The typical propertarian argument in favour of private property rights over capital (or an increased expansion in privatisation as an economic policy) and decreased state regulation in regards to environmentalism lies upon the premisises that (a) capitalists would desire to preserve resources in the long term to achieve a steady source of income over the long term and (b) with capitalistic private property rights in place, it would be possible to sue for environmental damage. These positions are flawed for a number of reasons, as I will explain in no particular order.
---------------------------------------------------------------------------------------------------------
* For the "lazy" readers: A summary of the entire post is as follows;
It is not always profitable to pursue aggressors of private property rights / costs that are saved not implementing proper environmental procedures is not necessarily < costs brought about by court hearings and fines / state owned courts and private courts alike tend to be biased in favour of propertied bodies / only resources of commercial interest are preserved, externalisation of costs distorts the price mechanism; this leads to a distortion of market signals for potentially green investments / income inequality also leads to a distortion of market signals for potentially green investments / managers wade off entrepeneurs wishing to buy up the firm by fixing accounting which also distorts market signals / the distortion of market signals can lead to over-evaluation of a companies potential green credentials and overall profitability leading to overproduction and resultant boom and bust periods which destroy the green market / there is a misperception of demand due to income inequality which means green alternatives are less likely to be invested in.
Overall, then, this *proves*, that costs are externalised in the capitalistic firm and the price mechanism is distorted; this means the critique of capitalism can extend beyond environmentalism
---------------------------------------------------------------------------------------------------------
It is not always profitable to pursue aggressors of private property rights. For instance, if the cost of nuclear waste non-permissably dumped upon a field equates to x but the cost of tracking down the offenders and launching an appeal is greater than the the compensation itself, the property owner is less likely to take such routes. I will admit though, that the example of nuclear waste is an absurd example given the relative easiness of tracking down offenders (you cannot discretely dump nuclear waste) and the absolute necessity of the owner's complete attention to solving the issue (under most circumstances). However, we can use less radical examples such as CO2 emissions, acid rain, ozone depletion and so forth: in these cases the cost of pursuing aggressors would be costly and yield very little return. As they say, a little here and there can add up to quite a lot.
It is also questionable which bodies should be accountable; for instance, should increased levels of CO2 emissions be held down to car manufacturers? Car users? Property owners for allowing cars to drive on their land? Which of the numerous and growing environmental concerns that *could* be responsible for cancer? Who is to blame and for what? Then there is the issue of court hearings and *which* body they are most likely to favour - will it be the ordinary, everyday non-propertied citizen/group of citizens (in fact the propertyless cannot even really sue given the fact they do not own capital or land affected in some way by pollution) or will it be the propertied entrepeneur? State owned courts tend to be the least accountable branches of the state and it is quite clear who private judicial systems would be more likely to favour given the bodies they are most likely to receive their funding from. Then there is the concern that successfully pursued court cases will mean that the amount a company is sued is lower than the costs they saved by pursuing a non-environmental course of action. Even when the case is successful, the damage to the environment is lasting; at best we can only argue that the threat of court cases would prevent environmental damage in the first place.
Only resources of commercial interest are preserved; it may be more profitable in the long run for a paper supplier to find a way of preserving a forest (assuming it is his own forest) rather than felling trees without replanting them (for example) but it may be even more profitable for the property owner to chop down the entire forest to build a farm or corporation. It might be more profitable for owners to preserve the wildlife in a lake district for tourist purposes; there again it might be even more profitable for them to transform it into a toxic waste disposal site.
The supply and demand model is limited by the cost of production. Marx explains this quite well in wage labour and capital.
"The price of a commodity rises considerably owing to a failing supply or a disproportionately growing demand...A mass of capital will be thrown into the prosperous branch of industry, and this immigration of capital into the provinces of the favored industry will continue until it yields no more than the customary profits, or, rather until the price of its products, owning to overproduction, sinks below the cost of production."
In other words, a business starts to do quite well if there is a smaller supply of the produce that is available on the market and if there is a demand for that produce. When a business is doing quite well, investors will invest in the opportunity and aspiring entrepeneurs will expand their business and purchase more equipment, employ more workers, etc., i.e. "[a] mass of capital will be thrown into the prosperous branch of industry". However, after a time, the actual cost of investing in so much capital will become higher than the profits it brings. It is at this point that capital is withdrawn (emigration of capital) and the supply of he product is reduced to the cost of the production.
When costs are externalised; that is passed on to other bodies such as society through means such as pollution (there are other externalities besides pollution), the price value of the good is distorted. This is because, the company has saved itself a fair deal of money in the costs of production by letting someone else deal with the costs and can now sell the commodity at a much cheaper price. So you see, the price of a commodity does not actually reflect the absolute cost in producing it. In a way, the consumer is deceived, thereby, by the price and the information is distorted. The consumer doesn't know whether a company saved itself costs by reducing health and safety measures, allowing one of its employees to take an injury (hence a non-environmental example of "passing on the cost"), whether it released chemical toxins into the environment poisoning the neighbouring community and so forth. Externalities don't just include external costs though; as an example strikes can push up the price of a commodity (but this doesn't make the actual useful physical properties of the commodity any different) due to the decrease in production during a period of strike and the resultant decrease of supply/increase of demand. There are, in fact, a whole multitude of externalities. So the price value can be quite deceptive. Propertarians like Ludwig von Mises like to play down the impact of externalities and dismiss them as "extra-economic":
"It [money] can never obtain as a measure for the calculation of those value determining elements which stand outside the domain of exchange transactions. If, for example, a man were to calculate the profitability of erecting a waterworks, he would not be able to include in his calculation the beauty of the waterfall which the scheme might impair, except that he may pay attention to the diminution of tourist traffic or similar changes, which may be valued in terms of money. Yet these considerations might well prove one of the factors in deciding whether or not the building is to go up at all.
It is customary to term such elements "extra-economic. " This perhaps is appropriate; we are not concerned with disputes over terminology; yet the considerations themselves can scarcely be termed irrational. In any place where men regard as significant the beauty of a neighborhood or of a building, the health, happiness and contentment of mankind, the honor of individuals or nations, they are just as much motive forces of rational conduct as are economic factors in the proper sense of the word, even where they are not substitutable against each other on the market and therefore do not enter into exchange relationships."
So the distortion of price values, the fact that they leave out an vast wealth of information, severely prevents the free flow of information around the market. This means quite a lot of things, actually but I am primarily concerned here with environmentalism.
The last two points were about supply and demand being limited to the cost of production and externalities distorting the price value were not a direct critique of the anti-environmentalism of the capitalistic free market. I will now tie them together. Because of the distortion of information in the market, the market can send mixed messages about investable opportunities. The potential profitability of an "green" firm can be over estimated; this leads to increased investment in firm and, as Marx explains, capital is withdrawn when the yield of returns is no longer greater than the cost of production (or, in this case, overproduction). At this point, tremendous booms are matched by bursts leading to chaotic trends in the market; what goes up must come down. Potentially prosperous industries with a promising ecological impact are destroyed. Granted, market trends are no longer so chaotic as they were in Marx's day but then, we are far from having a fully free market economy. On the other hand, certain industries are undervaluated, again due to the distortion of the price value and don't receive enough investment.
Managers of firms often further distort information by exaggerating the market capitalisation (that is, the value) of the firm by fixing accounting. This is to prevent predator entrepeneurs buying up large portions of the firms equity (i.e. taking over the company). So the effect of incorrect evaluations "green" investments are further exaggerated.
Another reason for the distortion of information/"extra-economic" variables in the market (and thereby the misevaluation of a firms' perceived ecological impact) is the misperception of demand - the belief that people are not so concerned with the environment and thereby the lack of incentive for businesses to invest in green alternatives is fueled by the fact that not so many people can actually afford to live a greener lifestyle - e.g. buy solar pannels, buy expensive ecologically green products and so forth. A lot of these products should, in fact be far, far cheaper but because there is a lack of investment (no perceived market, thereby no risky investment in capital), there is less production, thereby less supply and a higher price. (Imagine it this way; at an auction the purchasers vastly outnumber the buyer. The seller does not, therefore, have to sell his product at a cheaper price than another buyer because there is no other seller; the buyers, on the other hand must compete to offer a much higher price. This works in a similar way on the market; low supply/few sellers and high demand/many buyers will make for high prices. High supply and low demand = low prices). Furthermore, people are, unsurprisingly, not prepared to sacrifice basic living standards for the sake of a clean environment: if the only job they can get has a harmful effect on the environment they will take it; if they can only afford a house in a polluted area, they will purchase it and if they can only afford non-environmentally friendly products, they will buy them. This might lead the market to the wrong decisions regarding investment in environmentally green products; for this reason, it is incorrect to only consider market transactions alone to draw the conclusion society, in general, is not interested in environmental stability. Again, this is not quite the case with modern society but then, we don't have the sort of free(r) market based system the laissez-faire propertarians tend to advocate. The ultimate mistake here, of course is that the environment is not something that can be given a monetary value.
