What Does It Mean to Advocate a Market Solution to Climate Change?

Published Tue, Apr 15 2008 1:22 AM

[Cross-posted on the parent blog]

The purpose of this post will be to tie together some ideas I've been toying around with in other posts, in order to start working towards a coherent introduction to my thesis on the libertarian approach to thinking about climate change. Here goes nothing.

Moving Past the Science

As a group, libertarians have not dealt well with the prospect of anthropogenic climate change. As most of the world scrambles to find "solutions" to what they anticipate will be a serious problem for human civilization, the typical libertarian approach to the issue has been to deny that climate change is real, or to deny that humans have caused it. There are two problems with this position. First, the most vehement critics of what has become the "mainstream" view are not particularly well qualified for their missions, and often demonstrate a misunderstanding of their opponents' views which seem to indicate that they don't actually know what they're arguing against. Further, where there are well-qualified and well-informed "skeptics," their positions tend to be less vitriolic and more nuanced, being based more on uncertainty and imperfect knowledge, to the point where their views end up falling relatively close to those which are accepted by the mainstream scientific community. As far as I can tell, a relatively strong case can be made in favor of questioning our ability to know the precise truth about climate change, and our ability to predict future states of the climate; the same cannot be said about the position that climate change is not happening, or that humans are not causing it, or that it will not continue into the future in any significant way.

This leads to the second problem with the libertarian habit of questioning the scientific basis for concern about climate change: it does not address the question of what position libertarians would endorse if climate change were happening. There is no reason to believe that anthropogenic climate change, or some substantively similar phenomenon, could not happen. Accordingly, it seems extremely reasonable to ask what libertarians would say about such a phenomenon, if we knew that it was occurring right now. In this article, I will sketch the kind of answer we should be looking for.

Market Failures and Government Inefficacy

Where climate change has been discussed, by libertarians and others, it has generally been labeled as a market failure. Economic theory tells us that market failures occur whenever inefficient social outcomes result from individuals acting on their own desires. Looking at climate change from this paradigm, we would notice that for most individuals, the benefits of, say, driving a car instead of taking the bus more than outweigh any costs they would ever incur from their incremental contribution to climate change. Accordingly, it will be in everyone's interest to drive their car. But the predictable result of everyone making the sort of choices that result in driving everywhere, instead of using public transportation, is that we end up with climate change. As Garrett Hardin famously wrote "...we are locked into a system of "fouling our own nest," so long as we behave only as independent, rational, free enterprisers."

Simply recognizing this problem will not solve it. Mitigating climate change will involve sacrifices, and individuals will undoubtedly resist making these sacrifices if they do not have the assurance that others will follow suit. Unfortunately, getting individuals to voluntarily cut down on their contributions to climate change would be fraught with difficulties, ranging from the large costs of negotiating the agreement to the pervasive incentive to "cheat". These hurdles seem to rule out the kind of decentralized solution that the free-market is capable of providing. The most obvious and widely discussed solution is the one Hardin suggests: legislation. If we know that we will "foul our own nest" if left to our own devices, then it seems reasonable to impose rules on ourselves, and to punish those who violate those rules, in order to ensure that we don't bring about our own destruction.

But many libertarians bristle at the suggestion that central planning can solve the problems presented by market failures. It seems unreasonable, they argue, to suggest that we can fix an imperfect market by simply turning the matter over to the government. After all, governments have problems of their own. As Gene Callahan points out, "Government interventions and "five year plans," even when they are sincere attempts to protect the environment rather than disguised schemes to benefit some powerful lobby, lack the profit incentive and are protected from the competitive pressures that drive private actors to seek an optimal cost-benefit tradeoff."

Accordingly, a number of libertarians have apparently taken the stance that we cannot hope for an "optimal" level of climate stability, so our best option is to simply face the realities of our suboptimal state of affairs. And because, they continue, the free market is the most efficient system we know of for allocating resources to best suit the needs of society, the best way to face climate change would be to allow individuals the freedom to adapt in their own way. As George Reisman writes, "Even if global warming is a fact, the free citizens of an industrial civilization will have no great difficulty in coping with it - 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."

Climate Change: A Matter of Justice

This view of the issue leaves out an important consideration which is central to the libertarian paradigm: According to most accounts, climate change will have victims. This fact brings us out of the realm of mere economic efficiency and forces us to confront the issue from an ethical standpoint. Imagine if we were trying to determine 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 an unfettered 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 – brought about by her participation in a thriving market economy – would enable her to afford the replacement with comparative ease.

But surely libertarians would not be satisfied with this “solution.” In our story, the thief violated the rights of his victim by stealing from her, and therefore he should be held accountable for fixing the damage he caused. It is crucial to acknowledge that holding the thief responsible does not represent a departure from the normal course of the free-market; the very functioning of the free-market is predicated on the recognition of rights. This reveals an important feature of the libertarian position that the proper response to climate change is to simply allow individuals the freedom to adapt to it: It assumes that climate change does not represent an injustice. If climate change were an injustice, then the proper response would not simply be to allow people to adapt: libertarians would need to advocate the enforcement of justice.

Accordingly, it seems like the proper libertarian stance on climate change needs to be stated in terms of justice. The scientific disputes and efficiency-based arguments which have thus far characterized the libertarian position are wholly unbecoming of a political philosophy built on the foundation of respect for individuals’ rights. The libertarian community needs to ask what kinds of rights, if any, are infringed by climate change, and what should be done about those infringements. Anything else would simply be unlibertarian.

by Donny with an A
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Comments

# Grant said on Tuesday, April 15, 2008 5:03 PM

Danny,

The first step towards dealing with any problem is defining and recognizing it. In order to know how to "solve" climate change, we must quantify climate change. Given the complexity and vast scope of the problem, this is very difficult to do.

The only tool I know of which can significantly aid in this is a prediction futures market. Until such markets become legal and more widely used, I don't think we'll be any closer to arriving at a problem, let alone a solution.

I think you understate the dangers of government solutions. Its certainly true that global warming would be the single greatest public goods problem the world has faced, and so government seems to be the obvious solution. Whats rarely mentioned is that effective and just government policies are also public goods. Coordinating politics to produce effective and just policies regarding global warming is likely just as hard as dealing with global warming itself. I don't mean to say that government solutions will always fail to cure global warming, but just that they might have other, worse, effects, and much of their success would likely be based off of pre-existing cultural norms which are arising in response to global warming fears.

Of course, academics like to ponder thought experiments, so it might be useful to say "how would libertarianism deal with problem X, if it existed?". I certainly don't know. As I see it, the problem is basically how to get powerful, industrialized peoples to respect the rights of smaller, necessarily less-industrialized peoples. The incentives to respect those rights just don't seem to exist, regardless of the political philosophy in question.

Since I am skeptical that the above will happen regardless of the political philosophy adopted, let me point out a few ways in which libertarianism might deal with the effects of global warming irrespective of justice: 1) Open immigration for peoples negatively effected by global warming; 2) More private resources available in general, compared to government taxation and planning (so a higher likelihood of private-good solutions arising to combat global warming problems); 3) A significant likelihood that victimized peoples would simply prefer continued industrialization, trade and global warming to an alternative of state-smothered development and more poverty.

# Solomon said on Tuesday, April 15, 2008 9:22 PM

Atmosphere is a very abundant commodity, so it is "owned" communally by everyone who happens to live on the planet.  That being said, it is naturally subject to the free-rider problem i.e. it is perfectly acceptable (however unfortunate the effects) for anyone with a smoke-spewing factory or SUV to abuse it.  Therefore, if the polar ice caps should melt and flood all coastal residences, such a happening should be treated just like any other natural disaster: no one's fault, just the result of the risk people took when they decided to reside there.  

So basically, even if all the fearmongering is true it really doesn't matter.

# Donny with an A said on Wednesday, April 16, 2008 12:36 AM

Thanks for the thoughtful responses.  I'd point out that generally, libertarian conceptions of justice deal with rights possessed by individuals.  So in asking whether climate change represents an injustice, I'm not really focusing on any standard of efficiency, as the public goods approach suggests (though I will deal with the idea of efficiency and overall social wellbeing at the end of my thesis).

Remember, this post was the introduction to my thesis, not the thesis itself.  In the next section, I'm going to discuss what it means to have a right, and what kinds of rights are infringed by climate change.  Included will be discussions of the property rights of currently existing individuals, the concept of a statistical right to a certain level of risk, the idea of a right to inheritance (I'll argue this is not a right), the notion that we have a right to an opportunity to try to integrate ourselves into the culture of our upbringing (I'm not sure exactly how to handle this), the question of whether future people can have rights in light of the Non-Identity Problem (I'll argue that they can't), and the question of whether generations (as abstract entities) can have a right to inherit an unspoiled Earth (I'll argue that they can't).

So before getting too far ahead of yourselves (and me) by telling me the answers to these questions, perhaps you might find it worthwhile to check out the "Climate Change" label on the parent blog (there's more material there than on this blog):

libertarian-left.blogspot.com

The "Appropriation and Environmentalism" and "The Non-Identity Problem" labels also might be useful.

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