Can good stewards grow the economy?
That question, raised in a Banner editorial earlier this year (March 2012), brings up another, equally important: Do the needs of the earth conflict with the needs of sustaining a human population?
On the one hand, human laboring for economic gain may use up both natural and created resources and upset the ecological balance. Manufacturing processes, as we’ve seen, can be both polluting and unsustainable. A single oil pipeline leak causes damage that takes years to clean up. On the other hand, when production and economic growth slow, people endure inadequate incomes and faltering self-worth. They may lose access to healthy food, sound housing, education, and health care.
Surely there must be another path that allows people to take care of their own needs as well as the earth’s natural and created resources. We believe this is possible—and that it’s consistent with God’s desire for human flourishing on earth as well as in heaven.
In fact, we’re convinced that business firms have a unique opportunity to address the dilemma of caring for creation while fostering economic growth.
Stewardship, as many Christian economists understand it, involves the “use of and care for” creation. Notice that it’s both caring for creation and fostering economic growth, not one or the other. The task God assigned to Adam in Genesis 2 was to care for the earth, certainly. But we have also been given the earth’s resources to use, to find sustenance in, to enjoy. Created resources fulfill the purpose of providing for people’s needs; our calling is to sustain the creation for future use and enjoyment.
Can the economy—or, more precisely, markets—be trusted to provide adequate care of created and natural resources? Or is the context within which a business operates necessarily opposed to sustainability and care? Those who are convinced of the latter might view it as the role of the government to actively direct proper stewardly behavior in the economy. A better approach, we believe, is to work toward a consensus about the importance of both sustainability and economic well-being so that people behave in ways that are consistent with both values.
Environmental Issues and the Marketplace
So how do markets, and the business firms that facilitate markets, deal with environmental issues?
It is a common principle in the economic analysis of markets that the actions of those engaged in buying and selling should not lead to costs that spill over to others who are not involved in the transaction. For example, my production of a product might harm others if I misuse the air or water resources near my facility. These “others” then bear the burden of resulting pollution. Or I might ignore the environmental effects of some activity simply because I do not have to pay the price of resulting problems. Economists call these problems “externalities” because people who are external to market transactions bear the costs. In such cases, markets do not perform well, and often some type of government remediation is viewed as necessary.
But some people, including some economists, assume that business motives are at odds with environmental goals. They’re convinced that the only thing that motivates business is the quest for higher and higher income. These people ignore other objectives and motivations that may influence business behavior: good environmental stewardship, providing meaningful goods and services, providing employment, being socially responsible, and contributing to various needs within their communities.
Asked whether businesspeople operate in conflict with environmental stewardship principles, our students who are finishing their study of economic principles strongly suggest that this cannot be the case in business today because first, our society no longer tolerates such activity. In today’s economy, businesses would quickly lose sales if they overtly spoiled or misused the environment. Second, students note, the businesspeople they know realize the importance of sustainability and want to live in a world where people honor their stewardship responsibilities. At the same time, they acknowledge that some businesses may be limited in their ability to achieve their environmental goals because they are in competitive environments.
At the very least, it’s probably fair to say that in today’s economy there is less and less inherent conflict between seeking economic rewards and environmental good.
Going further, we can argue that there are good reasons why businesspeople actively pursue conservation of resources. Companies that extract either renewable or nonrenewable resources are in business to earn a stream of income over time. Thus those doing the extracting would be less inclined to extract as quickly or recklessly as possible because the potential for future income would be lower. Additionally, there is a built-in incentive to use sparingly any resources that get scarcer over time: Their prices increase. For the same reason, businesses are likely to use energy and other resources more wisely as their costs rise in the markets. New technologies and technological improvements are developed in response to rising costs, permitting companies to become more energy-efficient.
We need to add one important caveat at this point: Better use of resources can be expected if business firms have clear property rights to the resources. As we learned in the case of elephant poaching in Africa, if local tribal people have no interest in (that is, income from) a local resource—in this case, elephants—they will seek their own best outcome: going after the ivory tusks, killing the elephants. But when tribal people own the benefits of the elephants and can earn income from tourism over time, they have an economic incentive to keep the elephants alive.
What are the policy implications of all this? What is the path toward encouraging companies to promote better stewardship with respect to their economic activity?
First, some of the responsibility rests with public officials to create and maintain policies that help markets function and provide incentives for companies to use resources in good ways. Such policies include clearly defined property rights and incentives for appropriate technological development. To some extent, government agencies also must address the negative effects of externalities and spillovers that adversely affect the environment. They also have a role in providing information and best practices for using environmental resources. There is clear evidence that wealthier countries are willing and able to spend more and more on environmental improvements.
Second, there is a need for businesses to continue working toward sustainability and environmental quality. New information about environmental systems and sustainability are calling for this response, and so are the citizens of the U.S. and Canada. Companies can maintain jobs and contribute to a strong economy while addressing sustainability by adopting a few specific strategies:
- Take a longer-term view in decision-making. This will have an impact on the pace of using resources, but it also can impact decisions affecting jobs and economic health. Consider using temporary reductions in workdays or workweeks, for instance, rather than reducing jobs entirely when work slows.
- Develop creative and innovative solutions for using energy and labor resources. Invest in research and development to address the environment versus jobs dilemma. Look for partners with whom to work toward a broadly defined set of stewardship principles. Pay attention to how business decisions affect families, but monitor their environmental impact too.
- Become more intentional about the impact of production on the needs and well-being of the broader community. Recycling and reusing materials, for instance, can have a cumulative impact on the use of resources. At the same time, it creates jobs in industries that develop processes of recycling and reuse. One example of creative thinking in this area are emerging businesses that collect, dry, package, and resell cherry pits as fuel for residential wood stoves.
In the end, we see no conflict between a commitment to environmental sustainability and concern for jobs and income growth. This is not to say that caring for the environment is easy, and we don’t mean to downplay the difficulties. But at the very least, Christians need to be actively interested in and personally responsible for being good stewards of both the economy and the environment. We need to be intentional about the choices we make in both areas as we carry out our responsibility to consider, care for, and love our neighbors.
These are wonderful opportunities to be agents of transformation for Christ in the world—to provide meaningful work and flourishing lives for the people in our neighborhoods, our nations, and our world while also being earth-keepers, stewards of the amazing creation God has given us to enjoy, revel in, and care for so that it reflects his glory and continues to sustain life for all.
It’s not a question of either/or. God cares about both the environment and about jobs. And so should we.
About the Authors
Evert Van Der Heide is professor of economics at Calvin College, Grand Rapids, Mich. His economic interests and work involve macroeconomic forecasting and economic development of emerging nations.
Cal Jen served several years in management for Domino’s Pizza before co-founding AMDG Architects, Grand Rapids, Mich., in 1992. After selling his interest in the firm in 2007, he became an associate professor of business at Calvin College, Grand Rapids, where he received the student-selected “Professor of the Year” award in 2008-09.