Free Market Ecology

These gargantuan global conferences where the emissaries of governments meet in hallowed halls to thrash out a global planning agenda — dressed in the clothes of ecology, or sustainable development, or whatever the buzzword of the day — are a waste of time.

They are a waste of time for the taxpayer, who has to stump up to pay for such efforts. They are a waste of time for the protestors who swarm to such events holding placards and shouting slogans. They are a waste of time for the ecologists who — whether right or wrong — believe that the present shape of human civilisation is unsustainable. Possibly the only group that really benefits are the self-perpetuating bureaucratic classes, who often take home huge salaries they could never earn in the private sector.

And the Malthusian targets of the bureaucracy have a history of missing.

The Guardian notes:

Rio+20 was intended as a follow up on the 1992 Earth Summit, which put in place landmark conventions on climate change and biodiversity, as well as commitments on poverty eradication and social justice. Since then, however, global emissions have risen by 48%, 300m hectares of forest have been cleared and the population has increased by 1.6bn people. Despite a reduction in poverty, one in six people are malnourished.

If these bureaucratic classes knew the first thing about economics or markets, they would begin to question whether such conferences — and all the promises, intergovernmental commissions, and regulatory pledges they spawn — are necessary. The more I question, the more I come to believe that all that is needed to halt any man-made ecological crises are free markets and free speech.

The history of human civilisation has been one of triumph over the limits of nature. While we have had our ups and downs, recent projections of imminent ecological ruin — such as those in the 1970s produced by Ehrlich and Holdren and the Club of Rome, or earlier by Keynes, Malthus and Galton (etc) — have all failed to materialise. But the trend goes back much further, into the distant past. Throughout our history our species has done what has been necessary to survive. Humanity has lived on this planet for upwards of 500,000 years, and through that time, we have survived a myriad of climate changes — solar variation, atmospheric variation, cycles of glaciation, supervolcanoes, gamma ray bursts, and a host of other phenomena.

It will be no different this time. We are dependent on our environment for our life and for our future. That is widespread knowledge, and so as the capable and creative species that we are, we have already developed a wide array of technological solutions to potential future environmental problems. This is a natural impulse; humanity as individuals and as a species hungers for survival, for opportunities to pass on our genes.

As I wrote last month:

If we are emitting excessive quantities of CO2 we don’t have to resort to authoritarian centralist solutions. It’s far easier to develop and market technologies (that already exist today) like carbon scrubbing trees that can literally strip CO2 out of the air than it is to try and develop and enforce top-down controlling rules and regulations on individual carbon output. Or (even more simply), plant lots of trees and other such foliage (e.g. algae).

If the dangers of non-biodegradable plastic threaten our oceans, then develop and market processes (that already exist today) to clean up these plastics.

Worried about resource depletion? Asteroid mining can give us access to thousands of tonnes of metals, water, and even hydrocarbons (methane, etc). For more bountiful energy, synthetic oil technology exists today. And of course, more capturable solar energy hits the Earth in sunlight in a single day than we use in a year.

The only reason why these technologies are not widespread is that at present the older technologies are more economically viable. Is that market failure? Are markets failing to reflect our real needs and wants?

No; those who so quickly cry “market failure!” fail to grasp markets. Certainly, I think GDP is a bad measure of economic growth. But throwing out the concept of money altogether as a measure of society’s needs and wants is completely foolish. Markets are merely an aggregation of society’s preferences. Capital and labour is allocated as the market — in other words, as society — sees fit. As Hayek showed in the 1930s, the market gives society the ability to decide how a good or service should be distributed based on individuals willingness to give money for it. The market gives feedback to producers and consumers through the price mechanism about the allocation of resources and capital, which in turn allows on the basis of individual consensual decisions corrections that prevent shortages and surpluses. Under a planned system there is no such mechanism.

The fact that greener technologies have not yet been widely adopted by the market is merely a symptom of the fact that society itself is not yet ready to make a widespread transition. But the fact that research and development and investment continues to pour into green technologies shows that the market is developing toward such an end.

Solar consumption has gone parabolic:

And so it will continue; as society evolves and progresses, the free market — so long as there is a free market — will naturally reallocate resources and labour based on society’s preferences. Without a free market — and since 2008 when the banks were bailed out and markets became junkiefied intervention-loving zombies, it is highly dubious that there is such a thing as a free market in the West — planners will just end up guessing at how to allocate resources, labour and capital, and producing monstrous misallocations of capital.

The political nature of such reallocation is irrelevant; whether the centralists call themselves communists or socialists or environmentalists, their modus operandi is always the same: ignore society’s true economic preferences, and reallocate resources based on their own ideological imperatives (often for their own enrichment).

My view is that the greatest threat to the planet’s ecology is from the centralists who wish to remove or pervert the market mechanism in order to achieve ideological goals. It is not just true that removing the market mechanism retard society’s ability to evolve into new forms of production, resource-allocation, and capital-allocation based on society’s true preferences. The command economies of the 20th Century — particularly Maoist China and Soviet Russia — produced much greater pollution than the free markets. Under a free market, polluters who damage citizens or their property can be held to account in the market place, and through the court system.There is no such mechanism through the kind of command of economy that the centralists seem to wish to implement.

The answer is not central planning and government control. The answer is the free market. 

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54 thoughts on “Free Market Ecology

  1. Pingback: Free Market Ecology |

  2. Aziz, climate change is “unintended consequence” of free market – if we ever had such… but anyway, how do you expect to solve long-term problems with free market? Alex

    • Climate change has been happening since the planet formed, often at a far rapider rate than now.

      I suppose you mean man-made climate change?

      As I said in the article, this can easily be reversed by a number of already-existing technologies, specifically carbon scrubbing, as well as geoengineering (I would caution against that approach, as I think it probably involves a lot of side-effects).

      As I say in the article, centrally-planned economies are far more vulnerable than free market ones. If there is a problem, the free market will easily respond, because it is the sum preference of the entire society, rather than just the will of a politburo.

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  4. Such meetings might be thought of as the result of free markets and free speech. We no longer live in a world of a few scattered peasants and cities. Participants in the free market are also nation states, organizations etc. There’s a difference between top-down ideological decisions, and top-down decisions that are actually the end of a loop that started from the bottom-up.

      • I’m all for people meeting to thrash out the world’s problems. I just think they should do it on their own time and money.

        As per my comment – my opinion – these are part of the free market (just like those protesting outside – they are useful as well). There’s a difference between ideological, or for-profit, top-down decision making and top-down action that closes a loop that started from the bottom-up.

        • Yeah, when I say that various groups are wasting their time, I’m not implying I would try and force them to stop. It is all part of the free market for ideas. But a true free market in ideas requires as little state-sponsorship as possible, and the whole point of these conferences are that they are massively state-subsidised.

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  7. I remember once arguing that Greens should lobby in favor of nuclear powered desalination and pumping plants in Western Australia.

    Theres room for about 4.3bn trees.

    The response was literaly violent.

    With watermelons, ecology isnt the issue, state control is, ecology is the excuse

    • Hi TrT,

      As a Victorian, I agree we could have used our uranium resources to “water the desert” and export the food. I don’t have an issue with Uranium. I was born in Australia and so were my parents, but I have a Ukrainian background and Ukrainians are quite healthy in Ukraine even with Chernobyl. When I visited 6 years ago, you would have never known this event happened.

      The problem is building a safe reactor with no shortcuts to save money. Provided it was done right I would not have a problem.

      Glad to see we have a fellow Australian on here!

  8. These are people who wanted Simon to lose the bet to Ehrlich because they hate the idea of human ingenuity. So Ehrlich paid and Julian Simon is gone and now John Holdren is using the levers of the US National Science Foundation to push the behavioral sciences over the natural sciences.

    They really do hate human freedom and genuine innovation. And they hate anything that allows reality to trump ideology.

    They would like to rule and think Herman Daly’s book for the common good makes a nice blueprint. And they do not need any more treaties as long as no one fully appreciates that education is the primary vehicle to get this collectivist agenda in place.

    • It’s not just human ingenuity they hate. A lot of these pseudoscientists are antihumanists who believe humanity is a cancer that must be destroyed, and any ingenuity is just another excuse for us to “destroy” more of nature.

  9. “The answer is not central planning and government control. The answer is the free market.”

    The problem isn’t necessarily a lack of free markets [there is no such thing], but instead, the accumulation of wealth/power.

    Centralization [political] shadows accumulation [wealth], and becomes the mechanism by which wealth furthers/protects itself. This is why modern corporations and governments are co-dependent. Neither could exist without the other.

    A nearly free market would demand a world free of both corporations and governments. After all, is it not the purpose of government to rig markets for the highest bidder, and, as well, for the corporation to fund the government?

    • I look at this relatively.

      A purely free market is an unattainable ideal, but there have been many systems that have been much less regulated and governed than the one we have today (e.g. the post-WW2 system in North America with Glass Steagall and the gold exchange standard) that have worked relatively well.

  10. @ Aziz: “The political nature of such reallocation is irrelevant; whether the centralists call themselves communists or socialists or environmentalists, their modus operandi is always the same: ignore society’s true economic preferences, and reallocate resources based on their own ideological imperatives (often for their own enrichment).”

    Precisely!

    When you compare these ideologies to a religion, they are no different. People who don’t have the capacity to think, will blindly follow ideology. The Communist Party, Greens, or any other Statist/Leninist society will creat dogma and the “faithful” will follow to “fit in” find “acceptance” and “belong”

    I have had debates with Atheists and Rationalist, and I find their “passion” no different to a religious “nut”.

    It is a human “condition”

    Free Market proponents, Anarchists, are lone wolves who don’t need to be part of a group. The problem with democracy and party rule, is that the “herd” has the final say.

    So who are the Shepherds? What is their agenda?

    Power. Control.

    They are corrupt!

    • And the wonderful thing about how the world once was it that there was always a frontier for the individualists to flock toward and take control of their own destiny. Right now in this hyper-governed hyper-regulated world there are fewer frontiers than ever.

      But new ones will open up.

    • I’m just stating how the status quo has been. Malthus predicted humanity was going to collapse a century and a half ago when the human population is a fraction of what it is now.

      When I want to judge a school of thought, I look for correct predictions. The Malthusian school of thought does not make correct predictions. It just shrugs off its huge catalogue of wrong predictions, and says “but this can’t go on forever”.

      No, I will go with the school of thought that makes consistently good projections. Those are the anti-Malthusians.

      Primal humanity is nature. And nature is smarter than any model.

  11. “The history of human civilization has been one of triumph over the limits of nature.”

    Perhaps Man’s arrogance/ignorance has never been stated with greater precision.

    • I very much concur @impermanence. Well said! Haven’t read Robert D. Kaplan, but it seems he’s my kind of guy; about one of his books (just found this fitting here):

      conveys a historically informed tragic sense in recognizing humankind’s tendency toward a kind of slipshod, gooey, utopian and ultimately dangerous optimism.

      • I’m just telling the truth.

        There have been lots of blips, but overall, we have overcome the Malthusian limits again and again and again, without fail.

        Will we fail one day? I don’t honestly know. Personally, I tend to believe that those suffering from the deepest arrogance are those who believe that their statistical models and projections are greater than the sum of human ingenuity, and that they “know” humanity is headed for a fall. They have been wrong every single time.

        I don’t like to throw my chips in with a thesis that has been wrong every single time.

        • Personally, I tend to believe that those suffering from the deepest arrogance are those who believe that their statistical models and projections are greater than the sum of human ingenuity, and that they “know” humanity is headed for a fall.

          I don’t know whether or not humanity is headed for a fall. I’m arrogant myself, but I direct my arrogance only towards people that are not humble. Kind of like what Taleb does. There are people on all sides that are not humble. We could rephrase that history of humanity and say that humans have been incredibly lucky despite all the stupid things they have done (you know at some point, there were only a few thousand homo sapiens remaining – some thousands of years ago). Models are not bad, they can be useful components of our worldview (aware of their limitations). I’d say a worldview based on faith, that humanity will prevail no matter what in the future, just because we’re still here (no need for models because they are bad) – is incredibly arrogant and dangerous.

  12. Free markets are the answer only if there is some sort of framework to restrain runaway centralization and to put a stop to negative externalities. Time and time again we have seen where the profits or benefits of enterprises are private but the costs are socialized. Has there ever been any example in history of a pure market based system, where the wealthy and/or successful didn’t manage to get the poorer or less successful to shoulder the costs of their success?

    Seems like there has to be some sort of government and regulation, imperfect as that may be, or the clever few quickly win all at the expense of the dull many.

    • Has there ever been any example in history of a pure market based system, where the wealthy and/or successful didn’t manage to get the poorer or less successful to shoulder the costs of their success?

      No — because there has never been a pure market based system. But there have been many periods of history that have come much closer to a pure market based system than what we have today, and that have generated a lot of wealth for the entirety of humanity. The post-WW2 world with the gold exchange standard and Glass Steagall, was much freer than today’s world, and generated much more wealth that was spread much more evenly.

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  14. AZIZ: Free markets, free speech, Hayek — you understand what’s good for humans. Maybe it would help the brain dead, brainwashed and brain-empty if we simplified/generalized: bottom-up (individual liberty) works, top down (control) doesn’t. Examples: (1) Christian morality (Jesus’ teaching, not organized church despotism) is the foundation of western civilization’s better quality of life. (2) The U.S. Constitution with its Bill of Rights, implementing the people-sovereign/government-servant “Truths” of the Declaration of Independence, created the freest and most prosperous nation in history.

  15. A free market is actually what got us into trouble in the first place. Put simply, from a free market, we have free market capitalism, which has eventually led to environmental destruction, the threat of a resource crunch, and a debt-ridden global economy.

    Central planning and government control will not help, either, because state capitalism has essentially the same qualities as free market capitalism: the need for increasing production and consumption of goods, which in turn requires increasing debt and leads to increasing pollution.

    Re: using various sources of energy, unfortunately there’s EROEI.

    • We don’t have free market capitalism. Free market capitalism is incompatible with bailouts. It’s incompatible, actually, with corporations, because a corporation is just a fictitious means of limiting liability.

      A free market requires no special privileges for anyone. And the establishment get everything they want under our system. This isn’t a free market. This is rigged-market corporatism.

      • My two cents’ worth through AZIZ’s of June 25, 2012 @08:40:28:

        (1) Malthus has been wrong so far, but a new (probably should say STILL ANOTHER “new/unique”!) threat confronts the earth and the elite (all humans) who have dominion over it [I believe Jeremy Grantham spotted this one]: whereas the 19th (+/-) century emerging middle class high-consumers comprised only a small part of a small global population, the 21st century emerging/growing high-consumption middle class (China, India, etc.) is huge.

        (2) But the threat is shortage of resources, not pollution. [Remember -- human-caused global warming is a fraud].

        (3) Bad news: humans don’t change much. The medieval Seven Deadly Sins persist — pride, covetousness, lust, anger, gluttony, envy, and sloth.

        (4) Good news: humans are still ingenious. INTEMPERANCE labels AZIZ’s “triumph over the limits of nature” arrogance and ignorance, but I have difficulty with this description of fire, wheel, written language, steam power, medicine, electricity, etc.

        (5) Maybe those two — and I — could agree that we have not yet triumphed over HUMAN nature?

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  17. When I look at that chart I don’t see proof of a free market or choice working, I see government mandates artificially manipulating the market. I can say with certainty that we’d be nowhere close to where we are with solar without government intervention.

    • Sure, but even with all the intervention — all the subsidies for big oil, global military spending, etc — it’s still an example of market forces working. A flower blooming through concrete.

      • The market isn’t succeeding in spite of intervention, the market is succeeding because of it. But one could argue that since we vote in people that want to create these mandates, in some weird way we are moving the market along ourselves.

        • You know how massively subsidised the oil industry is right?

          It makes initiatives like Solyndra seem like pocket change, and it’s a wonder any non-carbon energy industry is even in business at all.

  18. I believe that people need to get over this notion of, “free.” There is no such thing as, free, as there are always costs associated.

    The markets we refer to as, free, would be analogous to calling each of us, free. We are each owned, markets, by their very nature, and us, by sovereign decree [citizenship].

    Getting beyond the notion that freedom is possible allows one to seek liberty outside of intellectual constraints.

    • As far as I am concerned freedom and liberty are synonymous, and in my book you are playing word games.

      Care to try and differentiate the two?

      My definition of freedom in this context is free from undue external influence. For example, heavily state-subsidised, or the state picking winners and losers. Obviously there is no such thing as a totally free market, but some markets are freer than others.

      • Free implies no costs. The degree of Liberty one enjoys is in increasing/decreasing one’s autonomy.

        Aziz, it gets back to the notion that one can live outside of Nature’s boundaries. When it comes down to it, 99.9999999% [give or take :] of what we do is completely controlled [by our environment].

        The idea that we exist as independent intellectual beings is comical, as we can not even figure out the simplest of things [because of the infinite number of actions that gave rise].

        • Aziz, it gets back to the notion that one can live outside of Nature’s boundaries. When it comes down to it, 99.9999999% [give or take :] of what we do is completely controlled [by our environment].

          If you want to get philosophical, I will clarify my statement about “nature’s limits” as humanity’s perception of nature’s limits. Natures true limits are unknown. So by “nature’s limits” I am really referring to the Malthusian conception of nature’s limits that have been widely popularised via the media.

        • I’m still aghast at your apparent blind spot. In your case, I find it hard to blame ignorance, although it’s true that “We are all ignorant, only about different things”.

          The priceofoil.org link specifies nothing except a vague repeat of your statement above about protecting Persian Gulf oil. If you want to call that national defense expense something else after the end of the cold war, call it assuring low cost supply to U.S consumers and industry.

          Consistent with your antipathy for top-down economics, you should support ending government’s politically-motivated obstruction of U.S. domestic oil and gas development. We could hasten the end of dependence on middle eastern oil and increase employment and government revenues.

        • I’m all for ending all obstruction of U.S. domestic oil and gas development. Deregulate, deregulate, deregulate. Competition, competition, competition.

          But don’t subsidise either.

      • AZIZ, some of your earlier posts echo the chant about the “subsidized oil industry”. I’m surprised — no, shocked — that YOU join the socialists, radical environmentalists, and political propagandists in this malicious nonsense. In the cases of Solyndra, et al, we know that public funds (stolen not just from taxpayers, but also from entitlements, etc.) were given to Obama campaign money “bundlers” and to pander to “green” contributors and voters. But show me who/when/where the oil industry is “massively subsidized”.

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  20. In a pure free market, the us nat gas producers would sell the gas overseas at the highest prices to the detriment of other industries paying higher prices for energy. Do you regulate i.e. Mandate non export of nat gas to allow cheap energy and increased competitivness of manufacturers, giving a range of jobs and skills, or do you just tax the profits of nat gas exporters then subsidise the manufacturers with lower taxes?
    If there was zero regulation the USA would specialise in Nat Gas extraction and export. They would have Gas princelings and rely on tourism at las vegas, much like Dubai.

    When the oil runs out in UAE Dubai will be a tired run down theme park.

    The free market can ruin the national interest because the free market relies on individuals who may not be nationalsts.

    • Relax, Buddy! U.S. natgas producers WILL be exporting LNG, but we may have to get Obama and his Marxist czarists out of power first, along with waiting for the VERY time- and and capital-consuming liquefaction “trains”.

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