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Stefan Krook has spent most of his career building companies. He founded and publicly listed Glocalnet while still a student at SSE, and later co-founded Kivra, the digital mailbox now used by most people in Sweden. 

In addition, he has launched a string of other ventures along the way. But for the past one and a half years, he has focused on a bigger mission: arguing for an update of the economic system. 

That argument is at the heart of his new book, The Laghum Economy, which Krook recently presented at an Inspirational Session in the House of Innovation’s new lecture hall.

The title borrows from Old Norse. Laghum, the root of the Swedish word lagom, means "in balance with what is right, according to the law." It frames a book that argues humanity has upset its balance with nature. 

"The economic system is like an operating system. Even if it is great, if we don't update it, it stops working," Krook said. 

Stefan Krook presented at an Inspirational Session for professional services staff at the Stockholm School of Economics. Photo: Majlin Skjetne 

A model with a missing variable 

Krook's presentation started with Adam Smith. When Smith published The Wealth of Nations in 1776, he identified three factors of production: capital, labor, and land (including nature). But because nature seemed limitless at the time, economists left it out of the model. It became what economists call an externality: acknowledged in theory, invisible in practice. 

The consequences of this economic model are now visible in the data. Scientists have identified nine planetary boundaries (the safe operating space for humanity), and we are currently overshooting seven of them. Climate change is only one of these nine boundaries.

"This is not balance," Krook said. "And it is not working." 

The problem, he argued, is not that the market is broken. It is that the market has never been asked to account for nature.

"We are in the middle of the largest market failure in human history," he said. "The market does not price nature, emissions, and natural resources in the right way." 

Participants at the session contributed to the conversation. Photo: Majlin Skjetne 

The upgrade: sustainable consumption taxes 

The solution Krook proposes is to put a price on nature through what he calls sustainable consumption taxes. Instead of taxing labor, governments would tax the resource footprint embedded in the goods and services people buy.

A barcode on a book, he suggested, could carry a "resource declaration" detailing how much paper was used, where it came from, and what emissions its production generated. At the point of sale, a consumption tax proportional to that footprint would apply. 

The revenues raised could then be used to reduce taxes on labor, shifting the tax burden from human effort to resource consumption. 

The idea to put a price on nature is not new, in fact the SSE Professor Erik Dahmén was a pioneer in the late 1960s and 1970s, promoting the core idea. The policy principle that polluters should pay has been around since. Krook however now argues to complement and partly rethink this principle. 

Previous attempts at green taxation have stalled because countries fear losing competitiveness if they move first. His model is designed to reverse that dynamic and turn sustainability into a competitive advantage. 

"Early movers could gain a competitive advantage. Other countries and regions will start to follow because it's good for them." 

When a country reduces labor taxes, its factories become cheaper to run. When it exports goods to markets without equivalent resource taxation, those goods become more competitive, not less. 

"It's the same medicine," Krook said, "but a different treatment method."

Rather than requiring the world to act in lockstep, the model creates incentives for early movers and a potential domino effect as others follow. 

The audience engaged with the content and raised several questions about the proposed economic model. Photo: Majlin Skjetne 

A new brief for business 

Today, Krook said, the implicit brief that markets give every business is to produce as much as possible at the lowest possible cost, without accounting for nature. 

Under his proposed system, that brief would become: create maximum consumer value with the minimum possible resource footprint. 

In practice, this would mean that business models built on circularity, sharing, and durability would gain a structural advantage for the first time. 

When one of the attendees asked how this model might affect innovation, Krook drew a direct link between constraints and creativity.

"Innovation happens from constraints and problems," he said. "If we accept that there is only one planet and price that reality into the system, that will influence all innovation." 

In short, ventures that today cannot attract investment because they do not fit the economic model would, in a reformed system, become the more attractive investment case. 

Stefan Krook presented key ideas from his new book The Laghum Economy. Photo: Majlin Skjetne 

Change through understanding, not moral argument 

Krook was candid about the limits of persuasion. He is less convinced than he once was that consumers will voluntarily choose the more sustainable option, even when it is available. 

Drawing on behavioral economics and Daniel Kahneman's work on human irrationality, he argued that the goal should not be to make consumers more virtuous, but to design a system in which the default choice happens to be the right one. 

"How can we, knowing this, design policy that changes what they buy?" he asked. "They are influenced by price." 

The session also generated questions about fairness. In particular, whether shifting taxes from labor to consumption would disproportionately burden lower-income households, who spend a higher proportion of their earnings. 

Krook acknowledged the concern directly but argued it is solvable. By making remaining labor taxes more progressive and raising the income thresholds at which taxes kick in, he explained, the regressive effects can be offset. 

"It's a really important challenge," he said, "but it's not unsolvable. It's just something policy design needs to take into consideration." 

Looking ahead

What drives Krook's optimism is not government action alone, but the movement he sees building around the ideas. Readers of the book, he said, tend to become advocates.  

Professor Mattia Bianchi, Head of the Department of Entrepreneurship, Innovation and Technology at the House of Innovation, has engaged deeply with his work. Mattia is currently exploring ways of integrating the ideas of Laghum into his CEMS course.  

“I am truly grateful and excited about the prospect of working closely with Mattia on these ideas,” says Krook. 

Professors at other universities in Sweden and beyond, including top universities such as Harvard and Stanford, have showed interest in the work. 

At the Stockholm School of Economics and the House of Innovation, we look forward to further collaborations with Krook, and welcome the many conversations the Laghum Economy continues to spark.