BP’s Fate in a Free Market, Part Two

Having read some interesting commentary on my previous column on BP, I thought I’d do a follow-up to clarify and expand on a few things.

Shawn Wilbur, a leading scholar in the history of the individualist/mutualist tradition in addition to being an anarchist himself, agrees that oil companies like BP would be far less able to externalize costs on the public in a free market order, absent such privileges as caps on liability. But he goes on to raise the issue of the “many kinds of value and interest” that are not adequately represented by markets:

“After all, sea turtles and brown pelicans don’t get any more of a vote in the market than they do in elections or campaign contributions. Private property conventions tend to establish a separation of interests not reflected in, or respected by, the circulatory systems of the biosphere …”

Gary Chartier, a market anarchist professor at La Sierra University, commented that since sea turtles lack any means of effectively asserting or defending rights on their own behalf, their interests in any system — whether under statism, market anarchy, or any other kind of anarchy — depend entirely on the existence of human beings who identify those interests with their own.

I would add that the present system includes many structural barriers that prevent humans who value the interests of other species or of the ecosystem from expressing that valuation in the marketplace. For example, federal lease auctions allow only companies from the relevant industry (lumber, mining, etc.) to bid on access to federal land. That means conservationists who value holding land out of use are banned from the bidding process, that the winning bid is hence lower than it likely would otherwise have been, and that resource extraction is artificially profitable. Federal preemption of vacant land means, likewise, that the privileged access granted by the federal government is uncontested by other previous claimants.

Were vacant land not preempted by the state and then granted on a privileged basis, then the oil, mining and lumber companies could establish legitimate homestead rights only over the land that they were capable of effectively developing and fully prepared to economically exploit at any given time. In the meantime, other groups might have homesteaded significant parcels of land with the intention of conserving it. As Wilbur himself states in the comments under his post, “active conservation” — like “a wildlife corridor, or critical wetland, or scenic area” — is “pretty obviously a use.” In a free market regime with open homesteading, lumber and other extractive industries would have to buy out such competition at whatever price the latter demanded, if they were willing to sell at all.

As I mentioned in another post, one reason the ecosystem in West Virginia has had so little protection against mountaintop removal, is that the property rights of small owners had so little protection against expropriation, and the surrounding communities had been robbed of so much of their common law protection against tortious action by the mining companies against their air and water. As chronicled in the movie “Matewan,” the first white homesteaders in West Virginia — who mostly lacked formal title to their land, having settled when government was still quite irregular — were later expropriated by the mining companies, who could afford to buy both good lawyers and bad legislators.

Iain McKay, principal author of An Anarchist FAQ, raises the question of how a free market liability regime, which only operates after the fact, could prevent something like the Deepwater Horizons disaster from happening in the first place. And would the threat of penalties after the fact be sufficient to deter such bad behavior–especially given the normal human tendency to underestimate risk and the cognitive bias toward gambling on huge potential payoffs? By the time tort damages were imposed, even if they meant a corporate death sentence, the damage would already have been done.

True enough — but how is that different from any other system? I don’t think there’s any system that would address pollution ex ante. The regulatory state was supposed to prevent risky behavior ex ante, and we see how that turned out. If the point is to “deter people… doing potentially dangerous things,” by definition the approach is of behavior modification based on the anticipated consequences of one’s actions ex post. And I expect the threat of a “corporate death sentence” with all assets liquidated to pay the full cleanup costs and economic damages from a big spill (in addition to cleaning out the bank accounts of execs personally guilty of deliberate criminal negligence) is at least as effective as the threat of a fine from the EPA for inadequate safety measures.

There’s no system in which the operations would not be carried out by human beings with a tendency to underestimate long-term cost and risks compared to short-term gratification.

If market anarchy is to be compared justly either to statism or to other forms of anarchy, it must be compared to the alternatives as they would likely be administered by actual, grubby human beings. It is not intellectually honest to compare a market anarchy run with an average level of human competence to a regulatory state run with some never-yet-attained level of ideal efficiency.