It all follows an apparent logic: there are massive environmental catastrophes which the market is failing to solve. This is because there is continued exploitation or degradation of stocks or buffers – public goods – which the market cannot express in its own terms; private gains then come at a public cost. Therefore, we must fix the market and internalize these external costs by properly valuing our natural capital.
To use an example by Pavan Sukhdev, the Amazon is a rain factory and its transpiration is essential for the survival of everyone downwind. But – he infers – since those beneficiaries don’t pay for this benefit, there is no correlative incentive for Amazonian locals to maintain the provision of this ‘service’ and so keep from deforesting. This is all so tragic, he thinks. The benefit of that service should be properly measured, extracted from its end users, and (presumably) redistributed to either the producers or owners of that natural capital. This would align incentives and so maintain the production and consumption of valuable services.
This is the fever dream of environmental economics: the services provided by our natural capital (naïfs might still call it nature) will finally be properly represented once natural scientists and economists team up to assess what these services are and who benefits from them, and by how much. Values will be represented in commensurable, exchangeable, and individual terms – preferably monetary ones – and, now that these values will all be represented in one grand unified system, there will be no more needless destruction of natural assets.
Do I sound at least a little sympathetic? I’m trying to sound sympathetic. Okay, fine, I’ll stop trying.
This is a contorted, autofellating perversion of economics. Not only does it sanctify the shakiest practical and moral assumptions of orthodox theory; it roundly rejects the best ones. Let me explain.
First the shakiest assumptions: all value is human value; everything under the sun can be reduced to costs and benefits for humans; those costs and benefits are commensurable (reducible to one common scale) and so can be represented by utility or money; since the goodness is representable in monetary terms, so too is it exchangeable. In this case then, all natural value is tradeable human value.
Of course, focusing on these commitments is to ignore whether or not we could ever have complete enough knowledge about the way nature works to know its benefits for humans (see previous post). But that criticism notwithstanding, the problem of value incommensurability which rears its head elsewhere in economics does so with a vengeance when we consider the natural environment. Just as you couldn’t possibly decide the number of pop tarts which has equivalent value to watching your child take her first steps, so too could you not decide the *true* human value of a cow which produces greenhouse gases, causes soil erosion, indirectly consumes Brazilian rainforest, dumps fertilizer, and provides eventual McNourishment to someone.
But buried in this aspiration for fully commensurable and exchangeable natural values is the more secret dream that every part of nature could be privately owned (again: see previous post). This debate will forever rage in normal economics, but it takes on a special kind of absurdity in the natural world. Our planetary and ecological systems are functionally integrated systems – made of component parts which play essential stabilizing roles in tandem with other ones, and which cannot be separated from them. A grassland is like a gerbil; made of components, either pollinators or spleens, which cannot be separated from the containing whole without killing it. Parts cannot be separately owned and exchanged. (The same argument could be levied socially: society is a functionally integrated system which follows an order that private property cannot properly respect or sustain.)
So taking just those two tenets – commensurability and exchangeable private ownership rights – it seems pretty audacious to suggest we could get the natural world to behave in the ways they demand. But it becomes clear that these tenets are maintained, not because it seems like nature could cooperate, but because economics demands them of us.
Now is the point when the environmental economist will say “yes, yes, these are problems but we must measure and represent these values, however incomplete they are! Otherwise these natural stocks and flows will be entirely ignored and degraded.” This specious pragmatism betrays his deeper capitulation to economics’ ethical ethos: that values can only come in this individualized form. If he doesn’t have the flexibility to imagine other ways of valuing, like moral argument or political negotiation, then his appeal to a gerrymandered market is understandable. It reminds me of Thatcher’s famous submission to the gods of the market: “there is no alternative”.
However this fixation on the market as the true source of values pairs rather poorly with the economist’s admission that the market has failed – dramatically – to capture the value of nature. Given the failure to imagine other value systems, the economist can only recommend ‘fixing’ the market with our expert scientific knowledge of what nature does for us – knowledge which individual consumers or investors don’t have. To him, we must use the state apparatus to intervene in prices and so approximate the complete, perfect market which we’ve been unable to attain thus far.
If the environmental economist has so far celebrated the worst features of orthodox theory, this is where he rejects the best ones – the second failure.
The decision about what parts of nature matter, how much, and for whom, is an immense political problem. But economists don’t see it that way. For them, it is a matter of expert measurement and judgement; the weighing of costs and benefits. The problem is simple: since interests conflict and since the natural world is so bottomlessly complex, any measurement of costs and benefits will be incomplete. Worse, such an accounting system will be arbitrary since there is no way of holding these experts to account for their choices; they are insulated in the back rooms of a bureaucratic machine.
When these arbitrary measurers are given real power to shape markets by imposing prices, or to decide where to build dams and windmills, then this is nothing less than a political tyranny. There are no strong mechanisms for connecting these decisions to the will of people, whether citizens or consumers and producers. It’s fair to say that the classical proponents of free markets would be abhorred by this since they were all political liberals. For them it was essential that people have the autonomy to value things as they see fit and to exchange with others; this was necessary to free them from the tyrannies under which they struggled.
This should help us see that the environmental economist’s heavy-handed commitment to fixing markets concentrates power into an elite class of technical experts, and that this is no less than the total abandonment of the politically liberal heartbeat in classical economics.
The absurdist shadow play of environmental economics is thereby complete. They sanctified the worst parts of conventional economics, blinded as they were to any value system which wasn’t individualized, commensurable, and exchangeable – however little sense it made for the natural world. Worse, their effort to follow through on these commitments impelled them to a final tragicomic embrace of arbitrary bureaucracy and the tyrannical rule-of-experts, disinheriting them from the moral core of classical economics: political liberalism.
Philosophically and morally contorted, these economists went on to twist and fold our national and international political administrations into such unrecognizable shapes that only they could look normal.