. It's that simple. In other words, it's cheaper to put in the windows than to keep buying the energy from wherever it's coming from.

And so what happens is, when you put in a window company-- and we're calling it a window utility as a working title-- but what happens is, and you install them, the way it works is that somebody knocks on your door, comes and says, we'll match these windows exactly, but they'll be super windows, whether they're wood or aluminum.

All the windows are recycled and reused. Nothing is thrown away. The new wood frame windows are extruded with recycled thermal plastic resins and so forth to match exactly the windows that you have now, if you have Victorian oval windows, whatever, using a system designed at the University of Minnesota, which is an extrusion process. So the windows could be matched exactly. You don't need to change the architecture of your house.

Now, these are installed. You get a check for $500. Now, what happens is, the city finances the windows with industrial development bonds that are low interest. So it creates currency in the first unit of sovereignty that we have, which is our cities, villages, towns. And basically, those windows are paid over 20 years in your utility bill. And the debt goes with the structure, not with you.

And the calculations are done and shown so that basically, it's going to cost less to buy the windows than it was to buy the heating and cooling that you were utilizing before. So basically, you'll have money in your pocket. The city now has a multiplier effect of the money being spent in the city now on windows, labor and so forth, and being exported out on the power lines or gas lines.

So it's a win-win. We counted 30 wins in this cycle. And it's not a cyclical economy unless it's a win-win. It can be a curved line. But it's not a cyclical economy unless it's win-win.

One other area we're working in is in an area that's very biologically rich in timber, fish, and soil. But in Washington state, which it's the lowest 10 percentile in terms of income, education, highest 10 percentile in alcoholism, abuse, divorce, and dropout. So what's wrong with this picture? Why are biologically rich places being deracinated the way they are?

But this is not just true in Washington state. It's true all over this country, which is why loggers get so upset about environmentalists. And basically, they want to bring an industrial park to create jobs. The oyster fishery people are saying, don't you dare. The small city of Raymond, Washington has no sewage system. There is no outfall to the ocean. And oysters are extremely sensitive to pollution.

So what we have done-- not we, but really Ecotrust, [INAUDIBLE] Alliance, and many other organizations, and I participated in this and so forth-- is in a sense, design a zero emission industrial park. Which is, in a sense, bringing in industries that are closed loop manufacturers that do not require and will not use any sewage system whatsoever. Always will be processed on site.

And so what happened is in so doing, you took-- this is a community where the loggers, the fishermen, the farmers, everybody hated the environmentalists. Nobody liked the environmentalists. And now you have a solution that the environmentalists, the fishermen, the loggers, the farmers, the townspeople, the unemployed loggers, are all happy with.

Now, this is a town that makes studs. It makes 2 by 4's. This is a town that hasn't built a new house for 15 years. That's how sad it is in terms of its economy. Because it is exactly like a third world country. It's exporting all its capital to more developed nations in the United States. And wondering why their kids drop out and take drugs and leave town, and no houses are being built.

And so what we're doing is not just ecological restoration. The industries are using red alder, which Weyerhaeuser been spraying with helicopters and killing to make furniture, making essential oils from the green waste from the logging. Starting some things with the fisheries and salmon, doing a brewery, doing a new soap factory based on a new French technology. I won't go into those right now.

But the point is that in ecological restoration talking about social restoration. And there's a man in Pittsburgh named Bill Strickland, has a vocational school. He took it over for children at risk, which is a euphemism primarily for minority students. He took it over. It wasn't working at all. So he got rid of all the vocational courses. And it still didn't work. So they got rid of all the academic courses. And all he taught was art. And he taught those kids singing, dancing, poetry, jazz, rap, whatever.

And what happened is that they began to feel that they were valued for the first time, that there was something inherent in them, intrinsic to who they were, that was perceived and seen as being talent, as being valuable, as being good, so forth. They began to change their sense of themselves. They began to accrete to them their academic and other skills that they needed in a sense to further what they wanted to do. And he ended up with a very high placement to this day in colleges in Pennsylvania.

But he said something which really stuck. He said, you can't teach kids algebra if they don't want to be here. And I thought he meant at the school. And he wasn't talking about the school. He's talking about here, here on Earth. And that's what our kids are telling us, is that we don't have just a waste problem, a landfill problem, an atmospheric problem.

We have exactly the same problem in society. And we have a whole generation shooting each other, shooting up, and engaging in extraordinary high risk behavior, all of it to try to communicate to us and say, you know something? I don't want to be here. You have not made a world I want to be here.

And why not? Why is it they're going to do? What jobs do we offer them that makes sense, that gives them dignity, that gives them respect, that gives them meaning? Nothing. And so instead, of course, we have built more prisons and hired more guards, but when they're trying to communicate with us.

So when we're talking about a restorative economy, we're not talking about linking social restoration and environmental restoration. Linking is what you do on a phone conversation. We're talking about the fact that they're identical. They're exactly the same thing. There is no separation between social environmental restoration. And we have to understand that in a system, an industrial system, that devalues natural systems is not going to respect human beings or living systems.

And so when we're talking about the things that Karl Henrik-- we're talking about really for the first time looking at our problems in an integrated way and seeing that they're intimately connected, and not trying to solve them with just simply more taxes or more bureaucrats or more programs to basically buy off the poor or buy off the people who've been marginalized by an industrial system that no longer values people. So the work is very, very exciting.

I want to just close with one thing, which Jean-Michel Cousteau said. And he's quoting I think an Indian poet, as I remember. But he said that in the end, we will protect the things that we love. And the rest of that is, of course, that we love the things that we know.

--that had been a sense, what-- we've been removed from those truths. And we're talking about bringing these truths together. These are truths that we can all understand. We don't need a degree to understand these truths, to understand what it is that we want to do, how it is that we can get there.

And that's why it's so exciting. And that's why I think it will be a bottom up phenomenon. And that's why I think I'm so excited about the environmental movement, because there's no leader. There is no charismatic leader. There's no religion. There's no cult. There's no central power structure. It mimics the thing it wants to see happen, which is-- I'm struck by the parallels in our thinking.

And it strikes me more is that many, many other people have the same thinking, and we didn't have to talk to each other to come to it. It arises out of the situation. The truth is inherent in natural systems, as opposed to being imposed upon it. And that's why the environmental movement is going to win. And we have to start acting that way and take responsibility as designers. We are all designers of this system. We're not going to lose. We're not going to lose.

This is going to be-- there is going to be ecological reformation, social reformation in our lifetime. And it's time that we took that responsibility on, as opposed to environmentalists sort of being on the outskirts or off stage shouting, saying I told you so, and hoping the ship goes down. No, it's we have to know that this is going to happen. These truths can't be stopped. So thank you very much. And I'd be happy to--


Did you know-- this is not true today, but a few years ago, when a Chinese person drank a Coke like this, that they doubled their fossil fuel energy consumption for the day? Isn't that amazing? I'm thirsty, but not that thirsty.

AUDIENCE: When I went to purchase your book, Ecology of Commerce, I looked first in the business section of the bookstore and didn't find it there. I found it in the nature and environment section. I'm wondering how the book is being received by business people, and also by the environmentalists because those ideas are floating [INAUDIBLE]

HAWKEN: The question is, where can you find the book in the bookstore. And the business community has not exactly embraced this book. It's a tough book for business, because it's a wake up call. It's a little bit of a wake up, we have a problem.

And the interesting thing about it-- well, the fascinating thing about it is the prior two books, which are The Next Economy, and Growing a Business, where reviewed in most of the business press-- the Wall Street Journal, Business Week, Barron's, Inc., Entrepreneur, Forbes, et cetera. Not one single business publication reviewed this book. Inc. didn't review it, no. I did an article for Inc., but they didn't review it, no. So I found that very interesting. And I had trouble finding the book too in bookstores.

But on the other hand, who has sort of taken to the book is people in public policy and who are really dealing with the problems on a community level in towns, cities, regions. They have really taken to the book. And it's been very popular overseas too. The American version, it's in 10 languages in the next year, but I mean already. So I'm talking to the Mexican government. I'm talking to governments in many countries, but not so much this country.

AUDIENCE: What would it take to achieve the [INAUDIBLE] success that has happened in Sweden with those ideas? What would it take for that?

HAWKEN: Well, I think it takes a process that's safe. And I don't think we have created safe-- I mean, that's certainly what Peter [INAUDIBLE] is doing. He's creating safe biologic processes. But I mean, I don't think we've created one around this issue for business yet. And so you get-- because you have this split between least cost, least price, you get businesses doing the most foolish things to-- sincere, I have to say, but foolish-- to try to win over and curry favor in terms of their environmental awareness.

You get McDonald's and EDF, you know, going from polystyrene to paper clam shells, you know.


When everybody knows the environmental problem is inside the clamshell, right?


What is it? A pound of beef is, what, 2,500 liters of water, and it's destroying 270 million acres of Western grazing land and basically depleting the Ogallala Aquifer, the largest body of fresh water in the world and the major cause of deforestation. And they want to go to a paper clamshell.

But what we have to do is rather than just make fun of that, which I do mercilessly, but is point out that they're in a least price system, and they have to basically have non-perverse incentives in order to change. And in many cases, they do and so forth. Karl Henrik, you want to say something?

ROBERT: Yes, I have a comment to that question. I think that business journals simply don't have the language to comment on. Because if they did, they could [INAUDIBLE]. But complete silence is due to the fact that they don't know how to [INAUDIBLE]. And why do I say that? Because when we [INAUDIBLE] every household in Sweden [INAUDIBLE] our business would have gone down the drain together with [INAUDIBLE] if we continue to do what we do. It wasn't [INAUDIBLE] extra journey. And the impact was-- I mean, 4.3 million [INAUDIBLE] to every house and every school in Sweden. And there was not one comment. It was complete silence.

Today we are running business and [INAUDIBLE] together. [INAUDIBLE] So I think the rest is just [INAUDIBLE]. And then we will connect on the next problem. They need to learn. They are ignorant. They are not stupid, and they are not vicious. They're simply ignorant at this stage. Because [INAUDIBLE].


AUDIENCE: [INAUDIBLE] to the extent to which we need to produce [INAUDIBLE]. How do we provide disincentives during that period of time? If we're paying somebody else in a socioeconomically [INAUDIBLE] community--

HAWKEN: Right. What are we doing?

AUDIENCE: --to take responsibility for [INAUDIBLE].


AUDIENCE: Well, what's on my mind in particular is that Edison [INAUDIBLE] search for a jurisdiction to deposit spent fuel from the first nuclear reactors. [INAUDIBLE]

HAWKEN: I have two responses to that. In the intelligent product system, what they're talking about is utilities that are citizen owned, called parking lots, for better example. But basically, those who have spent fuel, which is very tricky technically. But let's talk about just toxins that can be stored in glass lined metal barrels.

What they're saying is, that those have to be stored at these parking lots. You can't store them yourself. In other words, you may produce them. You may have them. But you can't keep them. You have to store them in these literally parking lots. They're concrete structures that are multi-level. And you have drums parked there like cars that contain the toxins that cannot be detoxified right now. Because incineration does not detoxify. It just changes the toxins.

And that those companies don't have to pay a rental fee for that, which does two things. One is, it gives them incentives to figure out what to do with it, number one, eventually. Because they're going to pay for it in perpetuity otherwise. Secondly, it takes the responsibility out of their hands directly until they do come up with a scientifically proven way to detoxify whatever it is it may be.

Now there's another part to that, which is the spent fuel. Which is you're talking about timelines that no civilization has ever encountered or planned upon, 25 to 200,000 years. And one of the most interesting proposals I have seen was-- first of all, which I thought was disastrous, and then was a very interesting response-- was from First Americans. And that is to put it on reservations.

And I thought, oh god, here we go again. Can you believe it? First we exile them from their exiled land, because we found uranium on it. And then we're going to put back plutonium and other radioactive waste. And it does seem sort of like another type of cultural imperialism.

And it is, excepting that one of the tribes said, you know, we think you're right. You don't know what to do with this stuff. And we have a culture that does think long term, and you don't. So better give it to us. Because we think we can take better care of it than you can. And that's going to, in a sense, be our duty for the earth. It's not a favor to you. It's a favor to ourselves.

But there's also a group forming-- Joanna Macy and others-- what's very interesting, to create a kind of a warrior, not a fighting, but it's like a class of people, guardians, who pass on the information lore for thousands of years. And how do you start that now to take care of spent waste? That's a very interesting project that's being undertaken. So anyway. It gets pretty interesting when you talk about plutonium, the culture. Yes.

AUDIENCE: I'm wondering about the role of legislation and government [INAUDIBLE] talk a lot about turning the tax system upside down and [INAUDIBLE].

HAWKEN: Right side up.



Just thinking about how to actually [INAUDIBLE] the argument of having costs [INAUDIBLE] a lot of sense, but how do you get businesses to do that? I was wondering about this relationship.

HAWKEN: Right. Good question. And the next book, which is called Natural Capitalism, is about that. And what we have to do is we have to show people in inner cities, people who are un- or underemployed in rural areas, we have to show unions that are seeing their membership atrophy, and we have to show business people that a true cost system is in all their interests. Because the fact is when we go to true cost, when you go to a system that rewards natural capital productivity, you create a climate of innovation and change that makes the super information highway look basically an electrical job.

Because right now, so much of the technologies and ideas that would accomplish these increments in productivity are basically uneconomic. And so by-- basically we're not just not costing things at their true cost. We are subsidizing their depletion. There's really not a resource in this country that isn't subsidized-- water, soil, minerals, oil, coal, forest products, fisheries. We, the taxpayer, is subsidizing the depletion.

So when we talk about a true costing, we're talking about releasing innovation in a subsidized system. We are suppressing the imagination, the creativity, and the best instincts of our people. Whether they're in the top or whether they're on the bottom right now. And so what we have to do in a pedagogic way is really show that this is true. So it doesn't come out as a win-lose, topsy turvy, let's shift it sort of thing. It's going to require study, a lot of thought.

It also has to be phased in over a very long time-- 20 years I'm using-- so that it is not disruptive, it's not dislocating, so you can engage in long term planning that's rational, that makes sense. That you can have these increments, that it isn't punitive to any one group or class of people in society. Yes.


HAWKEN: When we're being nice, yeah.

AUDIENCE: But what [INAUDIBLE] superimposed [INAUDIBLE]. What we frequently forget is that this is exactly what we have been running in the Western countries because there is no law in nature that's saying that we can't have a relationship of income tax and natural resources that you are suggesting. It is superimposed on top of us by political decisions. There is no law in nature at all. It is a planned economy, just like in the eastern countries, which we are doing and running in the name of freedom, which is actually--

HAWKEN: And to me, part of the process or the exercise is to get our language straight here. Because it's funny, when you go-- and I took Economics 101 in high school actually as a correspondence course from Cal when I was a junior. But the first chapter defines income. And income is what you can take and leave the capital intact. Right? It's like, oh yeah. And so you know when people say, well, how are you going to price it? I mean, who's to say what the true cost of a sequoia or a mineral deposit or the water is, and so forth?

That's easy. A freshman economist can do that one. Because basically, either we're going to preserve and increase capital, or we're going to deplete it. So the cost is what we can take in a year and leave the capital intact. That's our income. That's the cost of those products.

Now, when we have a system that subsidizes them, that guarantees the right of private property owners to treat it any way they can and so forth, there's no way that we have a tax system that can distinguish between income and capital. And that's why I go back to the thing. I want to try a capitalist system. Maybe it isn't any good. Maybe Marx is right. But we haven't tried it yet. And I really want to see us try a system that distinguishes between income and capital and recognizes-- and where everybody knows the difference, even a fifth grader. Yes, one more question, then we should--

AUDIENCE: [INAUDIBLE] to find the biggest leverage for all this movement. Usually, it's a customer is really the biggest generator [INAUDIBLE] when the crops of garbage breaks out. It's really grown. Like happened in Germany, the garbage removal just got so expensive. Everybody got concerned. Now, in a system like here in America, where everyone is really concerned about their individual point, their individual best solution, how can this happen? We have to wait years until each one's sense of responsibility and accountability or--

HAWKEN: Well, two things. Two things, specifically and generally. In terms of the tax system, you have to do everything in a revenue neutral way so that no one feels threatened by these changes. So there's not inequities or big inequities built into that chain. Second of all, when you look at things systemically, you realize that the system is the lever, and that there is no one lever.

So it's not the demand side. It's not supply side. It's not consumer. It's not corporate. It's all of those plus taxation, plus municipal, plus-- so it may sound like a cop out, but we're used to a hierarchical, patriarchal, top down, dominated sort of way of problem solving. And what's so healthy about the way we're going to solve these problems is it's not going to be that way.

And of course, all of those who study TQM know that Deming's observation about quality circles came from watching women work, not men. It's the women who got together in a circle at the munitions plant during the war and tried to figure out what they were doing during the day and tried to do it better the next day. And that's why they outproduced the men on the other line, because they sat in a circle. So really what we're talking about is creating not only just cyclical in terms of the systems, but in terms of how they relate to each other.

And what I really esteem and admire about what Karl Henrik is doing, is he's basically getting people talking together in a circle who have been arguing together as opposites. And that's what we have to do in this country. I mean, we can talk about technical fixes. But really, process has to proceed those fixes. It's got to be a process where we as Americans can start to listen to each other. And right now we can't.

And I'll close with one story that Stuart Brand told me when he was in Kenya, and he went to a classroom, and he was talking. And a boy in the back, eight years old, raised his hand said, Mr. Brand, can you [INAUDIBLE]? And Stuart said, what? He said, Mr. Brand, [MUTTERS]. So Stuart walked. [INAUDIBLE] what did you say? He said, Mr. Brand, could you talk more softly? I can't hear you.

[LAUGHTER] Thank you.


ISAACS: So I just want to thank both of our speakers, Karl Henrik and Paul, thank you very much for a quite extraordinary couple of hours. I can't help but think that the Earth itself is shaking--


--with what we're considering here. And I'm convinced these days that there are no more coincidences. And perhaps a shakeup or two is appropriate. So I trust this will be the first of more in this vein. And I thank you again very much.