Markets and Partial Controls
Utilitarianism can answer some of the difficulties with Blackstone’s theory. Utilitarians see
environmental problems as market defects, arguing that pollution should be avoided
because it harms society’s welfare.
To make this position clear, it is helpful to distinguish between private costs and social
costs. Private costs are the actual private costs that a firm incurs to produce a commodity.
Social costs include the private costs plus the external costs that the firm does not pay–
the costs of pollution and medical care that result from the manufacture of the commodities.
The divergence of private and social costs is problematic because the divergence means
that price no longer accurately reflects all of the costs of a commodity. This means that
resources are not being allocated efficiently, and society’s welfare consequently declines.
When markets do not take all costs into account, more of a commodity will be produced
than society would demand if it could measure what it is actually paying for the commodity.
In addition, producers ignore these costs and do not try to minimize them. Since goods are
no longer efficiently distributed to consumers, pollution violates the utilitarian principles that
underlie the market system. Third, when the production of a commodity imposes external
costs on third parties, goods are no longer efficiently distributed to consumer. External
costs introduce effective price differentials into the markets and everyone does not pay
equal prices for the same commodities.
In a well-functioning competitive market the value of what buyers and sellers on average
receive from their market exchanges equals the value of what they contribute.
Pollution violates the kind of justice or fairness that characterizes a free competitive market.
When a market generates pollution, there are external costs that some people have to pay
in addition to what they pay for the goods they receive. We also recognize that pollution
violates the rights that characterize a free competitive market.
The remedy for external costs, according to utilitarians, is to internalize external costs to
ensure that the producer pays all of the real costs of production and uses these costs to
determine the price of the commodity. To internalize the costs of pollution, a firm may be
required to pay all those harmed by pollution. A problem with this way of internalizing the
costs of pollution, however, is that when several polluters are involved, it is not always clear
just who is being harmed and by whom. Alternatively, the firm might install pollution control
devices and stop the harm at its source.
This way of dealing with pollution is consistent with the requirements of distributive justice.
Since pollution’s external costs are largely borne by the poor, pollution produces a net flow
of benefits away from the poor and towards the rich. Internalizing these costs can reverse
this flow. However, if a firm makes basic goods, such as food, then internalizing costs may
place a heavier burden on poorer people.
Internalizing external costs is also consistent with retributive and compensatory justice,
because those who are responsible for pollution bear the burden of rectifying it and
compensating those who have been harmed. Taken together, these requirements imply that
(a) the costs of pollution control should be borne by those who cause pollution and who
have benefited from pollution activities, whereas (b) the benefits of pollution control should
flow to those who have had to bear the external costs of pollution. Internalizing external
costs seems to meet these two requirements: (a) The costs of pollution control are borne by
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stockholders and customers, both of whom benefit from the polluting activities of the firm;
and (b) the benefits of pollution control flow to those neighbors who once had to put up with
the firm’s pollution.
Costs and Benefits
Since the effects of pollution are so harmful, it might seem that no action to remedy
pollution could be too drastic. However, if a firm spends a greater amount on a pollution
control device than the amount of damage the pollution would cause, then the firm should
not install it; the economic utility of society will be damaged if they do. The amount a firm
should invest in pollution control, then, must rest on a cost-benefit analysis: a precise
calculation of what the device or practice would cost and what its expected benefits would
be. Thomas Klein summarized the procedures for cost-benefit analysis as follows:
1. Identify costs and benefits of the proposed program and the person or sectors
incurring or receiving them. Trace transfers.
2. Evaluate the costs and benefits in terms of their value to beneficiaries and donors.
The standard of measure is the value of each marginal unit to demanders and
suppliers ideally captured in competitive prices. Useful refinements involve:
a. Incorporating time values through the use of a discount rate.
b. Recognizing risk by factoring possible outcomes according to probabilities and,
where dependent, probability trees.
3. Add up costs and benefits to determine the net social benefit of a project or
program.
The problems involved in getting accurate measurements of the benefits and costs of
pollution control are also illustrated by the difficulties businesses have encountered in trying
to construct a social audit (a report of the social costs and social benefits of the firm’s
activities). Those who advocate that a corporation should measure and report the social
impacts of its activities have been forced to understand that all the variables involved in
making these measurements will result in compromises having to be made because of the
limitations of current technical capabilities. As a result of this inability to measure benefits,
so-called social audits are often nothing more than qualitative descriptions of what a firm is
doing. Without definite quantitative measurements of the benefits deriving from its attempts
to reduce pollution, however, a firm has no way of knowing whether its efforts are cost-
effective from a social point of view. These measurement difficulties pose significant
technical problems for utilitarian approaches to pollution. In addition, the use of utilitarian
cost-benefit analysis is sometimes based on assumptions that are inconsistent with people’s
moral rights. Advocates of utilitarian cost-benefit analysis sometimes assume that if the
benefits of a certain technology or manufacturing process clearly outweigh its costs, then it
is morally permissible to impose the process on unwilling citizens.
Many thinkers have argued that the environmental crises we face are rooted in the social
systems of hierarchy and domination that characterize our society. This view, now referred
to as social ecology, holds that until those patterns of hierarchy and domination are
changed, we will be unable to deal with environmental crises. In a system of hierarchy, one
group holds power over another and members of the superior group are able to dominate
those of the inferior group and get them to serve their ends.
Until these systems (such as racism, sexism, and social classes) are changed, we will be
unable to deal adequately with the environment. Ecofeminists, a related group of thinkers,
sees the key form of hierarchy connected to the destruction of the environment as the
domination of women by men. They believe that there are important connections between
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the domination of women and the domination of nature–patterns of thinking, which justify
and perpetuate the subordination. This logic of domination sets up dualisms (artificial and
natural, male and female) where one of the pair is seen as stronger and more important. To
solve our ecological problems, we must first change these destructive modes of thinking.
According to the ethics of caring, the destruction of nature that has accompanied male
domination must be replaced with caring for and nurturing our relationships with nature and
other living things. Nature must be seen as an “other” that must be cared for, not tamed or
dominated. Thought-provoking as these approaches are, they are still too new and
undeveloped to give us specific direction.
5.3 The Ethics of Conserving Depletable Resources
Conservation refers to the saving or rationing of natural resources for later use. In fact,
even pollution control can be seen as a form of conservation, since pollution consumes air
and water. However, generally, conservation refers to the saving of finite, depletable
resources. The only source of such resources is what has been left over from previous
generations.
As we deplete the world’s resources, there is unavoidably a smaller amount of them left for
future generations. If future generations have an equal right to the world’s resources, then
by depleting them we are stealing what is actually theirs.
A number of writers have claimed that it is a mistake to think that future generations have
rights. They advance three main reasons to show this:
First, future generations cannot intelligently be said to have rights because they do not now
exist and may never exist. I may be able to think about future people, but I cannot hit
them, punish them, injure them, or treat them wrongly. Future people exist only in the
imagination, and imaginary entities cannot be acted on in any way whatsoever except in the
imagination. Similarly, we cannot say that future people possess things now when they do
not yet exist to possess or have them. Because there is a possibility that future generations
may never exist, they cannot “possess” rights.
Second, if future generations did have rights, we might be led to the absurd conclusion that
we must sacrifice our entire civilization for their sake. Suppose that each of the infinite
number of future generations had an equal right to the world’s supply of oil. Then we would
have to divide the oil equally among them all, and our share would be a few quarts at the
most. We would then be put in the absurd position of having to shut down our entire
Western civilization so that each future person might be able to possess a few quarts of oil.
Third, we can say that someone has a certain right only if we know that he or she has a
certain interest which that right protects. The purpose of a right, after all, is to protect the
interests of the right holder, but we are virtually ignorant of what interests future
generations will have. What wants will they have?
John Rawls, on the other hand, argues that though it is unjust to impose heavy burdens on
present generations for the sake of the future, it is also unjust for present generations to
leave nothing for the future. We should ask ourselves what we can reasonably expect they
might want and, putting ourselves in their place, leave what we would like them to have left
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for us. Justice, in short, requires that we hand over to our children a world in no worse
condition than the one we received ourselves.
The ethics of care support conservation policies similar to the ones Rawls advocates.
Utilitarian reasoning, too, supports Rawls’ conclusions. Some utilitarians posit that the
ethical thing to do is to discount future consequences based on their uncertainty and
distance from the future. We are therefore clearly obligated not to take actions that will
almost certainly harm tomorrow’s generations. However, since we can be less certain what
the effects of our actions will be on far distant generations, our responsibility towards them
is somewhat diminished.
Rawls went on to say that what earlier generations in justice owe to later generations will
lead to the conclusion that what justice demands of us is merely that we hand to the next
generation a situation no worse than we received from the earlier generation.
We cannot rely on market mechanisms to ensure adequate conservation for future
generations, however. The needs of future generations are so heavily discounted by
markets that they hardly affect prices at all. It then appears that the only means of
conserving for the future appears to be voluntary (or politically enforced) policies of
conservation.
Wilcox and Shepherd provide four reasons why businesses in markets will fail to not
consider the scarcity of resources:
1. Businesses try to consume resources to quickly before competitors do.
2. Busienesses have short horizons.
3. The future is difficult for businesses to predict.
4. Businesses tend to ignore externalities.
Many observers believe that conservation measures are falling short of what is needed.
Some even maintain that future generations will have a quality of life much lower than our
own. Industrialized nations will need to convert from growth-oriented technologies to more
labor-intensive ones. In fact, our entire economic system may have to abandon the goal of
steadily increasing production: continual economic growth promises to degrade the quality
of life for future generations. This is because demand for depletable resources will continue
to rise until the resources simply run out. Then, living standards will decline sharply
Rawls, Attfield and others believe that we are obligated to do what we can to ensure that we
leave the next generation a world that is no worse than the one we received from the
generation previous to ours. Unfortunately, there are many definitions of sustainability.
The concept of sustainability, however, is now commonly interpreted as encompassing more
than just environmental concerns. Sustainability is often said to depend on “three pillars”:
(1) our economic activities, (2) our social arrangements, (3) and our environmental
activities. They are seen as interrelated and dependent on each other, so that sustainability
in any one domain is possible only if the other domains are sustainable. Although there is
some controversy about how sustainability can be achieved, it is clear that the idea of
sustainability is consistent with the ethical judgment of Rawls and Attfield that w should
leave our children a world that is no worse than the one our parents left us.
Many observers believe that conservation measures will fall far short of what is needed to
ensure sustainability. Several environmentalists argue that if we are to preserve enough of
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our limited nonrenewable and non-substitutable resources for the benefit of future
generations, people like E.F. Schumacher claim that we will have to scale down our pursuit
of economic growth, capital-intensive technologies to much more labor-intensive
technologies in which humans do work machines now do. Others argue that economic
systems will have to abandon their goal of steadily increasing production and put in its place
the goal of decreasing production until it has been scaled down to “a steady state” – that is,
a point at which the total population and the total stock of physical wealth are maintained
constant at some desired levels by a ‘minimal rate of maintenance throughout.
As our supplies of energy diminish, other moral concerns are raised. Though the U.S. has
only 6% of the world’s population, we consume 25% of its energy; 50% of the people of the
world get along with only 8%. Some seriously question whether high-consuming nations like
ours can be justified in using for its own sake the nonrenewable resources of the world that
others are too weak or frugal to use themselves.
One group, the Club of Rome, predicted that a catastrophic collapse of goods and services
will result at some point in the middle of this century; by 2100 the world’s population may
even drop below 1900 levels. More recently, the some observers have concluded that even
if the Club of Rome’s timetables were off, their conclusions were substantially correct.
The high energy consumption rates of Americans, Europeans, and the Japanese are not
paralleled by similarly high rates of energy production. At the same time their energy
consumption is subsidized by the Caribbean, the Middle East, and Africa. The people of the
developed world use much of the energy supplies available to them for inessentials,
whereas the more frugal nations tend to use their supplies to meet basic needs. These
comparisons cannot help but raise the question of whether the high-consumption nations
are morally justified in continuing the economic growth policies that lead them to
appropriate for their own use the nonrenewable resources of other, more frugal nations that
are too weak economically to use these resources or too weak militarily to protect them.
Extra Resources
1. A large number of documentaries on the environment are now available.
Documentaries on global warming include:
“An Inconvenient Truth” (2006); “The 11th Hour” (2007);
“Extreme Ice” (2009); “The Antarctica Challenge: A Global Warning,” (2010).
2. Documentaries on environmental threats include:
“Earth Report, State of the Planet 2009” (2009) which surveys the impact of
development on the environment.
“Planet in Peril” (2008) is a 3 hour CNN documentary that looks at climate change,
vanishing habitats, disappearing species, population growth.
“What Price Clean Air?” (2009) looks at effects of air pollution and industry attempts
to weaken the Clean Air Act.
“Ghana: Digital Dumping Ground” (2009) is a 20:29 minute Frontline – World Watch
Stories from A Planet video describing e-waste reclamation in developing countries.
“Global Warming; The Signs and the Science” (2005) is an approximate 60 minute
PBS documentary on the effects of global warning (the first nine minutes are a good
lead in to the subject).
“From Waste to Watts” (2007) a 10 minute KQED video documentary showing a
dairy that uses the cow manure and restaurant left over waste and converting it into
clean energy, available online at http://www.kqed.org/quest/television/view/415 .
into
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A video series on the pollution described in the On the Edge feature entitled “Ford’s
Toxic Wastes” (p. 250) is available online at http://toxiclegacy.northjersey.com and
http://www.northjersey.com/specialreports/ringwood5yearslater.html .
3. “The Corporation” (2004) is a 145 minute Documentary on the corporation with
interviews. The following is a suggested interview for this chapter:
Sam Gibara – “Responsible Corporations Don’t Externalize”.
4. “Death on a Factory Farm” (2009) is an HBO documentary on the inhumane
treatment of farm animals.
5. “Meet Your Meat” (2003) is a documentary on the inhumane treatment of farm
animals.
6. “Ray Anderson on The Business Logic of Sustainability “A TED2009 film available on
the web:
http://www.ted.com/talks/ray_anderson_on_the_business_logic_of_sustainability.ht
ml .
Questions for Class Discussion
1. What is the distinction (or the relationship) between pollution and resource
depletion?
2. What are the most important types of air pollution? What harmful effects does each
form have on our lives, health, and economic well-being?
3. What are the main sources and types of land and water pollution? What dangers do
these types of pollution represent?
4. What is exponential depletion of resources? What is peaked depletion of resources?
What are the economic consequences of both models?
5. How do the concepts of “unlimited good” and “carrying capacity” relate to pollution
control?
6. Define deep ecology or ecological ethics. What are the consequences of taking an
ecological ethic seriously?
7. What is Blackstone’s concept of environmental rights? What are the weaknesses of
his theory? Are there any ways to answer these concerns?
8. What is the difference between private costs and social costs? Why is it a problem
when they diverge? What remedies for this divergence are there?
9. How are cost-benefit analyses related to pollution control? What are the limitations
inherent in such analyses? How does informed consent enter into the issue?
10. How do social ecology and ecofeminism attempt to rethink standard approaches to
the environment? What are the values and limitations of these views?
11. What considerations are relevant for the ethics of conserving depletable resources?
Do future generations have the same right to the earth’s resources as we do? Do
other countries have the same claim to resources, such as energy, as we do?
12. What are the prospects for continued economic growth? What ethical problems
pertain to continual growth?
Activities and Assignments
1. Ask students to visit The Regional Impacts of Climate Change website and/or the EPA
website to gather information about the possible effects of global warming in their
specific area.
2. The debate about genetically modified foods is a good example of how utilitarian
concerns are limited by rights of consent when dealing with potentially harmful new
technologies. Have students gather articles on genetically modified foods and then
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analyze them as a group to identify the moral theories that serve as the foundation
for each point of view they find.
3. Have students debate the different positions concerning the right of future
generations to the world’s resources.
4. To begin a discussion of justice to future generations, have students make a list of
the major resources used 500 years ago, 100 years ago, and today. Are there types
of resources that seem always to be in demand? What things that used to be
valuable are no longer necessities of life? What principles seem relevant to predicting
the needs of future individuals?
5. Ask students to compare the reports of the Club of Rome and Worldwatch concerning
the prospects for continued economic growth. Have them decide what they think
their lives will be like in fifty years in the face of these predictions.
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