The Green Economy: Is “Internalizing Externalities”

Really a Way Forward?

Green Economy ColloquiumThe Hague

2 October 2012

Yes, prices are crazy!

But where does this price insanity come

from?

• The answers are complex – and very political. For example ...

“Cheap food enables the cheap and rapid exploitation of human nature in the form of labour, and has always been indispensable to the revival of world accumulation. Nature’s 'free gifts' outside the commodity system are appropriated in order to maximize labour productivity inside. Plunder and productivity form a partnership.”

Jason W. Moore

Falling wages under neoliberalism ... →

→ demand problems, potential for unrest

How is this price insanity being fought?

… not only a critique of cheap food and the power of speculative finance, but also a call for transcending cheap-food, land-grabbing, “austerity” regimes that devalue human and extra-human nature.

THE BIG STRATEGIC QUESTION:

Can “true price” campaigns* help with

these struggles?

*campaigns that “strive for a sustainable global economy in which all social and environmental damage is reflected in prices.”

On the surface, the signs look good.

It's time to stop corporations taking “free gifts” from nature and labor.

Absolutely!

PEOPLES' MOVEMENTS TRUE PRICE

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It's ridiculous that oil companies enjoy such huge subsidies.

Totally!

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We need to find ways of forcing corporations to behave.

I agree!

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??

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But is this really a romance made in

heaven?

In what sense are our two friends “saying the same thing”?

One view from economics:

Realm of monetary exchange

Externalitieseee

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But is this a situation that can be corrected by

“internalization”?

The successful corporation must always “play the role of an externalizing machine.”

Robert Monksinvestment banker

… and so for market exchange generally ...

“Markets would be impossible if people were made to account for every cost ... The constraints, understandings and powers that frame the economic act ... and thus make the economy possible, at the same time render it incomplete … The conventions and powers that enable the completion of an exchange cannot contain all the human and nonhuman forces and interactions that would make it incomplete … ”

Timothy Mitchell

“Agents and goods involved in calculations must be disentangled and framed if calculations are to be performed and completed.”Michel Callon

In other words, calculating externalities so that they can be “internalized” back into the market economy is a kind of “manufacturing process” ...

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What are the pratical effects of this

“processing” of externalities?

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New externalities!

E.g.: Try to “internalize” the “externalities” involved in bringing Brazilian steak to Europe at a cheap price ...

E.g.: What is the “true cost” of this Brazilian steak to climatic stability?

Radical climatological uncertaintyIncommensurability of potential catastrophe and price (Weitzman)Reflexivity (Keynes, Soros)

The question is absurd because of (e.g.) ...

As a result, one of the effects of “internalizing” the climate cost of the Brazilian steak (and other things) is ...

… damage to the climate.

Another example ...

“Internalizing” climate damage into carbon prices has reduced the chances of extracting “climate reparations” from the North. Instead of being forced to pay punitive “fines” for climate violations (with the possibility of further sanctions), the North is allowed to pay “fees” for carbon credits. Instead of being held legally responsible for climate damages, the North becomes legally entitled to excessive emissions ...

The South is meanwhile incentivized not to promulgate or enforce environmental laws but rather to remain dirty in order to provide raw materials for the cleanup operations that manufacture saleable carbon credits.

… again resulting in damage to the climate.

Internalizing the climate problem into prices of molecular movements also ignores the difference between 'survival' and 'luxury' emissions ...

… thus putting itself in conflict with the “commons” view according to which the right to subsistence takes precedence over the price system and private property, and capital accumulation is not allowed to dominate survival considerations.

When “green economy” advocates say that pricing externalities is “better than nothing”, they assume that commons valuations and other commons practices are “nothing” – which is a direct attack on the commons.

… in effect “externalizing” damage to the commons.

“We conserve forests because forests are life, not a commodity.”

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Are these new externalities

minor?

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… or huge?

… and what do you do with them?

… try to “internalize” them in turn?

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… and what do you do with the new

externalities created by that process?

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Internalization is externalization.

It is not a solution to externalizzation.

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Otto Neurath, 1920s-1930s:

Impossible to base responsible social action on prices when the issue is, e.g., whether to save labor by using more coal now, and therefore have less coal in the future – especially given uncertainty about the amount of coal remaining, about future technologies, about future prices. Important decisions have to be taken outside any market, via conversation and planning.

So it seems like our two friends may not be “saying the same thing” after all ...

Every time you “internalize costs”, you just create more “externalities”.

So let's just internalize those externalities!

PEOPLES' MOVEMENTS TRUE PRICE

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That doesn't get rid of the problem. We need to defend commons. I don't understand

commons.

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Commons means the right to subsistence.

No one has the right to subsistence. Everything must pay its way.

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Commons see nature as interlocutor.

Nature is not an interlocutor, it's a resource.

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Commons are not resources. Everything is a

resource.

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We need some decommodification!

No! We need extra commodification!

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We need not to internalize some things.

Maybe, but we should internalize as much as possible!

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More internalization only creates more pressure on common territories.

Pricing environmental services can allow commoners in the South to cash in!

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“True pricing” is unrealistic because it undermines the political strength of commoners. But “true pricing”

will appeal to elites!

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Only because it makes possible new forms of accumulation that treat commons and commoners as “free gifts!”

What are you, some kind of crazy Marxist??!!

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So ... how can we return to romance?

“What is the 'true price'?”

→ “What kind of society do we want and can we fight for?”

Don't fight us, join us!

Well, OK, maybe I need to slow down and broaden my horizons ...

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JUST PRICE

CAMPAIGNS?JUST PRICE

CAMPAIGNS?

COMMONS CAMPAIGNS?