Economic Calculation in the Environmentalist Commonwealth
Just in time for Earth Day, here’s “Economic Calculation in the Environmentalist Commonwealth,” under review at the Quarterly Journal of Austrian Economics. The abstract:
Do environmental initiatives like carbon accounting provide a viable alternative to monetary calculation based on profit and loss? Economic insights about calculation and imputation suggest that they do not provide a reliable, rational guide to action. Non-monetary calculation of the environmental effects of action runs into the same problems of in natura calculation and commonly-owned means of production. The information needed for rational economizing does not exist when we forsake the price mechanism. A legal regime based on strict private property rights solves environmental problems. Relaxed restrictions on property rights can generate environmental benefits and reduce our contribution to environmental degradation. Examples include the elimination of restrictions on housing markets and privatization of municipal recycling and garbage collection.
Update: Forthcoming in New Perspectives on Political Economy, here’s “A Note on Profit, Loss, and Social Responsibility.” The abstract:
This short note discusses the role of profits and losses in organizing information. I explore the ethical status of a firm earning losses and argue that to earn a loss reveals important information about the production plans that are likely to be successful. I further argue that the information revealed in a profit-and-loss economy is socially beneficial.
Cross-posted at the Mises Blog and Division of Labour.