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Ronald Bailey: Liberty And The Environment

Ronald Bailey, The New Atlantis

Countries with the biggest environmental problems today, and the least means and apparent interest in addressing them, are not advanced capitalist economies but the ones with weak or nonexistent democracies and still-developing economies.

Human activity is remaking the face of the Earth: transforming and polluting the landscape, warming the atmosphere and oceans, and causing species to go extinct. The orthodox view among ecologists is that human liberty — more specifically economic activity and free markets — is to blame. For example, the prominent biologist-activists Paul and Anne Ehrlich of Stanford University recently argued in a British science journal that the environmental problems we face are driven by “overpopulation, overconsumption of natural resources and the use of unnecessarily environmentally damaging technologies and socio-economic-political arrangements to service Homo sapiens’ aggregate consumption.” The Ehrlichs urge the “reduction of the worship of ‘free’ markets that infests the discipline” of economics.

But the notion that economic activity and free markets are antithetical to the flourishing of the natural world is complicated by the fact that the countries with the biggest environmental problems today, and the least means and apparent interest in addressing them, are not the liberalized ones with advanced capitalist economies but the ones with weak or nonexistent democracies and still-developing economies.

So is it really the case that liberty and the environment are simply opposed? Does the good of one come only at the expense of the other? Or can liberty and a flourishing natural environment reinforce one another, the good of one encouraging the good of the other? Can economic activity under a system of liberty be environmentally sustainable in the long run?

“Natural States” and the Environment

To better understand the ways in which the natural environment fares differently under social orders with more or less liberty, we will have to consider the broad sweep of time, from prehistory to the latest modern developments to projections about the future. A conceptual framework very helpful for making such generalizations can be found in Violence and Social Orders, a brilliant 2009 book by Nobel laureate and economist Douglass C. North, University of Maryland economist John Joseph Wallis, and Stanford political scientist Barry R. Weingast. The book begins by noting that violence is the central problem confronted by societies encompassing more than a few hundred people. In prehistoric times, when subsistence depended on hunting and gathering, humankind was organized in small groups based on family relations or small tribes; face-to-face interactions and personal trust were possible, and indeed necessary for keeping peace. The authors call this way of organizing society the “foraging order.”

The larger a group grows, the more difficult it becomes to order a group based in personal trust. Conflict becomes more likely. What the authors call the “limited-access order” or the “natural state” emerges as a way to create institutions and practices that reduce conflict in larger societies. Historically, they argue, the first natural states arose with the development of settled agriculture, and until recent centuries, all societies were natural states.

Natural states are characterized by patron-client networks in which people (traders, producers, priests, educators, etc.) personally ally themselves with specific militarily potent individuals. The patrons offer protection and channel resources to clients in exchange for their loyalty and support should intra-elite violence break out. In natural states, the authors write, “personal relationships, who one is and who one knows, form the basis for social organization and constitute the arena for individual interaction, particularly personal relationships among powerful individuals.” Natural states are run by elites who control access to political power and economic resources; the only politics that matter occur as members of this elite jockey for position among themselves. Individuals have only a limited ability to form organizations, and no significant organizations — religious, economic, or political — exist outside of the state.

Natural states operate by limiting access to valuable resources — for example, by creating and sharing the rewards of monopolies. Members of the dominant coalition agree to respect each other’s special privileges, creating a standoff that curtails violence and enables each to earn and enjoy the monopoly benefits of the land, labor, and resources that he controls. Social peace makes the returns on the assets that each controls higher than what he might gain from fighting. However, if some members of the elite come to believe that they would win access to more resources (and power) by fighting, then they may defect from the coalition and fight.

This model is simple enough that it applies across most of human history. Bronze Age Mesopotamia, ancient Greek city-states, the Roman Empire, feudal Europe, Maya civilization, Ottoman-ruled Asia Minor, and Qing dynasty China — all of these were natural states. Even today, many countries are still organized in this way. What looks like corruption in places like Russia or Mexico is really the more or less normal distribution of largess through patron-client networks. While civilizations organized as natural states may last for centuries, all of them through history, in both the Old and New Worlds, have ultimately proven unsustainable — arguably because the form of social organization in the natural state stifles the innovation needed to respond to change.

However, in the late eighteenth century, some societies began to transition to what the authors call “open-access orders.” In such societies, a large number of individuals have the right to form organizations that can engage in a wide variety of economic, political, and social activities. Unlike in natural states, the existence of organizations in an open-access order does not depend on the individual identities and elite privileges of its members; the organizations are, in that sense, “impersonal.” The authors argue that this kind of “impersonality” is the key to open-access orders. People can create organizations with impersonal legal identities and rights that have an existence that endures independently of the lives of their members. Think here of corporations and formal political parties and advocacy groups that can be created without the permission of the state. In open-access orders, the rule of law prevails, which means that all persons, institutions, and entities, including the leaders, are accountable to laws that are publicly promulgated, equally enforced, and independently adjudicated. Put simply, in the transition from the natural state to the open-access order, subjects become citizens. It remains to be seen, of course, whether open-access orders will prove sustainable in the long run.

We can now make some broad generalizations about the way the natural environment fares under each of these three orders. In prehistoric times, under the foraging order, Malthusian pressures reigned. With no restrictions on who could access and use natural resources, humankind began to remake the environment. For example, after the last Ice Age started to thaw and the glaciers retreated twenty thousand years ago, our hunter-gatherer ancestors spread across the globe, devastating animal populations already stressed by climate change. This included wiping out nearly two hundred species of large mammals. To put this destruction in perspective, if you were to weigh all of the mammals living all over the world at the time, that total figure — the planet’s mammalian biomass — fell so drastically that,according to one estimate, it did not recover until just before the Industrial Revolution, when it was finally matched and then far surpassed by booming human and domesticated animal populations.

The advent of agricultural civilization, the rise of the natural state, and the development of proto-property rights (for elites) made possible much higher levels of productivity than had been available to our hunter-gatherer ancestors. But the fact that natural states limit access of resources to the elite means that material and technological progress in such societies is stymied, that the Malthusian competition for resources continues to prevail, and that most people in such societies live in poverty. Relatedly, it also means that such societies are inherently inefficient when it comes to transforming — using, consuming, destroying — the natural world. Which is not to say that such natural states are environmentally “sustainable” or have a track record of careful environmental stewardship, but just that the structure of such societies prevents them from being efficiently exploitative.

It was only during the eighteenth century, as some societies became open-access orders, that humanity’s fortunes turned. Open-access orders have unleashed entrepreneurial forces that have produced unprecedented innovation, revving up productivity for a significant portion of humanity and rapidly improving material standards of living. According to the estimates from the Maddison Project, which updates the work of the late economist Angus Maddison, per capita global GDP barely grew froma.d. 1 to 1700, moving from $467 to $615 (in constant 1990 dollars). But it doubled from 1700 to 1900, doubled again by 1956, and then tripled in five decades, standing at $7,614 by 2008. By almost any conceivable way of measuring standards of living, from health to longevity to income to population growth to access to food, the past few centuries have clearly been, as the economist Deirdre McCloskey has dubbed them, “The Great Enrichment.”

Property and Progress

In order to understand how the open-access order makes possible such material abundance, and the effects such societies might be expected to have on the natural world, it is worth taking a moment to revisit what John Locke, the seventeenth-century British philosopher whose ideas helped birth modern liberal politics, had to say about property rights and nature. In the second of his Two Treatises of Government (1689), Locke asserts that before the rise of civilization, land and natural resources were held in common by mankind. But, he argues, these goods can become the property of individuals who mix their labor with them. For the purposes of this discussion, we can broaden the definition of labor to include not just the sweat of people’s brows but also the application of their knowledge and intellect.

Property rights and markets create value by encouraging the division and specialization of labor. Lockeoutlines the remarkable variation and distribution of labor required just to make a loaf of bread: “the plough-man’s pains, the reaper’s and thresher’s toil, and the baker’s sweat,” and “the labour of those who broke the oxen, who digged and wrought the iron and stones, who felled and framed the timber employed about the plough, mill, oven, or any other utensils.” Without labor, Locke adds, “nature and the earth furnished only the almost worthless materials, as in themselves.”

Specialization and division of labor are in turn aided by the efficient coordination of effort and knowledge supplied by markets and market pricing. This idea, described perhaps most memorably in Leonard Read’s short 1958 essay “I, Pencil,” was expressed three centuries earlier by Locke:

It would be a strange catalogue of things, that industry provided and made use of, about every loaf of bread, before it came to our use, if we could trace them; iron, wood, leather, bark, timber, stone, bricks, coals, lime, cloth, dying drugs, pitch, tar, masts, ropes, and all the materials made use of in the ship, that brought any of the commodities made use of by any of the workmen, to any part of the work; all which it would be almost impossible, at least too long, to reckon up.

Locke goes on to explain why, as the world became more populous, people began to define and delineate property rights. As land began to be used up, “the several communities settled the bounds of their distinct territories, and by laws within themselves regulated the properties of the private men of their society.” In Locke’s telling, which is largely compatible with the account offered in Violence and Social Orders, the evolution of property rights over natural resources such as land, water, and animals was hastened by the development of agriculture and the creation of settled communities. And the shift to agriculture arose in part from human population growth, which increased the scarcity of and competition for wild resources.

Although the wild commons are depleted when resources become property, the creation of property rights actually ends up increasing the goods available to mankind: “he who appropriates land to himself by his labour,” Locke writes, “does not lessen, but increase the common stock of mankind.” An owner has a strong incentive to increase the productivity of his land. By intensively cultivating it, he produces “a greater plenty of the conveniencies of life from ten acres, than he could have from an hundred left to nature, [and] may truly be said to give ninety acres to mankind.” So, for example, cultivating crops and herding animals increased both the certainty and the supply of food. The result of appropriation from the commons — that is, of privatization — is a dramatic increase in the availability of goods.

In his 1967 article “Toward a Theory of Property Rights,” economist Harold Demsetz elaborated on how the advent of property rights boosted productivity by making owners directly responsible for their property, both in its costs and gains:

private ownership of land will internalize many of the external costs associated with communal ownership, for now an owner, by virtue of his power to exclude others, can generally count on realizing the rewards associated with husbanding the game and increasing the fertility of his land. This concentration of benefits and costs on owners creates incentives to utilize resources more efficiently.

Owners develop specific knowledge about the natural qualities of their fields, pastures, and woodlots. Where does the runoff go; how stony is the soil; is the land better for wheat or barley — all the little bits of information that help them to coax more out of the land, water, and crops. Ownership also makes it easier to hold people liable for damages or shared costs associated with their land usage, allowing them to negotiate with other owners about dam-building, escaped animals, and so forth. The direct costs and profits guide market participants in making sound choices about the best uses of their land, labor, and capital.

Moreover, property rights also reduce conflicts over who has access to and control of resources. As Locke puts it, “The great end of men’s entering into society” is “the enjoyment of their properties in peace and safety.” This stability makes trade between individuals more likely, further contributing to prosperity.

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