Eco-Socialism: Threat to Liberty around the World

Smith Paper Presented at Mt. Pelerin Society Meeting

Full Document Available in PDF

Our economics fails to see, let alone measure, the full value of major parts of our world…Much of what we don’t see with our economics involves the accelerating destruction of the environment. – Al Gore, Earth in the Balance.

It is true that where a considerable part of the costs incurred are external costs from the point of view of the acting individuals or firms, the economic calculation established by them is manifestly defective and their results deceptive. But this is not the outcome of alleged deficiencies inherent in the system of private ownership of the means of production. It is on the contrary a consequence of loopholes left in the system. It could be removed by a reform of the laws concerning liability for damages inflicted and by rescinding the institutional barriers preventing the full operation of private ownership. – Ludwig von Mises, Human Action: A Treatise on Economics.

The statements above capture the significant differences between the contemporary collectivist and classical liberal perspectives on environmental protection.  The collectivist vision is well represented by former Vice President Al Gore (quote above).  He and most other environmental activists are convinced that the classical liberal order cannot protect the environment.  They believe that markets are rife with market failures—that externalities are everywhere, and that environmental public goods are undersupplied.  In a world of pervasive externalities, government intervention must also be pervasive.    To the more theological wing of the environmental movement—the eco-theocrats—mankind has sinned against Nature, so we must expiate for our wicked ways.  And this expiation is no mild thing—it requires nothing less than a “wrenching transformation of civilization.” 

In contrast, the classical liberal vision is well captured in the quote from Ludwig von Mises.  To classical liberals, the environment is but one of the many important areas that different people value to differing degrees.  Given the vast array of resources that make the environment, and the diversity of taste about these resources, classical liberals argue that a comparable control over these resources is needed.  Classical liberals seek to provide that protection by integrating ecological resources into the market, by extending property rights and the rule of law to them. The environment values deserve as much—but no more—protection than other values.   Nature cannot protect itself. Trees cannot have standing as legal actors, but behind every tree can stand an owner who, by protecting his property, protects it for all.  The classical liberal approach is not to seek more efficient ways to advance some politically determined goal, but rather to create an institutional framework to facilitate exchanges and trade offs between individuals, empowering them to make their own choices.