Rethinking Capitalism: Equitable Consideration of Financial, Human, and Natural Capital
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Themes
Sustainable accounting, human capital, natural capital, financial capital, capitalist system, accounting management, CARE/TDL method, ecological national accounting, triple capital approach, corporate social responsibility, environmental impact, social impact, equitable capital consideration, new accounting model, sustainable capitalism, stakeholder capitalism, ESG, environmental economics, sustainable development, corporate governance, responsible investment, capital preservation, maintenance budget, accounting reform, sustainable business practices, ecological urgency, climate change, resource depletion, invisible hand, market laws, soft laws, hard laws, regulatory framework, international accounting standards.
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Abstract
The authors propose a new accounting system that prioritizes human and natural capital alongside financial capital, challenging the traditional capitalist system.
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[...] According to the authors, business leaders must manage a maintenance budget for the capital, not only financial as in the framework of a capitalist system, but also on the human and natural capital. It is therefore necessary to ensure both the maintenance of natural resources, ecological but also the health of workers. - The recording of maintenance cost budgets in the liability as capitals. It is not a matter of compensating a loss of human capital with a gain in financial capital. The three capitals are not permeable and a debt on one of the three capitals must be settled separately. [...]
[...] First critique, favorable: One can welcome from the authors the consideration of what they call human and natural capital. Indeed, the democratic and supposedly humanist societies that are ours, at least in the Western world, cannot allow a capitalist system that only thinks about the prosperity of financial capital to express itself. Traditionally, accounting practices have focused primarily on financial capital, considering it as the sole measure of commercial success. However, this one-dimensional approach neglects the essential human and environmental aspects necessary for long-term sustainability of businesses and society as a whole. [...]
[...] The authors propose to conserve the dual accounting that we only apply in the capitalist system to financial capital between on the one hand the amounts of capitals to be preserved and on the other hand the assets. - The imposition of the new model by accounting laws. The three capitals must benefit from the same rigor concerning the issuance of laws and standards. It is no longer a matter of setting up hard laws for financial capital and soft laws for the other two capitals, which, according to the authors, require the same level of demand. [...]
[...] In summary, the potential complexity of implementing the proposed system lies in both the practical challenges related to data collection and analysis, as well as the conceptual challenges related to changing mindset and organizational culture. To overcome these challenges, a strong commitment from businesses, regulators, and society as a whole would be needed to promote more holistic and responsible accounting management. Third critique, unfavorable The idealistic or utopian perception of the proposed approach by some business actors is a potential critique of the authors' proposals in terms of accounting. [...]
[...] They explain that if laws are made to protect financial capital, none or very few are put in place to protect human and natural capital. - In the third chapter, the authors will propose a new type of accounting management in which human and natural capital will be considered at least as much as financial capital, whereas in the traditional capitalist system, it is only the latter that counts or counts above all, to the detriment of the other two conceptualized by the authors of the book. [...]
