Tani on Calabresi and the "Economic Style"

Karen Tani just completed a fascinating four-part series at Legal History Blog on Guido Calabresi's particular form of law and economics scholarship and its influence on legal thinking. Though Tani doesn't directly deal with environmental issues (nor did Calabresi give them much attention), the series raises important questions that have relevance to understanding the history of environmental regulation and environmental law scholarship in recent decades. In particular the series focuses on the question of to what extent economic thinking in Calabresi's writings claimed exclusivity or made room for other ways of thinking about legal problems. 

Calabresi himself often insisted (as in the subtitle "One View of the Cathedral") that economics was just one factor to be considered in legal analysis, and his classic works (such as The Cost of Accidents and the Cathedral article) also at least paid lip service to this idea, but I have always thought that the depth of Calabresi's economic analysis, juxtaposed with the cursory treatment he usually gave to distributive considerations, broadcast the message that efficiency was the key factor to be considered.

This way of thinking has obviously had great effects on environmental law, starting from the way environmental issues are typically presented to law students - as negative externalities that need to be internalized or collective-action problems that need the aid of law to overcome, rather than, say, as issues of distributive justice or problems of environmental ethics.

Efficiency and equality in US environmental regulation

Kunal Parker recently reviewed Elizabeth Popp Berman, Thinking Like an Economist: How Efficiency Replaced Equality in U.S. Public Policy (Princeton UP, 2022). There's a lot here that's relevant to the history of environmental regulation. First, Parker's summary of Popp Berman's argument, with obvious implications for understanding historically some mainstays of environmental policy, such as cost-benefit-analysis and market tools for regulation:

The book explores the rise to prominence of an economic “style of reasoning” in U.S. policymaking in the post-World War II decades. Between 1950 and 1980, Popp Berman shows, this style pervaded realm after realm of policymaking, from social welfare programs to the regulation of markets to the management of the environment.

The chief institutionalizers of the economic style of reasoning were not neoliberals or libertarians (these would become truly prominent in government only after the election of Ronald Reagan in 1980). Instead, they were Democrat-appointed economists and the bureaucrats they worked with and influenced. Albeit not ideologically opposed either to social programs or to market intervention, these economists and bureaucrats insisted that social goals be met as efficiently as possible and that market solutions were generally preferable to interventionist ones. Wherever possible, they pushed cost-benefit analyses and reviews within administrative agencies, urged the dismantling of early-twentieth-century market controls, and sought to achieve ends by creating markets for entitlements rather than by imposing standards by fiat. In all this, they shared much with those further to their right.

By the time Ronald Reagan was elected president, the economic style introduced during the Kennedy and Johnson years had become thoroughly entrenched. Indeed, it had become the hegemonic approach to solving all manner of public problems, its ubiquity and self-evidence continually reinforcing each other. Reagan Republicans would employ the economic style, but the ground had been laid for them decades earlier by Democrats. Indeed, Popp Berman argues, Democrats proved far less strategic in using the economic style than Reaganites. Democrats privileged it as a method in context after context and allowed it to subsume their substantive ends. By contrast, Reaganites were more selective and often successfully subordinated it to their substantive ends.

Parker, though, queries whether equality was actually the guiding principle in the pre-efficiency era:

Bounties and land-use regulation

Jack Whiteley recently posted "Property in Wolves", forthcoming in the Cornell Law Review. The abstract:

From colonial times until the mid-twentieth century, governments paid bounties to kill wolves, mountain lions, and other wild animals. Clearing the wild was a sustained legislative project. Yet interest in these statutes has remained confined to scholarship on wildlife conservation, and important insights for legal theory have gone unobserved.

Based on new research, I argue that these bounty statutes have implications for the history and theory of property. The statutes were, in their intent and effect, land use regulations. For more than three centuries, they encouraged livestock. By removing wild animals, the statutes made livestock-raising a more cost-effective use of land than it otherwise would have been for landowners. And by removing wolves and other ecologically important species, they changed the character of land in ways that diminished the value of wilder uses. The statutes chose winners among land uses, and they operated over a much longer timeframe than conventional accounts, which date land use regulation’s origin to 1916, would suggest.

The statutes also had a deeper consequence. They encouraged private property in land. Predation on livestock is the kind of “large event” that, on a famous theory developed by Robert Ellickson, makes collectively-owned land valuable. By acting to remove the threat of wild animal predation on livestock in settlement communities, governments weighted the scale toward privately-owned, fee-simple land regimes. This discovery raises questions for a popular normative justification for private property in land.

The Article finally offers thoughts as to why animal eradication was such a pronounced public policy. The phenomenon suggests the influence of cultural preferences on property regimes.

Note: Apparently bounties are still with us, as can be seen in the recent poster below. 

(Boise State Public Radio)

Environmental law in Rome and beyond

For the Italian speakers among you (courtesy of the ESCLH blog): The Laboratory of Legal and Economic History at Università degli Studi "Magna Graecia" in Catanzaro will be holding a conference on "The environment between law and economics: a long journey from the Roman world to the contemporary age" on 3-4 December 2021. The program and links for remote participation are below and on the website Storia del diritto medievale e moderno.

The polluter pays principle and policy transfer

I missed this one a while back: The European Review of History published Jan-Henrik Meyer's "Who should pay for pollution? The OECD, the European Communities and the emergence of environmental policy in the early 1970s". The abstract:

Environmental policy emerged as a new European and global policy field within a very brief period of time during the early 1970s. Notably in Europe, international organizations played a central role in defining core principles for this new policy domain. This article argues that inter-organizational connections were crucial in this context: the exchange and transfer of policy ideas facilitated the rise of environmental policy across different international organizations. Focusing on the co-evolution of the polluter-pays principle enshrined almost simultaneously both at the OECD and the European Communities, the article assesses the multiple routes along which policy ideas travelled, the role inter-organizational competition played and the selective nature of transfers. While expertise played a key role in determining which policy concepts were selected, institutional conditions and the politics of the recipient institution determined how they were adapted to the respective new context.

Economic theory and climate policy

A recent issue of Nature Climate Change carried an article by Jonas Meckling & Bentley B. Allan, "The evolution of ideas in global climate policy". The abstract:

From carbon pricing to green industrial policy, economic ideas have shaped climate policy. Drawing on a new dataset of policy reports, we show how economic ideas influenced climate policy advice by major international organizations, including the Organisation for Economic Cooperation and Development and the World Bank, from 1990 to 2017. In the 1990s, the neoclassical notion of weak complementarity between environmental protection and growth dominated debates on sustainable development. In the mid-2000s, economic thought on the environment diversified, as the idea of strong complementarity between environmental protection and growth emerged in the green growth discourse. Adaptations of Schumpeterian and Keynesian economics identified investment in energy innovation and infrastructure as drivers of growth. We thus identify a major transformation from a neoclassical paradigm to a diversified policy discourse, suggesting that climate policy has entered a postparadigmatic period. The diversification of ideas broadened policy advice from market-based policy to green industrial policy, including deployment subsidies and regulation.

The number of times neoclassical, Keynesian/Schumpeterian or limits-to-growth arguments appeared in our sample of IO annual reports each year from 1990 to 2017 (from the article)

The ecology of economic thought

I've been participating in a great online series on the historical intersections of economic and environmental thought, organized by Troy Vettese and Julia Nordblad. The organizers write:

One would think that environmental history and economic history would be peas in a pod. After all, central questions in the history of economic thought concern environmental issues such as the early-modern enclosures and the importance of water-power and coal to the industrial revolution. The meanings of ‘the environmental’ and ‘the economic’ have shifted over the centuries, especially as issues were traded between natural philosophy, political economy, and ecology. While much has been written on policy of various kinds, what this workshop is focused on are works that lie at the convergence of environmental, economic, and intellectual history. What  for example are the origins and contexts of Spaceship Earth, catastrophe bonds, geo-engineering, externalities, cap-and-trade, and sustainability? 

Many of the papers are on topics with significant legal aspects, such as the history of economic thought on emissions trading, Pigouvian taxes, and the like. Stephen Gross's paper for tomorrow is particularly laden with connections to the history of environmental law and regulation.

The schedule for the remaining meetings is below. Registration is for each session separately (links below), and the discussions assume pre-reading of the papers, as the authors do not present them but only respond to comments. Papers are available from Troy Vetesse.

Water pollution regulation: an economic analysis

Last year the Journal of Economic Perspectives published "US Water Pollution Regulation over the Past Half Century: Burning Waters to Crystal Springs?" by David A. Keiser and Joseph S. Shapiro. The abstract:

In the half century since the founding of the US Environmental Protection Agency, public and private US sources have spent nearly $5 trillion ($2017) to provide clean rivers, lakes, and drinking water (annual spending of 0.8 percent of US GDP in most years). Yet over half of rivers and substantial shares of drinking water systems violate standards, and polls for decades have listed water pollution as Americans' number one environmental concern. We assess the history, effectiveness, and efficiency of the Clean Water Act and Safe Drinking Water Act and obtain four main conclusions. First, water pollution has fallen since these laws were passed, in part due to their interventions. Second, investments made under these laws could be more cost effective. Third, most recent studies estimate benefits of cleaning up pollution in rivers and lakes that are less than the costs, though these studies may undercount several potentially important types of benefits. Analysis finds more positive net benefits of drinking water quality investments. Fourth, economic research and teaching on water pollution are relatively uncommon, as measured by samples of publications, conference presentations, and textbooks.

In memoriam: Meir Shamgar

Meir Shamgar as a detainee in Eritrea, 1946

Friday saw the passing of one of the greats of Israeli law, former Justice and President of the Supreme Court Meir Shamgar. Shamgar has been eulogized elsewhere, mainly with regard to his many important contributions to constitutional law and public law in general, but I'd like to shine a light on an important decision of his in an environmental nuisance case, about which I've written (in Hebrew). (I hope the case will be translated into English soon.)

Ata v Schwartz (1976) is an Israeli classic. Briefly put, Schwartz sued a neighboring textile factory, the largest in Israel at the time; asking for an injunction against the noise emitted by its cooling and ventilation systems. Despite the factory's warning that granting the injunction would lead to the layoff of thousands of workers, the trial court as well as the two appeals courts that considered the case upheld Schwartz's right to an injunction, noting that the relevant statute rejected a "balance of the equities" test for permanent injunctions, and emphasizing the importance of every person's right to live free of harsh disturbances.

What makes the case a chestnut for teaching, beyond the stark facts and bold result, is Justice Shamgar's discussion in his decision for the Supreme Court of the then-new economic approach to law. Unbidden by the parties, Shamgar linked the defendants' claim that an injunction should be granted only if the balance of the equities was in the plaintiff's favor (i.e. that the harm eliminated by the injunction would be greater than the cost of complying with it) to classic arguments by Ronald Coase, Richard Posner, and Guido Calabresi (with Douglas Melamed), arguing for wealth- or utility-maximization as the guiding principle of nuisance law. I write "classic arguments", but Shamgar's decision was really the first (in the world) to discuss the works of these authors at any length. Why "the law and economics movement" received its first substantial treatment in an Israeli, and not an American, court is a subject for another time.

Savagery, civilization, and property III: The commons theorists

In the last post in this series, we looked at the way early modern "stadial theory" connected between stages of civilization and property regimes. Now let us examine some of the classics of modern commons theory, noting the fondness of theorists for stories reminiscent of various aspects of stadial theory. I wish to highlight here not simply that commons theorists of many stripes tend to connect pressure on resources to property regimes, as unanimity on this point could plausibly be explained by observations of a pervasive phenomenon. It is rather the connection of these two parameters — pressure and property — with the early modern idea of civilizational stages characterized by hunting, pastoralism, agriculture, and sometimes commerce, that I find striking. Whether seeing these stages in terms of the march of Progress or a fall from Edenic bliss, nearly all commons theorists seem to be attracted to the basic narrative of stadial theory.

Garret Hardinʼs “Tragedy of the Commons” illustrated its argument against common property with a parable of a common pasture.  While neither Hardin nor William Forster Lloyd, from whom he borrowed the story, argued that society does or should progress along stages of development, their descriptions of the common pasture echoed some elements of stadial theory: shepherds have no “property” in their pastures, a characterization consistent with stadial thinking (and clearly disproved by historical work on actual common pastures).  Such pastures are subject to overgrazing, as in the story of Abraham and Lot adduced by Dalrymple.  Moreover, Hardinʼs article echoed stadial theory at several points, such as when he writes that “the logic of the commons has been understood for a long time, perhaps since the discovery of agriculture or the invention of private property in real estate,”  or in his argument that increasing pressure on resources drives enclosure of the commons:

Perhaps the simplest summary of this analysis of man’s population problems is this: the commons, if justifiable at all, is justifiable only under conditions of low-population density. As the human population has increased, the commons has had to be abandoned in one aspect after another.

First we abandoned the commons in food gathering, enclosing farm land and restricting pastures and hunting and fishing areas.

Approximately contemporaneously with Hardin’s article, Harold Demsetz published his “Toward a Theory of Property Rights.”  Here the similarities to stadial theory were yet more prominent. Demsetz, relying on the work of anthropologists who had studied native tribes of the Canadian northeast, described societies that had moved from hunting to husbandry of fur-bearing animals (husbandry being either a sort of pastoralism or agriculture). Demsetz argued that this change in subsistence methods was accompanied by a change in property arrangements — lack of private property gave way, as a response to new, commercial demands for pelts, to defined property rights in land:

Herman Moll, inset from Beaver Map (1715)

We may safely surmise that the advent of the fur trade had two immediate consequences. First, the value of furs to the Indians was increased considerably. Second, and as a result, the scale of hunting activity rose sharply. Both consequences must have increased considerably the importance of the externalities associated with free hunting. The property right system began to change, and it changed specifically in the direction required to take account of the economic effects made important by the fur trade.

While not tracking Enlightenment stadial theory precisely, Demsetz’s account overlapped with it in several respects (not at all coincidentally, as we will see): echoes of the progression hunting-pastoralism-agriculture-commerce, an accompanying shift to increasingly defined property rights, and an explanatory mechanism based on increasing pressure on the resource.  Regarding this last point, Demsetz’s consideration of externalities was markedly similar to Adam Smith’s argument that “when flocks and herds come to be reared property then becomes of a very considerable extent; there are many opportunities of injuring one another and such injuries are extremely pernicious to the sufferer.”

Demsetz’s work was extremely influential on property theorists in the legal academy, many of whom continue to make use of the stadial paradigm. James Krier, for instance, recently advanced a modified Demsetzian account of the evolution of property rights from hunter-gatherer societies with communal ownership to agricultural ones with individual ownership.  Demsetz’s model also had major impacts on the economic literature on the commons (e.g. Anderson & Hill's "The Evolution of Property Rights" and the literature it spawned),  as well as on the “common pool resources” literature associated with Elinor Ostrom.

Perhaps less obvious, but in some respects uncannily similar to Adam Smith’s theory, is Carol Rose’s influential classification of management strategies for common resources.

Commons and cognition

Next up in the series of posts on "The Tragedy of the Commons at 50" (the last post is here) is the article of my co-editor for the volume, Carol Rose, "Commons and Cognition". The abstract:

Garrett Hardin’s Tragedy of the Commons primarily concerns actions rather than thoughts. But he did famously describe the cognitive state of a hypothetical herder on a grassy field. With respect to the field and its other users, Hardin’s herder is both ignorant and indifferent; he coolly calculates that his best option is to take the full benefit of grazing his stock while suffering only a fraction of the cost — an action that contributes to the decimation of a common resource. While Hardin viewed the herder’s attitude as identical to that of actors in many other collective action situations, the work of other commons theorists suggests several different cognitive stances among such actors, largely depending on the scale of the commons issues they face. Thus participants in the Prisoner’s Dilemma (a very small commons) would appear to be dominated by distrust rather than the hypothetical herder’s ignorance or indifference. Participants in midsized commons — such as Hardin’s herders in real life — show some distrust, but also great knowledge and engagement in common pool management. Participants in the largest-scale commons issues are actually those most likely to exhibit the ignorance and indifference that Hardin attributed to the herder. This Article discusses the ways in which these different cognitive stances track the scale of collective action “tragedies” as described by major theorists and concludes with some observations about the cognitive aspects of climate change.

Robert Axelrod, author of The Evolution of Cooperation (1984)

Cronon and commodification

Andy Seal at US Intellectual History Blog posted an interesting piece on William Cronon's extremely influential Nature's Metropolis (1991) earlier this week. It's a rich piece, covering a lot of topics, but it's his discussion of Cronon and commodification that I thought particularly relevant for those of us interested in the intersection of environment, law, and history. Some excerpts:

[Jeffrey] Sklansky argued that one of the reasons why commodification has become such an important frame for new histories of capitalism is because—unlike proletarianization—it seems to have no necessary boundaries.

This boundlessness is quite different from the implicit premises of a narrative focused on proletarianization. Labor history and business history—as they were written up through, say, the 1990s—thrived on drawing distinctions, on identifying stages of development and differentia specifica. The most important distinction, perhaps, was between the human and the nonhuman: proletarianization is, after all, a human process.

Commodification, on the other hand, tends to overwhelm distinctions, starting with the human-nonhuman: while only humans can be proletarianized, everything can be “priced”—placed in a relationship with other things that can be expressed in terms of a number. Even more, while the process of proletarianization seems never to engulf the whole of a person (see my argument in this post), commodification assimilates both individual humans and their internal qualities to a system of commensurable valuations: your cheerfulness as well as your blood pressure, your knowledge of Latin as well as your attention can all be denominated in dollars, no different from a television or a ticket to a concert.

In this way, the story of commodification flattens distinctions between humans and the (rest of the) natural world, demolishing proletarianization’s marked anthropocentrism. Putting a price on human lives or health or knowledge or creativity and putting a price on a chair or a car is one single continuous process; as much as labor could be abstracted as just one more input or one more production cost, the story of making humans into proletarians was always distinct from—if parallel to—the story of extracting value from the natural world.

There are various ways to account for this shift in historical narration away from proletarianization’s anthropocentrism. Certainly, the influence of environmentalism has something to do with it. While very much leftist critique descending from Marx is (still) only fitfully cognizant of ecological critiques of capitalism, some of the ontological premises of an ecological worldview have seeped into culture so generally that an older stark separation of the human and the nonhuman is no longer tenable.

Another possible explanation comes from the small explosion since the 1990s of works in the subfield of what Lorraine Daston has dubbed “historical epistemology,” which as Sklansky defines it is the study of “the invention of new kinds of fact such as employment figures and credit ratings along with the modern metrics and matrices that produced them” (Sklansky, “Elusive Sovereign,” 242). Offspring of the history of science, studies in this vein emphasize the ways that quantification and abstraction have profoundly reshaped the image of “the human,” creating what Dan Bouk has called the “statistical individual.” Incarnated in numbers, this creature can float freely as part of a universe of endlessly adaptable equations: where the human worker needs to occupy a certain place in the production process, the statistical individual can be plugged in far more flexibly at many points in a firm’s calculations and predictions.

*****

The other week on Twitter, Eli Cook pointed out one possible source of inspiration for a generation of historians, one reason why folks who entered graduate school from at least the mid-90s through the present might have had commodities on their minds. That source is a single chapter in a single monograph: the grain chapter of William Cronon’s Nature’s Metropolis (1991), Chapter 3. 

The marine "commons" discourse

Next in the series of posts (the last one is here) on "The Tragedy at 50" (by the way, if anyone wants a hard copy of the journal issue, please email me), is Harry Scheiber's "The 'Commons' Discourse on Marine Fisheries Resources: Another Antecedent to Hardin’s 'Tragedy'". The abstract:

Throughout the fifty years since its publication, Hardin’s “The Tragedy of the Commons” has been regarded as a seminal paper in the environmental movement, although his emphasis on population control (which actually formed the core concern of the article) has been largely forgotten. Hardin argued that free access by a growing population to common resources would inevitably lead to the depletion of those resources, citing as one example how maritime nations’ belief in the freedom of the seas, combined with their belief in the inexhaustibility of marine resources, had brought whales and many species of fish close to extinction. Hardin failed, however, to take account of the extensive debates throughout much of the twentieth century by scientists and policymakers on the general problem of the ocean commons — what they generally termed the “dilemma of the commons” — as it applied not only to living marine resources but also to mineral resources. By mid-century, as improved fishing technology gave rise to ever greater catches, the notion of the inexhaustibility of fisheries was largely discredited; hence scientists as well as experts in both national and international law became focused on addressing the dilemma of the commons through fisheries management, and specifically by determining the Maximum Sustainable Yield. Some economists, arguing instead for maximum efficiency, urged that open access be abandoned in favor of limited entry. Such measures to resolve the dilemma of the commons were the subject of numerous conferences (including the second UN Conference on the Law of the Sea in 1958) and were widely debated in scholarly publications and, indeed, by the late 1960s had been practically implemented by a number of laws and treaties. By 1966, national control over a twelve-mile fishing zone offshore of coastal nations had been well established. These developments regarding the oceans commons, predating Hardin’s article, were apparently either of no interest to him or (if he knew of them) purposefully subordinated to his main polemical objective, which was his Malthusian analysis of the commons issue and his call for limits on “human breeding.”

The banality of the Tragedy?

As promised, I'm going to post on some of the articles that were published as part of the issue of Theoretical Inquiries in Law on "The Tragedy at 50", which I co-edited with Carol Rose. These articles attempt to provide historical context for the modern commons discourse.

First up is Stuart Banner's "The Banality of the Commons: Efficiency Arguments Against Common Ownership Before Hardin". The abstract:

The Tragedy of the Commons tends to be remembered today as the canonical statement of the idea that commonly-owned resources will be overused. But this idea was well known for centuries before Hardin wrote. Hardin acknowledged that he got the example of cattle in a common field from the early nineteenth century economist William Forster Lloyd, and by Lloyd’s time the idea was already familiar and was already being applied to the analysis of overpopulation, Hardin’s primary concern. This paper will trace the history of the idea that common ownership is inefficient, and will suggest why  The Tragedy of the Commons nevertheless quickly attained its canonical status.

On the other hand, Nathaniel Wolloch has a different view, as evidenced in his "Before the Tragedy of the Commons: Early Modern Economic Considerations of the Public Use of Natural Resources":

John Stuart Mill

This article distinguishes between the precise legal and economic approach to the commons used by Hardin and many other modern commentators, and the broader post-Hardinian concept utilized in environmentally-oriented discussions and aiming to limit the use of the commons for the sake of preservation. Particularly in the latter case, it is claimed, any notion of the tragedy of the commons is distinctly a modern twentieth-century one, and was foreign to the early modern and even nineteenth-century outlooks. This was true of the early modern mercantilists, and also of classical political economists such as Adam Smith and even, surprisingly, Malthus, as well as of Jevons and his neoclassical discussion aimed at maximizing the long-term use of Britain’s coal reserves. One intellectual who did recognize the problematic possibility of leaving some tracts of land in their pristine condition to answer humanity’s need for a spiritual connection with nature was J. S. Mill, but even he regarded this as in essence almost a utopian ideal. The notion of the tragedy of the commons in its broader sense is therefore a distinctly modern one.

Banner and Wolloch come from different disciplinary backgrounds, which may affect their understanding of what exactly the "tragedy of the commons" is supposed to mean. (I, for one, am with Banner on this.)

Just price

Thomas Aquinas
(detail from Valle Romita Polyptych by Gentile da Fabriano (c. 1400))

William Boyd recently posted  "Just Price, Public Utility, and the Long History of Economic Regulation in America". The abstract:

This Essay investigates the history of “just price” and its influence on the concept and practice of public utility regulation in the United States. It begins with a discussion of the Scholastic understanding of just price and its relationship to commutative justice, with particular attention to the problem of coercion in economic exchange. The Essay then discusses the centrality of just price to broader ideas of moral economy and to economic thought and regulation in colonial America and the early United States. The heart of the Essay shows how the idea of just price influenced public utility regulation as it took shape during the late nineteenth and early twentieth centuries. As the Essay demonstrates, received understandings of just price were fundamental to the public utility idea and were at the heart of battles over the proper approach to utility valuation and rate regulation during the first half of the twentieth century. The Essay concludes with a discussion of efforts to restructure formerly regulated industries during the last quarter of the twentieth century, with particular attention to the challenges faced by the Federal Energy Regulatory Commission as it seeks to ensure that prices in restructured natural gas and electricity markets are just and reasonable. Although much of the Essay’s purpose is descriptive, several larger points emerge from this study. First, the history of just price reveals that relations of reciprocity and fairness in exchange are at the very core of the public utility idea. When seen from this perspective, public utility represents an important experiment in translating abstract principles of economic justice and fair pricing into working rules for governing key systems of provisioning in a modern industrial society. Second, the history of just price reminds us that prices are more than signals; that they are also relationships and that price relationships can be coercive. At root, the economics of just price is an economics of coercion and, as such, an economics that resonates quite strongly with efforts by Progressive lawyers, legal realists, and institutional economists to develop an approach to law and economics (and economic regulation) that would put coercion at its center. Third, the history of just price shows that competitive markets, when functioning properly, can be powerful instruments for protecting consumers and facilitating fairness in exchange. But it also underscores the importance of taking individual markets on their own terms and recognizing that some markets, and the mechanisms of price formation at their center, are more vulnerable to disruption and manipulation than standard economic models suggest. Finally, at the most general level, the history of just price reminds us that for a very long time—far longer than the lifespan of classical and neoclassical economics—ethical and social concerns have been intimately bound up with conceptions of economy, economic life, and the provision of necessities.

Compensatory mitigation and neoliberalism

Restored perennial and season marsh and riparian forest
at Wildlands Mitigation Bank, Placer County, California (EPA)

The always interesting Dave Owen recently posted "The Conservative Turn Against Compensatory Mitigation", whose primary subject is the recent turn described in the article's title (compensatory mitigation is a policy that require parties receiving permits for environmentally harmful activities to compensate for them by improving environmental conditions elsewhere). Owen also has something to say about the origins of the practice, rejecting the arguments of critics who have portrayed compensatory mitigation as part of a neoliberal, capitalist resurgence:

The proponents of compensatory mitigation reform hardly ever identified their efforts as measures to boost the capitalist system. As one retired departmental employee explained to me, even during the Reagan Administration, debates about compensatory mitigation were driven more by conflicts over regulatory intensity and states’ rights rather than by Milton Friedman-style market ideals. And later reformers’ key goal was to strike a compromise between political mandates to accommodate economic development and legal mandates to protect the environment, and to make permitting decisions in an expedited fashion. Compensatory mitigation policy, in other words, evolved to fulfill agency goals, not to advance a free-market agenda, even though the policies did sometimes bring regulated industries the benefits of expedited and more flexible permitting.

I have to say that I don't find this very convincing, though it is true that compensation mechanisms can serve as a way of balancing interests, as Calabresi and Melamed taught us. First of all, I doubt whether one can get a full and reliable account of agency motivations by interviewing agency sources. Second, as Laleh Khalili points out in a recent interview at Viewpoint, officials and managers often work to advance capitalism without being conscious of it. Finally (and relatedly), I would posit that regulators " driven... by conflicts over regulatory intensity and states’ rights" were in fact often responding to "Milton Friedman-style market ideals" (whether they realized it or not). "States' rights" and "regulatory reform" are ideas the popularity of which in the last few decades owe a lot to business interests, politicians, and intellectuals pushing a neoliberal, capitalist agenda. It is no surprise that "agency goals" meshed with the neoliberal agenda (or that the recent conservative about-face on compensatory mitigation exposes the essential bad faith behind much of "regulatory reform").

Historical analysis in environmental law VI: What is at stake

In the last couple of posts in this series I suggested several directions of inquiry for uncovering the history of environmental law. In this final post in the series, I would like to tentatively offer some thoughts on why the historical exploration of environmental law matters.

First of all, history can help us better understand current environmental law. For instance, David Driesen has recently advanced a positive theory of environmental law, attempting to explain its salient features, such as reliance on certain types of standards. Notably missing from his account are historical explanations for these aspects of environmental law, explanations which might be provided by works such as those of Morag-Levine.  Or take the argument of 'free market environmentalists' that private law would do a better job of protecting the environment than modern regulation; this type of argument could be checked against the historical experience of legal systems that have relied on private law for this purpose.

AC Pigou

Second, the history of environmental law is a topic that offers an opportunity to bridge the material and the abstract, or to take up environmental historian Linda Nash's challenge 'to show how what is presumed to be social or cultural is thoroughly intertwined with the natural.' Such an endeavour would be beneficial to both environmental history and legal history, as legal doctrines, institutions, and ideologies—social and cultural artifacts—developed with regard to the natural, may circulate beyond the narrow confines of environmental law to other legal contexts. One thinks, for instance, of Pigouvian taxes, cost-benefit analyses, and feasibility standards, all developed 'intertwined with the natural' but spreading their branches far afield.

Environmentalists often portray themselves as acting in the name of an apolitical public interest.

Water rights III - Property in water: Theory

(Continuing the series on water rights:)

The question of how and why water has been governed by regimes of private, public, and common property has occupied scholars for some time, often in tandem with the normative issue of which type of property regime is best for the resource. 

Harold Demsetz

As in many other fields, economic analysis has proved to be a dominant theoretical lens for understanding the development of water rights, generating both direct insights and provoking trenchant critiques. On the level of positive theory, many have built on the framework of Harold Demsetz's (1967) theory of property rights, according to which property regimes progress from common to private property as the increasing value of the resource in question, or pressure on it, renders the advantages of its privatization greater than the administrative costs of establishing and maintaining a private-property regime. According to this theory, we should expect to see water regimes characterized by relatively open access or common property in societies and environments characterized by an abundance of water, and increasing reliance on private rights as pressure on the resource increases. An influential work in this tradition is Anderson and Hill (1975), which posits that the abandonment of a common-property regime (riparian rights) in favor of private rights (the prior appropriation doctrine) in the American West was a result of the region's aridity and consequent pressure on the resource. 

Economic analysis has also developed a normative critique of existing systems of water rights. Beginning with the work of Milliman (1956, 1959) and others, many scholars have argued that common property in water leads to waste, inefficiency, and depletion of the resource. The solution, according to this line of argument, is the creation or recognition of completely specified private property rights in water, rights that will allow the functioning of an efficient market that will move water to its most valuable uses and create incentives to avoid waste (Charles J. Meyers & Richard A. Posner (1971) Market Transfers of Water Rights: Toward an Improved Market in Water Resources. Arlington: National Water Commission; Terry L. Anderson (ed.) (1983) Water Rights: Scarce Resource Allocation, Bureaucracy, and the Environment. Cambridge: Ballinger). This sort of argument has obviously resonated with Hardin's (1968) famous article on the tragedy of the commons, and also fit in well with general enthusiasm for market solutions to policy issues in recent decades. It continues to be advanced in various contexts, such as with regard to water rights in China (Speed, 2009).

Yet other theorists have questioned the above conclusions, both positive and normative.

The Cold War context of "risk"

The Journal of Policy History recently published Linda Nash's "From Safety to Risk: The Cold War Contexts of American Environmental Policy". From the introduction (notes omitted):

The late twentieth century marked the rise of “risk society,” to use Ulrich Beck’s well-known term. In Beck’s account, the seemingly endless proliferation of material risks to health and environmental integrity is the outcome of late capitalist modernization, a proliferation that society’s institutions are completely unable to control or address. But without disputing the fact that industrialization has introduced a multitude of new threats to both bodies and environments, their conceptualization as “risks”—rather than merely as “dangers”—was more than a choice of words; it marked both an important policy change and a crucial cultural and political shift.

The dominance of risk discourse in environmental and health policy has not gone unchallenged. Since its inception in the 1970s, the assumptions and methods of regulatory risk assessment have been critiqued and interrogated from a number of perspectives. The social science literature on the topic is vast, much of it quite nuanced and attuned to the social, cultural, and political contexts that structure both lay people’s and experts’ perception of risk. But most who write about risk do not seriously question the term itself, nor do they consider its history. To the contrary, most scholars treat the language of “risk” ahistorically, often conflating “risk” with any kind of danger. Existing historical treatments have been narrowly framed as studies of a single area of federal law and policy. In these accounts, the rise of risk is portrayed either as a necessary maturation of environmental policy that was driven by greater understanding of the issues and improvements in science and technology, or, alternatively, as a triumph of industry and business-friendly politicians in opposing federal regulations. In all these accounts, the focus has been on government actors and, to a lesser extent, industry representatives.

This article builds upon the existing historical work but offers a somewhat broader institutional and intellectual history of risk in the postwar period, drawing particularly on scholarship that has emphasized the role of the Cold War in shaping American social and political thought across the second half of the twentieth century. Rather than locating the shift toward risk in techno-scientific developments or solely in conservative politics, I emphasize the role of intellectuals committed to new modes of formalized decision making and their influence among a new generation of agency managers. Scholars of environmental politics have paid little attention to the intellectual contexts that influenced the development of environmental policy. At the same time, historical accounts of systems analysis and its key institutions have emphasized their influence in defense rather than domestic policy, while their impact on environmental policy has been left almost completely unexplored.

Moreover, when the institutional and intellectual contexts of risk discourse are examined, it emerges not as a logical response to advances in science or technology, nor as simply a response to the challenges of “modernity”; rather, it depended upon the particular political and material forms that modernity took in the post–World War II United States. While acknowledging that politics played an important role in the ultimate adoption of the risk framework, the core of my argument is that risk thinking marked a radical departure from previous approaches to environmental regulation—from an approach based in biology and assumptions about human rights to one based in economics—and that the roots of this shift lay in Cold War defense planning and the insular academic and intellectual worlds it spawned.

Water management and American liberalism

Water Alternatives recently published a review by Joe Williams of JJ Schmidt, Water: Abundance, Scarcity, and Security in the Age of Humanity (NYU Press, 2017). From the review:

The central argument – which might rankle were it not so meticulously made – is that as critical hydro-social scientists we have been getting things wrong for years. Schmidt contends that the old story about the separation of society and nature under modernity and the entrenchment of binary Enlightenment thinking does not apply to water management. The conceptual starting point of many critical scholars, of the transformation of naturally occurring and materially messy 'water', to the industrial product 'H2O', delineated, separate from nature, is, according to Schmidt, a false premise. The logic of water management conceived in the United States in the late 1800s, that has since spread across the world, has instead always connected human society, through water, to the land and geological history in particular and politically significant ways. "The difficulty", he argues, "is not a society/nature dualism or even unique human agency. Rather, the problem is the historical attempt (and ongoing consequences) of a failed strain of social science in the United States that sought to do away with the society/nature dualism" (190). This philosophy of water, through which American (and now global) societies are intimately connected to the land, is given the conceptual handle of 'normal water'. By this, Schmidt refers to the "program of bringing water’s social and evolutionary possibilities into the service of liberal forms of life" (6). Normal water, then, describes a normalised and entrenched set of socio-cultural practices, economic conventions, technological and institutional structures, and geological processes, that link together human society, biological life and planetary evolution under the logic of liberalism. The book traces the development of normal water through its inception at the beginning of American expansionism, its internationalisation under post-war development, and into the Anthropocene.

The political, techno-institutional and conceptual emergence of normal water, according to Schmidt, is premised on three assumptions: "that water was once abundant, that it has now become scarce, and, as an outcome of mismanaging scarcity, that water is now an issue of security" (41). The book is correspondingly structured into four parts. Part one, Abundance, concerns the framing of water as a resource central to the development of American society. It focusses on several key figures associated with the Washington DC-based Cosmos Club around the end of the nineteenth century and beginning of the twentieth, notably W.J. McGee and John Wesley Powell. Water was seen by these men as having geological agency that, if combined with human agency, could form the basis of the most advanced form of liberal society. The driving principle of normal water in the era of abundance, Schmidt says, was that the agency of water could be "synced with the coevolution of American society and the mutual adjustments that water and society made to each other" (79). In an attempt to cement American independence from European colonialism, W.J. McGee even proposed that currency should be tied to water rather than the gold standard. In this respect he was unsuccessful, but the corresponding principle that water was a public good that should be managed for 'the people', Schmidt argues, has formed the bedrock of normal water.