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Ethonomics Explained

| Monday June 22nd, 2009 | 7 Comments

preidio-buzz-bar.gif ethonomics
By Rebecca Greenberg
It can be said, beyond the shadow of a doubt, that our world is changing.
Our planet is warming, our population is growing, our water supply is under preassure, and our financial systems have suffered. We have a new president in office; a man who passionately describes a new, green economy. The traditional ways of conducting business are changing. Even the largest investment banks and motor companies are beginning to realize that the “status quo” of doing business, i.e. profit for profit’s sake, must be revolutionized.

Our economy must adapt to be faster, “greener” and more innovative. So what do we have when we combine traditional economics with environmental stewardship and social ethics? Ethonomics, of course.
Ethonomics has several definitions. The term was originally coined to describe the academic process of mapping value systems. Earlier this year, however, Fast Company magazine assigned a new meaning to the term Ethonomics: ethical economics.

According to Fast Company, “…any business that claims to be truly sustainable and innovative should be increasingly efficient with energy and natural resources, transparent and accountable, and good on balance for people and other living things. Ethonomics is a hybrid of technology, design and social responsibility.”
Around the same time that Fast Company redefined the term ethonomics, a lawyer named Tom Linton founded The Ethonomics Organization. Linton defines the term as “the study of ethics in the marketplace.”
Whichever definition you prefer, ethonomics is principally about business ethics. It is the study and practice of firms and professional changemakers that choose to implement triple-bottom-line business practices. It is the new and improved, Obama-friendly version of economics, coined just in time to save the world.

Ethonomics is a rather all-encompassing term. It includes social entrepreneurship, corporate social responsibility, fair trade, micro-lending, even stakeholder engagement. In this sense, ethonomics can be described as a portfolio of principled business practices rather than a buzz word meant to be splashed across the cover of newspapers and magazines.

A mainstream shop owner might choose to buy and sell organic and fair-trade products, because he believes that it is a wise ethonomic decision. A Fortune 500 firm may execute an annual CSR report because they believe it is a shrewd business move to comply with ever-increasing ethonomic demands from the marketplace.
Traditional economics provides several ways of thinking about ethics and altruism. The Pareto Optimality, for example, discusses distributions of wealth. A Pareto improvement is a way of allocating goods and services in such a way that it improves the lives of some without damaging or disserving the lives of others: in other words, economic selflessness. An Ethonomic version of the Pareto improvement might involve a for-profit business that serves the health needs of an impoverished community. The firm is generating financial profit (through subsidies, grants, donations and a clever business plan) while also providing much-needed services to the people who need it most. The community, then, enjoys an improved quality of life at no expense to the firm.

Ethonomics, however, is not free of criticisms or dangers. Defining what is and is not “ethical” is a bumpy road. A benefit of tried and true capitalism is that it is profit-oriented. We do not care, necessarily, about the value-systems of companies with which we do business, or in which we invest. We understand that our business relationship is symbiotic in that our mutual goal is financial profit. By establishing a universal or even widely accepted ethical business code, we run the risk of becoming narrow-minded and homogeneous. Only time will tell if ethonomics have enough flexibility to accept multiple and varying ethical value systems.

Living during a time of political, economic and social change has an inevitable side effect: buzzwords. We hear President Obama use terms like “renewable”, “cleantech” and “green” on an almost daily basis. Ethonomics may or may not be another buzz word created for the media to use when discussing issues such as the failing economy or sustainability.

Actions speak louder than words, though. Van Jones has been sent to the White House to serve as the “Green Jobs Czar.” The Obama-Biden administration intends to invest $150 billion in the next 10 years in an effort to incentivize the private sector to introduce new, renewable energy efficiencies. Motor companies, the new scourge of the 21st century, are being forced to design more fuel-efficient cars. These small and large steps in the right direction may indicate that our society and our country are moving away from “business as usual” and towards ethonomics.
***
Greenberg_Rebecca.jpgRebecca Greenberg is a MBA candidate at the Presidio School of Management in San Francisco. Prior to her studies at Presidio, her professional experience was primarily focused in corporate retail merchandising at both Gap Inc. and Williams-Sonoma Inc. Contact her at Rebecca.Greenberg@presidiomba.org. This is Rebecca’s first column in a Sustainable MBA series published with Sustainable Industries.


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  • http://www.lifeaftergrowth.com Scott

    Rebecca,
    Glad you called attention to this newish term that Fast Company and others are starting to glom on to. To play with the definitions, I’ve often thought of the concept as recognizing all the streams of value that a business is hopefully creating: financial, environmental, ethical, communal, etc. Being focused on just one, as we’ve seen, is destructive in the long term and now, probably, in the short term.
    Two questions: why do you describe our economy as having to adapt to “faster”? I think there’s an argument to be made for going a little “slower”. Also, do you think there are any downsides to dressing the cultural sea change you talk about in a single term?
    I don’t know myself. Would be interested to hear your thoughts!

  • Willoughby C Jenett

    I am reminded of a report I heard on NPR this weekend regarding the specifics of the creation and quatification of carbon credits in privately owned forests. I think the commodification of these credits is an interesting part of this struggle you wrote about. Thoughts? Thank you for the well written article.

  • http://blog.jessdaniel.com Jess

    Thanks for the breakdown of the term — I hadn’t heard it before, but I definitely associate strongly with its meaning. It reminds me a lot of a term that’s being thrown around in food sustainability circles: Profood. It started on Rob Smart’s Every Kitchen Table blog (http://everytable.wordpress.com/2009/06/30/pro-food-is-2/) and has blossomed from there. I don’t necessarily like the term (I’m not sure it’s very descriptive) but I do appreciate the idea that Smart’s trying to convey.

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