I cannot even begin to tell you how many times I am told, “yeah, supply and demand and prices work and all that, but if we allow them to run wild, the environment will inevitably be destroyed.”  These arguments are often levied far more vehemently in the presence of classical liberals than in more mainstream schools of political thought, and are often levied far more vehemently in the presence of anarcho-capitalists than in more pragmatic utilitarian believers in markets.

This is odd. And it is wrong.

Do critics of markets actually understand what axiomatic principles are? Do critics of markets actually understand what the term “institutions” means? For those of us who are classically liberally oriented and prefer a much more market oriented economy, THE very fundamental premise of our economic and political worldview is the non-aggression axiom. Individuals may contract with one another and otherwise behave in ways that pursue their own interests so long as in doing so the property of others is not violated. If individuals violate the property of others, there is just cause for the situation to be rectified (let’s ignore how). In other words, the default “anarchist” position on things like pollution is, “no pollution allowed.”  And that position derives from the axiom that the rest of the classical liberal framework evolves from. For our utilitarian friends, upon what such axiomatic foundation does “environmental externalities are bad” derive? Keep searching … keep searching … keep searching … there is, of course, no such foundational reason outside of expediency.

Seriously, go ask someone what they think the default position of “free-marketers” is on pollution and I guarantee they’ll argue that “people who support free-markets are enemies of the environment.” But the default position of true market proponents is that injunctions against and damages for all forms of contamination of land, water and air are required when actual nuisance and damage occurs. Sure, there are cases when relying on the body of common-law and tort to deal with these intrusions will be costly or impossible, but the basic market approach provides a framework for understanding when this is likely and also a way to think about when those barriers to such implementation are likely to fall.

The ignorance, the almost proud ignorance, of anti-capitalists on this matter would be laughable if they didn’t have guns. The Keystone issue would be a good application. Does the fact that a pipeline exists mean that pollution is inevitable (ignoring the fact that there are already dozens of pipelines across the same area, and that pipeline safety is far better than transporting fuel in other ways)? Does the current body of environmental law, and the record of torts on environmental issue suggest that builders of the pipeline are going to be more or less sensitive to potential damages today than in the past? In this case too, you might think the conditions upon which market transactions can occur effectively would be violated – but it is clear where the pipeline would be travelling, and it is not hard to imagine that with today’s computing and communication technology that the pipeline owners could negotiate with all potential damaged parties to make it clear what might happen should a leak or explosion occur. Where in the entire discussion was the public made aware of what typically happens if a pipeline has an issue? Where in the entire discussion was the public made aware of tools they might have to become involved in the negotiations? Where in the entire discussion was the fact that Ogallala aquifer is a common-pool resources that is as much the source of the problem as the pipeline itself? Do you think if Warren Buffet owned the entire aquifer we’d have the same issues?

Finally, the existence of pollution and so-called externalities presents an opportunity for profit-seeking entrepreneurs to solve the problem. And while I understand that we don’t really want the problems to emerge in the first place, it is usually because of our problems that we are able to advance. For example, without copper prices skyrocketing, maybe we never stumble upon fiber optics.

But beyond that, and really the reason I wanted to write this post, is to remember that there are people in the current intellectual environment who believe that smart regulation creates jobs. Let’s not dispute that. Then the same exact argument can be applied to the spurring of market solutions to externality problems. The same … exact … argument. Do anti-capitalists think that market forces harness greed only when it comes to doing damage and not preventing or cleaning damage? So we are only greedy when it wrecks the lives of others and wrecks the planet. Under what model are you operating if that is in fact your worldview?  So you may want to argue for regulation, but you really ought not do so on the premise that it creates jobs first because it obviously doesn’t, and second, if it does, it doesn’t appear that it would create ’em any differently than would emerge otherwise particularly if the legal system works well.