Twenty years ago it would have been nearly impossible to see capitalism and environmentalism blending together. Much of the environmental degradation that has happened worldwide in the 20th century has been perpetuated in the name of capitalism. As corporations greedily sought to increase their bottom line and outrace their competitors, they took advantage of the environment in ways that are widely recognized today as “unsustainable.” That means, if we progress at the same rate of environmental degradation in the 21st century that we have in the 20th century, we will destroy the earth. That has been the very heartbeat and message of the environmentalism movement.
During the 70’s and 80’s, the environmentalism movements was seen largely as a leftist “fringe” movement in political circles, which basically meant it was very grassroots and had no strong backing by the higher powers in government or culture. However, that started to change in the 90’s. Scientific studies started to produce shocking results of our environmental state, and then in the 2000’s, the environmental movement found a place smack dab in the middle of popular culture.
Today, pop magazines run dedicated issues that discuss how to live green and help protect the environment. American consumers can buy green cars, green clothes, and green living quarters. There has undoubtedly been a shift in American consciousness regarding environmental matters. And this shift is good. In fact, if the earth is going to exist in the fashion we would all like it to, then this shift must be seen as essential.
Thus, corporations are being forced to reassess how they conduct business around the world. It is no longer acceptable to ravage the earth’s resources without a second thought to the long-standing effects of such decisions. Government is also being forced to re-evaluate its stance on various environmental issues. Primarily, the government has been involved in establishing a legal framework around environmental issues. As the government recognized the importance of protecting the environment over the last 10-15 years, they have done what the government does best—regulation. However, many environmentalists believe that overregulation of environmental issues actually serves to deteriorate the environment even further. In recent years, a strong movement has risen the combines the ideologies of environmentalism and capitalism, which has resulted in free-market environmentalism.
Free-market environmentalism basically believes the best way to protect the environment is to deregulate the market and allow the free market and property rights to preserve the health and sustainability of the environment. Let’s examine a few of the major tenets of free-market environmentalism.
Overexploitation
One of the greatest concerns regarding the environment is overexploitation. For example, current environmental laws tend to create a communalization effect of many natural resources such as rivers. Free-market adherents believe that if private property rights were protected and encouraged in place of communalization, then individuals and companies would be more apt to protect property and the environment. When communalization is in effect, individuals and companies do not have much incentive except to race into the natural resource to get the most they can in the shortest amount of time. This causes little care to be shown and actually causes further environmental degradation.
Pollution
This is also tied to private property rights. Free-market thinkers believe that pollution will only increase when heavy regulation is in place because market participants will have no care for the inherent value of property since it is public. They have no vested interest in the value of the property, which decreases as pollution increases. They have no incentive to keep pollution low and engage in pollution clean-up. However, as deregulation is instituted, pollution clean-up will be a natural result.
Overconsumption
Free-market adherents believe the government misunderstands the power of supply and demand as market forces. Over time, overconsumption will not be a problem according to free-market thinkers because as overconsumption increases in the short-term, supply will dry up and prices will increase. The increased prices will eventually cause a decrease in demand. Then, this decrease in demand will eventually cause an increase in supply. These market forces will protect the environment from over consumption in the long run. Thus, deregulation is the best step in protecting consumption concerns.
As stated earlier, in decades past, it was not thought that free-market capitalism and environmentalism were necessarily “friends.” But this new breed of free-market environmentalists is creating a very strong argument concerning how to best protect the environment. Free-market principle have led to unprecedented economic prosperity over the last 50 years, and true free-market environmentalists believe these same market principles, when applied to the environment, will produce a protected earth for many years to come. A forex trader is also affected by these concerns as he seeks to predict what effect environmental concerns will have on specific currencies.
