Ethical Capital

Description

Umair Haque:

"Ethical capital can be thought of as the rules, tools, and practices for defining and refining values that an economy possesses. So without ethical capital, an economy will never be able to fully develop productive preferences in the first place. So though it may have machines, talent, energy, resources of all kinds - only ethical capital can ensure that all those resources have, attached to them, discount rates that reflect their true long-run worth, depreciation rates that reflect their true long-run sustainability, and interest rates that reflect their true long-run opportunity costs.

You can think about that more simply this way: ethical capital is the set of rules ensures that the rate of return we seek isn't merely stolen from the next guy, the environment, or the future. If we don't have it, today's productivity gains are likely to be an illusion - unsustainable at best, a prelude to decline at worst.

Conversely, only ethical capital can ensure that externalities become the exception, not the rule - again, exploding productive capacity, by making sure that, for example, Deepwater Horizons are less likely to happen, and destroy, to some degree, the productive capacity of an entire region for decades.

And perhaps most deeply - only ethical capital can ensure that economies actually are built on (measures and concepts) that matters to humans - not just beancounters. That means updating what we conceive of as the economy - redefining GDP, etc .. " (http://www.bubblegeneration.com/2010/06/ethical-capitalism-and-metaproductivity.html)