What can The Lorax teach us about sustainable capitalism and the role of the state?

‘I am the Lorax, I speak for the trees, for the trees have no tongues’.

(this blog post was originally written as an assignment for the Rethinking Capitalism course, one of my electives on the MPA Public Value and Public Purpose UCL Institute for Innovation and Public Purpose. I had fun writing it back in January — and thought I’d share it here for other Dr Seuss/economics fans — am sure there’s an overlap between those two groups)

The Lorax (1) was written in 1971, and as a child it had a huge impression on me. It’s widely accepted to be an allegory about the damage consumption and business can do to our ecosystem. At first glance it may seem superficial to use a children’s book as a starting point — but how we approach climate change in the future, and our understanding of the role of the state in doing so depends in part on the stories we tell ourselves and our children.

The Lorax tells the story of an entrepreneur (the Once-ler), his new product that everyone needs, the consumption of natural resources to make this product and the detrimental effects of unsustainable growth on the natural environment. I’d alway thought of the Lorax as the physical embodiment of the conscience of the natural world (the common interpretation is an eco activist (2)).

But what if we viewed him instead as the voice of a weak and ineffectual state — a state seemingly powerless in the face of the demands of the market, rapid industrial growth, individual entrepreneurship and over-utilization of common goods? In thinking about our 21st century climate change grand challenge this could be a useful lens through which to highlight the importance of the state in creating a sustainable future.

Chandran Nair advocates the need for a strong state to provide a ‘licence to operate’ for markets through regulations and institutions (3). His argument is that only the state can protect public goods, especially those of natural resources. Mariana Mazzucato argues strongly for the state to more explicitly own the role of entrepreneur — to actively invest in innovation, shaping markets so that growth has a directionality as well as a rate (4). Neoclassical (orthodox) economists share the view that markets will self regulate — and that the state should only intervene when there is market failure.

The Lorax is a story for children about power and inequality, about who ultimately owns our natural resources (and who will protect them), and what happens when economic growth produces negative externalities for society — in this case the pollution of the environment, deforestation and species loss.

The Lorax can only protest and appeal to the Once-ler’s better judgement (it’s clear that Dr Seuss did not believe in the power of corporate social responsibility), and he’s powerless to prevent the Once-ler’s business from using up the natural resources before it’s (almost) too late.

There are different ways of looking at this problem of capitalism vs sustainability, and whichever view we take has an implication for the policy tools we might imagine the Lorax could use.

If as Lazonick (5) argues — it’s not the markets that generate growth, it’s the organisations (governments, households, business), then how could the state have had more agency in this story? The Lorax could limit the Once-lers activity through licences, permits and quotas, regulate the quality of production or impose taxes or fines to pay for cleaning up the pollution. He could play a more active role as an investor in innovation, as Mariana Mazzucato argues, creating partnership activities that have a common sustainable goal or mission.

Alternatively this story could be seen as an example of the tragedy of the commons, if we believe that shared, unregulated and unowned resources will always be exhausted when there is no clear ‘owner’. If that’s the case then the Lorax could create protected spaces such as a state owned national park, or give private property rights to the existing population, trusting that this would then enable the protection of the environment.

Elinor Ostrom argues that it’s partly rapid pace of change that overwhelms a self governing community system because it can’t adapt in time (6). In that case the Lorax would be wise to focus on building community based, adaptive governance institutions, working in partnership with the Once-ler and the existing community to manage the environment.

Whether we believe that it’s the main role of the state to protect the public good, or that people when given the space to self organise can and do manage common goods cooperatively and sustainably; even if we only believe that negative externalities such as pollution or species loss are a justifiable reason for the state to intervene in the market — it’s clear that the state will have to play an active role in shaping sustainable economic growth in order to avoid climate catastrophe.

Given that this book was written in 1971 — and that in 2020 we are still grappling with the effects of economic growth on the environment it seems fitting to end with the famous quote from the repentant Once-ler.

‘UNLESS someone like you Cares a whole awful lot, Nothing is going to get better. It’s not.’

Endnotes:

1. Suess, Dr. 1971 The Lorax. New York: Random House
2. Henderson, B., Kennedy, M. & Chamberlin, C. in Wild Things: Children’s Culture and Ecocriticism (eds Dobrin, S. I. & Kidd, K. B.) 118–148 (Wayne State Univ. Press, Detroit, 2004).
3. Nair, C. (2018). The Sustainable State / Nair, Chandran. (1st edition). Berrett-Koehler Publishers.
4. Mazzucato, M. (2014). The entrepreneurial state : debunking public vs. private myths in innovation / Mariana Mazzucato. (Revised edition.). London : Anthem Press.
5. Lazonick, W. 2016 ‘Innovative Enterprise and the Theory of the Firm’ Chapter 5 in Rethinking Capitalism: Economics and Policy for sustainable and inclusive Growth (Wiley 2016) edited by Mariana Mazzucato and Michael Jacobs.
6. Dietz, T., Ostrom, E., & Stern, P. C. (2003). The Struggle to Govern the Commons. Science, 302(5652), 1907–1912. Retrieved from http://www.jstor.org/stable/3835713