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Fit for purpose? Clarifying the critical role of profit for sustainability

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This conceptual article contributes to the post-growth strand of political ecology literature, which seeks to find sustainable ways of organizing the economy that do not require economic growth. It explores the idea that transitioning to post-growth societies requires a transition in the relationship-to-profit of business. I first conceptualize relationship-to-profit as the intersection of purpose, investment, and ownership of firms. Specifically, for-profit business structures entail a financial gain purpose, private ownership, and unlimited returns on investment; whereas not-for-profit business structures have a social benefit purpose, collective ownership, and limited returns on investment. I then outline ideal types of for-profit and not-for-profit economies, based on the differences between these two kinds of relationship-to-profit. The first ideal type shows how the for-profit business structure drives consumerism, economic growth, and ecological harm, as well as inequality and political capture, preventing post-growth transitions. These dynamics might be slowed down by businesses that seek to balance private financial gain with social benefit (known as dual-purpose businesses). The second ideal type describes the dynamics that might be expected in an economy consisting of not-for-profit businesses, which have a legal mandate to pursue only social benefit. This analysis explains how transitioning from for-profit to not-for-profit forms of business might change some of the most problematic dynamics of the economy, allowing for post-growth transformations. A brief discussion of the possible shortcomings of a not-for-profit economy is also offered. Keywords: Not-for-profit business, nonprofit enterprise, for-profit business, relationship-to-profit, post-growth, degrowth, economic growth, sustainability, sustainable econom
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Fit for purpose? Clarifying the critical role of profit for sustainability
Jennifer B. Hinton1
Stockholm University, Sweden
Université Clermont-Auvergne, France
Abstract
This conceptual article contributes to the post-growth strand of political ecology literature, which seeks to find
sustainable ways of organizing the economy that do not require economic growth. It explores the idea that
transitioning to post-growth societies requires a transition in the relationship-to-profit of business. I first
conceptualize relationship-to-profit as the intersection of purpose, investment, and ownership of firms.
Specifically, for-profit business structures entail a financial gain purpose, private ownership, and unlimited
returns on investment; whereas not-for-profit business structures have a social benefit purpose, collective
ownership, and limited returns on investment. I then outline ideal types of for-profit and not-for-profit
economies, based on the differences between these two kinds of relationship-to-profit. The first ideal type shows
how the for-profit business structure drives consumerism, economic growth, and ecological harm, as well as
inequality and political capture, preventing post-growth transitions. These dynamics might be slowed down by
businesses that seek to balance private financial gain with social benefit (known as dual-purpose businesses).
The second ideal type describes the dynamics that might be expected in an economy consisting of not-for-profit
businesses, which have a legal mandate to pursue only social benefit. This analysis explains how transitioning
from for-profit to not-for-profit forms of business might change some of the most problematic dynamics of the
economy, allowing for post-growth transformations. A brief discussion of the possible shortcomings of a not-
for-profit economy is also offered.
Keywords: Not-for-profit business, nonprofit enterprise, for-profit business, relationship-to-profit, post-
growth, degrowth, economic growth, sustainability, sustainable economy
Résumé
Cet article conceptuel contribue au volet post-croissance de la littérature en écologie politique, qui cherche à
trouver des moyens durables d'organiser l'économie qui ne nécessitent pas de croissance économique. Il explore
l'idée que la transition vers des sociétés post-croissance nécessite une transition dans la relation au profit des
entreprises. J'ai d'abord conceptualisé la relation au profit comme l'intersection du «sens du but», de
l'investissement et de la propriété des entreprises. Plus précisément, les structures commerciales à but lucratif
impliquent un objectif de gain financier, la propriété privée et un retour sur investissement illimité; tandis que
les structures commerciales à but non lucratif ont un objectif d'avantages sociaux, de propriété collective et de
retours sur investissement limités. J'expose ensuite les types idéaux d'économies à but lucratif et sans but
lucratif, en fonction des différences entre ces deux types de relation au profit. Le premier type idéal montre
comment la structure commerciale à but lucratif stimule le consumérisme, la croissance économique et les
dommages à l'environnement. En outre, il crée des inégalités et la capture par les intérêts politiques, empêchant
les transitions post-croissance. Cette dynamique pourrait être ralentie par les entreprises qui cherchent à
équilibrer les gains financiers privés et les avantages sociaux (appelés «entreprises à double usage»). Le
deuxième type idéal décrit la dynamique qui peut être attendue dans une économie composée d'entreprises à
but non lucratif, qui ont un mandat légal de rechercher uniquement des avantages sociaux. Cette analyse
1 Jennifer B. Hinton, Stockholm Resilience Centre, Stockholm University, Sweden and Centre for Studies and Research in
International Development, Université Clermont-Auvergne, France; Email: Jennifer.hinton "at" su.se. Acknowledgements:
Thanks to my supervisors Sarah Cornell, Arnaud Diemer, and Wijnand Boonstra, as well as colleagues who gave me
feedback on drafts (especially Timothée Parrique, María Mancilla García, and David Collste). Thanks to the three reviewers
for giving very constructive feedback. Funding is acknowledged from the Marie Sklodowska Curie Fellowship Action in
Excellent Research (grant agreement no. 675153).
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Journal of Political Ecology Vol. 27, 2020
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explique comment le passage de formes commerciales à but lucratif à des organisations à but non lucratif
pourrait changer certaines des dynamiques les plus problématiques de l'économie, permettant des
transformations post-croissance. Une brève discussion des lacunes possibles d'une économie à but non lucratif
est également proposée.
Mots-clés: entreprise sans but lucratif, entreprise à but non lucratif, entreprise à but lucratif, relation avec le
profit, post-croissance, décroissance, croissance économique, durabilité, économie durable
Resumen
This conceptual article contributes to the post-growth strand of political ecology literature, which seeks to find
sustainable ways of organizing the economy that do not require economic growth. It explores the idea that
transitioning to post-growth societies requires a transition in the relationship-to-profit of business. I first
conceptualize relationship-to-profit as the intersection of purpose, investment, and ownership of firms.
Specifically, for-profit business structures entail a financial gain purpose, private ownership, and unlimited
returns on investment; whereas not-for-profit business structures have a social benefit purpose, collective
ownership, and limited returns on investment. I then outline ideal types of for-profit and not-for-profit
economies, based on the differences between these two kinds of relationship-to-profit. The first ideal type shows
how the for-profit business structure drives consumerism, economic growth, and ecological harm, as well as
inequality and political capture, preventing post-growth transitions. These dynamics might be slowed down by
businesses that seek to balance private financial gain with social benefit (known as dual-purpose businesses).
The second ideal type describes the dynamics that might be expected in an economy consisting of not-for-profit
businesses, which have a legal mandate to pursue only social benefit. This analysis explains how transitioning
from for-profit to not-for-profit forms of business might change some of the most problematic dynamics of the
economy, allowing for post-growth transformations. A brief discussion of the possible shortcomings of a not-
for-profit economy is also offered.
Keywords: not-for-profit business, nonprofit enterprise, for-profit business, relationship-to-profit, post-
growth, degrowth, economic growth, sustainability, sustainable economy
1. Introduction: the overlooked possibility of a not-for-profit market economy
Given the magnitude of the global ecological crisis, it has become clear that aggregate economic activity
must decrease in order to minimize environmental pressures (Parrique et al. 2019). Yet, this downsizing of the
global economy must happen alongside the fulfillment of human needs. How can the economy be organized in
ways that allow for the fulfillment of every person's needs while also fitting within the ecological limits of the
planet? Political ecology research has an essential role to play in analyzing the power relations that maintain
and drive the dominant growth-based economic system, as well as developing alternative pathways that promote
social and environmental justice (e.g. Hornborg 2017; Paulson 2017; Trainer 2019).
Growth-critical scholars have identified profits, competition, and capital accumulation as important
drivers of economic growth and inequality (Magdoff and Foster 2011; Richters and Siemoneit 2017). When
companies seek to maximize profit, they tend to expand production and prompt more consumption through
advertising and, in this way, profit-seeking drives economic growth and environmental damage (Jackson 2017:
109, 140; Kallis 2018; Varey 2010). Global market concentration and competition among transnational
corporations exacerbates this destructive growth dynamic (Foster 2014; Korten 2001). As such, these scholars
point to the need for businesses to move away from profit-maximization. However, there is not a clear
articulation of the structures that might be keeping these dynamics in place. Paech (2014) mentions private
equity-based investment driving the need for businesses to generate profit, which in turn drives economic
growth. Paech also mentions that alternative corporate forms like cooperatives, foundations, and non-profit
organizations can diminish structurally-driven expectations for profit, and thus also assuage the growth
imperative (Ibid). However, he leaves his audience wondering how and why this might be the case.
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If the profit-driven nature of firms is an important driver of economic growth, environmental damage,
and inequality, then post-growth2 research should dedicate some analysis to how non-profit-driven types of
business might change the dynamics of the market.3 Upon searching for literature that gives a more in-depth
analysis of business from a post-growth perspective, I found Bocken and Short (2016), Gebauer (2018),
Johanisova et al. (2013), Khmara and Kronenberg (2018), Schaeffer et al. (2015) and Upward and Jones (2016).
Yet, all of these approaches take for granted the orthodox economic assumptions that:
firms are financially self-interested actors;
firms are (or must be) privately owned; and
making money is the main aim of business.
The underlying assumption is that the market is necessarily driven by profit.
There is, however, a body of literature that explores not-for-profit forms of business.4 These types of
business exist only to deliver social benefit, have no private owners, and must use all financial surplus for social
benefit (Roeger et al. 2012; Salamon and Anheier 1997; Salamon et al. 2013).5 They have another kind of
relationship to profit, which entails a different approach to purpose, investment, and ownership. Bridging the
scholarship on not-for-profit business and post-growth transformations, Maclurcan and I (Hinton and
Maclurcan 2016; Hinton and Maclurcan 2017) have argued that a market of not-for-profit businesses might
better allow for a post-growth economy because there would be a better circulation of wealth and no systemic
pressure to produce and consume more in order to deliver profit to owners.
This article explores whether transitions to post-growth societies require a parallel transition to not-for-
profit forms of business. In the analysis below, I will offer a conceptualization of the distinction between for-
profit and not-for-profit forms of business as 'relationship-to-profit.' I will then describe and compare two ideal
types of economies based on the difference in the relationship-to-profit of business.6 In doing so, I use a systems
analysis approach to identify and describe key feedback loops that drive the behavior of the economy. The first
ideal type is that of a for-profit economy, composed of for-profit businesses. Driven by financial gain, they
strive to deliver unlimited returns on equity-based investment to private owners who have financial rights to
profit. The second ideal type is a not-for-profit economy in which all businesses aim to achieve social benefit,
have no private owners, and must direct all profit to their social benefit mission. I will be discussing the
implications of relationship-to-profit for economic growth, economic equality, and environmental integrity, and
give evidence to support why these claims are plausible. In doing so, this article builds bridges between
different, but synergistic, fields of study including: political ecology, post-growth economics, Eco-Marxian
scholarship, organizational theory, sustainable business literature, and nonprofit studies.
2 I use the term 'post-growth' rather than 'degrowth' because I see the latter as a subset of a larger post-growth perspective,
which includes growth-critical scholarship that is not necessarily associated with the degrowth movement, such as Tim
Jackson's Prosperity without growth (2009); Kate Raworth's Doughnut economics (2017); and Peter Victor's Managing
without growth (2008), as well as much eco-Marxian literature.
3 I define 'market' as the meeting of people for the purpose of selling and buying goods and services (Oxford Dictionary
online, market entry).
4 I define 'business' as an entity that sells goods or services, in line with the Oxford Dictionary's definition as "a commercial
operation or company" with commerce being defined as "the activity of buying and selling" (Oxford Dictionary online,
business entry and commerce entry).
5 Johanisova et al. (2013) refer to Salamon et al.'s work, but choose not to focus on the legal distinction between for-profit
and not-for-profit – instead favoring 'not-for-profit' and 'not-only-for-profit' business (the latter is still for-profit in legal
terms). In grouping not-for-profit and not-only-for-profit companies together, they ignore the legal differences between
these organizational forms, which either allow for or do not allow for the pursuit and distribution of profit for the enrichment
of private owners - a distinction which I argue in this article has critical ramifications for the aggregate economy.
6 The terms 'organizational form', 'legal type', 'profit-orientation', 'regulatory form', 'legal category', 'organizational type',
and 'organization orientation' have also been used by authors in various fields to refer to the distinction between for-profit
and not-for-profit firms.
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2. Conceptualizing 'relationship-to-profit'
To better understand how the 'relationship-to-profit' of companies might impact sustainability issues, we
first need a broader conceptualization of the firm that allows for the inclusion of not-for-profit types of business.
It is commonly assumed that all businesses are for-profit, but there is a growing body of research about the role
of enterprising nonprofits and social enterprises as a relatively new kind of actor in the market. This research
has shown that not-for-profit businesses exist and can be found in diverse geographies and sectors of the
economy (e.g. Borzaga and Tortia 2007; James and Rose-Ackerman 1986; Roeger et al. 2012 and Salamon et
al. 2013).
Not-for-profit (hereafter NFP) businesses differ from their for-profit (FP) counterparts in that they have
a social benefit purpose (which can include environmental missions) and all of their profit7 must be used to
achieve their mission. This means that there can be no private distribution of profit known as the 'non-
distribution constraint' (ICNL 2013).
Maclurcan and I (Hinton and Maclurcan 2016; Hinton and Maclurcan 2017. distinguish between not-
for-profit businesses and traditional not-for-profit organizations in that NFP businesses generate more than half
of their revenue through the sale of goods and services and seek to be financially self-sufficient through trade;
while traditional not-for-profit organizations rely mostly or wholly on philanthropy, grants, and donations.
Some examples of NFP businesses mentioned in Hinton and Maclurcan (2017) include: Wikispeed (a car
manufacturing company in the U.S); Zenman Energy (a solar power plant designer in the U.S); Glas Cymru (a
water works company in Wales); and BRAC (a large organization that operates banks, food processing plants,
renewable energy infrastructure, professional print and copy shops, and department stores in order to fund
educational programs and provide healthcare services to rural populations in Bangladesh).8 Based on this
definition, the term 'NFP business' can include a wide variety of firms, such as mutual insurance companies,
commercial foundations, state-owned companies, commercial associations, credit unions, many social
enterprises, and nonprofits that do business (Borzaga and Tortia 2007; Hinton and Maclurcan 2016).9
Thus, relationship-to-profit refers to the difference between not-for-profit and for-profit firms, and can
be conceptualized as the nexus between three key elements of any business: purpose, investment, and ownership
(Figure 1).
Purpose
In legal terms, the purpose of a business can be: financial gain for owners, social benefit, or both financial
gain for owners and social benefit10 (Reiser and Dean 2017). Because NFP businesses are such a new actor in
7 Profit here refers to the financial surplus that remains from total revenues after business expenses have been paid. This is
what accountants and micro-economists call 'total profit', 'accounting profit', 'operating profit' or 'net income', which is the
surplus revenue left over after variable costs and fixed costs (including product inputs, payroll, debts, rent, and utility
payments. have been covered (Boyte-White 2018). This is the surplus from which dividends to owners are distributed. It
only refers to explicit costs and excludes opportunity costs. There is a common misunderstanding that employees are paid
from profits. This is only true in the case of bonuses and dividends, but wages and salaries are considered business expenses
and are thus accounted for before profit is calculated.
8 For more examples, see Hinton and Maclurcan (2016: 34-68).
9 Consumer cooperatives can also be considered NFP businesses. Their social benefit purpose is to provide accessible, high-
quality products to their customers and any profit they make goes back into their mission. If they distribute some of the
profit to their customers at the end of the year, it is better characterized as a refund on some of the purchases the customers
have made, rather than a dividend. Members of a consumer cooperative will not take more money out of their cooperative
than they pay in. Worker cooperatives, however, would fit better into the for-profit category, because they are allowed to
privately distribute profit to the worker-owners and, unlike consumers, the workers are expected to take more money out of
the business than they put in, which can lead to private inurement. Producer cooperatives might be FP or NFP, depending
on whether their producer-members are FP or NFP firms themselves. A dairy producer cooperative, for instance, might be
made up of for-profit dairy businesses or NFP dairy businesses.
10 There can be a lot of diversity in the way a business articulates its purpose, but all purposes would fit into one of these
two categories. The purpose of providing livelihoods or earning a living is inherent in all businesses, whether for-profit or
not-for-profit. The NFP framework allows for a living wage for employees but not passive income for owners, whereas the
FP framework allows for both.
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the economy, it is only recently that scholars even began thinking about the legal purpose of business.
Traditionally, it has been assumed that all firms exist to deliver returns to investors (e.g. Walker 2017). Any
business that delivers profit to owners or intends to do so, whether in the short- or long-term, is legally
considered as having a financial gain purpose and is, thus, for-profit11 (Salamon 2010). For-profit legal
frameworks allow for the purpose of private financial gain. This is not to say that all for-profit firms see profit
as their main aim, but they all have the right to. As such, a number of for-profit companies do see financial gain
as their main purpose their bottom line.
Figure 1: Relationship-to-profit of business.
In contrast, NFPs can only have a social benefit purpose and must direct any profit into achieving social
benefit (ICNL 2013; Salamon 2010). This constraint is in place to ensure that the social mission is not disrupted
by the pursuit of private wealth. In legal terms, NFP businesses can only use profit as a means to achieving
social benefit, while for-profit businesses can pursue profit as an end in itself. When it comes to legal
frameworks, social benefit is defined by local laws or policies, but around the world these definitions tend to
include a wide variety of goals (Salamon et al. 2013), such as providing: healthcare, rehabilitative support,
professional training, childcare, education, a place for community gatherings, healthy or sustainable products,
as well as protecting animals and wilderness.
Investment
Investment is another important aspect of relationship-to-profit. There are three broad categories of
investment in business: equity-based (e.g. shares)12, debt-based (e.g. loans and bonds), and donation-based
11 Some FP businesses act in a more profit-hungry way than their peers, but this study seeks to better understand the effects
of relationship-to-profit on the sustainability of the economy, so these differences in strategy are ignored.
12 The term 'equity' here refers to the monetary value of ownership shares in a firm. This can refer to any kind of shares of
ownership, including in a publicly traded company, a worker cooperative, a partnership, or family-owned business. A not-
for-profit entity can hold equity in a business.
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investment (e.g. subsidies, grants and philanthropy) (Ojong 2015).13 For-profit frameworks allow for all three
kinds of investment. Not-for-profit businesses can only take debt- and donation-based investments, but due to
the non-distribution constraint, they cannot accept equity-based investment (Reiser and Dean 2017).
This has important consequences for how a business uses its resources, in terms of whether financial
returns on investment are unlimited, limited, or non-existent. Donation-based investment has no returns. Debt-
based investment involves returns limited to the percentage of interest on the debt and there are no further
returns after the principal and interest have been repaid. Equity-based investment, on the other hand, has no
limits. In theory, a for-profit business could pay dividends as a return on investment to its owners at as high a
sum as its managers deem viable, for as long as it operates.
The different kinds of investment are tied to the purpose of the business. Equity-based investment in for-
profit companies is in service of the purpose of delivering financial gain to owners that is why it is unlimited.
Debt-based investment can be in service of the purpose of financial gain for lenders or in service of the purpose
of social benefit, depending on how it is done. Donation-based investment is typically done in service of a social
benefit purpose that is why there is no expectation of a return. In fact, it is exactly because investment is tied
to purpose that NFPs cannot take equity-based investment. If they could offer unlimited returns to private
owners, then they would, at least in part, be serving the purpose of private financial gain.
Ownership
When it comes to ownership, for-profit frameworks involve private ownership by individuals or by other
companies, in which equity gives owners the right to take money and assets out of the business, known as
'financial rights' (Palmiter 2003).14 This is clearly in service of the financial gain purpose. Not-for-profit
frameworks are more accurately described as having a form of collective ownership, wherein individuals (such
as managers. can have control rights, but no financial rights.15 Here I use Stein's definition that collective
ownership is the situation in which "all rights are vested in an undivided collectivity", whereas private
ownership is a situation in which "divided rights are vested in individuals'"(1976: 299).16 Collective ownership
then means that managers have control rights (the right to make decisions on behalf of the organization) but not
financial rights. In private ownership, however, there are private financial rights, and so the control rights and
financial rights often overlap (e.g. a manager owning shares or an owner making management decisions). This
lack of private financial rights in NFP business relates to the fact that no profit can be privately distributed
because the firm exists to deliver social benefit, not financial gain (James and Rose-Ackerman 1986). Table 1
shows the key differences between for-profit and not-for-profit.
Let us articulate the three aspects together (Figure 2). Every business starts with a legal purpose, which
can be financial gain and/or social benefit. The entrepreneurs decide whether to use a for-profit or not-for-profit
framework17, which determines the form of ownership. The relationship-to-profit of the legal framework
determines the kinds of investment the business can take and the ways in which it can use its financial surplus
after operating expenses are paid. If it is FP, it can distribute the profit to owners, reinvest it in the business, or
use it for social benefit; whereas if it is NFP, it can only reinvest the profit or use it for social benefit. Of course,
13 Ojong (2015. also refers to membership fees as its own category. Many companies pre-sell their goods and services in
order to raise capital, but this is just another form of debt-based investment because the business has an obligation to pay
the investor back in the form of products or services in the future (such as a year-long membership).
14 These rights have also been called rights to surplus/profit (e.g. Grossman and Hart 1986). Such rights usually include the
rights to transfer and liquidate the equity (Palmiter 2003).
15 Not-for-profits can own other NFPs, but a FP can never own an NFP. On the other hand, an NFP can own an FP subsidiary
that delivers all of its profit to the NFP owner(s), which then must use those resources for their social benefit mission.
16 Although some scholars conceptualize NFPs as having no ownership (e.g. Young 1982). I chose to use the concept of
collective ownership. This definition includes both financial rights and control rights, the latter of which are important for
envisioning alternative economic systems. If I were to choose the concept of no ownership, then I would be restricting the
definition of ownership to financial rights.
17 Important to note here is that entrepreneurs are not always aware of their legal framework options and sometimes choose
the most familiar or convenient framework, regardless of whether it best aligns with their intentions for the business
(Hillman et al. 2018).
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decision-making, leadership, and strategies vary from firm to firm, but the differences in relationship-to-profit
guide and constrain business strategies and behavior.
Relationship-to-profit
For-profit
Not-for-profit
Purpose Financial gain for owners and
possibly social benefit Social benefit
Investment Equity-, debt-, or donation- based
with private financial rights
Debt- or donation-based with no
private financial rights
Ownership Private Collective
Table 1: The three key differences in relationship-to-profit.
The guiding and constraining principles of the NFP framework (i.e. having a core social benefit mission,
no private financial rights, paying limited or no returns on investment, and having to use all surplus for social
benefit. means there is good reason to explore how these features might create different system dynamics than
the for-profit economy, especially with regards to political ecology issues like economic growth, inequality,
and environmental impact.
Figure 2: Purpose, investment, and profit in business.
3. The sustainability implications of a for-profit economy
This section analyzes three problematic reinforcing feedback loops that could be expected in a for-
profit economy: consumerism, inequality, and political capture.18 I limit this analysis to the minimal number
of variables needed to explain the most direct links between the relationship-to-profit of business and the
sustainability issues listed above.
Consumerism and growth
It is often assumed that profit-seeking leads to economic growth through investment in production and
innovation (e.g. Jones 2018; Krugman and Wells 2018). In such an economy, entrepreneurs strive to generate
profit (propelled by the so-called profit motive. so as to reinvest it in production and innovation.19 Profit can be
increased in three main ways, by: increasing revenue per item, decreasing costs per item, or increasing the
number of items sold. High levels of growth, profitability, cashflow, revenue, and market share are considered
signs of a successful for-profit business, and that is what managers and owners seek (Penrose and Pitelis 2009).
18 These issues were outlined to some extent in Hinton and Maclurcan (2016: 78-99; 109-114). This article offers a deeper
analysis, with a clearer conceptualization of relationship-to-profit and the way in which purpose, ownership, and investment
interact to shape the economy's dynamics.
19 This analysis is meant to stay at a generalizable level, so 'production' refers to any variety of goods and services.
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Profit is also seen as the financial reward for taking the risks of investment (Knight 1921). The more sales that
are made, the more profit will be generated, and a greater return on investment will be delivered to owners (in
the short-, medium-, or long-term).20
The more money the owners receive, the more money they are willing and able to invest in firms, with
the expectation of a return on investment (Krugman and Wells 2018). One report of a survey of over 2,000
American millionaires found that the current net worth of individuals (at the time of the survey) corresponded
with the amount of wealth they aspired to have amassed in the future - higher net-worth individuals aspired to
have more total wealth than lower net-worth individuals (UBS 2015). The study also describes this constant
seeking of more wealth as a treadmill that rich individuals feel they cannot dismount, due to costly lifestyles,
feelings of financial insecurity, and social pressure (Ibid). Another effect of more profit, aside from increased
dividends going to owners, is that managers will reinvest more money in firms' production in order to generate
even more sales and profit (Penrose and Pitelis 2009). Figure 3 illustrates this feedback loop of the profit-motive
leading to more investment, production (and innovation, sales, profit and dividends, which in turn increases the
profit motive.21,22
If there were no demand for products, however, then investment and innovation would not necessarily
boost sales. So, businesses use advertising in order to attract customers (Brierley 2005; Varey 2010). It follows
that one can expect that more advertising will lead to more sales, which translates into rising GDP (i.e. economic
growth, Jackson 2017).
All production, use, and disposal of goods and services entails some degree of environmental impact, as
researchers in the fields of ecological economics (Daly 1996), ecological Marxism (Magdoff and Foster 2011),
bioeconomics (Georgescu-Roegen 1971) and degrowth (Hickel and Kallis 2019) have described.23 Therefore,
more production and sales entail increased environmental impact. Figure 4 illustrates advertising's effect on
demand and the impacts of production and sales on environmental damage.
Planned obsolescence is another prominent profit-seeking strategy that many companies use to sell more
items, which has an important impact on economic growth and the environment (Guiltinan 2009; Jackson 2017).
Planned obsolescence refers to consumer goods being designed to break down or seem outdated earlier than
necessary in order to prompt consumers to buy new products and services (Guiltinan 2009).
Examples of products that are commonly designed to become obsolete include so-called 'fast fashion',
textbooks, lightbulbs, many single-use or disposable products, and electronic products like printers, laptops and
mobile phones.24 The more planned obsolescence there is in the economy, the more people buy products and
services to replace those that have become obsolete (Cooper 2004, 2005; Guiltinan 2009; Kuppelwieser et al.
2019). The further sales there are due to short product-life and perceived obsolescence, the more harm is done
to the biosphere, through production and disposal (Pope 2010; Rivera and Lallmahomed 2016). Also, increased
sales reap greater amounts of profit, which leads to larger dividends going to owners. Managers will also tend
to invest in more advertising and planned obsolescence to deliver profits if they have proven to be successful
20 'Owners' include anyone holding equity in the business, such as partners and shareholders.
21 If you are unfamiliar with causal loop diagrams, it is important to note that + refers to a positive causation between two
variables (i.e. more of X causes more of Y, or less of X causes less of Y than what would have otherwise been the case),
and indicates a negative causation (i.e. more of X causes less of Y, or less of X causes more of Y). 'R' indicates a reinforcing
feedback loop, wherein the variables continue to grow or to decline, typically at an increasingly rapid rate. 'B' indicates a
balancing feedback loop, which creates goal-seeking behavior in an effort to maintain a desired level of a certain variable.
I will use orange to designate new variables and causal connections as I build up to a more complex diagram of the system.
22 In this article's diagrams, 'Production' refers to production of existing goods and services, but also the innovation and
offer of new ones. 'Sales' can also be interpreted as consumption.
23 Firmly grounded in a post-growth perspective and using the precautionary principle of ecological economics, this analysis
takes the assumption that absolute, long-term decoupling of economic activity from environmental pressures on the global
scale can only happen to a limited extent, so an increase in the sale of goods and services will always have more
environmental impact (Daly 1996; Jackson 2017; Parrique et al. 2019).
24 The fact that planned obsolescence is an increasing problem in the global economy is evidenced by the growth of
consumer movements, like the international 'Right to Repair' movement, and even national laws to counter planned
obsolescence, as in France (Khaleeli 2015).
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strategies. On the aggregate level of the economy, there will be an increase of all of these variables as long as
they successfully satisfy the purpose of the market: to deliver returns on investment.
Figure 3: Feedback of financial gain purpose, investment, and production
In summary, economic growth and profitability depend to a large degree on maintaining and spreading
the culture of consumerism25 (Schor 2004). If the above chain of logic is correct, then profit-motivated
investment drives three main reinforcing feedback loops that contribute to consumerism; the loops of
production, advertising, and planned obsolescence (depicted in Figure 5). In these ways, profit-seeking
companies drive growth in sales and economic output (measured as profit and GDP) which in turn drives
environmental damage. Without significant balancing factors, reinforcing feedback dynamics like these result
in patterns of exponential growth over time. These system dynamics can be seen empirically in the exponential
growth of economic activity, consumption of resources, and ecological damage over the last century or so. This
is what Steffen et al. (2015) call the 'Great Acceleration.' 26
Figure 4: Advertising fuels demand and environmental damage.
25 Consumerism is defined as "the preoccupation of society with the acquisition of consumer goods" (based on Merriam-
Webster's entry for 'consumerism', 2019).
26Aside from the environmental impacts of consumerism, there are also high social costs, such as the weakening of social
ties, low self-esteem, and a general decline of wellbeing (Dittmar et al. 2014; Kasser and Kanner 2004).
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Figure 5: Feedback loop of consumerism.
Inequality
Although economic inequality and environmental problems are often treated as separate issues, eco-
Marxian literature is quick to point out that both issues are a result of the way in which the global economy is
currently organized (e.g. Magdoff and Foster 2011). The following section shows how, in addition to driving
economic growth and ecological deterioration, the for-profit economy also exacerbates inequality (Hinton and
Maclurcan 2016). Three different reinforcing loops contribute to growing levels of inequality in this for-profit
ideal type of economy. The first is the loop of private accumulation of profit; the second is market concentration;
and the third is the stagnation of wages.
In orthodox economic theory, the long-term stability of for-profit markets relies on owners reinvesting
most or all of their returns back into production, which should create more jobs and income for workers. This
would still be bad for the biosphere, but it would at least not systematically create inequality. However, this is
not what happens in reality. Owners' desire for financial gain drives them to reinvest enough profit to make
more money, but it also compels them to save and accumulate a large portion of their income. For instance, one
study found that high net-worth individuals save 27% of their wealth as cash and bank deposits and about 17%
of their income is invested in real estate (often seen as a form of saving) (Capgemini 2018). Of the amount
invested in equities (31%) and fixed income (16%) (Ibid), only a relatively small amount goes to investment in
businesses via initial public offerings or further stock issuance, whereas most of it goes into financial
speculation rather than production (Lazonick, 2018: 119). Over time, these owners are able to accumulate
wealth, which enables them to buy even more shares in the same or other businesses and, thus, accumulate even
more money27 (Hinton and Maclurcan 2016). Furthermore, the richer a person is, the higher the rates of return
on capital they will receive, because the super-rich can afford sophisticated wealth management services
(Picketty 2014).
These dynamics of accumulation and concentration are evidenced by the fact that, in the past three
decades in the US, dividends have increased as a proportion of corporate profits (Lazonick 2018: 117). It is also
clear in income tax data. For those in the richest tax brackets in the US in 2012 (those with annual incomes of
27 In the year 2012 in the US, for the 99% of tax filers with incomes of less than US$500,000, more than about 75% of their
income came from salaries and wages, whereas salaries and wages only made up 38% of total income for taxpayers with
incomes between US$1 and US$5 million, and only 18% of income for taxpayers with incomes above US$10 million
(Austin and Williams 2015).
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US$5 million or more) capital gains28 were the largest source of income, closely followed by business income29,
interest, and dividends (Austin and Williams 2015). This trend is also reflected in the UN's International Labor
Organization (ILO) and OECD statistics, showing that larger profit shares in high-income economies have often
not led to more investment (ILO 2016).
In short, owners invest to get more out than they put in. Over time, successful investors do not have to
invest more, because the shares they already own naturally increase their wealth by a certain amount every year,
so they can accumulate money whether they reinvest or not. This strengthens the power of the reinforcing
feedback loop of wealth accumulation (as shown in Figure 6). The economist Thomas Hungerford found this
process operating in the US., where capital gains and dividends through business ownership have been the
greatest contributing factor to inequality (Hungerford 2011). There is no reason to think this would not be one
of the most significant contributors to inequality in other countries as well (for instance, the burgeoning
billionaires in Europe, Australia, China, Brazil, and India).
Figure 6: Feedback loops of accumulation and concentration of wealth. Two dashed lines across
an arrow indicates a delayed causation; a causal relationship that takes more time to play out
than the other relationships in the diagram.
Although competition is often thought to be one of the best ways to keep businesses from growing out
of proportion, there is an incentive for for-profit firms to grow big enough to not have to worry so much about
competition. Becoming large ensures survival and ongoing financial gain for owners. This growth-imperative
can easily lead to the concentration of market share in the hands of a relatively small number of firms30 (Foster
2014). Larger firms also have significant advantages in the market. They are better able to profit from economies
of scale31 and mergers and acquisitions of other companies, have high visibility to both consumers and
investors, and more investment due to greater levels of (perceived) profitability (Penrose and Pitelis 2009).
Big companies have more resources to improve the reach and quality of their marketing. Brand visibility
and familiarity can be enhanced via advertising, the shopping environment, product packaging, product
placement (including shelf-visibility, which has been linked to increasing impulsive shoppingFlamand et al.
2016), and on-the-spot promotion. All of these tactics make the brand more salient in consumers' minds (so-
28 'Capital gains' refers to profit made from the sell or trade of assets, such as stocks, bonds, and property.
29 'Business income' refers to income gained from owning a business or being a sole proprietor.
30 Penrose and Pentelis (2009). point out that there are two different ways to measure industrial or market concentration:
inequality of size distribution (that is, how many firms are small compared to large in the market - a relative measure) or
absolute concentration (how much of the total production, employment or assets is concentrated in just a few firms). I prefer
absolute concentration as measured by total production and assets, as the number of small firms can be misleading when it
comes to the concentration of wealth and power among a few giant firms.
31 Economies of scale refers to how large firms are often able to save costs due to efficiency gains.
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called "brand awareness" (Aaker 1996), increasing brand loyalty and influencing consumer decision-making
during the shopping experience (Huang and Sarigöllü 2012). Because consumers often buy products that they
already know (Huang and Sarigöllü 2012; Penrose and Pitelis 2009), it means that large companies will have a
significant competitive advantage in capturing market share. Increased market share can also have a positive
effect on further investment, because companies that have captured a large share of the market are perceived as
more steadily profitable by investors.
Not only are large firms typically more cost-efficient, powerful, and visible, but they can also create
barriers to entry for smaller firms. These barriers include the power of large firms over technology, raw
materials, special relationships with distributors, and the ability to threaten price wars (Penrose and Pitelis
2009). In this climate, it becomes ever-more difficult for smaller firms to compete and it is often in their interest
to sell out to big firms (Ibid).
Over time, without significant balancing factors, such a market will become increasingly concentrated
(as shown in Figure 732). The higher the concentration of the market, the more severe the effects of these
feedback loops are. These dynamics might explain the empirical evidence of the consolidation of the market in
the hands of fewer and fewer transnational firms, in most sectors of the global economy (e.g. Bajgar 2019;
Brancaccio et al. 2018; Folke et al. 2019). The OECD Employment Outlook 2018 describes it as "winner-takes-
most" dynamics: "the process through which the most productive firms capture an overwhelming share of the
market" (OECD 2018: 60). Especially notable is the trend in transnational mega-mergers and acquisitions, in
which two extremely large multinational companies merge (such as Bayer's acquisition of Monsanto and
Nestlé's partial acquisition of L'Oréal in recent years). In a profit-seeking system, these mega-corporations are
perceived as successful, despite the unsustainable dynamics that led them to that 'success' and allow them to
maintain it. Therefore, rather than being a key cause of economic growth, market concentration (along with
growth) is an outcome of the for-profit economy.
The high levels of market concentration are accompanied by the concentration of ownership, as seen in
the global data provided by Brancaccio et al. (2018) and Vitali et al. (2011); as well as the concentration of
wealth among a relatively small number of owners, as seen in the global data presented by Fuentes-Nieva and
Galasso (2014) and Alejo Vázquez Pimental et al. (2018). In other words, the richest owners own the biggest
companies, which are taking an ever-larger share of the market, making the richest owners even richer.33 This
is what Karl Marx called the attraction of capital to capital (Foster 2014). If the above chain of logic is correct,
then it is no coincidence that the majority owners of the largest and oldest companies in the world are also
among the richest people in the world, as Kroll and Dolan show (2019).
As owners accumulate more wealth, inequality will rise unless workers' wages increase enough to let
them save at least at the same rate as the owners. However, because labor is a key factor of production for most
companies, it is also a key cost. That is why keeping wages low is seen as a cost-cutting strategy for companies
pursuing profit (Schnaiberg et al. 2002). When their goal is to generate returns on investment, it is rational for
companies to keep the wages of their employees as low as they can. This can be seen in the fact that wages in
middle- and low-income brackets have been declining or stagnating over the last few decades in many OECD
countries (OECD 2018. and the International Labour Organization says that 'wage stagnation characterizes the
global economy as a whole' (ILO 2016: 85).
Of course, wage suppression might be limited in places with strong trade unions or with strongly-
enforced minimum wage policies. Yet, it is also in the interest of profit-seeking owners to discourage union
membership (known as union busting. (Logan 2006; Royle 2008; Schnaiberg et al. 2002). And high-skilled
workers often have more success in negotiating better wages than low- and medium-skilled workers, who are
more easily seen by companies as replaceable. Globally, the high-skilled labor share of total global income
32 Note that this causal loop diagram is different from the diagram of the for-profit ideal type that has been developed in
preceding figures and that will be further developed in the following figures.
33 Perhaps these mechanisms of concentration would not happen if everyone started on an even playing field. However, the
only way that could happen is if everyone were an owner and even then, some investments would be more profitable than
others, which would result in inequalities that lead to these dynamics over time (assuming investment is guided by
profitability).
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increased from 1995 - 2009, while that of middle- and low-skilled labor decreased during that same period (Dao
et al. 2017). Low- and middle-skilled labor composed the vast majority of hours worked in both emerging and
advanced economies, during that time (Ibid).
Figure 7: For-profit market concentration dynamics.
This situation, of increasing profits going to owners in parallel with stagnating wages, is common to
most countries (ILO 2016). Globally, labor's share of income has declined in seven of the ten major industries
tracked by the IMF: manufacturing, transportation, mining, health services, trade, financial services,
construction, and utilities (Dao et al. 2017). It has only increased in real estate, agriculture, and accommodation
(Ibid). According to mainstream economic thinking, competition between firms in the market is supposed to
keep wages high and prices low enough to maintain a fairly stable economy, but due to the market concentration
dynamics of the for-profit economy, this is not happening. As inequality rises, those in higher income brackets
have reason to be even more profit-motivated, in order to avoid the risk of falling into lower income brackets,
in which people are struggling much more to make ends meet (Wilkinson and Picket 2009; UBS 2015). Figure
8 illustrates the dual feedback loops of wage suppression and wealth accumulation that drive inequality.
Economic growth is often seen as the solution to poverty and inequality because it will provide more
jobs (e.g. World Bank 2016). However, the growth rate of the economy needs to be exceptionally high in order
to create enough jobs to counterbalance the inequality dynamics of the system (Magdoff and Foster 2011: 57-
58). And that kind of economic growth comes at a very high environmental cost.
Furthermore, economic growth does not always result in more jobs, because automation can often
increase profits by boosting efficiency and saving money on labor costs. Data collected by the OECD reflects
that this is indeed what is happening in much of the global economy (OECD 2018). Wages are growing at a
slower rate than production, because a growing amount of that production is being done by automation rather
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than workers (Ibid: 49). This can lead to a situation in which there are fewer jobs in the labor market for working
class households, even in a growing economy (Rotman 2013).34
Figure 8: Inequality feedback loops.
Political capture
The above analysis implies a need for redistributive policies to balance out these negative consequences.
However, the redistribution of wealth (via taxes, for example) is at odds with the purpose of for-profit business
to achieve financial gain. Therefore, the wealthiest firms and individuals have an incentive to use their power
and influence to push for subsidies, lower taxes, and against environmental and labor-related regulations that
would cost their firms money (Schnaiberg et al. 2002). And in an increasingly globalized economy with high
levels of market concentration, they do just that, which in turn results in greater inequality, and another vicious
feedback loop (Phillips 2017).
In their 2014 report Working for the few: political capture and economic inequality, Fuentes-Nieva and
Galasso refer to this kind of illegitimate influence on policy-making as "political capture" and describe how
inequality has been leading to more political capture on the international stage (Fuentes-Nieva and Galasso
2014). The billions of dollars-worth of lobbying that is done on behalf of corporations can alter the agenda,
priorities, and problem-solving capacities of a government (Cave et al. 2015; Drutman 2015), and more
profitable firms lobby more (Sadrieh and Annavarjula 2005). Firms involved in lobbying and other forms of
political influence have annual revenue nearly four times higher, employee sizes over three times larger, and
annual assets worth nearly twice as much as non-politically active firms in the US (Kerr et al. 2014). These are
a small proportion of firms (between 6 and 10 percent, Ibid) with a large influence, which in turn gives them
added advantages in the market. Companies and industries can also have disproportionate influence on policy-
making via campaign contributions. For instance, the richest voters have a higher degree of influence on policy-
making than middle- and low-income voters (Bartels 2008; Gilens 2012; Gilens and Page 2014). Some firms
even participate in 'revolving doors', which refers to the act of placing industry associates in policy-making (or
policy-advising) positions (Vidal et al. 2012). This, in effect, allows an industry to regulate itself.35
34 Increasing levels of household debt among low- and middle-income earners exacerbate these dynamics and might
undermine the economy in the long-term by inhibiting the levels of consumption needed to keep the economy growing
(Berisha and Meszaros 2018).
35 An extreme example of political capture happens in the form of Investor-State Dispute Settlements, which are written
into trade agreements, like the TransPacific Partnership and the North American Free Trade Agreement, in which businesses
can sue governments in private arbitration courts if they feel that a policy is having a negative impact on their profits (BEUC
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High net-worth companies and individuals can also use threats to move elsewhere in order to influence
policy in their favor. Examples of this include a large hedge fund threatening to leave Connecticut in response
to a planned surcharge on investment services (Fitch 2017) and wealthy French residents threatening to move
their money in response to the proposal for a 75% wealth tax (Alderman 2012). Powerful companies and owners
increasingly keep their money in tax havens to avoid paying taxes (Fuentes-Nieva and Galasso 2014). In
maintaining the wealth of the richest and keeping money from going to support the safety nets that governments
provide for their most vulnerable residents, tax havens further increase inequality.36
In these ways, profit-motivated political capture counteracts policies that might otherwise have a
balancing effect on the unsustainable feedback loops of inequality and consumerism described above (Figure
9).
Figure 9: Feedback loops of political capture.
As this ideal type of the for-profit economy demonstrates, the purpose, investment, and ownership
structures of business have system-wide consequences. I claim that the for-profit economy generates the
following five patterns37:
1) Profit-seeking both requires and drives growing levels of production and consumption (i.e.
economic expansion) in order to deliver increasing returns on investment to private owners.38
2) More consumption and production undermines the planet's biosphere.
3) Inequality results, as owners accumulate returns and wages are suppressed in order to cut
business costs.
2014). These settlements have proven to be a very potent tool for industries and their leading firms to make sure that policies
are not detrimental to their profits (Sinclair 2015).
36 Work done by Galaz et al. (2018) also investigates the ecological damage that is indirectly related to tax havens.
37 Schnaiberg et al. (2002) refer to some of these dynamics in their article, The treadmill of production and the environmental
state.
38 For-profit economies experiencing little or no growth are considered to be in recession. In such a situation, returns to
owners decrease, wages are further suppressed to compensate for lost profits, tax income for the state decreases, and if this
goes on long enough, jobs also disappear, which exacerbates inequality.
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4) The goal of accumulating wealth encourages aggressive growth strategies among firms in
order to reduce competition, which leads to increasing market concentration over time.
5) Owners' desire for financial gain in a context of inequality leads to political capture, which
inhibits regulations and taxes that might otherwise reduce inequality and ecological damage.
If these points hold, then consumerism, economic growth, inequality, and the tendency to destroy the
natural environment are inherent features of a for-profit economy. Therefore, poor social and ecological
outcomes are not anomalies, market failures, or externalities that just need to be internalized in the for-profit
economy. Rather, they are logical outcomes of profit-seeking strategies in a profit-driven economy. It is
therefore difficult to imagine a socially and ecologically sustainable for-profit economy, because the very
policies that could be used to make it sustainable are at odds with a key institution of the system: the desire for
financial gain. Figure 10 highlights the problematic dynamics of this ideal type of economy.
Figure 10: The three vicious cycles of the for-profit economy.
4. What about a dual-purpose economy?
In a growing response to inequality and ecological crises, many businesses are broadening their scope,
by adding social and environmental goals to their profit-seeking purpose. Businesses can work toward social
benefit goals either by using their resources to undertake socially beneficial activities themselves, or they can
fund other organizations that focus on social benefit. This funding can come from the investment streams or
profits of a business. The business can form a partnership with an NGO or charity that does socially beneficial
work (Lodsgård and Aagaard 2017). Or they can undertake corporate social responsibility (CSR) schemes and
corporate philanthropy (Kotler and Lee 2004). Some businesses add social and environmental accounting to
their financial accounting, using tools such as those developed by Economy for the Common Good (2018) and
B Corps (2018).
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Others go so far as to use a dual-purpose legal framework, such as the Benefit Corporation in the US or
the Community Interest Company limited by shares in the UK (Mair et al. 2006; Reiser and Dean 2017).39 In
these dual-purpose businesses (sometimes called 'hybrid businesses'), there are two main sources of motivation
for investment: financial gain and social benefit (sometimes called the 'double dividend'). These firms are still
for-profit, in terms of their legal framework, but have decided to operate with a dual purpose. As such, private
owners have financial rights and can receive dividends from the firm's profit, but it is expected that some profit
also goes to social benefit, or that some profit is foregone in order to achieve social benefit (Reiser and Dean
2017). The businesses described above can be described as 'triple bottom line' companies that seek to balance
"people, planet, and profit" (Elkington 1994). The scant literature that does address business from a post-growth
perspective tends to take this triple bottom line approach (e.g. Bocken and Short 2016; Khmara and Kronenberg
2018; Schaeffer et al. 2015). The economic model of these businesses uses the same dynamics seen in the for-
profit ideal type of economy, but slowed down by the socially- and environmentally-beneficial work being
done, as well as the flow of that portion of profit into social benefit instead of into owners' hands. To the extent
that social benefit is being pursued and achieved by hybrid businesses, we can expect to see balancing feedback
loops that slow down the destructive dynamics of the for-profit economy, as shown in Figure 11.40
Figure 11: Key dynamics of the hybrid economy.
A large percentage of investment would have to be put into social benefit efforts in order to counteract
the vicious cycles of consumerism, wage stagnation, and the concentration of wealth among owners that are
39 Some such legal frameworks have a distribution cap, which means that only some stated percentage of the profit can be
distributed to owners and the rest must be reinvested in the social purpose or back into the business.
40 The dynamics of the for-profit economy have been simplified in this diagram in order to more clearly show the changes
that come with the addition of social purpose.
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features of a profit-seeking economy, much less to reverse inequality and regenerate ecosystems on a global
scale (which is what is currently needed). For the same reasons that we see political capture in a for-profit
economy, it is unlikely that most profit-motivated companies and their owners would want to make that kind
of investment. This would explain why, despite a large-scale mobilization of businesses taking on social benefit
missions over the past few decades, we continue to see worsening inequality in most of the world, in terms of
interpersonal, inter-country, and intra-country inequality41 (Hickel 2017) and increasing rates of global
environmental damage (Ekins et al. 2019).
Tradeoffs between social benefit and financial gain for owners are a constant part of decision-making
in these firms. There is only so much revenue and profit that is generated each financial year for any given firm
or market. It follows that transferring a higher percentage of the profit to owners means that a smaller percentage
is available for social benefit, and vice-versa.42 Therefore, such companies want to invest enough in social
benefit to pursue a dual purpose, but not enough to negatively impact their profits. Of course, some profit might
be made up for by passing the social investment costs onto the consumer, by raising prices, or to workers, by
reducing wages (Reinhardt et al. 2008). However, this means that consumers or workers are paying for social
benefit, rather than reducing the accumulation of profit by owners. In such cases, the social benefit activities
lack much of a counterbalancing effect, if any, on the inequality dynamics of the economy.
5. Not-for-profit business as a key element of post-growth transformations?
What might the dynamics of a not-for-profit economy, composed of businesses that exist only to deliver
social benefit, look like?
Let us start with inequality. As mentioned earlier, private financial rights and equity-based investment
are not permitted in the NFP legal framework. This would eliminate the loop of owners getting richer from
unlimited returns on investment that drives many destructive system dynamics in the for-profit economy
discussed above (Hinton and Maclurcan 2016). Additionally, there is no reason to think that the purpose,
investment, and ownership structures of NFP orientation would incentivize businesses to suppress wages.
Instead, the NFP framework encourages businesses to maintain fair wages. Empirical evidence shows that NFPs
have better pay equity than FP counterparts (Ben-Ner et al. 2011; Leete 2000). There is better equality in an
economy in which a large portion of businesses exist to help disadvantaged people, in which there is no
incentive to suppress wages, and in which there are no private owners to take profits.
One potential source of inequality in such an economy is debt-based investment. However, the limited
nature of returns on debt-based investment would lead to less inequality than the unlimited returns on the equity-
based investment of the FP economy. Furthermore, all banks and lending institutions in this ideal type are not-
for-profit, so most debts and interest are repaid to NFPs, which then put profit into social benefit. Therefore,
debt-based investment in the NFP economy does not contribute to inequality as in the FP context, in which
some portion of bank profits is paid to private owners and, propelled by the profit motive, some lenders charge
exploitative interest rates. Yet, there is still a risk for debt-based investment from private individuals to create
inequality in the NFP economy. Another potential source of inequality is wage suppression. Although there is
not the same incentive to suppress wages as in FP forms of business, NFP frameworks do not necessarily ensure
fair pay for labor.
There might also still be a tendency towards market concentration, as it could be natural to invest in
larger, more visible NFP companies. However, market concentration in the NFP economy would likely not be
the result of aggressive growth strategies in order to dominate the market. Indeed, there is some evidence of a
tendency to cooperate among NFPs (Hinton and Maclurcan 2016: 156-158).
In terms of political capture, NFP firms might have a drive to grow larger or to lobby for subsidies or
favorable policies in order to better achieve their missions, but there is no direct and obvious reason that they
would want to stifle the effectiveness of redistributive taxes or labor and environmental regulations.
Furthermore, not-for-profit businesses have three layers of accountability to ensure that they use their resources
41 With the exception of China and some of East Asia (Hickel 2017).
42 This has been referred to as "sacrificing profits in the social interest" (Elhauge 2005).
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for generating social good: legal authorities, the tax agency, their board, their customers and beneficiaries, and
the wider community (James and Rose-Ackerman 1986; Reiser and Dean 2017; Salamon 2010). Thus, they can
be held accountable through social pressure, consumer preferences, and legal institutions (including the tax
agency and justice system). Whereas many FP firms are explicitly started for a financial gain purpose, so it is
difficult to hold them accountable for contributing to social and environmental wellbeing. This is particularly
difficult to do when it comes to hybrid firms. How much social benefit versus private financial gain should be
expected by the various stakeholders? What happens if different stakeholders' expectations do not match up
(e.g. those of owners and beneficiaries)?
The NFP economy could potentially have the reinforcing feedback loop of consumerism, identified
above. There is no reason to think that the NFP economy would necessarily lead to less consumerism. Yet, it
does not have the same built-in pressure to sell more items in order to deliver profit to owners. For this reason,
it is questionable whether planned obsolescence would be a trend in an NFP economy.
Another key difference is that there are balancing effects in the NFP economy due to the social benefit
nature of these businesses (as shown in Figure 12). The greater the magnitude of social and ecological problems,
the more a desire for social benefit motivates community members to invest in resolving these issues. For
instance, if there is a high level of drug abuse, resources are invested into rehabilitation programs. If there is
wild species' habitat destruction, resources are invested into protecting and rehabilitating ecosystems. As
habitats recover and as drug abuse wanes, fewer resources are directed into these areas, because there is less of
a need. In this way, money goes to where it is most needed in order to provide for social and ecological health,
because there is no underlying goal to accumulate private wealth. Large parts of the market can become a social
safety net for disadvantaged segments of the population (Hinton and Maclurcan 2016).
Figure 12: Key dynamics of the not-for-profit economy.
In this section of the analysis, I have argued that a not-for-profit 'ideal type' economy might include
consumerism, but lacks the inequality and political capture feedback loops of the FP economy. It also generates
the following four patterns:
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1) The desire for social benefit promotes investment in businesses and organizations that use
their activities and all of their profit for social and/or environmental missions.
2) There are relatively high levels of economic equality, due to the lack of private financial
rights; more equal pay differentials; a large part of the economy doing social work that helps
disadvantaged people; and the absence of political capture for private gain.
3) Redistributive taxes, environmental regulations, and labor-friendly regulations can be more
effective in the absence of systemic political capture.
4) Investment is responsive to social and environmental problems and when there are fewer
problems, there is less investment.
6. Discussion
What insights can be gained from comparing the ideal types presented above? One that emerges is that
the NFP economy contrasts so starkly to the FP economy largely in terms of what it does not do. This has very
important implications for post-growth transitions, when it comes to dealing with factors that keep the economy
locked into growth-based pathways. The absence of destructive feedback loops in the NFP economy better
allows for most policies and actions advocated by post-growth theorists, such as work time reduction, re-
localization, alternative measures of wellbeing, redistributive policies, and resource and pollution caps. Let us
take the example of a core post-growth intervention: the shift to less materially-intensive lifestyles, also called
voluntary simplicity or down-shifting (Alexander 2015).
Despite environmentalists' call for more minimalist lifestyles for several decades (e.g. reduce, reuse,
recycle), most businesses in the FP economy have continued to contribute to a culture of consumerism. One
can imagine that if businesses in an NFP economy get the signal that consumerism is bad for people and planet,
then they would not continue to push people to consume goods and services, just for the sake of increasing sales
and profit. This would allow for a post-consumerist society to emerge. If needed, environmental regulations
and taxes could also put pressure on firms to adjust their strategies, and on people to live more minimalist
lifestyles, with a lot less resistance than in an FP economy. Figure 13 shows how the minimalist lifestyle
intervention could fit within the NFP economy, generating yet another balancing effect on the system.
Likewise, the NFP ideal type allows for a non-growing or degrowing economy, whereas it is difficult to
imagine a non-growing FP economy. Without the vicious cycle of consumerism driven by the profit motive,
there could be space for people to meet more of their needs in non-monetary ways; for instance, through greater
connection with their communities and nature, and having more time to themselves.43
Higher levels of economic equality would mean there is greater ability to ensure that only socially-
beneficial and ecologically-sustainable products and services are on the market. In an economy without a high
level of pressure to consume for consumption's sake, people would likely not buy as many things (Kasser and
Kanner 2004; Schor 2004) and in a context of more economic equality, individuals do not need to work as much
to make ends meet.44 This means that they can better afford to pay prices that cover socially-and
environmentally-responsible production (which further ensures higher levels of equality, in a virtuous feedback
loop). In positioning investment, strategy, and profit in service of social benefit, rather than in service of private
financial gain, NFP business transforms the mandate of business, as opposed to broadening it (as hybrid
businesses do). When businesses are motivated to generate financial gain for owners, they can very easily run
into situations in which their strategies sacrifice social and ecological wellbeing for profit. Broadening the aims
of business does not address such tradeoffs, whereas transforming the aims of business to focus solely on social
benefit can.
43 When referring to meeting needs, I suggest Max-Neef et al.'s (1991) framework of needs and satisfiers, which
conceptualizes satisfiers of needs as infinite and contextual, but identify nine universal needs that every person has,
regardless of context: subsistence, affection, protection, understanding, participation, leisure, identity, freedom, and
creativity. Money and consumption can help meet these needs only to a limited extent.
44 These dynamics are outlined in more detail in Hinton and Maclurcan (2016: 170-181).
Hinton Fit for purpose? Clarifying the role of profit for sustainability
Journal of Political Ecology Vol. 27, 2020
256
Figure 13: A not-for-profit economy with minimalist lifestyle interventions.
That said, the NFP economy is not perfect. It has the potential for consumerism, economic growth,
market concentration, socially-focused activities that do environmental damage, and some level of inequality
due to debt-based investment and the potential for high salaries (albeit much less than the inequality produced
by the unlimited returns on investment and bonuses from profits that owners and managers can receive in the
FP economy).
In this light, the NFP economy is best seen as necessary, but not sufficient, for a healthy post-growth
economy. Many post-growth theorists advocate that businesses must be environmentally friendly, democratic,
local, and small (e.g. Khmara and Kronenberg 2018; Latouche 2006; Liesen et al. 2015). Not-for-profit
businesses tend to be smaller and more local than their FP counterparts (James and Rose-Ackerman 1986) but
aren't necessarily local and small. Nor are they necessarily environmentally conscious and democratic.
Therefore, a sustainable NFP economy would need strong institutions that push for environmental justice, re-
localization, and democratic management of business. The ethos of NFP frameworks aligns with such
initiatives.
7. Conclusions
The current economic system is quickly eroding the resilience of ecosystems, as well as the resilience
of local biosphere stewardship, around the world. Common explanations for these global trends, such as market
failures, externalities, weak regulation, and a lack of information, do not match the scale of the phenomena. If
market failures and weak regulation are so widespread and leading to so much damage, there must be an
underlying systemic problem. The main contribution of this article to the field of political ecology is a more
clear, robust, and coherent explanation of the core economic structures and dynamics that give rise to global
patterns of social and ecological exploitation. In this way, it responds to the need articulated in the book, Global
political ecology, to "sort through the causes of environmental crises and clearly evaluate the kinds of political-
economic transformations necessary for reaching ecological sanity" (Peet et al. 2011: xiii).
Hinton Fit for purpose? Clarifying the role of profit for sustainability
Journal of Political Ecology Vol. 27, 2020
257
The above analysis shows that a number of unsustainable dynamics including consumerism, economic
growth, ecological damage, economic inequality, and political capture, are driven by the for-profit nature of
firms. Hybrid types of business might be able to slow down the destructive tendencies of the for-profit system,
but do not stop them. However, a not-for-profit economy lacks such systemic tendencies toward consumerism,
economic growth, inequality, and political capture. The latter type of economy would also likely be more
compatible with sustainability interventions.
This article also clarifies that in post-growth economics, the microeconomics of business and the
macroeconomics of economic growth cannot be treated separately. The macro-level phenomena of ecological
degradation, economic growth, and economic inequality are heavily impacted by businesses' relationship-to-
profit and business behavior is very much shaped by these macro trends, as political ecologists recognize. This
is a major shift from the traditional ways of thinking about economies even in heterodox schools of thought,
such as ecological economics.
In conceptualizing relationship-to-profit and analyzing how this aspect of business plays out at a larger
scale, this article clarifies the role of profit in post-growth transformations. Relationship-to-profit implies
different sets of rights and obligations that guide and constrain business in legally enforceable ways. For-profit
business structures do not require that managers and owners pursue profit as a main aim, however because they
can, many actors do, and they are able to concentrate wealth and power in doing so. This can more easily result
in a 'race to the bottom' in terms of ecological devastation and inequality. In such a system, the actors that do
not aggressively pursue profit are at risk of being either outcompeted, or bought out. As such, it is the legal
openness of for-profit frameworks to pursuing profit for unlimited private financial gain that is a key driver of
problematic dynamics, and a key barrier to post-growth transformations.
In order to test some of the claims made in this analysis, there is a need to gather more knowledge about
not-for-profit business, as an economic entity distinct from both for-profit business and donation-dependent
nonprofit organizations. It is my hope that the conceptual models in this article inspire the formation of new
research questions and data collection, as well as sparking discussion about the role of relationship-to-profit in
generating and transforming current sustainability crises. There can be no departure from the growth-based
economy without a change to this fundamental aspect of business.
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... While economic sustainability has long been enshrined as a key dimension of sustainable development discourse (Purvis et al. 2019;Spangenberg 2005;Zhong et al. 2021), scholars have highlighted how a persistent conceptual ambiguity has complicated attempts at putting it into practice (Norton and Toman 1997;Hinton 2020). Owing partly to this Content courtesy of Springer Nature, terms of use apply. ...
... Rights reserved. undertheorization, conventional economic logic continues to underpin the way sustainability is framed: in particular, the assumption that markets are inherently driven by profitable growth (Hinton 2020). As Spangenberg (2005) notes, "continuous and indefinitely (or at least long-term) sustained growth is-often implicitly-assumed to be part of sustainable development of the economy" in mainstream policy debates (49). ...
... The unexamined premise that profitable growth is a necessary condition for achieving sustainability outcomes is problematic for several reasons. First, scholars have pointed out that enterprises oriented towards profit maximization and capital accumulation simultaneously drive environmental damage and social inequality alongside economic growth (Parrique et al. 2019;Hinton 2020), revealing the inherent paradoxes of using the former in the service of addressing the latter. Second, scholars have increasingly demonstrated how conceptions of value encoded in measures of profit are socially constructed and relational (Graeber 2001;Retsikas and Marsden 2018). ...
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This article highlights the emergence of intentional communities known as ecovillages (ecoaldeas) in Mexico, exploring how humans seek to design sustainable futures in part by re-making rural livelihoods. Ecovillages are inherently speculative ventures, or as Burke and Arjona (2013) note, laboratories for alternative political ecologies, inviting—and indeed, necessitating—the reimagination of human lives with greater consideration for the natural world. In this sense, such communities might be understood as “exilic spaces” (O’Hearn and Grubačić 2016), in that they seek to build autonomous and self-sustaining agricultural, social, and economic systems while also reflecting a stance of resistance to neoliberal capitalist structures. At the same time, communities may also remain dependent on connections to broader regional or global markets in diverse and interconnected ways. Understanding ecovillages as diverse and emergent “worldings” (de la Cadena and Blaser 2018), I ask how these experimental social ventures reckon with their connections to the very systems they are positioned against. To trace out how communities negotiate this fragile space, this article is concerned with how ecovillagers spend their time at work—particularly when it comes to managing relationships with and between more-than-human beings. Drawing on participant observation with ecovillagers and more-than-human others they work with, I explore how the concept of “rentabilidad” (profitability) is differently constructed. To this end, I highlight ethnographic examples where rentabilidad is purposefully reconceptualized with more-than-human lives in mind; such a shift, I suggest, hinges on ecovillagers’ individualized relations with the beings they (imagine themselves) to care for.
... Over the last two to three years the number of publications on economic organisations in connection to postgrowth topics in general has increased (see e.g. Khmara and Kronenberg, 2018;Gabriel et al., 2019;Hinton, 2020;Nesterova, 2021;Hankammer et al., 2021). However, many of these publications disregard the political economic implications of degrowth stemming from its incompatibility with capitalism. ...
... 2018-2021) have produced more research on the topic (including other growth critical discourses such as postgrowth) (see e.g. Kostakis et al., 2018;Gabriel et al., 2019;Plaza-Úbeda et al., 2020;Hinton, 2020;Nesterova, 2020;Hankammer et al., 2021). Yet, the political economic implications of degrowth's incompatibility with capitalism is only briefly acknowledged, if at all, in the majority of these studies. ...
... Further, in light of the capital accumulative imperative of capitalist economic organisations such as businesses (see van Griethuysen, 2010) a focus on alternative economic organisations can be deemed necessary. This is in contrast to, for example, Hinton's (2020) definition that business can be for profit or not-for profit. Businesses' modus operandi is coupled to the imperative of capital accumulation (van Griethuysen, 2010;Ruuska, 2017;Nesterova et al., 2020). ...
Thesis
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This thesis identifies a research gap on the role of economic organisations in connection to degrowth and problematises that past research fails to view economic organisations as encompassed by capitalist structures. The thesis seeks to contribute to the degrowth discourse by filling part of this research gap by researching the role of economic organisations in achieving degrowth and the resulting implications for these organisations. The thesis makes use of Gramsci’s conceptualisation of hegemony and counter-hegemony to define degrowth as a counter-hegemony seeking to overcome the capitalist hegemony. The thesis finds that economic organisations must operate in line with a mode of production that can fit degrowth (such as commons-based peer production) and aim to shape society’s superstructure to help enable a degrowth transition. The resulting contradiction of aligning with an alternative mode of production is further unfolded using Luhmann’s social systems theory together with the concept of counter-hegemony. This theoretical investigation highlights that organisational social systems aligned with degrowth counter-hegemony face a paradox in having to embrace uncertainty in their social systemic reproduction. The thesis’ empirical findings show that economic organisations (on the example of commons-based peer production organisations) can align with degrowth through awareness of the afore mentioned contradiction and aiming to overcome it. These economic organisations require a strong alignment with degrowth counter-hegemony in their decision premises, particularly cognitive routine (the conceptualisation of the organisations system environment). The thesis highlights that such an alignment might only be achieved and ensured by keeping a relatively small organisational membership. The concept of scaling-wide is therefore proposed to create degrowth aligned networks of economic organisations that could further help to ensure counter-hegemonic reproduction. Ultimately, the thesis also makes a plea to the degrowth discourse to take charge of research on economic organisations in connection to degrowth to ensure counter-hegemonic alignment.
... Furthermore, the built-in incentive to suppress wages combined with the distribution of profit to private owner's results in increasing levels of inequality (Hinton, 2020). As owners accumulate more wealth, they are able to buy more shares in companies, delivering even more profit to them (as shown in the inequality loop in Fig. 13.1). ...
... Social benefit can include a wide variety of aims, including the provision of: education, health care, healthy food, transportation, housing, and renewable energy, as well as the protection of the environment. Not-for-profit businesses are legally required to use all of their resources to achieve their social benefit missions, which means that resources and surplus go to where they are needed most in an NFP economy (Hinton, 2020). Importantly, because investment is guided by social and ecological needs, the NFP type of economy has a feedback to signal when those needs are met or when more investment is required. ...
... It does not have built-in incentives for business managers to exploit workers, consumers, local communities, other value chain actors, ecosystems, and society as a whole, in order to generate more profit. As such a not-for-profit economy opens up the space for effective sustainability interventions, and allows for economic activity to slow down or even shrink, in ways that the for-profit economy does not (Hinton, 2020) (see Fig. 13.2). ...
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This chapter offers an overview and explanation of how society’s relationship-to-profit plays a significant role in determining social and ecological outcomes. The way in which societies relate to profit plays out in terms of both formal and informal institutions. One formal institution that is key for sustainability is relationship-to-profit , the legal difference between for-profitand not-for-profit forms of business. This chapter explains how relationship-to-profit, as a basic building block of the entire economy, plays a critical role in determining whether the economy drives sustainability crises or allows for meeting everyone’s needs within the ecological limits of the planet. This analysis reveals that the social and ecological crises of the twenty-first century have the same driver: the pursuit and accumulation of private wealth inherent in the for-profit economy. Yet, existent not-for-profit types of business offer a viable way out of this conundrum. In a market composed of not-for-profit businesses, all economic activity and profit would be oriented toward social benefit, keeping financial and material resources circulating to where they are most needed. The financial surplus of business activity would not accumulate in the hands of a few owners, as it does in the for-profit economy.
... This, again, is recognized within the research program, yet it does not effectively inform the approach (Schneider et al., 2020). As stated, private corporations' primary impetus is to make profits and accumulate capital, rather than to produce social values, such as biodiversityand the two frequently clash (Hinton, 2020;Leach et al., 2018;Longo, Clark, Shriver, & Clausen, 2016). For example, large corporate seafood enterprises are motivated to maintain the most economically marketable species, not necessarily an array of species; just as large timber companies seek to maximize timber volume of marketable tree species, not diverse forest ecosystems (Foster, Clark, & York, 2010;Longo, Clausen, & Clark, 2015). ...
... This would be of less concern if it were historically the case that 'keystone actors' inherently operate in the interest of longterm sustainability. We have argued that they do not, and indeed, it is well known that corporate actorsand the economic logic under which they operatehave played a large role in creating the environmental and social problems the research program suggests they can help solve (Clapp, 2018;Clark & Longo, 2021;Hinton, 2020;Mallin & Barbesgaard, 2020;Schneider et al., 2020). ...
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We highlight important assumptions associated with the research pro- gram in sustainability science developed around “corporate biosphere stewardship” and the promise of “science-business initiatives.” In doing so, we interrogate a central concept in this research, “keystone actors.” We analyze the program based on associated research outputs and communications, focusing on three key challenges 1) inequities related to the concentration of political-economic power 2) concerns with naturalizing social processes, or reification, and 3) the limitations of characterizing corporations as commensurable stakeholders in sustainable development. This research program has revealed some important conditions and dynamics in relation to consolidation and concentration in global industries. However, it has been limited by insufficient integration of knowledge from social science, particularly sociology. Thus, the approach tends to undertheorize social dynamics, processes, and structures. Despite being framed as an effort at “improving the prospects for transformative change,” the implications, outcomes, and recommendations that emerge from this research program may inadvertently promote increased control and power of elite actors by presenting an ostensible inevitability of corporate dominance for bringing about social welfare and sustainability. We suggest greater attention to social structural dynamics, and particularly social struggles and social movements, when considering the potential for transformational change for sustainability.
... It is a business model built for purpose -the purpose of 'meeting needs''. The absence of private owners focused on dividends, and the orientation of surplus to the benefit of the broader community, create a complete other dynamics than the shareholder model, and results in a much healthier economy (Hinton, 2020). 69 On this basis, Hinton (2021b) develops a framework for broader discussions about post-growth business around ' five dimensions of business […]: relationship-to-profit, incorporation structure, governance structure, strategy, and size and geographical scope'. ...
... As food is a fundamental necessity for human (and non-human) life, could we envisage a not-for-profit food economy? Not-for-profit businesses have social and environmental missions and use all the surplus for social benefit (Hinton, 2020). Using a series of Causal Loop Diagrams, a recent study of Hinton (2020) explored not-for-profit business structures in relation to a transition towards a degrowth society. ...
Article
Food packaging use is a wicked problem that is increasingly impacting on the environment. Current efforts to solve this global challenge are fragmented, fixating on single issues rather than on a ‘whole-of-system’ approach. To address this, we have used a novel approach combining systems thinking and network analysis to map out food packaging use in food systems. This process draws from experts across the Australian food system. We report three main results. First, the resulting Causal Loop Diagram sheds light on the experts' mental models about food packaging use. Second, current interventions fail because they tackle the symptoms of the problem and not the drivers. Third, the ten most influential food packaging drivers are presented and belong to the globalisation and household subsystems. The findings highlight that dependence on packaging is a symptom of the growth-driven globalised food market and time-deprived society. Finally, we demonstrate that shifting the current food systems towards economic degrowth principles could potentially curb the use of food packaging. Under a degrowth framework the need for packaged food could be reduced by eliminating the tension between cooking and working time constraints. Designing for a not-for-profit food economy and re-localising it would also reduce the need for packaging.
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Met deze reeks toonden we dat economie veel meer is dan enkel markteconomie en een heel divers domein van menselijke activiteit beslaat. Daarbij hebben we nogal wat aandacht besteed aan economische benaderingen buiten de markt die veelal in het economische discours nauwelijks erkend of zelfs vergeten worden, zoals het huishouden en de zorg. Bovendien strekt het zorgperspectief zich uit over het hele levensweb. In deze slotbijdrage proberen we de uitdaging van een economische duurzaamheidstransitie wat verder aan te scherpen. Daartoe keren we terug naar het centrale groene uitgangspunt dat een duurzame economie geen groei-economie kan zijn. Dat inzicht leidt tot verschillende benaderingen van wat 'post-groei' kan betekenen. Vervolgens laten we zien hoe ook bedrijven die op de markt actief zijn daarbij kunnen aansluiten. We ronden af met een overzicht van (nieuwe) manieren om het doel van de economie te formuleren.
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This volume offers a holistic understanding of the environmental and societal challenges that affect reindeer husbandry in Fennoscandia today. Reindeer husbandry is a livelihood with a long traditional heritage and cultural importance. Like many other pastoral societies, reindeer herders are confronted with significant challenges. Covering Norway, Sweden and Finland – three countries with many differences and similarities – this volume examines how reindeer husbandry is affected by and responds to global environmental change and resource extraction in boreal and arctic social-ecological systems. Beginning with an historical overview of reindeer husbandry, the volume analyses the realities of the present from different perspectives and disciplines. Genetics, behavioural ecology of reindeer, other forms of land use, pastoralists’ norms and knowledge, bio-economy and governance structures all set the stage for the complex internal and externally imposed dynamics within reindeer husbandry. In-depth analyses are devoted to particularly urgent challenges, such as land-use conflicts, climate change and predation, identified as having a high potential to shape the future pathways of the pastoral identity and productivity. These futures, with their risks and opportunities, are explored in the final section, offering a synthesis of the comparative approach between the three countries that runs as a recurring theme through the book. With its richness and depth, this volume contributes significantly to the understanding of the substantial impacts on pastoralist communities in northernmost Europe today, while highlighting viable pathways to maintaining reindeer husbandry for the future. This book will be of great interest to students and scholars of both the natural and social sciences who work on natural resource management, global environmental change, pastoralism, ecology, social-ecological systems, rangeland management and Indigenous studies.
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In Sápmi and beyond, the practice of reindeer herding is under increasing pressure from competing for land use, large carnivores and climate change. The governing systems are, however, ill-equipped and unable to address resulting cumulative and interacting impacts. This has led to a difficult situation for reindeer herding due to the loss of land, functionality and flexibility, and proves a challenge for the Nordic states as the legitimacy of reindeer husbandry governance is increasingly contested. Addressing this challenge, this chapter unpacks the discursive and political dimensions of reindeer husbandry governance in Sweden, Norway and Finland. Guided by three broad questions: i) governing what, ii) governing how and iii) governing for and by whom, it explores how problem representations are constructed, handled and contested. The analysis shows that state-led governance was never in fact constructed to address herders’ concerns, but was, and remains, based on the states’ and competing land uses’ problem representations. The chapter, therefore, concludes by identifying the need to revisit the present understanding of “problems”, “solutions” and “visions” in reindeer husbandry governance. A key task will be to re-image, or actively seek to change the discursive construction of, reindeer herding as a system-to-be-governed and attune it to the perspectives of the herders.
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This paper documents the downward trend in the labor share of global income since the early 1990s, as well as its heterogeneous evolution across countries, industries and worker skill groups, using a newly assembled dataset, and analyzes the drivers behind it. Technological progress, along with varying exposure to routine occupations, explains about half the overall decline in advanced economies, with a larger negative impact on middle-skilled workers. In emerging markets, the labor share evolution is explained predominantly by global integration, particularly the expansion of global value chains that contributed to raising the overall capital intensity in production.
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Parrique T., Barth J., Briens F., C. Kerschner, Kraus-Polk A., Kuokkanen A., Spangenberg J.H. 2019, 78 pp. Is it possible to enjoy both economic growth and environmental sustainability? This question is a matter of fierce political debate between green growth and post-growth advocates. Over the past decade, green growth clearly dominated policy making with policy agendas at the United Nations, European Union, and in numerous countries building on the assumption that decoupling environmental pressures from gross domestic product (GDP) could allow future economic growth without end. Considering what is at stake, a careful assessment to determine whether the scientific foundations behind this “decoupling hypothesis” are robust or not is needed. This report reviews the empirical and theoretical literature to assess the validity of this hypothesis. The conclusion is both overwhelmingly clear and sobering: not only is there no empirical evidence supporting the existence of a decoupling of economic growth from environmental pressures on anywhere near the scale needed to deal with environmental breakdown, but also, and perhaps more importantly, such decoupling appears unlikely to happen in the future. The validity of the green growth discourse relies on the assumption of an absolute, permanent, global, large and fast enough decoupling of economic growth from all critical environmental pressures. The literature reviewed clearly shows that there is no empirical evidence for such a decoupling currently happening. This is the case for materials, energy, water, greenhouse gases, land, water pollutants, and biodiversity loss for which decoupling is either only relative, and/or observed only temporarily, and/or only locally. In most cases, decoupling is relative. When absolute decoupling occurs, it is observed only during rather short periods of time, concerning only certain resources or forms of impact, for specific locations, and with very small rates of mitigation. There are at least seven reasons to be skeptical about the occurrence of sufficient decoupling in the future: Rising energy expenditures, Rebound effects, Problem shifting, The underestimated impact of services, The limited potential of recycling, Insufficient and inappropriate technological change, and Cost shifting. Each of them taken individually casts doubt on the possibility for sufficient decoupling and, thus, the feasibility of “green growth.” Considered all together, the hypothesis that decoupling will allow economic growth to continue without a rise in environmental pressures appears highly compromised, if not clearly unrealistic. This report highlights the need for a new conceptual toolbox to inform and support the design and evaluation of environmental policies. Policy-makers have to acknowledge the fact that addressing environmental breakdown may require a direct downscaling of economic production and consumption in the wealthiest countries. In other words, we advocate complementing efficiency-oriented policies with sufficiency policies, with a shift in priority and emphasis from the former to the latter even though both have a role to play. From this perspective, it appears urgent for policy-makers to pay more attention to and support the developing diversity of alternatives to green growth.
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The notion of green growth has emerged as a dominant policy response to climate change and ecological breakdown. Green growth theory asserts that continued economic expansion is compatible with our planet’s ecology, as technological change and substitution will allow us to absolutely decouple GDP growth from resource use and carbon emissions. This claim is now assumed in national and international policy, including in the Sustainable Development Goals. But empirical evidence on resource use and carbon emissions does not support green growth theory. Examining relevant studies on historical trends and model-based projections, we find that: (1) there is no empirical evidence that absolute decoupling from resource use can be achieved on a global scale against a background of continued economic growth, and (2) absolute decoupling from carbon emissions is highly unlikely to be achieved at a rate rapid enough to prevent global warming over 1.5°C or 2°C, even under optimistic policy conditions. We conclude that green growth is likely to be a misguided objective, and that policymakers need to look toward alternative strategies.
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The article argues that contemporary social theory has not recognized the significance of Limits to Growth. A global overshoot in resource consumption suggests we are at a dramatic turning point in human history, the end of the era of constant 'wealth' expansion and the beginning of an era of severe limits and scarcity. This has profound implications for critical social thought, and for addressing current social problems. Recognizing limits will influence the form that a sustainable and just society must take, and transitions to it. Radical and large scale 'de-growth' involves localized, cooperative, frugal, self-sufficient and self-governing lifestyles, settlements and systems. Key elements in the required 'Simpler Way' are discussed as workable and attractive. More importantly, the article argues that these transitions are non-negotiable; no alternative can resolve the predicament of limits. There are important implications for transition theory and practice. Social theory will pursue new directions in this context, with greater convergence around support for an Anarchist perspective on social goals and means. Keywords: Limits to growth, social theory, transition, alternatives, The Simpler Way
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Sustainability within planetary boundaries requires concerted action by individuals, governments, civil society and private actors. For the private sector, there is concern that the power exercised by transnational corporations generates, and is even central to, global environmental change. Here, we ask under which conditions transnational corporations could either hinder or promote a global shift towards sustainability. We show that a handful of transnational corporations have become a major force shaping the global intertwined system of people and planet. Transnational corporations in agriculture, forestry, seafood, cement, minerals and fossil energy cause environmental impacts and possess the ability to influence critical functions of the biosphere. We review evidence of current practices and identify six observed features of change towards 'corporate biosphere stewardship', with significant potential for upscaling. Actions by transnational corporations, if combined with effective public policies and improved governmental regulations, could substantially accelerate sustainability efforts.
Book
Social Enterprise Law presents a series of audacious legal technologies designed to unleash the potential of social enterprise. Until now, the law has been viewed as an obstacle to social entrepreneurship, too inflexible to embrace for-profit businesses with a social mission at their core. Legislators have poured resources into creating hybrid corporate forms such as the benefit corporation to eliminate barriers to the creation of social enterprises. That first generation of social enterprise law has not done enough. The authors provide a framework for future legislation to do what benefit corporations have not: create durable commitments by social entrepreneurs and investors to balance financial gains and social mission by putting a speed limit on profits. They show how sophisticated investors need not wait for the advent of these legislative changes, outlining a contingent convertible debt instrument that relies instead on financial engineering to build trust between those with capital and those ready to use it to nurture a double bottom line. To allow social enterprises to harness the vast power of the crowd, they develop a tax regime that would provide crowdfunding platforms the means to screen the commitment of for-profit startups. Armed with these tools of social enterprise law 2.0 and the burgeoning metrics of measuring public benefit, entrepreneurs and investors can navigate even the turbulent waters of exit without sacrificing mission, so that a sale need not mean selling out.
Companies use planned obsolescence as a central marketing strategy to motivate their customers to (re)buy new and upcoming products. These companies try to increase their revenue and profit by reducing the value of a product’s older version. While previous literature focuses on companies’ perspectives of strategic choice, economic or ecological impact, and innovation management, this paper highlights the customer’s perception of planned obsolescence. In presenting three studies, the paper finds that a planned obsolescence strategy harms customers’ value perception and ultimately their willingness to pay. By adding customer-related evidence to the discussion, the paper questions companies’ planned obsolescence strategies and opens up a potentially rewarding avenue for further research. Keywords: planned obsolescence; substitution; customer behavior
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Planned obsolescence is a strategy used to make products prematurely obsolete, leading to their replacement. The result is the over-exploitation of natural resources, increased waste and detrimental social impacts. It is a known practice in consumer electronics and affects other industries as they put profit before consequence. Understanding Planned Obsolescence looks at the causes, costs and impacts of planned obsolescence. It considers the legal and economic frameworks to overcome the practice and how to mitigate its effects. It also unearths new patterns of production and consumption highlighting more sustainable development models. Including a wide range of case studies from Europe, USA and South America, Understanding Planned Obsolescence is a vital step forward for the future of business and academia alike. Table of contents: Section - ONE: Identifying the causes, consequences and history of planned obsolescence Chapter - 01: Consumer society: A product of the growthist economy Chapter - 02: Planned obsolescence as an instrument of the growthist economy and its socio-environmental consequences Section - TWO: How to overcome planned obsolescence: from theory to practice Chapter - 03: Sustainability in Economics and Law: The greening of sciences in the search for a new paradigm Chapter - 04: The sustainability paradigm as the foundation to tackle planned obsolescence: New perspectives