Monday, February 28, 2011

False Choices: Cap and Trade Vs. Carbon Tax

I came across and interesting article by James Barnard Quiligan in Cosmos
In searching for answers, society is trapped in a false dichotomy: we believe that only markets and governments are capable of providing solutions for climate change, even though these institutions were never designed to internalize the costs of negative externalities like carbon emissions. There is another way to solve collective problems of this scale and jurisdiction. The emerging framework of the commons brings the monoculture of the Market State— the modern economic and governmental superstructure—into sharp focus and provides the analytical tools and predictive power to penetrate the deep dichotomies of its operations and policies. The commons illustrate, for example, how the major policy responses to global heating—cap and trade (via the private sector) and carbon taxes (via the public sector)— are more about the ideological debate on how much government regulation should be permitted in the market economy than about climate change itself.

This coincides well with my views expressed in Garden Earth:
There are others in the boat than the state and the capital

In politics, there is a traditional divide between those that think that a function shall be taken care of by the market and those that believe it should be by the state. Somewhat simplified the former are liberals and the latter socialists. One can look upon both markets and the state as social institutions to regulate relationship between people and distribution of property and products. Which institution one like the most depends perhaps on ones own situation, how it is organized and which context it is in. The same person that is very sceptical to market solutions is perhaps perfectly comfortable with her relationship to the organic farmer and found it deplorable that the government determined that organic chicken were not allowed to go out during the bird-flu scare in 2006. And the person who is against government control still applause government take-over of bankrupt banks or car-makers. One can also look at the roots of the capitalism and the state and see both of them as parasites from different epochs. The state is with this perspective a remnant of the war-lords and kings that established a Mafia style of protection. The market, as it has developed now, is an institution for capitalist exploitation. By forcing bigger and bigger parts of life into the market, capitalism can extract wealth from most parts of life and not only from the simple distribution of goods. Through political struggle, people have to some extent taken over control of the state, but that is not the case for the market. Despite all the hype about the market as a democratic institution, it is a place of very imbalanced relationships.
In form, they are very different. We, as citizens, have very little access to the state, our role is to pay taxes to finance it and regularly vote who shall rule it and therefore rule us. We sometimes interact with the state through civil action, direct contact with a politician, participation in a demonstration or writing a letter to the editor in a newspaper or a complaint (or more rarely praise) on a web site. In the markets, we on the other hand are constantly participating and in theory, we are equal with everybody else in the same market, as long as we have money to pay at least. The market can be seen as a giant social decentralized network. With this perspective, the difference between the state and the market is smaller, and it becomes even less when the state or the public sector has adopted the market terminology, management patterns and even acts as an “owner” or as a “client” to a lot of its own services which are actually taken care of by private companies. The problem with the market in this perspective is mainly that it that it favours those that are already rich and those that have better information and that those differences tend to increase over time rather than the opposite. The other problem with markets in their current shape is that they pitch people against each other through competition, something that in turn is bad for society.

State take-over of markets has in most cases been disastrous and market take-over of the state is almost as bad. Obviously, a certain balance is the best. But here we also need to look beyond markets and the state. The question is not only if a certain function shall be executed by the state or the market. By concentrating the debate around the market or the state, we tend to lose sight of the other possibilities. There are many other possibilities as we discussed earlier. There are completely voluntary associations formed to take care of a certain need, such as the need for youth to meet and dance or do sports; or to take care of a certain resource, such as cutting a meadow by scythe yearly or keeping an old foot path open. There are municipalities where the citizens in a very direct way organize most of their support needs. There are personal-cooperative day care centres, schools run by parents, homes for elderly owned and controlled by the elderly themselves; road cooperatives and irrigation communities. In Sweden there are 26,000 housing cooperatives owning in total 800,000 apartments (Bo Bättre 2009). Our voluntary organization to accomplish certain objective is very old, much older than both markets and state and is not at all limited to not for profit purposes. There is no indication that such arrangements would have been inefficient. Capitalism has, however, often worked against them simply because they limit the business opportunities and central governments have sometimes also made life difficult, or even prohibited them because they undermined the tax base and made people more independent from the state.

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