Free Markets, Property Rights and Climate Change: How to Privatize Climate Policy

Article excerpt

1 Introduction

SHORTLY BEFORE THE INDUSTRIAL REVOLUTION THE ENGLISH philosopher John Locke put forward a theory of property that reflected the emerging capitalist system. This theory has often been interpreted as supposing that we, the human race, live on a frontier with the natural world, looking across to plentiful resources in an as yet un-tamed and un-owned wilderness. In the 1960s Kenneth Boulding, an economist born in Liverpool whose working life was spent mainly in the USA, caught the mood of environmental anxiety by labelling this approach 'the cowboy economy'. He contrasted it with the idea of 'Spaceship Earth', its astronauts, the human race, depending for their lives upon the fragile atmosphere and depleted resources of a tiny planet spinning through an indifferent universe. Will Spaceship Earth land on a new frontier or disappear burning into deep space? Pessimists see the human race represented by Icarus, the young man in Classical Greek mythology whose ambition outstripped the technology available to him. He flew using wings made for him by his father, Daedalus, but the wax holding the wings melted when he flew too close to the sun. In Breugel's famous painting Landscape with the Fall of Icarus, he is depicted splashing helplessly into the sea.

Many believers in anthropogenic global warming (AGW) would see the fate of Icarus as a precursor of the fate of the human race. If carbon emissions are not reduced sufficiently to constrain AGW to a level that does not threaten dangerous climate change, our wings will indeed melt. The implication is that there is a case for government intervention in market activity to prevent this disastrous outcome.

It is true that the effects of AGW might prevent people from exercising their rights to life, liberty and the pursuit of happiness; for example, their territory might be inundated. And it is also true that it is the duty of governments to protect these rights.

However, this duty must not be discharged through government regulation of market processes, for several reasons. First, such a policy is based on the assumption of orthodox or neoclassical economics that AGW is a case of market failure, indeed 'market failure on the greatest scale the world has seen' (Stern, 2007, p.27). For, as Austrian economists and libertarian political philosophers argue, it is not markets that have failed but governments in failing to allocate property rights. Second, far from being the greatest market failure, the AGW hypothesis may rather be the greatest moral panic the world has ever seen.

There is no secure foundation in climate science for the current policy rhetoric; governments simply lack the knowledge to operate climate policy effectively. All existing climate policy instruments including taxes, subsidies, regulation and emissions trading should therefore be swept away.

My aim in this paper is propose an authentically Austrian approach to climate change policy. Such a proposal is necessary because the dominant neoclassical framework fails to provide an adequate defence of property rights and a secure foundation of knowledge for policy. Suppose that global mean surface temperatures are rising as a consequence of AGW and the effects of such increases threaten people's rights to non-interference in pursuing life, liberty and happiness.

In that case policy measures are needed to protect people's rights by curtailing carbon emissions.

But are global mean surface temperatures rising as a consequence of AGW? The earth's climate has always been susceptible to change caused by natural factors over which policy makers have no control, so the only climate change policy that makes sense is adaptation. It is my contention that we do not know that they are and that 'climate change' policy instruments should therefore be withdrawn. It is also my argument that in Austrian economics can be found a policy that could promote advances in climate science that might eventually yield reliable knowledge concerning the putative occurrence of anthropogenic global warming. …