Liberty, Markets, and Environmental Values: A Hayekian Defense of Free-Market Environmentalism

By Pennington, Mark | Independent Review, Summer 2005 | Go to article overview

Liberty, Markets, and Environmental Values: A Hayekian Defense of Free-Market Environmentalism


Pennington, Mark, Independent Review


In recent years, the development of free-market environmentalism has marked a major advance in the relationship between the classical-liberal tradition and the challenge to individualist institutions presented by the modern environmental movement. Building on the work of Ronald Coase and the New Institutional Economics, free-market environmentalism has demonstrated that environmental problems, far from being the inevitable result of market institutions, are best explained by the absence of these very institutions. Notwithstanding these advances, however, free-market environmentalism has failed to have a significant impact on the environmental movement. Indeed, insofar as there has been any reaction to proposals for the extension of private-property rights, it has tended to be hostile.

One of the reasons for this lack of progress stems from the differing social ontologies adopted by the proponents of environmental markets, on the one hand, and by the green political theorists and activists who tend to favour command-and-control models of environmental regulation, on the other. The former have a tendency to emphasize notions of rational self-interest, utility maximization, and efficiency, whereas the latter focus on communitarian conceptions that emphasize a nonreductionist account of social interaction and a "moralistic" approach to environmental issues that seeks to institutionalize a search for the "common good."

Although I recognize the contribution of rational-choice analysis, I argue in this article that free-market environmentalism is unlikely to make political progress unless its arguments are recast in a mode that speaks to the communitarian greens on their own terms. One way of achieving this goal is to restate the case for free-market environmentalism from a Hayekian perspective. I attempt to move the debate in this direction by showing that the conclusions of Hayekian liberalism are more consistent with the nonreductionist foundations of green communitarianism than are the conclusions of the communitarians themselves. The argument is structured in three parts. In the first section, I set out the communitarian critique of free-market environmentalism. In the second section, I outline the essentials of Hayekian liberalism and its similarities to and differences from communitarian ontology. Finally, in the third section, I offer a Hayekian defense of free-market environmentalism against the central claims of green communitarian thought.

Free-Market Environmentalism versus Green Communitarianism

Environmental problems for much of the postwar period were treated as classic examples of "market failure," a treatment inspired by developments in neoclassical welfare economics. In this perspective, market processes result in socially suboptimal environmental decisions because private decision makers are not held properly to account for the consequences of their actions owing to the prevalence of collective goods and externality problems. Seen in this light, the task of environmental policy is to devise ways of correcting imbalances in the market system via the judicious use of taxes, subsidies, and regulatory controls in order to ensure the appropriate provision of environmental goods.

The emergence of free-market environmentalism represents a significant advance in how environmental problems are conceived. Building on the work of Ronald Coase (1960), Harold Demsetz (1969), and developments in public-choice theory, free-market environmentalism suggests that the mere identification of market failures is not a sufficient justification for widespread government intervention. Insofar as markets are prone to 'Tail" in the environmental sphere, they do so mainly because of the high costs of establishing private-property rights. These obstacles to market exchange prevent the successful internalization of spillover effects. Transaction costs are not the sole preserve of the market system, however, and we commit the "nirvana fallacy" if we suggest that the alternative to an imperfect market is a government immune from the same sort of problems.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Liberty, Markets, and Environmental Values: A Hayekian Defense of Free-Market Environmentalism
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.