4. The four capitals

Up to this point, the argument has been developed as if the distinction between economic, social and environmental spheres is plain and clear. It is not as simple as that.

The economic, social, political and environmental dimensions of human activity are inter-penetrating and the boundaries between them are ‘‘fuzzy’’ (in the sense of ‘belonging’ in fuzzy set theory). Reasoning in terms of governance activity (the political sphere) addressing a ‘‘triple bottom line’’ (of sustainability for the social, environmental and economic spheres) requires us to specify conventions for making the distinctions between the ‘‘economic’’ and the ‘‘social’’ spheres, between the ‘‘economic’’ and ‘‘environmental’’ spheres, between the ‘‘social’’ and the ‘‘political’’ spheres, and so on. These questions have long histories in metaphysics, philosophy and the social sciences. Two specific strands of the question will be considered here, relating to the concept of ‘‘capital’’ in sustainability analysis and to the uses of monetary evaluation of changes in social and environmental domains.

Economic analysis since the 1970s, responding to poverty and environmental concerns, proposed the framing of sustainability requirements in terms of the maintenance of ‘‘four capitals’’—the economic, natural, social and human capitals. Because this ‘‘four capitals’’ model has widespread currency as a sort of halfway house between economics and systems science, it is useful to determine how it can be related to the four spheres of our Tetrahedral Model. In effect, three of the capitals are, in the economist’s jargon, ‘‘funds’’ corresponding to the three spheres—the economic (built capital), the environmental (natural capital: land, water and the biosphere) and the social (social capital as communities and networks of meaning and shared identity). Human capital, by contrast, is not associated with any single organisational type. Rather it is a constituent within each of the four spheres, that is, a building block for each of the four organisational forms. It mediates between the economic, environmental and social spheres (see Fig. 2) and is also a constitutive element of the fourth (political) sphere: the individual as political actor(voter, citizen, stakeholder, etc.). The political sphere – which has the role of ‘‘referee’’ that arbitrates on claims made by the actors of the social and economic sphere for themselves and with regard to the environment – has no ‘‘fund’’ or class of capital specifically associated with it.

Fig. 2 – Human capital in the four capital model