Book 1: Capitalism at Work: Business, Government, and Energy

Chapter 9 Internet Appendix

9.1 Thoroughgoing Alarmism: Paul Ehrlich and John Holdren
9.2 Deep Ecology
9.3 Welfare Economics
Bibliography: Chapter 9 Appendices

9.1 Thoroughgoing Alarmism: Paul Ehrlich and John Holdren

The comprehensive energy alarmism of Paul Ehrlich and John Holdren in the 1960s and 1970s is summarized below. The global warming scare, replacing global cooling concerns, would preoccupy these writers, as it did other neo-Malthusians beginning in the 1980s. This section can be supplemented by the chapter 11.3 Internet appendix, “Broader Energy Alarmism.”

	Depletion • “High-grade iron, copper, and other ores are no longer easily accessible; nor does oil bubble to the surface. … The world is running short of vital resources, and the American economic system must adjust to this reality” (Ehrlich, 1968: 48, 162). • “Today the frontiers are gone, and the evidence is mounting that technology cannot hold the law of diminishing returns at bay much longer. Resources being stressed today are often being stressed globally; they will not be replenished from outside the ‘system’” (Holdren and Ehrlich, 1971b: 8). • “Economists as a group have been guiltier than most in perpetuating the most dangerous myths of this troubled age … Mineral economists rely on the cornucopian dream, in which advancing technology conjures up ever cheaper minerals while consuming ever increasing amounts of energy and the earth’s crust to do it” (Holdren and Ehrlich, 1971d: 177). • “With respect to economic costs … it is questionable whether potential resources can be converted into available supplies at economic costs society can pay” (Holdren, 1977: 53). • “Both for the United States and for the world, any significant increase in consumption of oil and gas will lead to the substantial depletion of the recoverable resources of those materials by early in the next century” (Ehrlich, Ehrlich, and Holdren, 1977: 403).
	Air Pollution • “Los Angeles smog laws have just barely been able to keep pace with their increasing population of automobiles (the main source of LA smog). It seems unlikely that much improvement can be expected in this aspect of air pollution until a major shift in our economy takes place. As long as we have an automobile industry centered on the internal combustion engine and a social system which values large, overpowered cars as status symbols, we are likely to be in trouble” (Ehrlich, 1968: 103). • “Virtually every major metropolis in the world has an air pollution problem, and the rate of expansion of urban complexes everywhere is rapidly making the brown pall and smarting eyes ubiquitous symbols of ‘progress’” (Holdren and Ehrlich, 1971c: 66). • “Our limited knowledge of the details of air pollution permits little hope for early relief” (Holdren and Ehrlich, 1971c: 66).
	Global Cooling and Warming • “Many observers have speculated that the [global] cooling could be the beginning of a long and persistent trend in that direction – that is, an inevitable departure from an abnormally warm period in climatic history” (Ehrlich, Ehrlich, and Holdren, 1977: 686). • “There can be scant consolation in the idea that a man-made warming trend might cancel out a natural cooling trend. Since the different factors producing the two trends do so by influencing different parts of Earth’s complicated climatic machinery, it is most unlikely that the associated effects on circulation patterns would cancel each other” (Ehrlich, Ehrlich, and Holdren, 1977: 687).
	Power Plants • “Only one rational path is open to us – simultaneous de-development of the [overdeveloped countries] and semi-development of the [underdeveloped countries], in order to approach a decent and ecologically sustainable standard of living for all in between. By de-development we mean lower per-capita energy consumption, fewer gadgets, and the abolition of planned obsolescence” (Holdren and Paul Ehrlich, 1971a: 3). • “The American power industry wants to increase our per capita consumption at a rate that will double our national use of power every decade. At this rate, every square inch of the United States would be covered with conventional power plants in two hundred years or so” (Ehrlich and Harriman, 1971: 71). • “Except in special circumstances, all construction of power generating facilities should cease immediately, and power companies should be forbidden to encourage people to use more power. Power is much too cheap. It should certainly be made more expensive and perhaps rationed, in order to reduce its frivolous use” (Ehrlich and Harriman, 1971: 72). • “By far the worst prospects, however, are those for the world’s river systems. It is estimated that by 1985 fully one quarter of the total annual runoff by the United States will be for cooling power plants” (Holdren and Ehrlich, 1971c: 69).
	Public Policy Activism • “A massive campaign must be launched to restore a high-quality environment in North America and to de-develop the United States … Resources and energy must be diverted from frivolous and wasteful uses in overdeveloped countries to filling the genuine needs of underdeveloped countries. This effort must be largely political” (Holdren, Ehrlich, and Ehrlich, 1973: 279). • “Many of the conservation measures temporarily undertaken when the mini-crisis was in its acute stage—lowered speed limits, car-pools, reset thermostats, etc.—should be instituted on a permanent basis…. In the long run, energy should be made expensive, especially for large users, as an incentive to conservation” (Ehrlich and Ehrlich, 1975: 48). • “Unnecessary lighting in offices and factories should … be banned” (Ehrlich and Ehrlich, 1975: 226). • “It should immediately be made illegal to construct a building with windows which cannot be opened” (Ehrlich and Harriman: 73–74). • “Completely frivolous uses of power, such as gas yard lamps that are permanently lit, should be outlawed altogether” (Ehrlich and Ehrlich, 1975: 227). Return to Top

 

9.2 Deep Ecology

An influential branch of the modern environmental movement rejects a human-centered anthropocentric view of the world in favor of a nature-first ecocentricview. Norwegian philosopher Arne Naess in a 1973 essay (1993: 19–24) differentiated between shallow ecology, a concern with pollution and resource depletion in the developed world, and deep ecology where “the equal right to live and blossom” ends what is seen as a master-slave relationship between human and nonhuman (lower animal and plant) life.

Deep ecology stresses the interrelatedness of all life systems on Earth, demoting human-centeredness. Man must respect nature for its own sake rather than as a tool of man. The human ego and concern for family and other loved ones must be joined by a similar emotional attachment to animals, trees, plants, and the rest of the ecosphere. To hurt the planet, then, is the same as inflicting bodily harm to oneself (http://www.context.org/ICLIB/IC22/Zimmrman.htm). “In the broadest sense,” state Bill Devall and George Sessions (1985: ix), “we need to accept the invitation to the dance—the dance of unity of humans, plants, animals, the Earth.” To get to this point, we need to “trick ourselves into reenchantment” (10) with nature.

The “deep ecology platform” of the Deep Ecology Foundation (http://www.deepecology.org/deepplatform.html), formulated by Arne Naess and George Sessions, states:

1)	The well-being and flourishing of human and nonhuman life on Earth have value in themselves (synonyms: inherent worth; intrinsic value; inherent value). These values are independent of the usefulness of the nonhuman world for human purposes.
2)	Richness and diversity of life forms contribute to the realization of these values and are also values in themselves.
3)	Humans have no right to reduce this richness and diversity except to satisfy vital needs.
4)	Present human interference with the nonhuman world is excessive, and the situation is rapidly worsening.
5)	The flourishing of human life and cultures is compatible with a substantial decrease of the human population. The flourishing of nonhuman life requires such a decrease.
6)	Policies must therefore be changed. The changes in policies affect basic economic, technological structures. The resulting state of affairs will be deeply different from the present.
7)	The ideological change is mainly that of appreciating life quality (dwelling in situations of inherent worth) rather than adhering to an increasingly higher standard of living. There will be a profound awareness of the difference between big and great.
8)	Those who subscribe to the foregoing points have an obligation directly or indirectly to participate in the attempt to implement the necessary changes.

Bill McKibben’s The End of Nature (1992) identifies the “terminal sin” of man’s altering nature and complained about how “the greenhouse effect is the first environmental problem we can’t escape by moving to the woods” (216). He lamented how “the cheap labor provided by oil” makes the “deep ecology model” difficult to fathom much less implement (200).

In Earth in the Balance (1992), Senator Al Gore complained about a “dysfunctional civilization” (chapter 12) predicated on fossil fuels.

Our civilization is, in effect, addicted to the consumption of the earth itself. This addictive relationship distracts us from the pain of what we have lost: a direct experience of our connection to the vividness, vibrancy, and aliveness of the rest of the natural world. The froth and frenzy of industrial civilization mask our deep loneliness for that communion with the world that can lift our spirits and fill our senses with the richness and immediacy of life itself (220–21).

Eschewing incrementalism, Gore called for “bold and unequivocal” global action where “the rescue of the environment” is “the central organizing principle for civilization” (269).

One can debate how much the above statements qualify their authors as deep ecologists. Whatever the case, the above thinking reflects the stasis mentality, which Virginia Postrel has defined as a belief that “a good future must be static: either the product of detailed, technocratic blueprints or the return to an idealized, stable past” (1998: xii). This in-the-past mentality is quite different fromdynamism, which embraces “a world of constant creation, discovery, and competition” (xiv).

To deep ecologists, energy as the enabler of man over nature is a root enemy. Economics, the human-centered science of plan coordination and material improvement, is also the enemy. As one ecologist explained:

Economics and ecology, as words, have the same root; but that is about all they have in common…. The world of ecologists is ‘unspoiled nature.’ They tend to avoid cities, parks, fields, orchards. The real world of the economists is … money, labor, market, goods, capital” (Bates, 250–51).

9.3 Welfare Economics

Economist A. C. Pigou (1877–1959) posited situations of market failure and a need for government correction, thus founding the subdiscipline known as welfare economics. Market failure is defined as a situation where an individual gains from an action although it produces more social costs than social benefits. Neo-Malthusian economics, discussed below, is a radical outgrowth of welfare economics.

Pigou in The Economics of Welfare (1920) classically stated the negative-externality/market-failure argument:

In general, industrialists are interested, not in the social, but only in the trade net product of their operations. Clearly, therefore, there is not reason to expect that self-interest will tend to bring about equality between the values of the marginal social net products [national dividend] of investment in different industries, when the values of social net product and of trade net product in those industries diverge (1920: 149).

He added in a later edition of the same book: “Consequently, certain specific acts of [government] interference with normal economics processes may be expected, not to diminish, but to increase, the dividend” (1932: 172).

Pigou distrusted private decision-making in mineral resource extraction, citing

wide agreement that the State should protect the interests of the futurein some degree. The whole movement for “conservation” in the United States is based on this conviction. It is the clear duty of Government to watch over, and, if need be, by legislative enactment, to defend, the exhaustible natural resources of this country (1920: 28).

Economists would later coin a term to describe Pigou’s divergence, market failure(Bator). Other terms are spillover effects, negative net externalities, and net welfare loss.

Pigou did not consider the costs of government correction as compared with the posited market failure but did add: “How far [government] should [correct the problem] … out of taxes, or out of State loans, or by the device of guaranteed interest … is a more difficult problem” (ibid.).

Market failure as a rationale for government intervention became pronounced in energy markets in the 1970s. The present-versus-future production issue took a back seat to the commons problem (negative externality) of air and water pollution. Regulation went into high gear to modify polluter activity. Then came the ultimate commons problem: anthropogenic (man-made) climate change. What a 1979 Resources for the Future study stated—“Externalities and other forms of market failure are endemic in the energy sector” (Schurr: 472)—found new rationales and would continue to grip the thinking of many intellectuals in subsequent decades.

“Welfare economics” in the above incarnations has been criticized on several grounds. One, (“social”) costs and benefits cannot be aggregated and thus measured and compared for normative purposes (Cordato). Second, alleged market failure has often failed to consider the institutional context where a better application of property rights underlies the conflict between private gain and wider outcomes (Mises, 1949: 653).

Third, economists have too often derived negative externalities from a hypothetical ideal—and then advocated government intervention to correct the market failure. Yet there is government failure as well. Ronald Coase warned his fellow economists:

Contemplation of an optimal system may provide techniques of analysis that would otherwise have been missed and, in certain special cases, it may go far to providing a solution. But in general its influence has been pernicious. It has directed economists’ attention away from the main question, which is how alternative arrangements will actually work in practice. It has led economists to derive conclusions for economic policy from a study of an abstract of a market situation. It is no accident that in the literature . . . we find a category “market failure” but no category “government failure.” Until we realize that we are choosing between social arrangements which are all more or less failures, we are not likely to make much headway (Coase, 1964: 195).

Joseph Stiglitz, a tough judge of free markets, has proffered that “although there may be significant market imperfections, there are no readily available instruments to correct the problems they create” (1975: 56). The weighting of market failures with government failures—and analytical failure in the first place—is crucial to social-science scholarship.

Bibliography: Chapter 9 Internet Appendices

Bates, Marston. The Forest and the Sea. New York: Random House, 1960.

Bator, Francis. “The Anatomy of Market Failure.” Quarterly Journal of Economics72 (2): 351–79 (August 1958).

Coase, Ronald. “The Regulated Industries: Discussion.” American Economic Review 54 (3): 194–97 (May 1964).

Cordato, Roy. Welfare Economics and Externalities in an Open Ended Universe: A Modern Austrian Perspective. Norwell, MA: Kluwer, 1992.

Devall, Bill, and George Sessions. Deep Ecology. Salt Lake City: Peregrine Smith, 1985.

Ehrlich, Paul. The Population Bomb. 1968. Reprint, Cutchogue, NY: Buccaneer Books, 1971.

Ehrlich, Paul, and Anne Ehrlich. The End of Affluence. 1974. Reprint. Rivercity, MA: Rivercity Press, 1975.

Ehrlich, Paul, and Richard Harriman. How to Be a Survivor. 1971. Rivercity, MA: Rivercity Press, 1975.

Ehrlich, Paul, Anne Ehrlich, and John Holdren. Ecoscience: Population, Resources, Environment. 1970. Reprint, San Francisco: W. H. Freeman and Company, 1977.

Gore, Al. Earth in the Balance: Ecology and the Human Spirit. New York: Plume, 1992.

Holdren, John. “Energy Costs as Potential Limits to Growth.” In The Sustainable Society: Implications for Limited Growth, edited by Dennis Pirages, 53–73. New York: Praeger, 1977.

Holdren, John, and Paul Ehrlich. “Introduction.” In Holdren and Ehrlich, Global Ecology, 1–6. New York: Harcourt Brace Jovanovich, 1971a.

Holdren, John, and Paul Ehrlich. “Resource Realities.” In Holdren and Ehrlich,Global Ecology, 7–10. New York: Harcourt Brace Jovanovich, 1971b.

Holdren, John, and Paul Ehrlich. “Overpopulation and the Potential for Ecocide.” In Global Ecology, edited by Holdren and Ehrlich, 64–78. New York: Harcourt Brace Jovanovich, 1971c.

Holdren, John, and Paul Ehrlich. “Prospects for a Sane Economics.” In Global Ecology by Holdren and Ehrlich, 177–79. New York: Harcourt Brace Jovanovich, 1971d.

Holdren, John, Anne Ehrlich, and Paul Ehrlich. Human Ecology: Problems and Solutions. W. H. Freeman, San Francisco, 1973.

McKibben, Bill. The End of Nature. 1989. Reprint, New York: Anchor Books, 1990.

Mises, Ludwig von. Human Action: A Treatise on Economics. 1949. Auburn, AL: Ludwig von Mises Institute, 1998.

Naess, Arne. “The Shallow and the Deep, Long-Range Ecology Movement: A Summary.” 1973. Reprinted in Radical Environmentalism: Philosophy and Tactics, edited by Peter List, 19–24. Belmont, CA: Wadsworth, 1993.

Pigou, A. C. The Economics of Welfare. 1st ed. London: Macmillan, 1920.

Pigou, A. C. The Economics of Welfare. 1932. 4th Edition. Reprint, London: Macmillan, 1960.

Postrel, Virginia. The Future and Its Enemies. New York: Free Press, 1998.

Schurr, Sam, et al. Energy in America’s Future: The Choices before Us. Baltimore: Johns Hopkins University Press (for Resources for the Future), 1979.

Stiglitz, Joseph. “The Efficiency of Market Prices in Long-run Allocations in the Oil Industry.” In Studies in Energy Tax Policy, edited by Gerald Brannon, 55–99. Cambridge, MA: Ballinger, 1975.