"The World Turned Upside-Down."

That's the title of a piece by Monbiot. But given the breathtaking heights of illogic in the piece, a more fitting description might be (as I've argued before) "Ass-Backward."

A week ago, I would have said that if it is too late, then one factor above all others is to blame: the chokehold big business has on economic policy. By forbidding governments to intervene effectively in the market, the corporations oblige us to do nothing but stand by and watch as the planet cooks. But on Wednesday I discovered that it isn’t quite that simple. At a conference organised by the Building Research Establishment, I witnessed an extraordinary thing: companies demanding tougher regulations, and the government refusing to grant them.

Precisely, I repeat, ass-backward. The government is intervening effectively in the market, on behalf of big business. Current levels of energy and resource consumption, and greenhouse gas emission, reflect poor cost internalization by the market actors engaged in those behaviors. And government is, primarily, a creator of externalities. As Murray Rothbard put it, "our corporate state uses the coercive taxing power either to accumulate corporate capital or to lower corporate costs."

Monbiot continues:

Environmental managers from BT and John Lewis (which owns Waitrose) complained that without tighter standards that everyone has to conform to, their companies put themselves at a disadvantage if they try to go green. “All that counts”, the man from John Lewis said, “is cost, cost and cost.” If he’s buying eco-friendly lighting and his competitors aren’t, he loses. As a result, he said, “I welcome the EU’s Energy Performance of Buildings Directive, as it will force retailers to take these issues seriously.”....

The only thing surprising about this is Monbiot's surprise. Capitalists have been acting through the state to establish cartelized industry standards ever since, well, there have been capitalists. This is a phenomenon noted by Marx almost 150 years ago, in the chapter of Capital vol. 1 on the ten-hour day. With competition unlimited by the state, the issue of working conditions presents a prisoner's dilemma for the individual capitalist; it is in the interest of the capitalist class as a whole that the exploitation of labor be kept to sustainable levels, but in the interest of the individual capitalist to gain an immediate advantage over the competition by working his own labor force to the breaking point.

These acts curb the passion of capital for a limitless draining of labour power, by forcibly limiting the working day by state regulations, made by a state that is ruled by capitalist and landlord. Apart from the working-class movement that daily grew more threatening, the limiting of factory labour was dictated by the same necessity which spread guano over the English fields.

Marx referred, later in the same chapter, to a group of 26 Staffordshire pottery firms, including Josiah Wedgwood, petitioning Parliament in 1863 for "some legislative enactment"; the reason was that competition prevented individual capitalists from voluntarily limiting the work time of children, etc., as beneficial as it would be to them collectively: "Much as we deplore the evils before mentioned, it would not be possible to prevent them by any scheme of agreement between the manufacturers.... Taking all these points into consideration, we have come to the conviction that some legislative enactment is wanted." Attempts by employers to limit the workday voluntarily to nine or ten hours, in their collective interest, always came to nought because the individual employer found it in his interest to violate the agreement. State regulation, essentially, amounts to capitalists acting through the state to enforce a cartel among themselves.

In any event, in the case of eco-friendly lighting the principle doesn't hold true. If the energy savings from eco-friendly lighting are great enough to pay for its cost, then the market incentive alone will be enough to convince rational actors to switch. The fact that the savings are not great enough reflects either the fact that all the costs of providing energy are not fully internalized in price, or perhaps that it's just not worth it. And if it's not worth it, it's not worth it, regardless of state intervention. State intervention can make someting artificially profitable at everybody else's expense, but it can't transform a net social loss into a net social gain.

When all costs and benefits of economic activity are fully internalized by the actor, market price is the best way to determine whether a given form of conservation, as Thoreau put it, "costs more than it comes to." For years, I've based my decision on whether to participate in local recycling programs on the savings that are passed on to me. If a given form of recycling really does result in a net reduction in social cost compared to consumption of virgin material, then the local sanitation company will be able to pass its savings on to the customer. So when a local trash operation offers free curbside pickup of recyclables, and allows me to pay by the bag for pickup of non-recyclables, I jump at the chance to save money. But when I'm expected to bundle the stuff up and transport it at my own cost to some recycling center out of a sense of "social responsibility," I figure it's probably a net social loss.

This was not, I now discover, the first time that the corporations have demanded regulation. [Gasp! Maybe he'd better sit down to read Gabriel Kolko.] In January the chairman of Shell, Lord Oxburgh, insisted that “Governments in developed countries need to introduce taxes, regulations or plans … to increase the cost of emitting carbon dioxide.” He listed the technologies required to replace fossil fuels, and remarked that “none of this is going to happen if the market is left to itself.”

Yes it will. If the market is left to itself, and the price of fossil fuels includes all the real costs of providing them, then the market price will in effect be a "carbon tax." And the rising market price of fossil fuels will by itself be enough to make alternative technologies more attractive.

george monbiot , energy , alternative energy , fossil fuels , regulation , free markets