Saturday, June 19, 2010

Markets, Government and the Environment

I stand by my previous observation that without some practical acknowledgment of ecological realities, no institution can properly address a problem like the Gulf oil spill. It seems clear that the freedom-to-function of a market is a separate issue from the various forces, ideologies and knowledge-sets that shape the activity and perceived interests of the economic actors involved. That means, of course, that a "market" can freely function towards quite a number of specific ends, depending on how the economic actors understand their interests.  It may also complicate the sorts of simple oppositions between free market function and governmental intervention that drive so much market anarchist thought.

In the left-libertarian responses, there is a lot of emphasis on regulatory capture—which amounts to the ability of certain economic actors to determine how "common goods" will be defined and protected—and the ways in which the intervention of the (captured) regulatory state have distorted the market incentives for everyone. When you compare a captured governmental apparatus to a free market, one would certainly expect the free contender to look pretty good—so I'm not sure how fair the comparisons really are. But there are, it seems to me, other and quite serious objections to the sort of claims being made for the free market's ability to deal with environmental concerns. The most troubling of these may be a sort of variation on the problem of "conflation"—its flip-side, perhaps—where the workings of the unfree market are presumed to be radically different, at least where it counts, from their free workings. To my progressive friends, regulatory capture looks like interference in the free functioning of a democratic government by "the market." You can say to them, "Well, it's not a free market," but the obvious comeback is, "Well, neither is it a free government."

Kevin Carson points to the obvious shortcomings of the existing regulatory state:
Think:  this is the most “progressive” president, with the largest Democratic majority, likely to be elected in a generation.  If this guy lacks the political will to make full use of the powers available to him in holding a dirtbag like Hayward accountable in a smoking gun case like this, what good’s a regulatory state?
A regulatory state that works properly only when completely staffed with Dudley Do-Rights, who never sleep on the job (especially with the people they’re supposed to be regulating) is a regulatory state that will never work.  In the real world, government is a lot more apt to protect the corporations against you than vice versa.
And maybe he's right that this is as good as it's likely to get for the progressives for awhile. But we don't have to look very far back to find presumably more conservative regimes that showed more willingness to act in the interests of the people. Obama and the Democrats would certainly be unable to pass legislation like the Endangered Species Act, let alone something like the National Park Service Act. But I'm not sure that tells us anything except that the most progressive government likely to be elected in a generation falls somewhere to the right of Richard Nixon or Teddy Roosevelt on some critical issues. The current regulatory state is what is left after decades of dismantling. In the realm of environmental protection, we've seen three decades of general retreat, with a few high-profile battles standing in for an environmental policy. Reagan-era agencies like the MMS were captured from the beginning.

What seems obvious is that the current government is "progressive" in the same way that our actually-existing market is "free"—that is, it's not progressive in any meaningful sense, and it is not at all what real progressives would think of as a functioning regulatory state. To the extent that we want to move from criticism of the current regime to comparison with market alternatives, I would want to know: 1) what is the free-est market we are likely to see in the next generation; and/or 2) what would a freely-functioning regulatory state look like. If we're going to talk tough about "the real world," there's no escaping some very hard questions about how much of the capture of the state has been in accord with market strategies that would make just as much sense in a free market as they presumably do under actually-existing capitalism.

In the battles over logging old-growth timber, for instance, short-term profits repeatedly trumped long-term industry sustainability, and there's not much reason to believe that a free market would have made much of a difference. As willing as some federal agencies were to put public land to private uses, and as blatantly political as the "science" of some of the most use-oriented agencies became, it's hard to imagine what private enterprise would have concerned itself with questions like biodiversity and endangered species or ecosystems in the first place.

There's clearly much more to say, but that's about all I have the energy to tackle at the moment...

4 comments:

MBH said...

Beautiful.

Kevin Carson said...

I think I agree with you that "without some practical acknowledgment of ecological realities, no institution can properly address a problem like the Gulf oil spill." The problem is, this is a background prerequisite for any kind of society, so in terms of its effect on the relative benefits of the market and the regulatory state it seems to me to be a wash.

One possible advantage for markets, when comparing an optimally functioning genuine market to an optimally functioning genuinely democratic state (or even a middling market against an optimal democratic state) involves transaction costs. A state has to function in an optimally democratic manner to overcome transaction costs such as political barriers like regulatory capture and lobbying. The transaction costs involved in thwarting grand designs by (say) the extractive industries, by comparison, are probably much lower in a stateless society. The transaction costs in a stateless society, rather, would tend to fall on extractive industries. Without a state to preempt the field and allow privileged access to (say) sites in U.S. "territorial waters," there would be constant legal harrassment by all sorts of groups like fishing collectives claiming common rights over fishing in the area, and things of that sort--just to take one example. There would be a lot more cases like that cartoon where the real estate developer had to build a skyscraper around Bugs Bunny's rabbit hole.

MBH said...

Kevin, I wonder what the costs would be for inside traders riding the coat tails of the creative. And when the traders inevitably control the bulk of capital, what are the transaction costs for their permission to enter the relevant market?

Kevin Carson said...

MBH: For technological reasons, I think the whole "controlling the bulk of capital" think is becoming increasingly irrelevant.