Factor Four: Doubling Wealth — Halving Resource Use
By Ernst von Weizsäcker, Amory B. Lovins and L. Hunter Lovins
Allen & Unwin, 1997. 322 pp., $24.95 (pb)
Review by Allen Myers
Is there a "technological fix" to the ecological crisis? That is the real subject of this book, although it isn't stated that explicitly. And that, in turn, makes this an often frustrating and much less useful book than it might otherwise be.
When talking about "technological fixes", it's best to be precise. If a "technological fix" means simply that there are ecologically sounder and technically feasible ways of meeting the needs and demands of the human race, then of course a technological fix exists. One of the merits of Factor Four is to indicate some of the possibilities for fixes that already exist in terms of scientific and technical knowledge.
But if "technological fix" means only improved scientific knowledge and its application, without far-reaching social changes, including to human beings' needs and demands, then it is a pipe-dream. There is far too much of such dreaming in this book.
The best of Factor Four comes in part one, which documents some of the technology which has been, is being or (one hopes) is about to be applied in particular companies or industries. From hypercars that can cross a continent on a single tank of fuel, to houses and office buildings that require virtually no heating or cooling, to super-refrigerators that consume only a fraction of the usual electrical power, to practical methods of saving water in households and in agriculture, the book bubbles over with good ideas.
Along the way, the authors drop in the occasional reminder of the scope and urgency of the problem — such as the stunning statistic that the inhabitants of Houston, Texas, spend more on air conditioning than the total gross national product of 42 African countries.
All of the environmentally friendly technology described, the authors maintain, is "economical"; it will save money for those who adopt it, as well as helping to save the environment.
Therefore, they claim, the answer is "yes" to the question which is also the title of chapter four: "If markets create the problem, can they also provide much of the answer?" Capitalists can go on pursuing their own interests on the free market, and in the process they will make the world a better place, just like Adam Smith promised.
But things are not really that simple. If these new technologies are both ecologically sound and more profitable for capitalists, why are most of them not in widespread use, despite their feasibility having been demonstrated (in most cases by working examples that are discussed in this book)?
If capitalists have shown reluctance to use most of these technologies — and they have — there seem to be only two possible explanations. Either the heads of major capitalist corporations are normally incapable of recognising what is most profitable for their firms, or the authors of Factor Four have got something wrong in their judgment that environmentally friendly technologies are also profitable.
Either way, the conclusion must be that the free market is not really a means of protecting the environment. Sorry about that, Adam.
The authors seek to salvage their claims for the market's role by proposing to correct "market distortions".
A market distortion is a very clever invention of free market economists who were confronted by the fact that markets frequently fail to behave in the way economists say they do, and fail to produce the promised outcome of social equity, environmental protection, full employment or whatever.
Such disparities between theory and reality are labelled "market distortions" — the implication being that the theory is fine, but the reality is in need of some correction.
But reality cannot be corrected in the manner needed by minor reforms to tax rates and the like, which is the kind of "painless" solution Weizsäcker and the Lovinses propose. This should be obvious merely from their statement of the scope of the problem: "... the list of price distortions needing correction is longer than this book ... Estimates by business reformer Paul Hawken indicate that the direct waste ["market distortions"] in the US economy ... constitutes at least half the GDP."
It never seems to occur to them, however, that such a widespread phenomenon must have a cause — something a bit more fundamental than mistakes by capitalists, managers or politicians.
Market distortions are not an accident. They are the regular and largely inevitable product of markets.
Markets, after all, are not exactly new. They have been around for millennia, and have dominated the economies of the developed countries for centuries.
So if the markets are distorted, if they're not producing the desired results, it's not because we haven't had a chance to work out how they operate.
It's because markets always and inevitably create economic inequalities: some people have more money than others. After the passage of any length of time, a few people have a lot more money than most people. That money gives them power — the power, among other things, to distort markets to their own advantage.
This indicates what is wrong with the authors' claims that the various (largely unused) technologies are "economical". The technologies may well have the potential to be economical for society as a whole — that is, to reduce the overall social cost of producing some good or service. But they will not be widely used unless they improve the profits of a particular capitalist — generally one with considerable market power.
What is profitable is not determined solely by "economics". Market power carries with it the ability to use political means to protect and increase profits, through securing monopolies, subsidies, favourable tax treatment and so on.
Factor Four contains more than a few illustrations of this very point. For example, the authors favour encouraging fuel economy in cars by means of "feebates" — owners of new cars with better than average fuel economy are paid a rebate, while those with poor economy pay a fee or tax; the fees and rebates would be made equal so that the measure is not used by sneaky governments to increase overall taxation.
A "feebate" scheme passed by the California legislature "never went into effect because the outgoing governor ... vetoed it after the legislative session (because Ford Motor Company opposed it, although General Motors was neutral) ..."
Was Ford opposing its own best interests by killing off California "feebates"? Of course not. It was already making billions from cars as they were. Setting up production of new, more fuel efficient cars (especially for only a part of the US market) would be a huge extra expense with no likely prospect of increasing profits. (We can also doubt the "neutrality" of GM, which would have been aware that a failure to lobby against Ford's position would guarantee the death of the measure.)
Elsewhere in the book, the authors tell us that direct and indirect subsidies to the US car industry come to nearly US$300 billion a year, and that the total value of "distortions" in transport may come to US$700 billion annually. It is beyond a dream to pretend that the car companies would tolerate tinkering with such subsidies, or any major undistorting of their market power.
Ironically, the authors conclude their book with admonitions that the market should not be everything, that there are other human values that must come before money. Like undistorted markets, this will remain merely a pious wish until there is a political movement that can overcome the political and then the economic power of big capital.