The Snow Turns Black in Moscow Too

The author argues for a new ethic, not only for man among men, but for man amidst nature.

I could, but for two reasons, try to pass this piece off as a commentary on an article* by Prof. R.H. Coase of the University of Chicago. First, the article is a decade old, which is to say, practically prehistorical; second, I'd never get away with it. Even though it's true that my thoughts were immediately occasioned by the Coase piece, which I just ran across, in fact Coase was a stimulus, not a source, so why should I try to hide behind the commentator's mask?

Let me caricature Coase briefly, so you know what went before. Since the end of the 16th Century, the prevailing opinion in Anglo-American law has been that the most important factor in deciding cases is not justice—who is right, who is wrong—but social utility—which decision would benefit society most. As you might imagine, different judges have had different notions of where the public good lay, but apparently all agreed with the principle of social utility.

In an example after Coase, suppose that Farmer Jones raises cows, some of which wander into Farmer Smith's fields and snack on Smith's crops. Coase says that the prevailing tendency in cases like this, in deciding whether Jones or Smith or somebody else or nobody ought to bear the cost of keeping the cows out of the vegetables, is to inquire which result—the cow's continuing to nibble, or the crops' growing unmolested—helps society more. Some judges will do an economic analysis in such a case, figuring whether the crops or the cows contribute more to society; others will think of the case as precedent and try to figure which class of result will help society more (help still being defined economically as a rule, but over the long run).

Whichever it may be, Coase maintains that the specific decision makes no difference to society, as long as some decision is made. He works from the Austrian principle that the operation of a free market by definition results in the optimum assignment of resources (assuming cost-free negotiations), in other words, if the crops are worth more to Smith than a fence would cost, and the nutrition that Jone's cows get is worth less than the fence, Jones will pay to build the fence whatever the court decides, and so on through the set of permutations. Both Smith and Jones, that is, have goods at stake, and by bargaining will be able to come to a mutually agreeable adjustment.

A second example that Coase uses is that of a railroad engine which gives off sparks, setting afire a neighboring forest. The courts, apparently have consistently held that the railroads operate under a charter from society (the state), which is prima facie evidence that deciding in favor of the railroad line is to the social benefit. Since as a matter of fact almost every major commercial enterprise since the Industrial Revolution (before, for that matter) has operated under a charter (every corporation does, of course, so that it has legal protection for the notion that no person is liable for anything the corporation does), it follows that as a general rule a business concern can do pretty much what it pleases in the way of fouling its neighbors' nests, as long as it doesn't vary from the custom of the trade.

Although there have been some recent exceptions to that rule (some homeowners, for example, have won suits for noise against airlines and airports), they have been few. Nevertheless, Coase says again, it makes no difference whether the law takes the railroad's or the landowners' side, because by the operation of the free market they can come to a bargain which will adjust their claims.

You must remember that a doctrine of prices underlies Coase's economic analysis. According to that doctrine, prices are "set" by the interaction of a number of bidders for various goods, both bidders and goods competing. By this economic analysis (the orthodox Austrian analysis), society may be identified as the sum of all the competing bidders. Although this seems arcane, what it means is that the price structure of the moment becomes the expression of the "public good." Thus, when Farmer Smith and Farmer Jones bargain about who, if anyone, should pay to have the fence put up, they are (assuming they are part of the price nexus and not as a matter of principle or circumstance self-sufficient) bargaining in terms of what their respective products, crops and cows, are worth, which is to say what the prices are, which is to say, what they are "worth to society. "

In a smoothly settled negotiation in which individual quirks and costs of negotiation have no part, the result of the bargaining will, by logical necessity, be to the greatest public good. Economically, that is.

Much the same with the railroad. If the parties are free to negotiate (and quirks and costs don't interfere), the outcome will be determined by an adjustment among the profits of the railroad, the cost of preventing sparks, and the value of the forest. Again, because of the way the argument is set up, the result will necessarily be to the public good.

Following this reasoning, it is easy to see that progress, economically defined, can be made to be one of the bases of our legal system; indeed, it may be regarded as merely an alternate expression of the notion that the end result of the legal system ought to be the greatest public good.

Attentive readers, especially those with philosophical axes to whet, might be starting to wonder whether the Utilitarian doctrine, however discredited it might be in ethical and political philosophy, has not managed to insinuate itself into our legal system. In fact, exactly that seems on cursory glance to be so, which I think bears some brief looking into.

The main problem in political philosophy has almost always been to arrange matters for the maximum convenience (however defined) of the ruler. Some philosophers have maintained that the welfare of the community is to be taken without reservation as the ultimate good. Others, even while maintaining the primacy of individual rights, have regarded themselves as technicians trying to set up a smoothly-running government which, they believe, will as a matter of course operate to protect rights. The Federalist writers, for example, begin by saying that governments ought to secure rights, and then spend most of their time trying to insure that the government will survive and prosper, enjoying all the usual perquisites of power.

I used advisedly the word "technician" a moment ago. I had in mind the contention of the Austrian economists that an economist ought to be able to speak of actions and necessary consequences without advocating any particular action or consequences, something like a doctor who didn't care if his patient lived or died. Or, alternately, a lawyer who can advise a client how to conduct his affairs to accomplish a particular end, regardless of what opinion he, the lawyer, might personally have about his client's rectitude.

Just so, a political or legal philosopher ought to be able to tell a ruler how to run his country to accomplish any given purpose. Rulers, as it happens, have only one important characteristic in common: they want to keep the job. As it also happens, the most likely client for a political philosopher on the make is a ruler. Thus, it is not surprising that all political philosophies have one important feature in common: they all give detailed instructions on how to keep a state going.

If you start with the notion that a—or the—primary function of a legal-political system is to perpetuate itself, and add to it a notion that greater profit is in some way a sign of greater public good, you are quite likely to end up the set of notions that I ascribed to Coase. (However, Coase is too good a technician for me to be confident that he personally subscribes to the views he expresses.)

Imagine, for example, that you are called on to decide who should prevail, an insignificant farmer whose only claim to your interest is that his land adjoins a railroad track, or the owner of the railroad which will make transport of goods and persons so much easier and cheaper that commerce will prosper, the connected cities and the commonwealth will thrive, the consciousness of the citizens will expand to include all the places and ideas they could not previously reach; the railroad's employees will take home more money, the railroad's suppliers will be enriched, and the nation's tax coffers will swell. Would you hesitate to say that the railroad may proceed to dump on the farmer?

If you would hesitate, then you are libertarian material. You may or may not appreciate the benefits of civilization, especially the material benefits; you may be Luddite or Fullerite. But by God you have not forgotten the dumped-on farmer and his modest but inviolable claim to consideration. Neither, as you may gather, have I, and I say hurrah for both of us.

Those charged with the welfare of the state may worry themselves sick trying to keep their racket thriving, but it is no concern of mine. A nation of calm, unoppressed citizens will manage to find happiness, I believe; a nation in a hurry to progress no matter what will end up just like us. By the way, it makes no difference in this analysis whether the society is capitalist or socialist. Competing claims will be adjudicated, whoever the ultimate owners are.

It would seem only fair, since the consequences of the existing notions are all around us, to give some idea of what following the contradictory notions would cause.

First, you will have to assume with me that any prevailing political notion is supported by prevailing ethical notions. More concretely, you can't be expected to find a nation that gives priority to rights unless its citizenry individually gives priority to rights.

It would be in the spirit of Coase to object that in any event, the two parties could always make a deal; the farmer could sell his objections to the railroad's sparks. This, however, is exactly the same as selling your objections to someone's hitting you. Boxers and other psychopaths may do so, but not normal persons. In a society that was not predisposed to progress, I believe, it would be unlikely that anyone would sell the right to burn his forest. Especially if forests were widely believed to have a value not readily measurable in economic terms—if, say, people loved the earth. The consequences of a libertarian spirit in the railroad example are hinted at above. If it were possible to operate that particular kind of train at all, the cost would be higher (by assumption—otherwise the facts in the example would have been different) to prevent sparks, or to buy insurance against the farmer's claims. This would raise the cost to all concerned, which would mean that the railroad probably would be used less and therefore affect society differently. If it were not economically feasible to operate that kind of train, then either a different, more expensive, kind would be developed sooner or later, or trains as such would never have developed. Either would mean that the consequences of railroads on society would be altered.

To take a limited historical example of what that could mean: In America, during the great railroad expansion of the 19th century, the great railroad empires would likely not have developed, nor would the attendant corruption of legislators and system of subsidies and grants and bribes. A lot of buffalo would not have died. Timber that went to make ties and stoke engines would have remained standing. The great land exploitation schemes would not have happened, and the peopling of the West would have been slower (which in turn means that the country's population would have increased less rapidly). Coal and iron resources would not have been so depleted, nor would the land in which they were found been so scarred. The Pullman strike might not have occurred. The expansion of telegraphy would not have taken the same course. Travel across the continent would have been more difficult, so the isolation of the coasts from each other would have been greater. And so on.

(There's one obvious objection I would like to mention, namely that most of the land through which the railroads went was unowned. In the first place, effectively cutting the railroads off from areas where the land was unowned—or requiring them to buy all the land they would imperil—would have been a great discouragement, anyway. In the second place, I think that at least under the then-existing circumstances, the American government could properly be said to have been acting, at least in name, as trustees of those lands for the American people. After all, the government did sell and give away the land, which hints some kind of ownership claims. A trustee, of course, is obliged to act prudently, and exposing property to the risk of fire is hardly prudent unless progress is deemed a good not to be questioned.)

I admit to not having done any historical research to speak of, so I could not say how many fires railroads did in fact set during those days, or anything like that. Apart from laziness, I don't think I need to know. All a railroad director would need to know would be that if he caused a single fire he could be shut down or obliged to move his track elsewhere. Besides, I think a strong case could be made for the law's (whether legislative or judicial) requiring proof of elimination of the danger of sparks before a railroad would be allowed to operate, not because trains are necessarily evil but because the consequences economically, esthetically, and ecologically of a fire in a forest are likely to be considerable.

Of course, if libertarian notions had been prevailing for any time, the 19th century would not have been the age of railroads in America anyway.

The same sort of analysis can be made of the case of the wandering cows. If it were simply against the law for Jones to let his cows wander onto Smith's fields, then either Jones will have to put up fences at his own expense, thereby raising the cost of everything he produces, or he will have to join up with Smith in some kind of partnership. (Or he could maintain that the cows could have chosen not to wander, but then he would give up his right to keep them in the first place, wouldn't he?)

The consequences of this in the American West in the 19th century would be a little less momentous. The inventor of barbed wire would have been much richer. Western movies would have lost the cattleman-sheepman confrontation. If any kind of sanity prevailed in doctrines of property, spreads would have been smaller, and therefore herd sizes would have been smaller, which would have meant a diminished economic (and political) role for cattlemen in the West. Again, the pattern of development of the West would have been different.

In earlier times, however, the impact could have been far greater. I said just a minute ago that fences would have to be put up or a partnership formed. Either course could have become the precedent, resulting in greatly different social traditions with, I believe, practically equivalent consequences.

The key is the notion of "the commons." A pasture in which everyone's livestock may graze is a commons. (Much of the American West was, in fact, a commons, as Robert Poole has pointed out [REASON, Dec. 69].) Usually a commons is held to be the "property of the community," such as a village or a tribe. Under many circumstances, commons have worked. But it is easy to find ways in which a commons can fail. If, for example, someone introduces sheep into a commons previously grazed only by cattle, he is likely to make some enemies because sheep graze lower than cattle leaving nothing for cattle. Even if only cattle graze, a herder is likely to face this problem: If a new cow grazes in the commons, then there is a little less pasture per cow for everyone, and only the person who owns the cow benefits. If it is someone else's cow, I am deprived of my previous share in the commons; if it is my cow, I get the advantage of another cow at practically no increased cost to me. Therefore, hadn't I better get a lot of cows into the common right away?

Unfortunately, the incentives work the same for everyone else as they do for me, and the result is that eventually everyone tries to get a lot of cows onto the commons and no cow has enough to eat. (Oil pools, of course, present similar problems. So, from a global point of view, does every resource.) There are two ways out of this dilemma, both with attendant drawbacks. The commons may be divvied up to private owners, which could lead to the present caricature of a property-based society in which nobody may be deterred from anything; or it may continue to be held in common, with a board of elders or some such setting quotas, making possible all the irrationalities of socialism.

The true solution of the dilemma is that the two antithetical traditions would at least in utopia yield identical results. In a pure ownership tradition, "ownership" would ultimately go to the person best suited to use the resource, with the reservation that he would not be permitted to use the resource so as to hurt others. In a pure communitarian tradition, the "quota" would go to the person best suited to use the resource, with the reservation that he would not be permitted to use the resource as to hurt others. The impediments to utopia are obvious, and may be briefly named: corruption. But I maintain that in both traditions the impulse is there.

In an uncorrupt society, of either tradition, economic progress, although not forbidden, would be allowed only if it occurred at no third party's expense. I have a hunch that this would result in the impulse to progress being diverted to moral, spiritual, and esthetic progress, and in material progress's being more a matter of refinement than of extravagance (in other words, not more but better). Thus the present ecological crisis would be averted, or at least postponed.

(I would hate to be misunderstood as saying that socialism and individualism are identical. Ludwig Von Mises has demonstrated to my satisfaction the economic unfeasibility of socialism as an economic system, and the psychological differences between the two would be considerable for individuals, especially creators and other cantankerous persons.)

What I am saying is that it is foolish or worse to blame the ecological crisis on either capitalism or socialism, entrepreneurs or planners, traders or rulers. The blame should be placed on shortsighted or evil persons, persons who coercively exploit people and nature. A man who by law or conscience is restrained from doing harm to others is not going to produce millions of cars with internal combustion engines, in a socialist or a capitalist society. And the law that would restrain him is not abhorrent to either utopia socialism or utopia capitalism.

In a conversation someone once explained to me how a particular oil company was trying to eliminate pollution, and how a chemical company was attempting to prevent harmful consequences of such of its products as pesticides. I said that if I owned either of those companies and I learned that I was producing poison, I would stop immediately, sell what I could, and get the hell out before someone caught up with me. There may be some moral credit to be gained by saying you are killing a few less people today than you did yesterday—but why don't you stop outright?

Maybe the political-industrial cartel doesn't really believe all the ecological horror stories; perhaps they haven't even heard them. That would be bad enough. But what are we to say of the power company that says it is to be congratulated for reducing air pollution by converting to nuclear power plants (without mentioning nuclear wastes and thermal pollution)? Or the gasoline distributor who seeks applause for knowing how to reduce pollution a tiny bit (yet keeps selling gasoline)? Or the steel producer who says that it is. unfair to require him to eliminate the pollution from his stacks when his competitors, foreign and domestic, don't have to go to the expense (as if he had any right to pollute in the first place)?

Obviously those who own these companies—both managers and shareholders—have not the conscience to stop. But there is no reason why what they do should not be illegal. There may be practical reasons for stopping them quickly rather than immediately—the fact that thousands, maybe millions of persons would die in cities if internal combustion engines were forbidden immediately—but there are no moral reasons. To forbid pollution is not to deprive someone of his right to earn a living, any more than jailing a Mafia gunman is.

Charles Luce, the man who runs Consolidated Edison, has admitted (on the Today show, of all places, during Earth Day, of all days) that by the year 2000 if power production increases as it is expected to, power plants will produce enough heat to raise the temperature of all the water that flows across the United States twenty degrees. He suggested that the heat might instead be dissipated in the air. He did not say that he was immediately beginning a campaign to raise the cost of electricity and do everything else he could think of to discourage the use of electrical power. Nor was he planning to quit his job.

As it happens, whoever holds Luce's job would be obliged to contribute to that promised catastrophe. It is not bad enough that the government does nothing to prevent it: on the contrary, the government requires that it happen. Con Ed is a utility, you see, and is required by law to produce enough power to meet present and anticipated demands. If Luce actually placed an ad saying "Use less electricity," he could be tossed in jail.

Although corporations other than utilities are not so legally bound to provide service, the net result is the same. As things stand now, if the chairman of the board of DuPont, for example, said that effective immediately DuPont would cease producing anything that poisoned land or people in production or use, anything that was not biodegradable, and anything that required extravagant consumption of an irreplaceable resource, any shareholder could take him to court, point out that he was endangering profits and the continued existence of the company, and have him removed from office. The managers of a corporation are required by law to try to make a reasonable profit, and the law has yet to realize that contributing to the death of the earth is unreasonable.

It is the commons problem in another guise. Because the prevailing legal and political philosophy has conscientiously avoided what may be called ecological laws, the only limitation on the plunder of the earth and the poisoning of its inhabitants is the market. The market could care less about ecology, as long as there is someone to buy and someone to sell. There is, for example, a lot of gasoline sold, because there is a lot of gasoline bought. If I don't sell some gasoline to the market, someone else will. It helps me little if someone else sells that gasoline; it helps me a lot if I sell it. Apart from the restraints set by the (un-ecological) market in the form of costs, the only limitations on my sales of gasoline are demand and competition. If I stop to think of the consequences of what I am doing, it will only mean that someone else will do it, not that it won't be done. So I had better do while the doing is good.

Just as in the commons problem, there are two solutions. Either rigidly protect everyone's property, or rigidly protect the property of everyone. In either alternative, the rule is "Do not do to others what they would not have you do if they knew what you were doing." Or, "Do not regard others as means to your ends." Libertarians would call this forbidding coercion; socialists would call it prohibiting exploitation. It amounts to the same thing.

I dislike simplistic resolutions to complex problems, like blaming everything on the Communists or fluoridation or the CIA. In this piece I have maintained that a major share of the blame for the impending ecological disaster belongs to the notion that one may morally and legally disregard what economists call "external diseconomies"—i.e., the harmful effects of what you do on someone else. For the record, I would like to say that I think that man and the earth desperately need an ethic not only for relations between humans but also between humans and nature. In fact, I suspect that without such an ethic humans will not feel strongly enough about the violation of their rights to prevent another eco-catastrophe. But I do not think that the argument I have presented depends on this belief. A person who regards nature as infinitely malleable could still agree that we had better start recognizing each other's rights.

*"The Problem of Social Cost," The Journal of Law and Economics, Vol. III, October, 1960, pp. 1-44.