Blogs > Liberty and Power > Ecological and Austrian Theory

May 6, 2008 2:23 pm

Ecological and Austrian Theory

I think future intellectual historians will be fascinated by the disconnect between approaches to economics emphasizing the market's character as a spontaneous order and ecological science that emphasizes ecosystems as spontaneous order processes.

Both markets and ecologies are complex processes relying on negative and positive feedback to coordinate otherwise independent actions into more productive and adaptive patterns of interaction than could ever be accomplished by deliberate planning. Both are resilient and fragile. In ecologies 'keystone species' can shape an entire ecosystem, whereas non keystone species can exist or not and make little difference. The same applies to markets. Nail a keystone and the whole thing degrades significantly. Nail a non keystone and not much happens besides its disappearance.

And yet, these similarities and others are largely ignored by both sides, though in my experience even more by economists than ecologists.

People who are exquisitely sensitive to distortions generated in markets by external political intervention enthusiastically endorse central control or overriding of ecological processes.

For their part, many environmentalists who are well versed in ecological understanding are insensitive to the deep distortions arising from political intervention in the market. Sometimes they blame markets for what is really the result of political intervention. Sometimes they seek political intervention without appreciating how it is likely to backfire.

The issue if of more than purely theoretical interest. While both are emergent processes, they march to different drummers, with no guarantee of mutual harmony. For example, markets are ultimately constrained and shaped by human time preferences as manifested through the rate of interest. Ecosystems are structured by rates of biological reproduction by many different species. In both markets and ecologies short term benefits can arise from essentially consuming capital. But in most cases this is a foolish strategy, and can be justified only in dire emergencies.

If long term harmony can be found - and I think it can - it can only come about by respecting and working within both of these systems.

To link this argument to organic agriculture, the underlying approach of organic agriculture is to work with natural systems rather than seeking to override or replace them with detailed control.

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Tim Sydney - 5/7/2008

Interestingly enough the "two extremes" of Austrian economics and perhaps the most 'ecologically realistic' branches of environmentalism have made some close encounters. The Austrian economist Edwin G Dolan wrote his "TANSTAAFL:Economic Strategy for Environmental Crisis" in the early 1970s and he has continued with his own version of free market environmentalism, with 'The TANSTAAFL principle' (There Ain't No Such Thing As A Free Lunch) as it's guiding principle.

On the other side of the line, Garrett Hardin, an environmentalist considered 'too tough minded' for the mass of post-socialist socialist 'greens', made the "CC-PP" principle the core of his analysis. CC-PP, discussed in his excellent and pragmatic economic guidebook, "Filters Against Folly" stands for 'Commonize Costs - Privatise Profits'. TANSTAAFL and CC-PP are essentially the same principle and the heart of the environmental problems of our era.

Kevin Carson - 5/7/2008

...considering that most ecological problems arguably result from behavior which is promoted by the distortion of market signals. Negative externalities like pollution, excess consumption of fuel and other resources, etc., are all behaviors whose costs are very poorly internalized in price, if not outright subsidized. To take one example, if the price of petroleum incorporated the price of keeping the sea lanes open, negative externalities from land subsidence on the American Gulf coast (just think of its contribution to Katrina), etc., how many dollars would that add per gallon?