Pollution, Environment, and the Marketplace

Earlier, I wrote a long post on the limits of the market system, inspired by a post by Michigan Law Professor Don Herzog. It received to very insightful comments by my friend John Hall (he's "anonymous"), as well as my longtime reader Randomscrub. A new post on the subject by Prof. Herzog allows me to address their criticisms and bring up some new points.

Startign with Herzog's new addition to the discussion:

A line from Blackstone's Commentaries -- "There is nothing which so generally strikes the imagination and engages the affections of mankind, as the right of property ; or that sole and despotic dominion which one man claims and exercises over the external things of the world, in total exclusion of the right of any other individual in the universe" -- is sometimes cited as a prize nugget of classical liberal insight on property rights. But Blackstone invokes it only to launch a long and complicated history of how this intuition properly gives way to wide-ranging historical developments.

These historical points don't settle what we should do; I introduce them only to continue my nefarious project of showing the deep continuities between us left-liberals and our classical-liberal ancestors. If you're a libertarian, you're free to argue that the line in Blackstone is (more or less) right as it stands. And then we have the usual fun dilemmas: should I be permitted to buy a donut ring of property surrounding yours and then refuse to allow you to leave your lot, on the grounds that it would be trespass? Less whimsically, absolutism about property has always yielded in the face of pollution. In Anarchy, State, and Utopia, Nozick has a brief discussion oddly set off in italics. A subordinate clause -- "Since it would exclude too much to forbid all polluting activities" -- gives away the game. On the absolutist view, if a single propertyholder refuses to consent to having pollutants enter her property, that should be enough to shut down industry and other polluting activities.

This provides an adequate answer to John's point on the environment; simply put, he proves too much. If any property holder can sue (on the basis of a violation of property rights) to enjoin pollution that enters his land, then one property holder could permanantly stop all pollution. Perhaps Greenpeace will be happy, but I sincerely doubt it's what John has in mind in his free market system. Taken in the other direction, the tort model proves too little. An article by Murray Rothbard (ironically given to me originally by John) shows the difficulties of prosecuting any polluting activities if we apply the standard tort model. Rothbard lays out the standards for torts in a libertarian world:

To establish guilt and liability, strict causality of aggression leading to harm must meet the rigid test of proof beyond a reasonable doubt. Hunch, conjecture, plausibility, even mere probability are not enough. In recent years, statistical correlation has been commonly used, but it cannot establish causation, certainly not for a rigorous legal proof of guilt or harm. Thus, if lung cancer rates are higher among cigarette smokers than noncigarette smokers, this does not in itself establish proof of causation. The very fact that many smokers never get lung cancer and that many lung cancer sufferers have never smoked indicates that there are other complex variables at work. So that while the correlation is suggestive, it hardly suffices to establish medical or scientific proof; a fortiori it can still less establish any sort of legal guilt (if, for example, a wife who developed lung cancer should sue a husband for smoking and therefore injuring her lungs)
Murray Rothbard, "Law, Property Rights, and Air Pollution." Cato Journal 2 No. 1, Spring 1982. pp. 55-99

As Rothbard later recognizes, any claim of a harm (or as he prefers, an "aggression") based on pollution is almost inherently speculative, and would not survive this strict standard. Rothbard later talks of how property owners can homestead certain levels of pollution; the amount of pollution they give off is their "right" up until a new property owner is affected. At the point, the first property owner can still give off that level of pollution, but cannot raise it without violating the new owner's rights. This too, falters under analysis. Property has been "owned" (in the libertarian, homesteaded sense) since time immemorial, so presumably everybody has a homesteaded right to zero pollution. Even if one decides that modern society has so jumbled and infringed on property rights such as to make all prior property contracts meaningless, we're still left in a situation where we are locked into current levels of pollution, all it takes is one owner to protest against an increased industrial production on the grounds that it violates his property rights to stop it. In the end, either model is equally bad: Either we cannot ban any pollution (because we can't prove a harm beyond speculation) or we can ban all pollution (because it violates property rights).

Randomscrub points out that my argument assumes that the market is amoral, when in fact it is made of people who can choose to make moral choices. This is true, and it is certainly true that the Milbrath quote I cited only reveals that markets have a tendancy to aid the rich. However, there are several problems with the implications his claim.

First of all, there is only a small subset of the population who possesses the means to make the "moral" choice of funding a water treatement plant into a reality. I'd love to create a water treatment facility in South Asia, but I can't because I don't have the funds. The people who possess the funds probably got them from somewhere, and the way one makes enough money to fund major projects is by seizing upon the most profitable options and running them. As already noted, these options cater to the rich at the expense of the poor. So the very type of person who possesses capital is also relatively unlikely to be one inclined to undertake charitable projects.

Second, much capital in the modern world isn't controlled by individuals as such, it's controlled by corporations. Whereas individuals are free to do whatever they like with their money, corporations are bound by a variety of laws, contracts, and agreements to act in the best interests of their stockholders; this means they are obligated to seek out the most profitable, not the most moral, course of action. History shows that corporations, even those governed by people whom are quite generous in private life, tend to act in an impersonal manner, often flagrantly violating the rights of persons up until the outcry is loud enough to drown them out. Since this outcry only works to stop a fraction of the times where the company is proactively violating rights, it seems facile to suggest it would be strong enough to push the company to proactively improve the wellbeing of persons upon whom they have no legal obligation.

Third, I'd say my position is empirically true. The fact that I can pick up the newspaper and still read about appalling water conditions around the world is prima facia evidence that the "moral market" isn't solving the problem. True, some of the obstacles are put in place by and are the fault of corrupt local governments. But I don't believe that removing the governmental regulations would solve the problem. Again, this has been empirically verified. Chris Jochnick, Legal Director at the Center for Economic and Social Rights provides the example of Ecaudor. There, the state had given the Texaco Oil virtually free reign in the country's outland regions. The company responded by engaging in massive environmental degredation at the expense of the nation’s Amazon community. Affected citizens were told that there was no redress available from the company because Texaco was a private corporation and thus not party to relevant treaty law, they would have to go to the state for aid. However, since Texaco’s revenues were 4x the entire GNP of country, and in any event the company was actively backed by the US government, few believed that the nation could stop the environmental destruction even if it were so inclined.["Confronting the Impunity of Non-State Actors: New Fields for the Promotion of Human Rights." Human Rights Quarterly 21.1 (1999) 56-79].

Here, the state pretty much let a large company alone, free from oppressive regulations or legal restrictions. And following my model, Texaco didn't engage in win-win propositions with the local community, or seek to create mutually beneficial business activities. Instead, it systematically raped and plundered the region, at great profit to the corporate overlords and shareholders who lived thousands of miles away and did not have to face the consequences of their actions firsthand. Empirically, then, something more than a free hand has to happen before a company will engage in moral actions in the global periphary, especially in regions where governments are weak and easily coerced by powerful Multinationals backed by US power.

Incidentally, the above event also shows the limitations of claiming that "protection of property rights" would solve. Who exactly would be doing the protection? As noted, the violator (Texaco) was bigger and more powerful than the nominal enforcer (Ecaudor). With the policeman effectively taken off the beat, the structures which defend property rights from aggression effectively collapsed.

I still think the overarching point is valid: markets can't solve everything, and they are particularly bad at solving environmental problems. Once we accept that the governmetn can create certain "baselines" to make the market work, or at least work morally, then we can recast our discourse so that the market works for everyone, not just the elite few. This is the role of governments in the new, globalized world.