Western commentators attributed the fall of Soviet communism to the failure of both their political and their economic systems – repressive totalitarianism, on the one hand, and command-and-control/central planning, on the other. Many even concluded that the Soviet failures “proved” the superiority of western political and economic decision-making systems – democracy and competitive markets, respectively.
What this conclusion fails to recognise, however, is that more than a quarter of the economic decisions in North American are directed, not by market forces, but by central planning. The decisions that are made for us by the many levels of our governments – about the construction of roads; the provision of education, policing, and defense; and the selection of environmental policy – are not made by the impartial forces of “the market” but by civil servants, who operate under many of the same conditions and constraints as did those eastern European planners who were in charge of the production of steel, automobiles, shoes, and chocolate cakes.
In this posting, I argue that we can learn a lot about the difficulties of environmental decision-making, and about the types of responses to those difficulties that might be most appropriate, by investigating the manner in which central planning operated in countries that employed massive planning agencies.
Begin by thinking about the creation, distribution, and allocation of a common consumer item, like a shirt or blouse. A very abbreviated list of the resources that went in to the delivery of a cotton shirt to a particular consumer includes: the extensive list of materials required to build the store in which the shirt was sold; the labor required to staff the store; the labor, trucks, and gasoline required to transport the shirts to the store; the materials, labour, energy, and land, required to build and operate the factory; the land, labour, and energy, required to grow the cotton; etc. etc.
Now, imagine that you were the central planner in charge of producing and distributing shirts to the citizens of a country. Your job would have been to decide: how many shirts are to be produced, of which styles, colors, and sizes; who is to receive those shirts; how they are to be produced; and where the inputs are to come from in order to produce and distribute them.
Consider even the simplest of these problems: Assume you have decided how many shirts to produce, the type and size of factories in which they are to be produced, and who is to receive the final products. Now “all” you need to decide is the mix of styles. How many blue shirts, how many green, red, checked, striped, floral? How many short-sleeved, how many long? How many dress shirts, how many casual? Now multiply this decision by the thousands of consumer products that even a basic economy produces and it becomes easy to imagine how hopelessly complex central planning becomes.
And this complexity applies equally to decisions about the environment. The planners in our governments have to decide how much protection to give to each species (endangered or not); how much air and water pollution is acceptable/desirable; how much hiking, biking, skiing, and/or off-road vehicle operation to allow in protected areas; where to place parks, national forests, and wildlife areas and how large those areas should be; etc.
In my next three postings to this site, I will argue that we can learn important lessons about environmental decision-making by analyzing the problems encountered by the eastern European central planners. Specifically, each of those three postings will consider one of the three basic questions that all economies have to answer:
- WHAT is to be produced? Of all the environmental actions our governments could take, we need to decide which ones they will engage in, and to what extent.
- HOW is production to occur? In the same way that, say, bread can be made in many different ways, there are many alternative ways that any given environmental goal can be achieved. Antelope can be protected, for example, by setting aside parks, by imposing hunting restrictions, or by encouraging the establishment of game farms.
- FOR WHOM is production to occur? Once the planning agency has decided what is to be produced, it must decide who is to receive the output. In the environmental area, this question will involve issues such as access to public lands, placement of waste disposal sites, or issuance of hunting licenses.
