John BrÃ¤tland’s article on “sustainable development” in the QJAE recently came online. I would like to use this as an opportunity not only to highlight this important article but also to point out some of the major Austrian work on environmental issues.
BrÃ¤tland’s article (pdf) deals with the economic theory of intergenerational sustainability, more popularly known as “sustainable development”. The red flags pop up right away for Austrians with this description by a proponent:
Fundamentally, “sustainable development” is a notion of… disciplining our current consumption. This sense of “intergenerational responsibility” is a new political principle, a virtue that must now guide economic growth. The industrial world has already used so much of the planet’s ecological capital that the sustainability of the future is in doubt. That can’t continue.
BrÃ¤tland’s basic strategy is to deploy insights from the calculation argument against the neoclassical theory of Robert Solow and others. A few suggestive quotes from BrÃ¤tland will, I hope, pique your interest in this excellent article:
The concepts of valuation, capital, and income only take on valid or coherent meaning in the context of individual action, private property and market exchange… The critical goal of legitimate sustainability is to establish an expanded system of private property rights that allows the owners to manage resources as capital assets. (p. 21)
…the ethics underlying the acquisition of private property is not even acknowledged in the economics of intergenerational sustainability. The entire resource base of the world’s society is implicitly under the control of some government making allocative decisions. (p. 22)
Without private property, monetary exchange, and capital accounting, no rational economics of asset maintenance could exist… The extent that individual business plans may conflict and be incapable of mutual success creates a barrier to aggregation or “macro-reckoning.” Hence, society or a government as its agent has no aggregated measure of capital for which it can legitimately presume to make decisions. (pp. 28,29)
…public control of resources in the name of “sustainability” is not only contradictory but also self-defeating. (p. 41)
I have recently mentioned the insights of George Reisman on natural resources, (see especially Ch. 3 of Capitalism (large pdf)). These bear a striking similarity to the non-Austrian work of Julian Simon, especially in his book The Ultimate Resource. It may be of interest to note that in an e-mail exchange shortly before Simon died, he told me of his sympathy for the work of Mises and the Austrians.
Murray Rothbard’s main contribution to this topic was his paper Law, Property Rights, and Air Pollution (pdf). There he extended his analysis on these matters enough to note the following in a 1985 preface to For a New Liberty: “Of my writings since , the most relevant in expanding or developing ideas in this book have been The Ethics of Liberty… and ‘Law, Property Rights, and Air Pollution,’ which partially alters and develops my views on pollution law and the function of law generally.”
Finally, Roy Cordato laid out the basis for a comprehensive approach to this topic in his 2004 QJAE article Toward an Austrian Theory of Environmental Economics (pdf). Here he argues that “by bringing together Austrian concepts of costs and the praxeological foundations of economics we discover a unique perspective on pollution and the role of property rights in solving environmental problems. Furthermore by placing environmental problems within the context of personal and interpersonal plan formulation, we discover that they are not about the environment per se but about the resolution of human conflict.” (p. 3)
I have gathered Austrian resources on the environment in the Study Guide subject Natural Sciences and the Environment. If you know of an Austrian piece on this topic that isn’t included please let me know.