Management for a Small Planet by Stead - Article Example

Name : xxxxxxxxxxx Institution : xxxxxxxxxxx Course : xxxxxxxxxxx Title : Critical review Tutor : xxxxxxxxxxx @ 2012 Critical review Stead, J, & Stead, E., 2009, Management for a Small Planet, Third Edition, Greenleaf Publishing, London: CHAPTER 3. Introduction Sustainability is the long-standing upholding of responsibility, which has environmental, economic, along with social dimensions. The planet does not have the capacity of supporting the numerous human activities forever but the economic theory upholds the assumption that the planet has this capability (Stead & Stead 2009). This chapter provides a clear, cogent explanation of various sustainability dimensions, namely biophysical, economic, and social. In this chapter, the authors make use of a strategic, broad management insight in theoretical frameworks on how organizations can be involved in moving human race towards a more sustainable world. In this paper, I summarize the chapter and offer a critique about the presented suggestions. Summary Biophysical systems of earth are approaching their tipping points concerning their capacity to support human beings and their activities. There is a presumption that the planet has the ability to support the numerous human activities for a long time and this assumption originates from the fundamental presumptions of economic theory. Generally, there are key inconsistencies regarding the economic theory and they include ecosystem conservation, happiness of the human population on earth, dynamics of the global marketplace as well as the civilization conservation. If the current capitalism is changed, environmental crisis being experienced at present can be solved. The present economic theory is autistic and contains mathematic models that are operated under conditions that are not in existence (Stead & Stead 2009). As a result, most of the fundamental presumptions in economic theory are no longer valid within the business world and beyond. The theory has assumed that the benefits of organizational growth outweigh the costs involved in the growth irrespective of how big the economic grows. As a result, the natural systems supporting human life are being depleted beyond their capacity, leading to uneconomic growth. For instance, GDP is an undifferentiated measure of economic development because it is devised to account for all finances spent within an economy regardless of how the funds are spent. By economic theory assuming that growth is always positive, there is qualitative discrimination. The belief that technology will counteract the growth is not valid. With the present environmental problems, economic should embrace proven conceptions such as co-evolution, systems theory as well as thermodynamics; all these establish that unlimited growth on a finite space is disparaging and in the end not possible. Nature capital refers to the goods and services availed by nature, that sustains the ecosystem and if these goods and services are used constantly, they could be depleted in the long run. The global economy has an optimal size beyond which have negative biophysical effects of development and have outweighed the positive effects. The concept of optimal size has not been included in the economic theory (Stead & Stead 2009). Critique The authors’ insights, tools, and ideas for action are relevant and provide more insight in the economic world. The suggestions of the authors that nature capital cannot be ignored are appropriate. The term economic services emphasize the economic significance of nature to the market relevance and a progressively scarce natural world that should not be deemed as unlimited or free. Generally, as commodities and services become scarcer, there is an increase in the cost and these acts as a limit that prompts economy growth, technology innovation in addition to alternative products. Nonetheless, this is only applicable if the goods or services are within the market system. Therefore, as natural resources and service are treated as economic externalities, they are up-priced and hence overused and degraded. The economic theory ignores the fact that the ecosystem’s resources and services are limited and can be depleted in the long run which accordingly has an effect on the economy. Incorporating the models supporting the theory that unlimited growth is destructive and impossible within economic theory is hence essential. Treating the environment as an externality can produce short-range benefits at the expense of sustainability. As the author suggests, the economic theory should incorporate ecological concerns with social and economic ones. When the natural resources and services are depleted at the expense of growth; an “uneconomic growth” results since it results into declining of quality of life. Reducing “uneconomic growth” can give opportunities for businesses. For instance, industrial waste may be handled as an “economic resource within the incorrect place”. The economic benefits of reducing wastes consist of wastes from disposal costs, lesser environmental penalties as well as lower liability insurance. This can result into increased market share because of an enhanced public image. Energy competence might also raise profits through reduction of costs. In this chapter, authors put forward new economics for a coevolving world and suggest various models. These models should be incorporated within the economic theory to discard the unlimited growth presumption and hence have more practical macroeconomic model that acknowledges that economy has limits characterized by the ecosystem. According to Porritt, (2006) sustainability borders with economic via the social and ecological outcomes of economic activities. Sustainability economics embodies a wide analysis of ecological economic whereby both environmental and ecological variables and matters are fundamental but component of a multidimensional perspective. Social, cultural, health-connected as well as financial elements should be incorporated within the analysis. Nevertheless, the theory of sustainability is much wider that the conceptions of constant yield of benefit, resources or profit margins. Currently, the standard per capita consumption of individuals within developing countries can be sustained but the population increase is rising and people are aspiring to higher consumption. On the other hand, the population within developed countries is rising slightly but consumption heights are unsustainable. Therefore, there is a challenge to control and manage the consumption whereas raising the living standards of developing countries without increasing the resource usage and environmental effects. This can be achieved by incorporating the models suggested by the authors within the economy as such strategy will break the connection between economic growth and environmental damage and depletion of resources. Capital framework best practices involves presentation of capital and risk information, extent and convexity, allocation of capital, stress test probability, least solvent possible incident as well as big band and medium bang. This leads to better decision making from capital understanding. This chapter further suggests that biophysical systems of earth are approaching their tipping points concerning their capacity to support human beings and their activities. Basically, a key driver of human impact on earth systems is the damage of biophysical resources and in particular, the earth’s ecosystems. The total environmental impact of humankind and activities is dependant on the population as well as impact per individual, which consequently is dependant on the way, the resources and utilized and the scope of human activities comparative to the carrying capability of the ecosystems concerned. Managing the resources carefully can be applied at several scales including economic sector. Porritt (2006) supports this argument in that economically the consumption of resources can be managed. He proposed three extensive standards for ecological sustainability, namely; renewable resources ought to offer a sustainable yield, implying that the rate of yield is not supposed to go beyond the regeneration rate, for non-renewable resources, there is supposed to be equivalent development of renewable substitute and that waste production ought not to surpass the assimilative capability of the environment. The authors further also that social sustainability is an element of sustainable development and hence should be included within the economic theory. In general, social sustainability consists of corporate governance, human rights along with labor rights. Social sustainability points out that, future generations are supposed to have the equivalent or larger access to social resources as the present generation, which is referred to as inter-generational equity. Within the human development paradigm, environment as well as natural resources ought to comprise a means of accomplishing superior living standards. Authors further note that, the assumption that increasing the GDP is the most important means essential for accomplishing wealth and happiness for the entire world’s population, is wrong. This is because increasing GDP and enhancing human welfare does not automatically go hand-in-hand. This suggestion is further validated by Porritt (2006) who explains that the key focus of social sustainability is on the behaviors, attitudes and actions of people. The way of living towards a socially sustainable way might not essentially give a promotion of luxury, but instead the growth of reverse-consumerism. The perfect sustainable lifestyle entails understanding the minimalistic prerequisite of it. Whereas leadership and motivational subjects concentrate on wealth prosperity and diverse social status, social sustainability should involve taking the risk of changing what needs to be changed. Accordingly, to accomplish a sustainable system, the existing infrastructure, including the economic model should be changed. However, although this chapter provides persuasive ideas on social sustainability, there is no provision of dimensions of social sustainability or the significance of social sustainability in the economy. Social sustainability can be achieved when the formal and informal processes actively support the capability of present and future generations to establish healthy population. Dimensions of social sustainability include: Equity: To have a perfect economic model, there should be equitable opportunities and outcomes for everyone, more so the poorest and most susceptible people. Diversity: Promoting diversity ensures that there is the society is able to identify all processes that can support it. Social cohesions: Processes, systems and structures prompting connectedness in and outside the society at the formal, informal and institutional level should be provided. Quality of life: An effective economic theory should consider the quality of life of people. There should be a model to ensure that people are able to have their basic needs and should foster a good quality of life for everyone, for example health, employment, education, safety and such. Democracy and governance: There should be democratic procedures as well as open and responsible governance systems. Maturity: People should accept the accountability of constant growth and development through wider social aspects, for example, communication styles, philosophical discoveries and behavioral models. This chapter raises issues that are predominant and worth exploring. Numerous major areas have been targeted for economic examination and restructuring: the environmental impacts of unrestrained economic growth, the outcomes of nature being deemed as an economic externality, and the likelihood of an economics that greatly takes into consideration the social and environmental effects of market behavior. Such subjects are important since the economy should be able to grow exclusive of incurring subsequent increases within environmental pressure. For example, an economy should be in a position to sustain GDP growth without negatively impacting the environment and depleting natural resources. Sustainability researches analyze means of reducing resource intensity and this can be accomplished by using an improved economic management. An improved economic management system can be achieved by incorporating the concept of optimal size within the macroeconomic theory (Stead & Stead 2009). Conclusion In conclusion, this chapter presents a good resource for the economists who want a practical source of information on what encompasses an effective economic theory. The chapter suggests that there is a close link between economic growth and environmental/resources degradation: as the economies grow and population grows the environment declines. This tendency is evidently illustrated on graphs of human population numbers, environmental indicators and also economic growth. This leads to unsustainable economic growth. Unsustainable economic depletes the ecosystem services of the earth, which support its life. As a result, unless resource use is examined and efficient models implemented, resources will be over-exploited and this will result in uneconomic growth. Whereas the current economic theory is largely concerned with economic growth, this chapter presents changes that can be made to have a sustainable economic scale, fair utilization and proficient allocation of resources. Bibliography Stead, J, & Stead, E., 2009, Management for a Small Planet, Third Edition, Greenleaf Publishing, London. Porritt, J., 2006, Capitalism as if the world mattered, Earthscan, London Read More