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[Cross-posted on the parent blog]
When confronted by the possibility of climate change, many
libertarians default to the position that the free market, with its
ability to mobilize the ingenuity of the economy for the satisfaction
of the desires of the people, will provide the solutions we desire. I
want to discuss this view, because I think it is the result of a
mistaken understanding of the nature of the free market. For an example
of this view, consider George Reisman's comments in his essay, "Environmentalism in the Light of Menger and Mises":
The
appropriate answer to the environmentalists is that we will not
sacrifice a hair of industrial civilization, and that if global warming
and ozone depletion really are among its consequences, we will accept
them and deal with them--by such reasonable means as employing more and
better air conditioners and sun block, not by giving up our air
conditioners, refrigerators, and automobiles.
In his essay, "Global Warming Is Not a Threat But the Environmentalist Response to It Is," Reisman elaborates:
...if global warming is a fact, the free citizens of an industrial
civilization will have no great difficulty in coping with - that is, of
course, if their ability to use energy and to produce is not crippled
by the environmental movement and by government controls otherwise
inspired.
He goes on to say that global warming
...would
certainly not be too great a problem for tens and hundreds of millions
of free, thinking individuals living under capitalism to solve. It
would be solved by means of each individual being free to decide how
best to cope with the particular aspects of global warming that
affected him.
Reisman makes an important point.
When it comes to allocating resources efficiently, the free market is
unparalleled in its effectiveness. In his essay, "The Use of Knowledge
in Society," Hayek explained:
...knowledge of the
circumstances...never exists in concentrated or integrated form, but
solely as the dispersed bits of incomplete and frequently contradictory
knowledge which all...separate individuals possess. The economic
problem of society is thus not merely a problem of how to allocate
"given" resources--if "given" is taken to mean given to a single mind
which deliberately solves the problem set by these "data." It is rather
a problem of how to secure the best use of resources known to any of
the members of society, for ends whose relative importance only these
individuals know. Or, to put it briefly, it is a problem of the
utilization of knowledge not given to anyone in its totality.
Hayek points out that
...there
is...a body of very important but unorganized knowledge which cannot
possibly be called scientific in the sense of knowledge of general
rules: the knowledge of the particular circumstances of time and place.
It is with respect to this that practically every individual has some
advantage over all others in that he possesses unique information of
which beneficial use might be made, but of which use can be made only
if the decisions depending on it are left to him or are made with his
active cooperation.
He concludes:
If we
can agree that the economic problem of society is mainly one of rapid
adaptation to changes in the particular circumstances of time and
place, it would seem to follow that the ultimate decisions must be left
to the people who are familiar with these circumstances, who know
directly of the relevant changes and of the resources immediately
available to meet them. We cannot expect that this problem will be
solved by first communicating all this knowledge to a central board
which, after integrating all knowledge, issues its orders. We must solve it by some form of decentralization.
This decentralization is the free market. Hayek explains that
...in
a system where the knowledge of the relevant facts is dispersed among
many people, prices can act to coordinate the separate actions of
different people in the same way as subjective values help the
individual to coordinate the parts of his plan.
And
indeed, it's been demonstrated in practically every instance that the
free market has the capacity to satisfy the wants of the population
better than centrally organized alternatives. So I think Reisman is
largely right in saying that when it comes to adapting to new problems,
the market does do great work.
But when we talk about the free
market, we generally have two things in mind. The first, which Reisman
focuses on, is a system in which property titles are traded voluntarily
in a mutually beneficial way, resulting in a continuous progression
towards a more efficient allocation of resources. But the second, which
underpins the first, is a system in which rights are enforced, so that
individuals who infringe on the rights of others are punished, and
those whose rights are infringed are compensated for the harm they
suffer. It is my contention the Reisman's argument breaks down by
completely brushing off this second feature of the market.
Imagine
if we were trying to discuss the proper social response to a particular
theft. It might be true that of all social systems, a victim of theft
would be best equipped for dealing with her loss in a capitalistic free
market. She would not need to consult a central planning board in order
to replace the things that were taken, and her higher purchasing power,
enabled by her participation in a thriving market economy, would enable
her to afford the replacement with comparative ease.
And yet we would obviously not be satisfied with this "solution." The reason is simple. The thief did something wrong,
and therefore, the thief ought to be held responsible for fixing it,
never mind that we should perhaps have tried to stop the theft from
happening in the first place. Accordingly, by suggesting that we simply
allow the free market to operate so that adaptation will be easier,
Reisman is smuggling in the claim that we do nothing wrong to the
victims of climate change.
This seems obviously contentious. The
question should not be, as Reisman seems to want to make it, whether or
not the free market is the best system for facilitating adaptation to
changing conditions. The question is whether we do something unjust by
contributing to climate change. To be fair, Reisman briefly addresses
this issue, as I discussed here.
But my point is that by glossing quickly over the issue of justice,
many libertarians have completely missed the point. If the free market
is to be relied on to provide a "solution" to climate change, it must
be through a strict adherence to the principles of justice. If we
simply ignore injustice, and define fairness in terms of mere
participation in the market, then we cannot claim to be advocating
libertarianism.