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Getting the Prices Right — or Could Carbon Pricing and Other Market-Balancing Mechanisms Save Capitalism
When Gandhi arrived in England in the 1930s, a reporter asked him, “What do you think about Western civilization?”
“I think it would be a wonderful idea,” he reportedly replied.
Carrying the great man’s thinking over to today’s economy, we think capitalism would be a wonderful idea—in a fair market where folks actually paid what things actually cost.
But we don’t. Massive subsidies, unmonetized externalities, submerged value, prices that don’t reflect real costs – all these distort markets, and thus don’t support rational, much less sustainable, decisions. Businesses—as well as planets—are at risk for getting bitten by what Salesforce SVP Peter Schwartz calls “inevitable surprises.”
How bad is it? Is it of merely academic concern or material to businesses and investors? What are the Impacts? What can be done—at the level of policy, business, investors, customers—to move us toward “reality-based” finance and accounting?