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Businesses clearly have a major role to play in any strategy for saving the planet. They are the engines of the developed economies that devour a disproportionate share of the world’s nonrenewable resources and produce a disproportionate share of its emissions. They also generate innovations that reduce resource use and lessen pollution. As both a cause of and a solution to environmental degradation, they are inevitably at the center of sustainability debates. But how, exactly, can businesses contribute? According to one line of reasoning, rescuing the environment involves restraint and responsibility: Consumers and companies must do more with the resources they consume, recycle and process their waste more efficiently, and curb their appetite for consumption. In short, resources are finite and need to be carefully husbanded—an argument that appeals directly to the traditional virtue of moderation. This worldview achieved perhaps its clearest expression in the works of the 19th-century economist Thomas Malthus, who feared that at prevailing population growth rates the planet would eventually be unable to feed itself. Although the Malthusian view exercises a powerful influence on voters and politicians alike, it is by no means uncontested. Another line of reasoning, which flows from the work of the 20th-century economist and Nobel Prize winner Robert Solow, is that environmental and other problems can always be resolved through the exercise of human ingenuity. This view appeals to our natural optimism and underlies much advocacy for deregulation and the promotion of growth. It’s not hard to see why these two philosophies make uneasy bedfellows. Yet if we are to achieve real progress in solving the world’s environmental problems, we will have to apply both of them. “Population, when unchecked, increases in a geometrical ratio. Subsistence increases only in an arithmetical ratio.” —Thomas Malthus The World According to Malthus In the original Malthusian argument, if the world’s population grows faster than the planet’s ability to produce food and other necessities, the cost of those necessities will rise while wages fall because more people will be available to work. At a certain point we will no longer be able to afford children and as a result will stop having them, leading to a sudden population collapse. When he laid out this apocalyptic theory 200 years ago, Malthus was the center of intellectual attention. His dire view provoked strong arguments in support and in opposition. Among other things, it helped shape the Corn Laws, British tariffs designed to limit the availability of cheap foreign imports. Malthus was known to be one of Charles Darwin’s many sources of inspiration. But Malthus wrote at a time before agricultural mechanization, when 90% of Americans, for example, worked on farms. The linear growth in agricultural production that was central to his thesis turned dramatically geometric as the Americas, New Zealand, and Australia opened up to farming and then mechanized. Staggering productivity growth in manufacturing as well as agriculture followed. Malthus seemed to have entirely missed the mark, while Alfred Marshall, the dominant British economist of his time, explained to the world that productivity growth was now a centrally important feature of economic performance, spurring generations of economists to study it. Malthus’s ideas reentered the mainstream for a brief period 40 years ago, when Paul Erlich (The Population Bomb, 1968), the Club of Rome (The Limits to Growth, 1972), and William D. Nordhaus and James Tobin (Is Growth Obsolete?, 1972) all warned in vivid and uncompromising terms that conventional economic growth was on the verge of ruining the world. Once again events suggested that the warnings were misplaced: Energy and commodity prices fell, deregulation delivered the benefits of more-intense competition, and the technology revolution boosted opportunities and productivity. Today, however, as apprehension about environmental degradation mounts, Malthus’s notion that we are headed inexorably toward our own destruction is back at the center of the public discourse, heating up the debate about the role of corporations in finding solutions to urgent global problems. Modern Malthusianism generalizes the argument beyond food: The better we get at making things, the cheaper it is to consume and the faster we reproduce and use up the planet’s resources. The fear is that economic growth comes at the expense of the world’s natural resources, including oil, fish, clean air, clean water, carbon-absorbing forests, and so on. Our economic activity not only eats up nonrenewable resources but degrades the ecosystem while fueling faster and faster population growth. In other words, we are steadily approaching a metaphorical wall that lurks out there in the distance. Each year we get closer and closer; eventually we will smack into the wall, with devastating consequences that include natural disaster, plague, famine, and death. The only possible recourse is to slow our progress. “If it is easy to substitute other factors for natural resources, then there is in principle no ‘problem.’ The world can, in effect, get along without natural resources, so exhaustion is just an event, not a catastrophe.” —Robert Solow This is the dominant narrative of our time. In a sustainability-oriented world, a good citizen is one who reduces, reuses, and recycles. A good corporation should reduce, slow down, and conserve. To stay on the right side of the Malthusian narrative, it should stop burning through existing natural capital stocks and creating negative externalities such as pollution, CO2, and waste. It should self-impose limits to growth in order to win a bigger fight—the fight for the planet. We look to government to encourage or even coerce this restraint. The World According to Solow In counterpoint to Malthus, Robert Solow, one of the most influential heirs to Marshall’s intellectual estate, has focused on changing levels of productivity. He believes that capital that takes advantage of new technology is more productive than old capital, and that technological and process innovation is the most powerful driver of productivity. According to Solow, humanity needn’t conquer new worlds and acquire their resources to get richer: We need to innovate within our existing context. A classically Solovian innovation came during World War II. When Japan conquered Malaysia and gained control of the world’s only source of natural rubber, the Allies faced the prospect of grounding fighter planes for lack of tires. In all likelihood, that would have meant losing the war to the Axis powers. The Allies had no choice but to innovate—and the quick result was mass production of viable synthetic rubber. Many have developed Solow’s line of reasoning further. The economist Paul Romer is credited with leading the new growth theory, which holds that growth has no natural limits because the capacity for technological innovation is unlimited. Investments in human capital increase rates of return, in his view. Romer stressed in particular the value of the “spillover”—a positive externality whereby advances of knowledge in a particular industry stimulate technological advances in other fields. When Bell Labs created transistors for the phone system, it had no idea how much the spillovers into myriad other industries would benefit the world. When Martin Cooper invented the cell phone, at Motorola in 1973, no one had any idea how much the device would change daily life around the globe. That same year, when the wildlife photographer Dan Gibson created (and patented) the parabolic microphone to capture bird sounds, he didn’t imagine that it would soon be seen on every football game sideline. Technological innovation and knowledge spillovers have resulted in dramatic advances in standards of living and thus far have offered escape routes from a Malthusian denouement. Believers in innovation often point to the green revolution that took hold in the late 1960s and raised the world’s agricultural production beyond even the most optimistic prior estimates. Solovians suggest that technology and innovation can either stretch scarce resources further—pushing out that Malthusian wall ad infinitum—or allow us to simply scale the wall. Dueling theories breed inaction. For a consumer, a company, or even a government, the easiest course is to wait and hope for clarification on which is the right strategy. The Battle Rages The theories stand in stark contrast to each other. Malthusians see Solovians as delusional and utopian because they seem to deny that the wall exists, much less that it is getting dangerously close. Malthusians believe that limits to growth are imposed by nature and cannot be overcome by man. Innovation is terrific, they argue, but not the panacea that Solovians think it is. Malthusians worry that by arguing that technological innovation will provide a solution, Solovians risk lulling the public into failing to reduce, reuse, and recycle as much as is required.