Having read some interesting commentary on my previous column on BP, I thought I’d do a follow-up to clarify and expand on a few things.
Shawn Wilbur, a leading scholar in the history of the individualist/mutualist tradition in addition to being an anarchist himself, agrees that oil companies like BP would be far less able to externalize costs on the public in a free market order, absent such privileges as caps on liability. But he goes on to raise the issue of the “many kinds of value and interest” that are not adequately represented by markets:
“After all, sea turtles and brown pelicans don’t get any more of a vote in the market than they do in elections or campaign contributions. Private property conventions tend to establish a separation of interests not reflected in, or respected by, the circulatory systems of the biosphere …”
Gary Chartier, a market anarchist professor at La Sierra University, commented that since sea turtles lack any means of effectively asserting or defending rights on their own behalf, their interests in any system — whether under statism, market anarchy, or any other kind of anarchy — depend entirely on the existence of human beings who identify those interests with their own.
I would add that the present system includes many structural barriers that prevent humans who value the interests of other species or of the ecosystem from expressing that valuation in the marketplace. For example, federal lease auctions allow only companies from the relevant industry (lumber, mining, etc.) to bid on access to federal land. That means conservationists who value holding land out of use are banned from the bidding process, that the winning bid is hence lower than it likely would otherwise have been, and that resource extraction is artificially profitable. Federal preemption of vacant land means, likewise, that the privileged access granted by the federal government is uncontested by other previous claimants.
Were vacant land not preempted by the state and then granted on a privileged basis, then the oil, mining and lumber companies could establish legitimate homestead rights only over the land that they were capable of effectively developing and fully prepared to economically exploit at any given time. In the meantime, other groups might have homesteaded significant parcels of land with the intention of conserving it. As Wilbur himself states in the comments under his post, “active conservation” — like “a wildlife corridor, or critical wetland, or scenic area” — is “pretty obviously a use.” In a free market regime with open homesteading, lumber and other extractive industries would have to buy out such competition at whatever price the latter demanded, if they were willing to sell at all.
As I mentioned in another post, one reason the ecosystem in West Virginia has had so little protection against mountaintop removal, is that the property rights of small owners had so little protection against expropriation, and the surrounding communities had been robbed of so much of their common law protection against tortious action by the mining companies against their air and water. As chronicled in the movie “Matewan,” the first white homesteaders in West Virginia — who mostly lacked formal title to their land, having settled when government was still quite irregular — were later expropriated by the mining companies, who could afford to buy both good lawyers and bad legislators.
Iain McKay, principal author of An Anarchist FAQ, raises the question of how a free market liability regime, which only operates after the fact, could prevent something like the Deepwater Horizons disaster from happening in the first place. And would the threat of penalties after the fact be sufficient to deter such bad behavior–especially given the normal human tendency to underestimate risk and the cognitive bias toward gambling on huge potential payoffs? By the time tort damages were imposed, even if they meant a corporate death sentence, the damage would already have been done.
True enough — but how is that different from any other system? I don’t think there’s any system that would address pollution ex ante. The regulatory state was supposed to prevent risky behavior ex ante, and we see how that turned out. If the point is to “deter people… doing potentially dangerous things,” by definition the approach is of behavior modification based on the anticipated consequences of one’s actions ex post. And I expect the threat of a “corporate death sentence” with all assets liquidated to pay the full cleanup costs and economic damages from a big spill (in addition to cleaning out the bank accounts of execs personally guilty of deliberate criminal negligence) is at least as effective as the threat of a fine from the EPA for inadequate safety measures.
There’s no system in which the operations would not be carried out by human beings with a tendency to underestimate long-term cost and risks compared to short-term gratification.
If market anarchy is to be compared justly either to statism or to other forms of anarchy, it must be compared to the alternatives as they would likely be administered by actual, grubby human beings. It is not intellectually honest to compare a market anarchy run with an average level of human competence to a regulatory state run with some never-yet-attained level of ideal efficiency.
"Ouch! I’m not sure if you meant to connect the comments that Iain and I made to positions that are not 'intellectually honest,' but that’s sort of the way things read."
No, far from it–and I apologize for giving that impression. Actually I'd been thinking of Rachel Maddow and the people at Kos who hold up Somalia as an example of anarchy, and let my reaction to their failure to compare actually existing statelessness to actually existing Somali states bleed over into this.
I also meant to mention, in this post, the perfect compatibility of a free market with the kinds of common property regime that Ostrom examined.
"sea turtles lack any means of effectively asserting or defending rights on their own behalf"
I beg to differ:
That last comment was meant to be accompanied by this:
http://praxeology.net/turtle-defense.PNG
"homestead in order to homestead"? You probably mean "homestead in order to conserve".
I'd be interested in your opinion on Somalia. Everytime I bring it up, people roll their eyes. They don't understand what happenend, all they know is "civil war" and "poor as shit".
Ouch! I’m not sure if you meant to connect the comments that Iain and I made to positions that are not “intellectually honest,” but that’s sort of the way things read. There actually seems to be some broad agreement that neither markets nor government as such can assure ecological responsibility. Given that, it is just as great a problem to assume “ideal efficiency” *or* current levels of malfunction on either side in a comparison. “Grubby” human beings will value present biodiversity and long-term sustainability when the rest of the natural world no longer appears to them as merely raw material for their projects. The last several centuries of science have demonstrated the degree of our interdependence. Our collective sense of the range of agents deserving of recognition and liberty seems to have been steadily expanding. Ecological consciousness is powerful enough to be exploited by government and business, and to require the most frenzied sorts of denial. It doesn’t seem outlandish to think that something like Aldo Leopold’s “land ethic” might well assume the sort of role that “civil rights” occupies now — and without any of us becoming substantially less “grubby.”
It may, unfortunately, be harder for committed partisans of private property and markets to make the adjustment than for some other folks. As powerful a political tool as individual property is, putting it at center stage probably makes it considerably harder to recall that science, like most anarchist ideology, recognizes property as claiming a bit more than the objective facts support. Similarly, the broad understanding of “markets” tends to treat quite a wide range of interactions as “exchange,” when much of what is going on hardly resembles “exchange” in its narrower, more precise senses at all.
There are, in fact, ways to address ecological concerns ex ante, many of which could no doubt be achieved by non-state means, incorporating market mechanisms where they were appropriate. But we probably won’t get there by generalizing homesteading and increasing privatization of resources. Our understandings of “property” and “markets” have evolved enough that we no longer think of human beings as marketable property. Other evolutions, to combat other sorts of unjust privilege, are, I continue to think, not only possible but underway, at least in some circles.
Roderick: Does this mean that Lew Rockwell is the Mighty Krang?
Bleicke: Nice catch. And I'll probably be doing a column soon on liberal references to Somalia as an illustration of the same principle.
Without the government, a limited liability corporation would not have the protections they enjoy today. The corporation could gain limited liability if it is obtained via contract. Why anyone would sign a contract allowing a corporation limited liability is another question.
However, in the case of a tort, the owners of offending corporation would not only be possibly liable for the all of the assets of the corporation, they could also be personally liable down to their last farthing.
Strict liability is a great inducement to careful practices.
I certainly think that's true of corporate officers, if there's documented evidence that underlings were encouraged to cut corners. A good example would be all the stuff I've seen about multiple levels of failsafe mechanisms failing because the company deliberately skimped on safety expenditures. Not to mention Tony Hayward running his little tearjerker commercial about regaining the public's trust and making it right, and all of that–while BP was packing the beach with a hundred times as much cleanup crew during Obama's visit, prohibiting cleanup crews from talking to the press, telling cleanup workers they didn't need protective gear because they were afraid it would be bad television (despite the fact that most of the people involved in the Exxon Valdez cleanup died young), etc., etc. The guy is a bigger scam artist than Bernie Madoff, playing the public for suckers with his touchy-feely bullshit at the same time he's deliberately stonewalling and covering up for all he's worth and trying to do a token "cleanup" on three days' profit. Every single death from toxic chemical exposure, every single dollar lost to oil damage that could have been averted had BP allocated all available resources to cleanup, should be taken directly out of Hayward's wallet and/or his hide.
I'm not usually vindictive, but in this case I keep thinking of the late Sam Konkin's image of the Agorist cadres keeping David Rockefeller alive for a thousand years in a life extension lab just so he could work to finish paying off all the people he'd screwed.
I think the problem with environmental/land rights is similar to a broader problem that underlies mass society/utopian visions: a lack of recognition of the value of bonding.
I'm speaking of bonding in the manner that children form many different types and levels of bonds throughout their childhood. Deep, intimate bonds are an important part of a healthy childhood, because this is where social, as opposed to physical, control becomes effective. A child that is deeply bonded to a parent will, to some extent, obey the parent's requests simply because of the bond; emotional triggers help prevent the need for more physical forms of restraining the child's behavior. There's an awful lot of research on the issue that most people, including the vast majority of libertarians, simply ignore because of the problems that this knowledge presents to their utopian visions of society. The scope of this cognitive dissonance is evident from the right (failure to appreciate the impact of "collateral damage" upon a wide web of people who are deeply bonded with the victim) to the left (basing the definition of freedom on a day-care model of child rearing with parents ultimately free to lug their children all over the world on a moment's whim, or worse, leave the children with the day-care while they zoom about on their gleaming hover bikes for days at a time).
My understanding of the subject leads me to believe that the concept of bonding is a building block sort of structure. You can't learn to appreciate or deeply care for strangers unless you've had deep bonds to at least a few people in your life. You can't accept that people you don't know are flawed, but still worthy of love if you haven't deeply bonded with someone in your life. Many of the truly damaged personalities we observe in modern life are the product of childhoods where deep bonding was broken or never developed.
I think, similarly, one can "bond" with an area of land. Knowing an area intimately leads to emotional investment in the area. "Anthropomorphism" probably has its own flaws and problems to deal with, but I'm not sure you can address Shawn's concerns about things that can't speak for themselves without it. To really combat the problems that arise from high-stakes externalizing gamblers, you have to get people to learn to love the environment. And I think you get to broad view love of environment by first learning to love and understand one piece deeply.
I'm not saying that bonding (in either instance) doesn't have its own faults and issues, as emotional control can still be misused and abused. Rather, I'm just arguing that trying to minimize these faults and issues is better than ignoring what science has taught us about the human mind and consequently building a utopia based upon faith.
I think that Brian's point about LLCs is an important one. Based on what Kevin wrote, I was imagining that "corporate death" (and possibly liability of the executives) would be the end of it. If so, corporations would simply be structured in a way to minimize the potential liability. Individual oil wells would be operated by small corporations, being partially owned by other corporations. The executives would transfer all of their wealth to friends and relatives. That would create some interesting social and business structures, but it would hardly solve the problem of externalized risk. The liability would have to be transferred to the owners of the corporation at the time of the accident.
Following rewinn's comment on the previous post, even full liability would not necessarily be enough to provide the proper incentives. The full internalization of risk might require that the actor has enough assets/insurance to cover any likely accident, and possibly the worst case scenario.
Of course, then we get stuck in the mire of judging the "worst case scenario", which is highly subjective. Basically, all of society's prejudices will get wrapped up in this regulation, and it will effectively prohibit any activity that makes people scared. (e.g. "you need a billion dollars of insurance if you are going to smoke pot, because it might make you insane and cause you to go on a killing spree")
Kevin, I note that I have referred to and excerpted your post at my LvMI blog. I also reproduced the comment made by Brian Cantin about limited liaibility; Brian please let me know if you object:
http://mises.org/Community/blogs/tokyotom/archive/2010/06/09/more-by-useful-discussion-by-carson-both-on-bp-s-fate-in-a-free-market-and-on-the-inept-feckless-and-captured-regulatory-state.aspx
Let me cropy here a few of my comments:
“Kevin is entirely correct that “the present system includes many structural barriers that prevent humans who value the interests of other species or of the ecosystem from expressing that valuation in the marketplace.” So let me connect a link that somehow Kevin has overlooked in the context of the BP oilwell blowout and spill: the chief structural barrier here is the US government, which “owns” and “manages” the Gulf out to the 200 mile limit (there is moderate state control out a few miles), and which prevents indigenous and commercial fishermen, oystermen, shrimpers and conservationists from actually owning or directly managing any of the resources or ecosytems on which their livelihoods depend or that they otherwise value, and which is favors and is financially beholden to the oil industry.
“See, for example:
http://mises.org/Community/blogs/tokyotom/archive/2009/01/14/for-crashing-fisheries-coalition-of-mainline-us-enviro-groups-calls-for-property-rights.aspx
http://twitter.com/Tokyo_Tom/status/15689063688
http://twitter.com/Tokyo_Tom/status/15689222932
“I think Kevin that is also correct about mountaintop removal, which involves a frequently flagrantly corrupt use of the state to subvert common-law protections, as I have commented a number of times.
“And the following comment on the state grant of limited liability to corporate shareholders is consistent with points I have made any number of times:”
Regards,
Tom
No problem at all, Tom–thanks. I totally agree that the proliferation of ad hoc property claims in the absence of a state (e.g. groups of fishermen claiming the areas they fish as commons and regulating them jointly) would greatly increase the transaction costs and potential liabilities for offshore drilling in any particular area.