Intangible Capital
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Intangible Capital

Its Contribution to Economic Growth, Well-being and Rationality

John F. Tomer

Despite increasing research efforts, there is still much confusion regarding the nature and contribution of the most intangible forms of capital. This book develops a comprehensive and unifying conception of intangible capital in order to understand its role with respect to economic growth, well-being, and rationality. As the book illustrates, utilizing the intangible capital concept enables many new and important economic insights. Intangible capital is defined to include standard human capital, noncognitive human capital (including personal capital), social capital, and other intangible manifestations of human capacity. Understanding intangible capital is a key to realizing the full human potential of our economic systems.
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Chapter 13: Why We Need a Commitment Approach to Environmental Policy

John F. Tomer

Extract

13. Why we need a commitment approach to environmental policy with Thomas R. Sadler* According to Amartya Sen (1977) in his classic ‘Rational Fools’ article: ‘To run an organization entirely on incentives to personal gain is pretty much a hopeless task’ (pp. 333–5). This comment regarding employer– employee relations would seem to apply similarly to regulator-regulated relations with regard to environmental protection. Sen might also have said: ‘To protect the environment entirely using incentives to business gain is pretty much a hopeless task.’ Following Sen, in these situations, a large dose of commitment involving non-egoistic motivation is needed (pp. 327–9). The principal reason why economists have generally advocated environmental policies based solely on incentives is that their conception of business behavior and motivation derives from the neoclassical model of the firm. While businesses certainly do respond to profit incentives, firms’ behavior is also greatly influenced by socio-political considerations and their organizational capabilities. Firms are, more than ever, recognized as socio-economic entities embedded in society. In recent years, a significant group of businesses that are highly innovative, productive, competitive and socially responsible has emerged. These high performing organizations are capable of executing strategies that enable them to be financially successful and environmentally responsible at the same time. These are not the firms that policy makers envisioned when they formulated command and control and market incentive environmental policies. Because of this and other new business realities, there is a need for new types of environmental policies. Thus,...

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