The Science of Sustainability

It can be argued that throughout most of the nineteenth and twentieth centuries the dominating paradigm in the United States and Europe and most of the developed world has been that there were few limits to economic growth and that economic growth is always desired".

No limits to growth" is not an articulated theory per se, but it is, to a significant degree, implicit in modern economic thinking. "No limits" thinking highlights the efficacy of the private market. Underpinning "no limits" is the idea that resource scarcity - a major factor in "limits to growth" thinking - can be effectively addressed by economic laws of supply and demand. Laws of supply and demand do work; as resources become scarce, the market will reduce use by increasing the price of those resources.

The market and laws of supply and demand can serve to reduce demand for scarce resources and guide resource allocation to technology and innovation investments that can help address scarce resource concerns. Technology can help reduce resource demand through more efficient use of those resources. For example, a programmable thermostat can more efficiently heat and cool homes than a traditional thermostat. Increased prices will also favor substitution where another resource may be used in place of the scarce resource. An example of this would be building materials or furniture that no longer are produced using 100 percent real wood, as wood has become more scarce and expensive, but instead use wood-laminate and alternative composite materials.

Julian Simon (1932–98), a professor of business administration at the University of Maryland, is often cited in relation to the cornucopia theory - that there are no physical limitations on economic growth or human population. In Simon's book The Ultimate Resource (published in 1983), he states, "The supply of natural resources is infinite. Almost all trends in environmental quality are positive…There is only one scarcity: Human brain power 'the Ultimate Resource'". He argued that human ingenuity combined with the correct market signals (pricing) would allow for humans to continually grow economically and the overall human condition would continue to improve, not worsen. He believed that increased consumption would heighten scarcity, which would translate into higher prices, in the short term. This would in turn stimulate entrepreneurship to seek new ways to satisfy shortages. Society eventually ends up better off than if the original shortage had not occurred.

Neoliberalism is a view of the global economic system that holds to the overall tenets of no limits to growth and cornucopian theory. In this view, the private sector, not government, should determine economic and policy priorities. Consistent with a cornucopian viewpoint, neoliberalism views business entrepreneurship (unfettered from government regulations and trade restrictions) as being able to make society better off by letting the marketplace determine the use of resources.

Related to this view of unlimited economic growth are consumerism and the underlying assumption that more consumption is always better for the economy. Consumerism is the belief that our economic systems should favor consumption and that the consumption should be for goods and services that are in excess of basic material needs for survival. Consumerism not only attempts to meet material needs and wants but allows for continuous economic growth. Christine Frederick (1883–1970), a home economist, discussed the need for planned obsolescence in an industrial economy stating, "The way to break the vicious deadlock of a low standard of living is to spend freely, and even waste creatively". In 1955, economist Victor Lebow observed, "Our enormously productive economy…demands that we make consumption our way of life…we need things consumed, burned up, replaced and discarded at an ever-accelerating rate.

Currently, 70 percent of the $14 trillion US economy is driven by consumer spending. A focus on consumption, however, puts tremendous demand on natural resource systems. Natural resources are required to extract, produce, and transport the goods that we purchase, and the extraction, production, and transportation of these goods often release pollution and toxic chemicals in the process. Consumerism is not just limited to the United States, but as globalization of the economy continues, it is becoming universal across the world. Emerging economies such as China, India, Brazil, and Russia have experienced significantly increased demand for goods and services by consumers.

In the chapter on entrepreneurship, innovation, and sustainability, the market opportunities created by scarce resources are highlighted. The chapter will discuss how market signals regarding scarce resources can provide business opportunities for sustainable businesses.