(This continues a discussion of the topic I started here, in Spanish, and in §5.4 of this published paper, in English. Not necessary to read those first; this blog stands on its own.)

There are many definitions of sustainability. Perhaps the most familiar one is the Brundtland report’s: "Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs."[1]

An admirable sentiment, but a suspicious one. Suppose I borrow money to buy a house that I will bequeath to my children. I may die tomorrow, and the market may go down, leaving the kids unable to sell the house for the amount of the debt. I have compromised their ability to meet their own needs.

Suppose I borrow money to build a green business. Green firms face the same business risks as other companies; my children might inherit a profitable business, or they might inherit nothing, my assets wiped out by the bankruptcy of my enterprise. With no funds to complete their education,  they’ll have to take out loans, and… well, you get the idea.

Should I then avoid all borrowing?

I cannot guarantee that I won’t compromise the future. Should that be an excuse for doing nothing – taking no risk – now?

Obviously, no. A green future depends on innovation. Innovation needs to be financed via debt or equity. And that implies risk.

In fact, abjuring risk compromises the future. We dither about the “value” of space exploration, for instance, when resources plentiful unto the nth generation are no farther away than the asteroid belt.

The US now has a nine trillion dollar debt. If that doesn’t compromise future generations, I can’t guess what does. Even fiscal conservatives admit that the large part of the nine trillion spent on bank bailouts was necessary, to keep the economy from death-spiraling.

Yet we continue to talk about sustainability. So I think we don’t really believe a definition that emphasizes not compromising future generations. I mean, we care about future generations, but we also have confidence that they’ll be smart and compassionate enough to do what we do: Try to fix the broken things we’ve inherited; innovate boldly;
and do what we can to create a better future.

Past generations have done this for us, thus proving that there is such a thing as a free lunch. Using a telephone is free, for example. (If you deal with AT&T or Verizon, you’ll argue with that, but bear with me.) Your 16th-century ancestors had no phones. You did not personally have to invent the telephone. Yet you get to use a phone – solely by virtue of your luck in being born in the 20th century.[2] Phone calls substitute for polluting transportation, so they're green. Free, green lunch.

We want to give our descendants more free green lunches. But that part about not compromising their ability to meet their needs – where did it come from?

It echoes injunctions of the Abrahamic religions:

  • “Do not charge your brother interest, whether on money or food or anything else that may earn interest.” (Deuteronomy 23:19)

  • Jesus driving moneylenders from the temple (Matthew 21:12)

  • The Koranic prohibition on the charging of interest, which it characterizes as oppressive and exploitative (Qur’an 2:279)[3]    

One wonders whether the Brundtland report’s slant on sustainability was underpinned, perhaps unconsciously, by the religious feelings of its writers. And, with our current economic mess having been driven by mortgage loans, one cannot call such an underpinning totally wrong-headed.

(Incidentally, the three Abrahamic traditions do not prohibit equity investment – equity is in fact the central principle of modern Islamic banking – notwithstanding that ownership can be exploitative as well.)

Compared to the world of the Prophets, though, ours is more crowded, interdependent, and specialized.  The few weeks we spent this year with no credit market to speak of were not the kind of weeks we would wish on our descendants. It is necessary and unavoidable that we lend and borrow when it seems wise to risk the consequences. The consequences may compromise future generations’ assets.

I offer, with apologies to Dr. Brundtland, a modification of her principle: Let us always do our best for the future, while not compromising (too much) our enjoyment of the present, nor our capacity for taking bold risk.

I intend to use these ideas in my November keynote speech at the UNESCO-World Technopolis Association conference in South Korea. Your comments will help me sharpen them. I’d say "thanks in advance," but that would be lending, wouldn’t it?

[1] Page 8, World Commission on Environment and Development. Our Common Future. (Oxford, Great Britain: Oxford University Press, 1987). (Known as the Brundtland report, after Gro Harlem Brundtland, Chair of the Commission)
[2] Apologies to any 8-year-olds who may read this blog.
[3] Institute of Islamic Banking and Insurance