Friday, June 20, 2008

Mengerian Wisdom

"[W]ith advancing civilization non-economic goods show a tendency to take on
economic character, chiefly because one of the factors involved is the magnitude
of human requirements, which increase with the progressive development of
civilization." Principles of Economics by Carl Menger (1871) [p. 103]

Carl Menger distinguished betweeen what he called economic and non-economic goods. The former being goods that have a higher demand than the available supply of that particular good. Non-economic goods would be like the air (though not so much anymore) we breathe, something that is utilized to fufill some necessary human need but is in such a large supply that it is essentially "free". Everyone has access and can consume non-economic goods however they see fit, but property rights are necessary to protect those that control the finite supply of what Menger termed "economic goods".

To get to the point, I think this brief excerpt helps explain many of the current issues concerning the environment. Before, "the environment" was considered a non-economic good. It was something that was percieved to be in a seemingly infinite supply. However, today many people consider it to be their personal duty to help protect "the environment", to preserve it and limit human impact on it. Typically these same people strive to use the strong armed coercion of government to force others to follow what they deem to be the most advisable and satisfactory solutions for environmental protections, often regardless of the economic costs.

What is missing from most debates about "the environment" is that no one attempts to strike at the center of the problem. In the 1800s, amidst the Industrial Revolution, few were concerned with environmental degradation. What was focused on was the satisfaction of daily life, a much harder life than the one we know in modern times. This all led to the tremendous growth in production and consumption possibilities, and the further extension and intensification of the division of labor in the industrialized world. Only recently have people turned their attention to "the environment" and the impact of humans upon it. This is because, like Menger explains above, as civilization becomes ever more developed people turn their attention to and develop new desires--"a greater magnitude of human requirements"--and this explains the growth in the aesthetic appreciation of "the environment" and the concomitant want to preserve it.

The main problem, I think, with the issues concerning "the environment" is that there is no price for it. Without a market price for "the environment", it is impossible to engage in any value calculus between the millions of other goods and services that would necessarily be curtailed in order to preserve it against the potential benefits of environmental preservation. Until we can derive some sort of method for determining the price of "the environment" it is foolish and potentially very destructive to engage in any attempt to forbid certain actions that are percieved as harmful to "the environment" by some but not all of the populace.

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