Tag Archives: resource

Capitalism, Environmentalism, and Waste

One of the most common criticisms of capitalism is that it promotes not only mere apathy, but hostility toward the environment. Specifically, it drive a materialistic consumerism which requires an accelerating depletion of Earth’s natural resources. We burn fossil fuels, deplete our soil, and clear-cut vast swaths of forest, all causing glacial melt, rising oceans, and desert expansion. Ultimately, it goes, Earth will be transformed into a desolate wasteland.

These dramatic images beget dramatic reactions, such as the rise of the environmentalist movement. Originally a personal lifestyle focused on preserving natural resources, environmentalism has morphed into a powerful political movement concerned with shaping the behavior of others. However, the often drastic lifestyle changes required by environmentalism seldom resonate with its skeptics, which has led to numerous controversies and conflicts. We therefore cannot prudently abstain from questioning environmentalism’s central cause: Is it noble to preserve natural resources at the expense of enjoying certain lifestyles, and is the state necessary or even helpful to achieve this goal?

One of the most common responses is that we have in our interest the perpetuation of our own species, and that certain methods of utilizing natural resources are better or worse for doing so. To state that differently, environmentalism’s purpose is to prevent the wasting of resources so that their use may be prolonged.

This assertion requires that we first agree on a definition of waste. Unfortunately, too many use their personal preferences to determine whether or not waste has occurred. Let us consider a hypothetical example: I have some unwanted leftovers in the fridge, and I am trying to decide what to do with them. They are no longer exceedingly appetizing, and upon reflection, I probably should have bought less food to start. Nevertheless, I have no intention of eating them, and I decide to throw them away.

If you were to ask the average bystander, he would probably say that I was wasteful in this scenario. “There were a hundred other uses you could have chosen for the leftovers,” he might say, “You could have given them away, composted them, or even burned them as fuel. The mere fact that you did not simply eat them increases your future demand for food, spurring producers to further deplete our natural resources.” This sentiment is orthodoxy in environmentalist circles, but it indicates a narrow, lopsided perspective.

It is true that I have given up the leftovers, but the average bystander mistakenly assumes that the leftover food is the only resource involved in the equation. However, instead of unappetizing leftovers, I now have refrigerator space—also a resource—in which I can place newer, more appetizing food. I value the space in the fridge more than the leftovers, and from my point of view, keeping the leftovers would have been a waste of that space. Does it make me a wasteful person that, upon choosing between those two resources, some people disagree with my particular preference? If so, it would mean that waste is itself a purely subjective concept, and utterly useless for developing sustainable lifestyles.

Fortunately, a different concept of waste can still be useful—one which prioritizes not human preferences, but the methods we have for achieving those preferences. Values are subjective, but the methods we have for achieving our values can be objectively compared as more or less efficient. For example, crude oil can be easily extracted on Earth, but it is also possible that oil may be extracted from other planets. Per the amount of crude oil we need to extract, it is obvious that the expense of time, exploration and research, capital equipment, and labor to extract it from another planet is an enormous waste, given that one could extract oil much more cheaply on Earth.

Unfortunately, it is often difficult to know which methods of resource utilization are most efficient, so we must first have an economic system that best facilitates their discovery and development.

Capitalism, with its built-in profit motive, fulfills that very purpose. In a free market, firms earn profits when the revenue they receive for selling a good or service outweighs the inputs—land, labor, and capital—required to provide that good or service. There are only two ways for a firm to maximize its profits: It can either raise prices or cut costs. Because competition usually bars firms from the former option, it becomes within their financial interest to opt for the latter, which means using fewer inputs. This is how capitalism provides a financial incentive for using the fewest raw materials while still satisfying customers.

When the profit motive is dampened or removed, as is the case in subsidized or nationalized industries, the incentive for a firm to cut costs is also removed. If the success of a firm is no longer dependent on profit and consumer demand, a firm may continue to produce a good which is not needed, unnecessarily depleting natural resources.

While environmentalists may concede these arguments, they may still point out that Earth’s natural resources are finite, and that their depletion is inevitable, even if our efficient use of them causes it to occur more slowly. Therefore, renewable resources must be developed.

But even this is only partially true: While resources are finite, it is unlikely that any will ever be truly depleted. As a resource becomes scarcer, the cost of extracting it increases to the point where further extraction becomes prohibitively expensive and/or to the point where the cost of extracting an alternative resource becomes competitive. Also, by this very same principle, space exploration/colonization is inevitable, presenting us with a potentially limitless supply of resources.

Could socialism do any better in striking a balance between decadence and sustainability? In socialist economies, the preferences of individuals, and the methods by which they go about satisfying those preferences (the means of production), are all controlled by the state. Political incentives, rather than economic incentives, drive the different methods of resource utilization. There is neither an automatic mechanism to promote efficiency in the use of raw materials, nor one to spur the exploration of alternative resources in the event that extracting one grows costly. Even if political and economic incentives become coincidentally aligned—a rare occurrence—history has shown the state to be slow and clumsy in performing the same allocative functions as a market.

While environmentalists’ intentions may be good, their methods are not. Choosing between lifestyles of abundance and deprivation is a false choice. The best way to preserve resources is not to impose subjective behavioral changes upon individuals, but to promote freedom so that individuals will be incentivized to avoid waste in pursuing their happiness.