Paths To Knowledge (dot Science)

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The case for the free market as the best protector of the environment

Posted by Strategesis on May 13, 2012

1) Risk management

There are two extremes of governmental structure: One is where there is but one universal government, and the other is where each sentient being is a sovereign government unto himself. In the former case, the universal government has full control over the environment on a world-wide basis. In the latter case, each individual makes his own policy decisions regarding whatever part of the planet he owns and rules over as the sovereign (if he does–he may not own any land.)

With one world government, there is a single point of failure. All risk resides with that one policy maker, who could decide on any policy. Worse, the monopoly policy maker can change its policy at any time. If it chooses a really bad policy, and applies it worldwide for a sufficiently long period of time, the results could be extremely disastrous for the human race, perhaps even for all life on Earth.

Consequently, entrusting the environment to the care of a universal government is equivalent to risking everything on the outcome of a single event: all of one’s trading capital on a single trade, or all of one’s gambling stake on a single roll of the dice. Traders and gamblers who do that repeatedly will eventually lose all their capital. You will not win every roll of the dice without limit.

Trusting to the policy decisions of a single government is to repeatedly roll the dice again and again, hoping that you win each time the government reevaluates its policy, for whatever reason.

2) Governmental Failure

It is commonly alleged that the failure to protect innocent bystanders from the collateral damage caused by big corporate/industrial polluters is a failure of the free market. But that assertion is contrary to fact:

We don’t live in a society where the free market has the primary authority or responsibility for protecting rights, property or otherwise. We live in a society where the primary authority and responsibility for that has been socialized and politicized. It is the state and its public (not private or free-market) system of law making, law enforcement and judicial services that our society gives the authority and responsibility to protect lives, health and property. So any failure to do that function effectively and/or satisfactorily cannot possibly be rightly placed anywhere else than on the state, and not on the free market. The state prohibits the existence of a free market in law and/or judicial services. It claims to be the monopoly provider of such services, and enforces that claim with overwhelming force.

The state makes the rules that define what activities will be allowed and which will be prohibited, makes the rules that determine whether, when and to what extent polluters will or will not be forced to pay for damages, and makes the rules that may or may not prohibit pollution-causing activities. The state enforces those rules, judges whether its rules have or have not been followed, and grants immunity from suit or prosecution as it sees fit. And environmentalists are positively furious with the results–but inexplicably blame the free market for this failure of the state.

And environmentalists, amazingly, even fully understand the reason that states fail so badly! It’s because they are the monopoly providers of governmental services. Environmentalists abhor both monopolies and huge organizations, rightfully preferring small, local organizations and denial of monopoly power. And they can explain their reasons for that attitude quite cogently. But for some inexplicable reason, they only have that attitude with respect to private businesses in general, and large corporations in particular. Why they don’t apply the same logic to the largest, most powerful corporations–namely, states with a monopoly on the provision of governmental services in general, and law and justice services in particular–is one of the great, confounding mysteries of the modern age.

“If an agency is the ultimate judge in every case of conflict, then it is also judge in all conflicts involving itself. Consequently, instead of merely preventing and resolving conflict, a monopolist of ultimate decision making will also cause and provoke conflict in order to settle it to his own advantage. That is, if one can only appeal to the state for justice, justice will be perverted in the favor of the state, constitutions and supreme courts notwithstanding.” ~ Hans-Hermann Hoppe

It is also commonly argued that the free market is incapable of making polluters pay for the social costs (“externalities.”) But yet again, this assertion is contrary to fact:

In English common law–which can be thought of as the closest example in the history of Western civilization to a non-state system of private law–there originally were mechanisms by which polluters could be forced to pay for the damages they caused, or even prohibited from engaging in such harmful activities.

Quoting from Economic Freedom: The Case for Private Property Rights:

Up to the 1820s and 1830s, the legal jurisprudence in Great Britain and the U.S. was more or less predicated upon the libertarian vision of non invasiveness (Coase, 1960, Horwitz, 1977).

Typically, a farmer would complain that a railroad engine had emitted sparks which set ablaze his haystacks or other crops. Or a woman would accuse a factory of sending airborne pollutants to her property, which would dirty her clean laundry hanging on a clothesline. Or someone would object to the foreign matter imposed in one’s lungs without permission. Almost invariably, the courts would take cognizance of this violation of plaintiff ’s rights.

The usual result during this epoch was injunctive relief, plus anaward of damages.

So what happened? Politics and socialization happened. It was argued that the “public good” was better served by granting immunity to industrial/corporate polluters.

The “public good” argument is a sword with two edges. Eventually, the rich and powerful always turn it against the poor and powerless. Every time, without fail. Whatever is politicized and socialized by being converted into a “public good” becomes a “commons,” with all the dangers and moral hazards that inherently arise with whatever is nominally owned by all but effectively owned by whoever has the most power [See: Tragedy of the Commons]

“When under the pretext of fraternity, the legal code imposes mutual sacrifices on the citizens, human nature is not thereby abrogated. Everyone will then direct his efforts toward contributing little to, and taking much from, the common fund of sacrifices. Now, is it the most unfortunate who gains from this struggle? Certainly not, but rather the most influential and calculating.” — Frederic Bastiat

Appeals to “the public good,” or to the commonly-voiced alternative “what’s good for society,” or to that favorite concept of dishonest judges, the infamous “compelling state interest,” should always be met with derision. Even when they are sincere–and they usually aren’t–they always are excuses and rationalizations used to attempt to hide the fact that what is being proposed is something that no individual would have any right to do. For if a single individual could rightfully do what is proposed, there would be no need to appeal to the bogus concept of “the public good.” And if no private individual has the right to do it, then it can only be because the proposed action in fact violates someone’s rights. And if the action violates individual rights, so that no private person would have the right to do it, from what source could the state have acquired the right to do it? There is no other source of rightful power upon which any state or government can derive its authority other than the people it governs. If they as individuals have not the right to do what is proposed, then the government cannot rightfully have any such power either.

“The public” and “society” do not exist except as abstractions. And they essentially mean the same thing. Society is merely an epi-phenomenon that emerges as a consequence of the interactions between individuals. But society is not a person. It is not subject to death or pain–unlike the individuals that are its members. Society doesn’t care, only people do. And there is no logical or objective reason to ‘care about the whole’ or ‘the public good’ other than because what happens to individuals matters. Nothing else does, or it if does, it’s derived from the fact that individuals do.

The derivative does not rightfully take precedence over that from which it derives. Society is not the rightful master of those whose existence and actions are responsible for its existence as an abstraction. Society does not own us because we live in it. Claiming otherwise is the ruse used to make serfs or slaves out of free individuals, to enable a political class to ennoble themselves at the expense of the rights, freedoms and wellbeing of “the commoners,” and to do so by claiming to seek the opposite result.

But the truth is that no matter who ends up with power, by whatever name they are called, under whatever theory they are given power, what their nominal task assignments may be, and regardless of the charter by which they do business, they are still people. They will still act out of selfishness and greed.

That’s why the optimal case is where power is divided, diffuse, decentralized and limited. Anything that moves away from that ideal is dangerous, dumb and delusional. It creates far too much risk.

So instead, it is far better if each property owner independently makes his own sovereign decisions regarding environmental policy with respect to his sovereign territory. That way, there is no single point of failure and so risk is distributed and diversified. That way, the odds that any single bad policy decision will have disastrous consequences on a global scale is infinitesimally small, and the odds that a sufficiently large group of sovereign land owners would make policy decisions at the same time, and continue them for a sufficiently long period of time so as to cause any severe harm to the global environment, is extremely small.

That last point deserves an in depth analysis on its own–far more than I can give it here. But I will make the following points:

  • Financial markets continue to operate in spite of the fact that many traders lose all their investment capital. One important reason this is so is that traders who act self destructively just don’t accumulate a lot of capital. Similarly, those property owners who destroy the economic value of their land tend to lose their land and their capital, and so don’t accumulate enough of either to become major players.
  • When you only have a small amount of capital–or land–the general tendency is to be very protective of it. Most property owners care for their land quite well. Conversely, anyone (or any organization) that owned the entire planet–such as a world government–would not particularly care about any one small plot of land.
  • History demonstrates that the worst polluters are governments, and among them, the worst polluters generally are the socialist/totalitarian regimes. However, the worst polluter in the world is the US government.

The same reasoning, when applied to the ideal governmental structure of society, argues strongly that a world government is an unacceptable risk to human life, liberty and happiness. The principle of separation of powers argues strongly and vehemently against it. To concentrate power in one place also concentrates risk–and always leads to disaster.

3) Power to the people

You cannot give power to the people by taking it from them. But that’s what states do, and is in fact the principal reason for establishing the state: To make an organization sovereign, instead of individuals.

You cannot prevent tyranny by creating one. But that’s what a state is: A tyranny that claims for itself rights and powers that it forcefully denies to those it governs.

“Tyranny is defined as that which is legal for the government but illegal for the citizenry.” ~ Thomas Jefferson

You cannot prevent warlords and crime lords from dominating society by relabeling them as “the state,” and pretending they aren’t what they are because of the label you’ve given them, as though it were some sort of Indulgence that makes their behavior acceptable.

Of course, you also can’t just disestablish the state and assume that fixes any of these problems. Of course it does not. What it does do is invalidate the extremely dangerous notion that the problem doesn’t exist or is minimal because we have the state to protect us.

If government worked as statists say it should, then why would we care about separation of powers? Why would we care about different levels of government? Why would we care about having a Constitution? Why was the United States founded in the first place?

Freedom isn’t free. It is ours in principle by inalienable right, but in practice it has to be earned–continuously. Forgetting that fact is how we got where we are–partly because we wrongly assumed that the state and the Constitution that establishes it would protect us, when in fact only we can do that.

Governments, corporations and large private businesses are not problematical because of what they are. They are problematical because they are operated by human beings.

We have met the enemy, and he is us. The ultimate solution lies in changing ourselves. The near-term solution lies in dispersing risk and avoiding concentrations of power.

“The state is not something which can be destroyed by a revolution, but is a condition, a certain relationship between human beings, a mode of human behavior; we destroy it by contracting other relationships, by behaving differently.” ~ Gustav Landauer

Additional References:

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