Friday, April 24, 2015

The Revenge of Gaia: Earth's Climate Crisis & the Fate of Humanity

Book Review: The Revenge of Gaia: Earth’s Climate Crisis & the Fate of Humanity – by James Lovelock (Basic Books/Perseus 2006, 2007)

James Lovelock, originator of Gaia Theory, is at it again here in his informal style but backed with scientific rigor. He offers quite interesting perspectives, and though I don’t agree with all of them, his ideas are always worth considering. 

Lovelock genuinely thinks that the recent earth has two main balance states: a cold one with long ice ages and a hot one with low sea level (like the one 55 million years ago when subducting limestone-rich plates led to volcanoes that spewed copious amounts of CO2).He also believes that our inadvertent fossil fuels emissions are leading the earth to its hot state and there is little we can really do about it. Many would disagree. His advice is to ready our survival kits.

Lovelock wrote about four possible outcomes to the human-earth relationship, similar to how a disease affects its host: 1) destruction of the invading organism, 2) chronic infection, 3) destruction of the host, or 4) symbiosis. Lovelock writes from the perspective of a planetary physician whose patient is the earth. He fancies himself a geophysiologist. Our health depends on the health of the planet. He sees the ‘global heating’ situation as most dire and thinks that it is too late for sustainable development. He praises the work of the more alarmist climate scientists like James Hansen and the late Stephen Schneider. He notes that the science of climate change was slow to be accepted for one reason due to the lack of confirming data, which has gradually been coming. Lovelock suspects some sort of threshold tied to temperature or atmospheric CO2 that would lead the earth towards a ‘hot state’ of balance. We may have already passed some tipping points. He thinks the current human-caused climate disruption will be the greatest climate change since the Eocene 55 million years ago. This remains to be seen, of course. He does note that there are prominent scientific skeptics like American scientist Richard Lindzen and Danish statistician Bjorn Lomborg who think the threat from global warming is overblown. The IPCC actually tends to favor a middle ground and often gives a range of possible effects. Lovelock favors nuclear energy from fission as a short-term solution to our carbon problem but development of nuclear energy from fusion as much better in the long-term. Oddly, he quite seems to dislike wind energy, at least partly as a NIMBY factor.

Lovelock describes Gaia as a whole self-regulating system composed of organic and inorganic parts. He gives the analogy of the earth as a camel. Camels regulate their temperature at different levels depending on whether the surroundings are hotter or cooler. He also thinks the earth has a hot state of balance and a cool state of balance. He sees the cool state as the preferred balance but he sees global heating pushing it toward the hot state. Lovelock is quite knowledgeable about the various global chemical cycles: oxygen, carbon, sulfur, phosphorus, nitrogen, iodine, etc. and shows how such cycles serve to regulate the earth system. After collaborating with American biologist Lynn Margulis, they came up with the Gaia hypothesis: 

“the Gaia hypothesis views the biosphere as an active, adaptive control system able to maintain the Earth in homeostasis.”

He notes that the idea was at first quite unpopular with both geologists and biologists. Later he came to include the inorganic into the Gaia hypothesis rather than just the biosphere. The relationship between Darwinian evolution and the maintenance of a habitable planet is probably a key to Gaia theory. In 2001 at a science and climate meeting in Amsterdam the following statement was made that became known as the Amsterdam Declaration:

“The Earth System behaves as a single, self-regulating system comprised of physical, chemical, biological, and human components.”

A key notion here is that organisms affect their environment and that the atmosphere, crust, and oceans were generated not by geological processes alone but by biological ones as well. The goal of the self-regulating Earth, says Lovelock, is to sustain habitability. Ecosystems are dynamically stable, much like the human body. I think he wants to say that Gaia is basically a macro-ecosystem. Feedback between life and environment allows self-regulation to emerge. The interface is between environmental constraints and the tolerances of organisms. Organisms perish in environments beyond their tolerances. Global properties such as atmospheric and ocean composition and climate set some of these constraints.

“All life forms have a lower, an upper and an optimum temperature for growth, and the same is true for acidity, salinity and the abundance of oxygen in air and water. Consequently, organisms have to live within the bounds of these properties of their environment.”

Such regulation is very important as we humans seek to optimize our optimum and comfortable temperatures through heating and cooling which uses much of our fossil fuels and contributes much to carbon emissions. Lovelock gives several examples of the self-regulating functions of ecosystems: recycling of water in tropical rainforests, upwelling currents of cold water combined with nutrient availability making ideal conditions for oases of ocean life, and sea organisms that evolve mechanisms to neutralize high salinity. Various chemical cycles tend toward the maintenance of chemical stability. Lovelock started out with theoretical proofs to his Gaia hypothesis based on computer models similar to those used in population biology and later climate modeling. He mentions some positive feedback mechanisms of climate based on increasing atmospheric CO2: 1) ice albedo – white ice reflects sunlight for a cooling effect so less of it is a warming effect, 2) warmer oceans lead to more nutrient-poor water, less friendly to algae, 3) increasing temperature tends to destabilize tropical forests, 4) increasing range of dark-colored boreal forests absorb heat, 5) increasing forest and algae decomposition releases more CO2, and 6) warmer temperature could eventually lead to melting of arctic methane hydrates (clathrates) and those under the ocean. An important sink for CO2 that works as a negative feedback is rock weathering where CO2 dissolves in rainwater in contact with calcium silicate rocks and the process is aided by vegetation on the rocks. Another negative feedback is strong tropical storms which stir water and bring up nutrients from below for algae.

Lovelock speculates about the early history of the Earth and of life, which very likely evolved together. For life, one can also think of their niches evolving along with the organisms. His book Ages of Gaia goes into more detail. He notes that stable unchanging climate tends to reduce biodiversity but climate change to a new hot or cold state can increase biodiversity at least temporarily, as emerging species can share habitat with declining ones until the declining ones perish. He discusses other climate mechanisms such as the fact that the sun’s intensity has been increasing through time and that in an ice age, even though vast quantities of water are trapped in ice the lower sea level of nearly 400 ft exposes vast amounts of land with much of it in the tropics. Eventually, the sun’s heat will be too much for the earth to regulate, but Lovelock and colleagues calculate that will happen 100 million years from now. He also considers that the brief inter-glacials (like now) are actually a failure of the system to regulate as it prefers the cold state.

Some argue that climate is ultimately unpredictable due to the chaotic mathematics of weather systems. Lovelock argues that climate is much more predictable than weather and indeed the past geologic record does indicate several regularities. He points out that forecasts of avg. global temperature made 20 years ago have been fairly accurate. Climate modelling is gradually getting more sophisticated and taking into account more variables. Even so, Lovelock thinks, climate changes will likely not be regular but fluctuate more unpredictably. Tipping points may be on the horizon and models suggest various ones at certain thresholds of atmospheric carbon. CO2 at about 500 ppm or higher may cause the failure of algae as well as becoming a tipping point for the melting of glaciers. Of course, nature may not announce tipping points at all and we may be well beyond thresholds before we realize it. One common acknowledgment is that much of the Earth’s heat is stored in the ocean and that extra heat which has been fairly well measured may be released on a century or even multi-century scale, exacerbating atmospheric warming. Michael Mann’s ‘hockey puck’ graph is pretty solid evidence for anthropogenic climate change even though skeptics have tried many tricks to refute it. Lovelock thinks past climate data suggest that an ice age will return in about 10,000 years but others would say sooner, later, or even that man-made CO2 has or will avert it. Predictions of climate change triggers are made mainly on the basis of changes in the sun’s irradiance triggered by the various Milankovitch cycles.  Floating ice in the Arctic summers coming from the Greenland ice sheet has been declining regularly with some fluctuation for a few decades. The less there is the less air conditioning there is for the Earth as albedos change with a dark heat-absorbing sea surface replacing a white heat-reflecting surface, thus a positive feedback. Another issue is the ocean’s “conveyor belt” where warm Atlantic waters flow near the ocean surface north to the Arctic, becoming saltier as they partially evaporate. There they sink when cooled by arctic waters due to the greater density of saltier water. This conveyor belt effect powers the Gulf Stream. Wally Broecker, an ocean geochemist at Lamont-Daugherty Laboratory, discovered the details and studied ocean circulation extensively. This ocean circulation can be seen as a self-regulating system of a sort and if it ever changes (and it has in the deep past) it would wreak havoc. He discusses “global dimming,” cooling thought to occur due to the effects of mostly industrial aerosol particles that reflect sunlight. The particles stay aloft for only a few weeks. This means that any economic downturns or reductions of fossil fuel use will likely result in the corresponding loss of that cooling effect. Of course, the negative health effects of that particulate matter would be lessened as well. What he does not say is that there is much variation on what is the overall effect of aerosols on the climate. Exactly to what degree it affects solar irradiation is debatable. We have already released a half of a terraton of carbon which is within the range estimated for the Eocene hot event when temperature is thought to have arisen up to 8 degrees Celsius. Differences between then and now are that the sun is now 0.5% hotter and the land surface is far less forested so there are less carbon sinks. Lovelock thinks that the effects of reduced aerosols, more positive feedback mechanisms such as forest cover and ocean algal systems, and conversion to farmland have not been properly accounted for in models, so that warming may accelerate. 

Theoretically, since the Big Bang, the universe has been powered by nuclear energy, the nucleogenesis of stars like our sun. Lovelock is an advocate of nuclear energy. He believes it is our best bet to mitigate climate change and that it is much less dangerous than depicted and can be harnessed much cheaper than currently. He notes that nuclear reactions are millions of times more energetic than chemical reactions such as burning carbon in oxygen as we do with fossil fuels and wood. He thinks renewables are not nearly up to task economically or uninterruptedly. He seems to particularly despise the land footprint and aesthetics of wind turbines though others would disagree. For the UK and Europe, over-reliance on Russian gas could lead to insecurity. He notes that burning fossil fuels is no more harmful than burning wood. The problem is that we are burning it multitudes faster than it can be replenished with the excess carbon accumulating in the atmosphere and heating the planet.  He seems to think carbon capture and sequestration is viable in the long term but others note that due to the requirements of locating CO2 sources with suitable reservoirs for sequestration would require extensive piping and be quite expensive on a massive scale. No doubt more and more will be done and several pilot projects are functioning but it is expected to take decades and end up a small percentage of carbon captured and sequestered. Natural gas is the least emission fossil fuel. Lovelock notes the problem of methane leaks and the fact that it is a much more potent greenhouse gas in the short-term. In more recent times new data suggest that methane leaks from oil and gas processes and facilities are not as much as some predicted and the technologies are getting better and better for minimizing leakage, at least in the U.S. Ships carrying liquefied natural gas (LNG) can also leak, though much of the seepage due to heat is used to power the ships. He mentions the possibility of a hydrogen economy utilizing vehicles for hydrogen storage that can be reversed to import or export electricity but the technology and expense leave much of the details murky. Wind energy has the problems of inefficiency (smarter grids would help) and intermittency. They are more popular in farmlands and less so in populated regions. Wind energy requires back-up fossil fuel power, often from plants that must be idled in peak wind times which increases inefficiency of the whole system. Lovelock says wind, once thought to be a possible 100% solution, is more like a 3% solution at current (2006) tech levels. Tidal, hydroelectric, and biofuel sources of energy also have much limitations. Solar as well suffers from inefficiency, materials demands, and intermittency but technology continues to advance gradually. 

Nuclear energy consists of fission, which powers the plants of today, and fusion, which may power the plants of the future and requires less uranium and produces less waste. Of course, fusion has yet to be done, although there are prototypes being developed and some think it can be happening in a decade or two. If so, it would solve our energy problems. Nuclear fission is most practical in the short-term, he thinks. He thinks the danger of nuclear waste is way overblown and over-safety adds unnecessarily to the expense. He thinks the waste can be handled and disposed of safely. He invokes the words of Paracelsus: “the poison is the dose.” It requires about a million times more oil or gas to provide the same amount of energy as that produced by an equivalent quantity of uranium. He thinks the anti-nuke issue is a consequence of the mass destruction, mainly of the bombs that decimated Hiroshima and Nagasaki. He lists several books and movies that also served to enhance fears over nuclear energy. There was also the accident at Chernobyl which many people believe caused the death of thousands. He contends that the death toll was about 75 and it is fairly well-known that it was a preventable accident. He talks much about radiation biology and notes that often the problems of exposure result in shortening lifespans by a matter of days as, strangely enough, one could also attribute to particulate pollution. Of course, those would be averages and the vulnerable could be more affected. Compared to the fossil fuel and hydro-power industries, death and injuries among workers is by far the lowest in the nuclear industry. He thinks the health risks of nuclear energy are distorted. Overall, he calls for more nuclear energy in the short-term to phase out fossil fuels, mainly coal, with renewables continuing to be developed.
Next he considers some of the blunders of the environmental movement. First he notes he effects of Rachel Carson’s book Silent Spring, which mainly dealt with the dangers of the pesticide DDT. However, DDT was actually saving lives lost to malaria in tropical countries, as well as being effective in outbreaks of Typhus and Yellow Fever. Professor Paul Herman Muller discovered the insecticidal properties of DDT in 1939. He was awarded a Nobel Prize. His discovery saved many human lives. Lovelock is also a keen inventor and devised an instrument that could detect very small traces of insecticides like DDT. Of course, we did need to stop using DDT as a pesticide for crops as it did decimate ecosystems but we could have still utilized it in a controlled manner for malaria in tropical counties. Lovelock notes that the silent spring would not have been caused solely by pesticides but also by habitat loss due to human activities. He attributes the fear of cancer to over-suppression of chemicals that could be useful if used carefully. Next he discusses over-reaction against nitrates. Nitrates are used as fertilizer to supplement manure, most commonly ammonium nitrate. Scientists noted that they were a cancer risk. In the U.K nitrates were discouraged by environmentalists and eventually legislated against. This resulted in a new ‘organic slurry farming’ which leached into streams and caused algae blooms, eventually killing large sections of streams and rivers – both vegetation and animal-life were affected. Lovelock, as a long-time citizen of the English countryside observed these effects first-hand. He describes the experience as being as powerful as that experienced by Rachel Carson. He also notes that in 2004 a Scientific American article came out that showed that nitrates were not actually harmful but beneficial as necessary components of reactions in the human body.  He also notes the problem of acid rain being overblown in Europe in that the acidification occurring in Scandinavia was at first thought to be mainly caused by industrial pollution form the UK and other places but later found to be mainly caused by ocean algae fed by farming nutrient runoff from rivers flowing into the Atlantic and the Baltic. The algae make sulphuric and methano sulphonic acids from the gas dimethyl sulphide. Only about 15-20 % was deemed to be caused by industrial emissions there.

Next he considers toxicology, noting naturally-occurring poisons in food that evolved to discourage and harm potential predators. He discusses carcinogens, co-carcinogens, and genetic mutation. American physician Bruce Ames described the ubiquity of carcinogens and co-carcinogens (substances that can cause mutated cells to become cancerous) in the natural environment and in the food we normally eat. He came up with the “Ames test” which detects the presence of any substance or radiation that changes an organism’s genetic code. Many naturally-occurring substances in food are potentially cancerous. One well known one is aflatoxin which can occur on moldy nuts, mainly peanuts. Sometimes these natural substances are present in magnitudes greater (thousands of times greater) than products in the chemical industry. What he is suggesting is that our fear of man-made chemicals and their potential to cause cancer is rather irrational, even superstitious, considering the risk from naturally-occurring substances. Lovelock was originally trained as an organic chemist and indeed much of his knowledge is informed by chemistry. About 30% of us will die of cancer but fear of it from specific sources is mostly unwarranted. He notes that a faster rate of death is the cost we incur from utilizing the rapidly available energy we get from oxygen, a carcinogen. He goes through the process of oxygen metabolism and damage through what are called free radicals. These oxidation products cause cancer as do radiation and chemical substances which enhance their formation as does oxygen. So our life-giving oxygen has a dark side. It kills us eventually. He calls oxygen the dominant carcinogen in our environment.

Next he considers geo-engineering to mitigate climate change. He notes two main approaches: “the first to reduce the amount of heat received by the Earth from the sun, and the second to remove carbon dioxide or other greenhouse gases from the air or from combustible sources.” Proposals range from building a sunshade in space to putting aerosol particles in the stratosphere to artificially producing low-altitude marine stratus clouds across large areas of ocean. Even if the sun could be dimmed there would still be the problem of excess CO2 that is causing harmful ocean acidification. Carbon capture and sequestration is considered. Estimates now are that only 10-30% can ultimately be captured and sequestered due to economic, location, and reservoir availability constraints. Very recently, the U.S. announced that 10 million metric tons of CO2 have been successfully captured and sequestered from a handful of projects. Other options include reacting CO2 extracted from the air with the igneous rock serpentine to obtain blocks of magnesium carbonate that can be used as a building material. Another option would be to put sulphur in aviation fuel so that the effluent could be used as an aerosol in the stratosphere to dim the sun. There are a few problems: possible temporary increases of ground-level ozone and possible further depletion of the Ozone layer. The chem-trail conspiracy buffs think this is already happening but I sincerely doubt it. Lovelock notes that climatology is not the only factor in climate change. Land use and forest-to-farmland transition upsets natural climate regulating mechanisms. He thinks that we need a sort of land-use oath like the Hippocratic Oath to be put on chainsaws, bulldozers, industrial farm machinery, and other earth-changing equipment! He also speculates about synthesized food – lab grown and tissue culture meat and vegetables that could reduce the need for agriculture. I doubt much of this will catch on, on a large scale. He does note that dense well-planned cities offer the opportunity for large-scale energy savings over spread out rural existences. As a veteran of long journeys by sea he favors that route over aircraft for long-distance travel but I tend to disagree, especially with the usage of the most-polluting and highest emissions oil commonly used for ships. Natural gas powered ships might be better. Lovelock does concede that geoengineering might bring about serious problems but after tipping points are passed we may have no choice. 

Lovelock’s environmentalism is based on Gaia and on intuition, since Gaia as living earth is really a metaphor. He mentions instincts like our ability to recognize life from non-life. He considers religious leanings. He says that both the secular humanist term “sustainable development” and the religious idea of “stewardship” for the Earth are full of “unconscious hubris” and so both flawed. Intuition can be used to understand Gaia as it has been used by mystics to understand God. Both ideas are “ineffable,” he considers. Lovelock understands that endless growth in both population and energy usage is not sustainable. He likes deep ecology but is skeptical of greens who tout sustainable development. He reprimands those who think that earlier humans were more in harmony with nature than we are – saying that they would be the same under similar circumstances. Early humans destroyed ecosytems too (ie. Australians burning forests and Native Americans, Europeans, Africans, and Australians hunting species to extinction). In many ways fire (combustion) has made us the success that we are but also threatens to destroy us. Lovelock is foremost a scientist and his environmentalism is scientific. He uses the Gaia metaphor because he thinks it can help us to see through our hubris and correct matters before it is too late. He is an agnostic but for him his higher power is Gaia. His advice is to prepare for the worst as soon as possible. We tend to prepare for local threats but ignore global ones, probably because we have no experience doing so. Lovelock is a unique voice for sure and though I do not always agree with him, his opinions should always be considered. Currently, I am reading his book following this one – The Vanishing Face of Gaia. Just this year a new book was released by Lovelock, now well into his 90’s.


Thursday, April 16, 2015

Conscious Capitalism: Liberating the Heroic Spirit of Business

Book Review: Conscious Capitalism: Liberating the Heroic Spirit of Business – by John Mackey (Co-CEO of Whole Foods Market) and Raj Sisodia (Harvard Business School Press 2014 Kindle Edition.)

This is an important book that delves into what a business could and should be and as the authors think, what businesses will be in the future as conscious capitalism businesses and principles become more widespread due to their success. I think they are right but time will tell.
The forward by Bill George, business writer and former CEO of Medtronic, tells of a debate between John Mackey and the famed capitalist Milton Friedman. Friedman argued that the only social responsibility of business is to increase profits for shareholders. Friedman did try to incorporate some of Mackey’s ideas before his death but only as aids to profitability. While Mackey greatly admired Friedman he considered it the other way around – that profitability aids the socially responsible purposes of a company, at least in a company like his Whole Foods Market, where the health of the customer is a key goal, but profits can be made along the way. Mackey and Sisodia show that flexible qualities rather than rigid ones can be better for business success. They also emphasize and demonstrate that creating long-term sustainable value for all stakeholders can be superior to focusing on short-term goals strictly for shareholders. Business leaders are considered untrustworthy these days and they need to re-earn that trust through conscious leadership, say the authors. Companies large and small are incorporating these principals not only to improve their reputations but to improve their bottom line. The preface gives several examples and there are many throughout the book. These ideas have universal appeal, say the authors.

Mackey recounts the humble beginnings of Whole Foods as Safer Way Market. He notes that his education which contained no business classes was probably an advantage in that there would be nothing to unlearn, yet later he studied business extensively on his own. He started out favoring the co-op movement which emphasized cooperation but then noted that since every decision was politicized there was little room for entrepreneurial creativity. He discovered that business is based on cooperation and voluntary exchange. All stakeholders are faced with “competitive alternatives.” If cooperation is fostered between stakeholders (employees, management, suppliers, investors, community, and environment) then more value can be created for all. But this is challenging and prices and pay must be negotiated. However, with a good and just business model, success can be achieved. After losing about half of their investment in the first year and taking miniscule salaries they were accused by the co-op folk of gouging customers with high prices and being greedy. This experience discouraged Mackey’s faith in social democracy as a business model and led him to pursue business philosophy. He learned that:

“… voluntary exchange for mutual benefit has led to unprecedented prosperity for humanity.”
He also learned that: “free enterprise, when combined with property rights, innovation, the rule of law, and constitutionally limited democratic government, results in societies that maximize societal prosperity and establish conditions that promote human happiness and well-being… {for all}”  

Mackey next discovered first hand that stakeholders really matter. When they had just one store as Whole Foods in 1981 and it was getting successful, there was a major flood there in Austin, Texas. The store was destroyed and there was nearly half a million in losses. They thought it was over for them but what happened was that many loyal customers appeared ready to help. This spurred them to work harder and get things going again. Not only their customers helped but also their employees (working for free to be paid back later), their suppliers (giving them credit), and their investors (then a local bank). Getting through such an experience also drew all these factions together and galvanized the idea for Mackey and others that stakeholders matter.

The authors describe free-enterprise capitalism as “the greatest system for innovation and social cooperation that has ever existed.” They note that in the 20th century economic philosophy war between free-market capitalism and government-control communism, free-market capitalism has won by nearly every measure. Poverty has been drastically reduced and standards of living have been drastically raised. The creative forces of innovation and entrepreneurialism have arisen from the foundations of free-market capitalism. The authors see these business and technological innovators as heroes. However, many see capitalism as being inspired by greed. The injustices to workers in the early Industrial Revolution are often cited as an example and indeed from such injustices the ideology of communism has arisen. Of course, much of the criticism of crooked capitalism is justified. The authors think that capitalism needs a new narrative and a new ethical foundation. Becoming more conscious (of relationships and consequences) is the antidote. Overly focusing on profits in both business and among academics has led to more selfish orientations among business leaders. Often regulations have had the effect of creating conditions for the spread of “crony capitalism” where those who are politically well-connected can become quite advantaged.

Adam Smith first portrayed capitalism in his Wealth of Nations, as concerned with self-interest. However, in a previous book, The Theory of Moral Sentiments, he emphasized developing the ability to empathize with others and care about their concerns. According to the authors Smith had great insight into both economics and ethics. Perhaps if his economic and ethical ideas had been integrated from the beginning the injustices of the early Industrial Age could have been mitigated. However, that did not happen and ethical challenges to the brutality of capitalist economics spurred reactionary movements like communism. The authors here speak much of the negative consequences of “trade-off thinking.” Nowadays we realize that worker happiness and company reputations regarding social and environmental concerns are important to their bottom line. The myth of profit maximization is based on a narrow view of both human nature and the nature of business success. Profit is very important of course but not at the expense of other values. According to the authors, profits were rare before the Industrial Revolution. There were rich and poor according to social class but not much mobility. Now we realize that many entrepreneurs are inspired by a desire to help the world or to fulfill a societal need they discover. Profit is of course a motive but often not the sole or even the major one.

Crony capitalism allows certain connected business people to avoid accountability and discipline. This is one cause of the current economic disparity as the pay of CEOs grows disproportionately to that of workers. Another cause is greed and “unconscious” capitalism. Crony capitalists are propped up not by market forces but by governments and certain regulations. Indeed, this cronyism is what has given capitalism a bad name.

Capitalism has succeeded in lifting people out of poverty through voluntary exchange while communism has done it mostly through coercion and so capitalism has been far more successful. Even so, this lifting of people out of poverty was merely of a by-product to the profit motive. With conscious capitalism it can be done better by expanding business motives to helping all stakeholders. The authors say capitalism needs a new narrative, a conscious one rather than old ones concerned with self-interest and perceived by others as greed.

In the modern age we no longer accept injustices that were commonplace in the past like slavery and exploitation of workers. People are more educated. We are inundated with information. Such things contribute to our “rising consciousness” say the authors.

The four tenets of Conscious Capitalism are given as: 1) higher purpose, 2) stakeholder integration, 3) conscious leadership, and 4) conscious culture and management. Higher purpose (beyond mere profit maximization) needs to be sought out and then worked out. Stakeholder integration needs to be worked to favor win-win situations, or in terms of all major stakeholders, a win-win-win-win-win-win, or Win6 situation. Conscious leadership is vital and avoids trade-off mentality and carrot-and-stick approaches to management. Conscious culture is based on “decentralization, empowerment, and collaboration.” One goal is to harmonize the interest of the business with the interests of society.

The authors include an appendix devoted to the financial performance of conscious businesses and conclude that conscious businesses are generally among the most successful financially as well as providing benefits to all stakeholders. Caring for others also aids in creating value.

The authors go to some length to distinguish conscious capitalism from corporate social responsibility. Traditional businesses tend to graft corporate social responsibility onto their model as means to enhance their reputation or ward off criticism, ie. “greenwashing,” while conscious businesses incorporate responsibility toward all stakeholders including society and the environment. Such responsibility is a part of their core purpose. 

The authors insist that purpose matters for companies as it energizes them. A higher purpose indicates a purpose beyond self-interest. If all stakeholders can share in such a purpose then value can be created for all and it is a multi-win. Examples of statements of core values of conscious companies are given. “A firm’s purpose is the glue that holds the organization together,…” The authors distinguish purpose from mission and vision:

“Purpose is the difference you are trying to make in the world, mission is the core strategy that must be undertaken to fulfill that purpose, and vision is a vivid, imaginative conception or view of how the world will look once your purpose has been largely realized.”

The authors emphasize the importance of purpose and of not losing the sense of purpose. They give the example of the pharmaceutical industry as one that once had an admired purpose of devising miracle drugs to save lives, but lately has been overly influenced by profit motives and is now not so highly regarded. Another is the financial sector, once key to benefiting society, is now seen as profit-obsessed and short-term oriented. Focusing on such short-term goals has benefited CEOs but not so much the whole companies and society and so reputations have fallen.

The authors note the conclusion of Austrian psychologist Viktor Frankl that one way to happiness, meaning, and purpose is “doing work that matters.” They note that profits, like happiness, are ideally not “pursued” but aimed for indirectly, in the process of working for benefit. Most profit-oriented businesses, they note, are competing with other profit-oriented businesses and so are successful in those terms. But when conscious businesses enter the picture they are harder to compete with because they engage all stakeholders – they have a ‘bigger picture’ outlook.  Absence of purpose is a problem with many workers as they suffer through the drudgery to get their paychecks. People are often indifferent and even apathetic to the companies they work for and this is the fault of the companies, say the authors. They favor purpose maximization over profit maximization and point out that all workers can contribute to maximizing purpose. Aligning one’s passions with one’s work is a challenge. I work in science and enjoy working with data and interpreting it, revealing the hidden, as it were. The authors note that many companies have made the mistake of bringing in highly paid, high profile leaders who don’t align with the core values of the company with big problems including resentment and reduced profits being the outcome.

An example given of purpose is the company Waste Management, Inc. They took a cue from the sustainability movement and found innovative ways to extract value from the waste stream in terms of both energy and materials. They consult to help large companies reduce waste. They work in product recycling. They have many waste-to-energy projects. Most of their profit is in the waste itself rather than merely in the disposal of it.

The authors give four categories of purpose right from the ideals of Plato: 1) The Good – service to others and improving health, education, and the quality of life, 2) The True – discovery and increase of knowledge, 3) The Beautiful – excellence and aesthetics, 4) The Heroic – courage to do what’s right and improve the world.

The second tenet of conscious capitalism, stakeholder integration, is very important. For a conscious business, looking out for the needs of stakeholders is more an end rather than a means. Seeking and discovering synergies rather than trade-offs is encouraged. Shared goals among stakeholders can lead to less friction inhibiting the path toward those goals. Thus, the interdependence of stakeholders can be advantageous to business success. Stakeholders include customers, team members, suppliers, investors, industry partners, the community, and the environment. Customers are a key stakeholder. Loyal and educated customers can be fantastic aids to success. Companies have a responsibility to their customers. Whole Foods advocates “customer-focused innovation” where new products and improved quality can be found by assessing the needs of customers.

I found interesting the section about the conscious business approach to marketing. Rather than having large advertising budgets these companies focus on stakeholder integration to get the word out for them. Satisfied customers, team members, and suppliers can amount to good marketing. The authors criticize traditional marketing as predatory and full of hype and of course, people are reasonably suspicious of many marketing ploys. The relationship between team members and customers is critical, especially in service-based companies. If team members are happy then customers will see that. If customers are happy they will buy more and return. Innovative and creative work cultures generally generate more meaning and fun for team members. Team member engagement can lead to competitive advantage. Intrinsic motivation through enjoyment of one’s job is likely more useful than extrinsic motivation through reward and punishment. For management, hiring and retention, are important considerations. Finding the right people, those that fit with the company purpose, is important, and if they are motivated to stay, even better. The authors mention fear as motivation, as when Jack Welch, CEO of General Electric until 2001, had a policy of firing the lowest 10% of the work force. The idea was that people would be motivated to work harder to avoid getting fired. Apparently, Enron had a similar policy. The authors acknowledge fear as an effective short-term motivator but they point out that it is a poor motivator in the long-term and that former team members can also be seen as stakeholders of a sort. People laid off during downturns may be motivated to return during better times.

Compensation is another important issue addressed differently in the conscious capitalism model. At Whole Foods the top seven executives, including the CEOs get the same pay and perks. This avoids resentments and promotes transparency. They have a cap where all cash pay including bonuses is 19 times the avg. of all team members. In some companies it is as high as 400-500 times. Income disparity and outlandish CEO pay is a major issue these days and should be addressed by companies in a similar manner. The authors give the argument in terms of internal equity vs. external equity. Internal equity means the pay is deemed fair internally rather than competing with the external market – where since pay has risen dramatically for most executives it is argued that it should rise for all executives. Salary caps may have to rise to be somewhat competitive to the external market. Of course, so-called top talent may have to be sacrificed as they would be less likely to accept such a salary cap – but if their sole motivation is pay then they may not fit in with the conscious purpose of the firm. The authors also suggest that benefits be egalitarian, rather than having special benefits for executives. This reduces corporate classism. They say it also promotes solidarity within the company. Of course, company tenure, can still be associated with vacation time and a few other perks. They also suggest that some benefits can be voted on by team members. Internal health and wellness programs can also complement health care benefits.

The authors mention three types of capital: 1) venture capital – money for new ventures that are usually risky, 2) debt capital – loans from banks and investors that must be paid back with interest so that equity ownership is not diluted, and 3) equity capital – investments made for a percentage of ownership in the business. Venture capital helps provide equity capital for new businesses. Wall Street is known for cashing in on short-term wealth creation. Businesses do have ethical and financial responsibility to make money for their investors. They mention Warren Buffet and his firm Berkshire Hathaway as an example of good relations between a leader and investors where transparency and communication are emphasized. Buffet’s approach is open and long-term. Short-term speculators and traders, who have manipulated the system to some extent, have probably tainted the financial sector more than anyone. The average shareholding period for investors has dropped from 12 years in the 1940s to less than a year today. The “exit strategy” has been over-emphasized. An investor invests for the long-term while a speculator invests for the short-term. The authors give the example of the effect of the financial crisis of 2008-2009 on Whole Foods where the stock price dropped from $79 to $8 but the long-term investors stuck with them even buying more stock and the price then improved dramatically.

The authors also note that financial analysts often miss the nuances of companies since the only data they have and utilize are the numbers. Often, CEOs will react to analysts’ models to try and satisfy them rather than the company purpose, which can result in overly focusing on short-term gain at the expense of long-term gain. There are other incentives to do that as well – higher pay and bonuses for executives being one. Many companies offer incentives in the form of bonuses and stock options for meeting short-term goals which orients the focus on to those short-term gains, often at the expense of long-term gains.

Labor costs are another issue dealt with differently by conscious companies. Well paid employees can have better morale, better productivity, less turnover, better customer service, less training costs, and lead to better overall company reputation. All of these factors can enhance competitiveness.  

The authors note that both private and public companies can practice conscious capitalism and they give many examples of both. Polls have shown that Americans have greater trust in small businesses than in large public corporations. The authors think that all companies can become conscious if their leadership leads the way.

Suppliers are another valuable stakeholder, often overlooked. Suppliers include landlords, service providers (phone, trash removal, etc.), and utilities, as well as suppliers of goods. Team members supply labor. Investors supply capital. Innovation can be discovered through optimizing the capabilities of suppliers. Suppliers create much of the value for companies, particularly retailers. Thus, they should be treated fairly, openly, and collaboratively. Key suppliers should be seen as partners. This facilitates better communication so that new needs can be met faster. Companies need to be aware of over-“squeezing” their suppliers. Deeply collaborative and long-term contracts with trusted suppliers can enhance both businesses. The buyer business is better off when their suppliers are also flourishing. The buyer company ideally needs to look out for their interests as well, possibly helping them survive in downturn times. They can even invest in their suppliers. Win-win relationships with suppliers can be vital to the success of both companies. Another goal can be to promote the benefits conscious capitalism principles to one’s suppliers and to other stakeholders as well, for mutual benefit.

Social responsibility includes philanthropy and a conscious business considers a reasonable amount of philanthropy to be a part of its purpose. This could involve donations of money, time, community service, and other unique capabilities. Milton Friedman declared in 1970 that philanthropy could be seen as theft from investors. However, smart philanthropy can ultimately benefit investors as it promotes the corporate reputation, as well as employee morale and sense of purpose. Of course, degree of philanthropy should be approved by investors. The authors see a conscious business as resembling a responsible citizen. They think it is best if community service is done on a work day rather than on a weekend because it is better for the employees to plan for and leads to less resentment. Another issue is what non-profits to work with. They note that businesses should not be tools of social activists or the government. Whole Foods has a policy where on 3 or 4 days a year each store donates 5% of gross profits to charities. Members of those charities are encouraged to shop there that day and good will is created. The authors give the story of the Tata Group in India who owns the hotel that was bombed in a terrorist attack where many people were killed, including hotel workers who stayed around to help and protect people. CEO Ratan Tata and the executives went to great lengths and financial cost to compensate victims and their families, of both employees and guests. The authors also point out that there are creative ways to incorporate philanthropy that can include customers and suppliers as well. They also recommend coordinating with non-profit orgs. Non-profit orgs are mission-based and work well with the purpose component of conscious businesses.

Environmental responsibility is also important for businesses. Energy efficiency, waste reduction, promoting non-harming and sustainable practices, and knowing and reducing environmental impact are some ways businesses can be responsible. Businesses can take major roles in solving environmental problems. The authors also point out that nearly all businesses are fundamentally caring of the environment, even if often depicted as greedy and uncaring. Efficiency and waste reduction measures have the added benefit of saving money. Innovative use of technology can also reduce environmental impact and save money. Surprisingly, the authors highlight Walmart as initiating many innovative sustainability practices such as packaging reduction, energy efficient lighting and refrigeration, waste reduction, innovative plastic recycling and repurposing, and composting. The authors criticize fear-based and guilt-based environmentalism and suggest replacing it with love-based environmentalism, highlighting the successes already achieved in cleaning up the environment to spur more progress there.

The outer circle of stakeholders includes competitors, activists, critics, unions, the media, and government. Businesses encounter these factions all the time, sometimes in negative ways. Competitors can be seen as “allies in striving for mutual excellence.” Competitors often come up with innovations that are passed on to all in an industry. Activists and critics can also be seen as competitors, putting forth competing ideas of how things should be done. Mackey points out that it was an unpleasant situation with animal welfare activists that led Whole Foods to become better informed about animal welfare and incorporate better policies. Labor unions have also had a history of adversarial relationships with businesses. Whole Foods is not unionized in an industry that is highly unionized. They think they can avoid unionization by providing team members with excellent care, benefits, and pay. They do mention other companies that must engage with unions and note that businesses should not see unions as adversaries and should seek win-win situations with them. Whole Foods has apparently had quite a bit of issue with outsiders who wanted their employees to unionize. Employees of one store voted to unionize but it was later learned to be a setup. However, it was a wake-up call for Mackey and he visited every store having meetings to determine how to better employee situations. He learned there was a need for better health insurance and some other services that were implemented except for the store that was negotiating with the union was not allowed to participate. Eventually, that store voted not to unionize. The media is another outer stakeholder. They tend to report on “the three Cs: controversy, conflict, and change.” Whole Foods tends to focus more on social media and bloggers rather than traditional media. This allows them to engage directly with stakeholders rather than through the “middlemen” of traditional media, who can often put spins on stories to enhance any of the three Cs. Government is another outer stakeholder for all businesses. How much governmental regulation and input is needed is often a point of contention. The authors see the role of government as an impartial umpire in order to keep things fair. Some rules and regs are useful and protective while others are unnecessary and unfairly promote the interests of some factions over others. Some are wasteful or overly costly. Government is often wooed by special interests and those interests often involve setting up or avoiding regulations. Such activity can lead to corruption and cronyism in some cases.

Stakeholder interdependence can encourage virtuous circles. Overly focusing on profit for shareholders can lead to poor employee motivation and poor customer service, and so actually erode profits. Relationships between stakeholders can be seen as the mortar that holds the bricks (stakeholders) together. Understanding stakeholder relationships requires systems intelligence, say the authors. They suggest looking for hidden synergies rather than trade-offs. The focus should be on creating more value – making a bigger pie rather than chopping it up differently. They use cancer as a metaphor for lack of cooperation in a business or between a business and its stakeholders. A case in point is the recent financial crisis where so much focus was on short-term profits for one stakeholder, the investors, that the whole system was crippled. The selfishness of senior management in pursuing short-term gains can lead to similar results as can team members occasionally as when unions become too powerful, avoiding market discipline, at the expense of other stakeholders. Owners and investors must have legal control of the company, say the authors, as they are paid last. They also say that stockholders should have the power to fire management if necessary.

Conscious leadership is vital to conscious capitalism. The best leaders are motivated by service to the higher purpose of the business.

“Leadership and management are not synonymous. Leadership is mostly about change and transformation. Management is about efficiency and implementation.”

Generally speaking, the authors say that companies need more leadership and less management, but both in the right measure and in harmony. Leaders need versatility in intelligence: intelligence (IQ), emotional intelligence (EQ), spiritual intelligence (EQ), and systems intelligence (SYQ). Emotional intelligence is based on both understanding oneself and on understanding others. Empathy is important for EQ and EQ may well be more important than IQ. Spiritual intelligence refers to the ability to manifest goodness, truth, beauty, and compassion. It is also moral intelligence. Systems intelligence can be vital to feeling out complex relationships in the business world. Prevention and health in business relationships is sought by systems thinkers over short-term fixes to problems. Having a purpose related to service is important for leaders. Albert Schweitzer and Buckminster Fuller are given as examples. Integrity, as a synthesis of virtues is important for conscious leaders. Goals of a conscious leader include making a positive difference, embedding a shared purpose for those in the group, helping people to grow and evolve, and making tough moral choices when necessary. Some leaders are charismatic, but that is not a necessity, say the authors, and can be problematic. Role models, coaches, and mentors can be very important and Mackey gives a  very telling story about his father as a long-time mentor in his business. SYQ involves developing the habit of thinking in terms of all stakeholders, of contemplating how decisions will affect them. Mackey notes that a crisis can be an opportunity for growth. He notes one when Whole Foods merged with Wild Oats in 2007 when he was personally investigated by the SEC, including his personal emails. He was cleared of any wrongdoing but it was very stressful for him as he learned he was now a ‘public figure.’ Being a leader entails lots of responsibility so there is a need for a leader to be at his or her best physically, emotionally, mentally, etc.

Evolving a conscious culture and management is important also. Decentralization, empowerment of all team members, and collaboration are all vital to a conscious business culture, and they foster innovation. Culture is more vital than strategy, say some conscious management advocates. Seven characteristics of conscious cultures are given in the acronym TACTILE: trust, accountability, caring, transparency, integrity, loyalty, and egalitarianism. Many of these qualities must be built up over time. Trust is very important and the other qualities given support it. More transparency often equates to less fear within the company and more trust. Cultivating a sense of fairness throughout an organization is also essential. Love and caring have generally been ignored by corporate culture, which favors more survival-of-the-fittest motifs like paranoia, selfishness, competition, and motivation through fear. The authors give some interesting strategies for downsizing, outsourcing, recycling failed promotions, when necessary and in such a way that resentments are minimized. The authors point out that the role of management in a conscious culture is limited and that traditional management will tend to fail in a conscious culture – the two must be harmonious which requires less control by management. A sense of autonomy is best developed among team members. The role of management is to “create, sustain, and strengthen the conditions whereby team members operate primarily from intrinsic motivation.” This starts with hiring the right people – those who can be motivated from within and those who fit with the company purpose. Tapping into “collective intelligence” is one goal of conscious management. This often involves trying to locate decision-making at the lowest possible level unless necessary. Of course, there needs to be a balance between decentralization and centralization as some global decisions need to be centralized. Empowerment allows people to try new ideas, some of which will fail. While failures must be acknowledged and fixed, there will also be successes and those are what fuels innovation. Companies that depend on a few people at the top and outside consultants to come up with their innovations are far less empowered than those who rely on their own team members. Collaboration is also very important as it allows good ideas to spread and to become even better ideas as they are refined.

Developing a stakeholder mindset is a key to setting up a conscious business. Understanding and anticipating stakeholder needs can lead to success. In traditional business a customer is a means to profit but in a conscious business customer satisfaction by itself is also an important goal. The authors emphasize that business is not fundamentally flawed and in need of redemption. They say that business is fundamentally good and ethical because it creates value for people. Yet is creates more value and taps into higher purposes when done consciously. They think that conscious capitalism is on the way to becoming the dominant business paradigm, though it may take some time. Throughout this book many companies that utilize conscious principles to one degree or another are noted: Costco, Google, The Container Store, Tata Group, POSCO, Amazon, Whole Foods, Nordstrom, Panera Bread, Trader Joe’s, Patagonia, Southwest Airlines, Home Depot, UPS, Jordan’s Furniture, Starbucks, Wegmans, and many others.

Appendix A gives data tables and supporting info that shows quite clearly that conscious businesses are not only competitive but highly successful in terms of financial performance.

Appendix B gives previous ideas related to conscious capitalism and compares them. First is the notion of Natural Capitalism formulated in the book by Paul Hawken, Amory Lovins, and Hunter Lovins. The notion there is that traditional industrial capitalism is unsustainable since it ignores important inputs and costs such as natural resources, ecosystem services, living systems, and human and social capital. Conscious capitalism acknowledges those principles and extends beyond by emphasizing human creativity to solve problems. Another idea is that of the Triple Bottom Line: economic, social, and environmental. Conscious capitalism adopts the same ideas, not with a tack-on CSR approach as has been usual, but built into the core principles of the company. Another idea is Shared-Value Capitalism. This involves broadening the definition of value to include benefits to society. Here profits which also provide social benefits are seen as more valuable than those that do not. Another idea is the Creative Capitalism described by Bill Gates which involves businesses expanding the reach of market forces to more people, particularly those in poor and undeveloped places, in order to benefit them and the business. That idea utilizes variable pricing to make products available and affordable to those in new markets and also enhances the reputation of the companies. The goal is impact maximization rather than profit maximization. The authors note that while this is good, it is only applicable to certain industries such as pharmaceutical and biotech which can utilize variable pricing for low-income customers. Another idea is that of B Corporations, or benefit corporations. Such companies are chartered to explicitly address social and environmental problems and so resemble non-profits in some ways. Such companies are certified and get discounts form other companies in the network. While this can be a useful system the authors think that it is less viable as companies of this sort are more controlled by managers than owners (which include investors). Thus, management becomes protected from owners and their influence, which gives them less accountability. B Corps are and will only be a small niche in the whole business system, say the authors, and so are less important overall than companies who adopt conscious capitalism principles. Also, non-profits have a bit of a competitive advantage over B Corps in that donations to them are tax deductible.

Appendix C addresses some misconceptions about conscious capitalism. Most of these are fairly obvious and play on the intuitive or indoctrinated idea that profits are incompatible with societal benefits and sustainability. The financial performance data clearly show that conscious businesses are not only viable but often top tier performers.

Overall, this is a great book and one that should be read and studied by anyone interested in business and leadership.