When I heard the phrase "Margarita Declaration" I had much higher (and drunker) hopes than 131 environmental groups banding together to call for an end to capitalism.
A UN-backed conference on climate change ended with a call to end capitalism. The conference, organised by the Venezuelan government, saw 130 green activist groups meet to discuss their demands.Green website Respond to Climate Change says that at the end of the conference, the groups issued what is being called the 'Margarita Declaration', which says: "The structural causes of climate change are linked to the current capitalist hegemonic system. To combat climate change it is necessary to change the system."
This declaration will be handed to environment ministers when they meet in the UN’s talks in Lima later this year.
Participants at the meeting included the World Wildlife Fund (WWF), Climate Action Network International, Third World Network and Christian Aid.
The declaration also condemned the idea of having a so-called "Green Economy", saying this was nowhere near radical enough, and only the end of the capitalist system would solve the problem of climate change.
Look, I get the point. Markets set prices. Prices ration goods. Because environmental goods and services are severely underpriced by markets (in many cases that price is zero), environmental goods and services are overconsumed, underproduced, overexploited, crapped on, however you want to say it. Environmentalists are rightly concerned.
Because environmental goods and services are mispriced in a market based system, market based systems must be to blame for environmental degradation and (here's where the logic breaks down) therefore, we must abandon market based systems for allocating goods and services.
But to paraphrase Winston Churchill, capitalism is the worst system for allocating environmental goods and services, except for the rest. I'm always stunned by the misunderstanding and misrepresentation of market systems by environmentalists. Markets ration scarce goods. They do so through prices. The problem with environmental degradation is not that markets lead to overexploitation of environmental goods and services, but rather market conditions fail to allow markets to establish the proper price for environmental goods and services. If the price is right, people will (usually) make rational decisions.
So, the solution to environmental issues is not to abandon markets and dictate to people the choices they should make, but rather the solution is to establish the correct set of prices that capture the full scarcity value of all goods and services, including environmental goods and services. In some cases this might happen through the establishment of markets for environmental goods and services (for example, cap and trade) or it might happen through direct pricing of environmental goods and services (for example, emissions taxes), or it might happen through restrictions on use (for example, endangered species laws).
Abandoning markets will not solve environmental problems, because the environment will still be viewed as free. Prices, or some other representation of value, are still needed, and there is simply no better way to establish prices than through markets.
Poorly functioning markets might lead to environmental problems, but well-functioning markets are the best solution.
In my opinion--of course.
Now where's my Margarita?
*Since it is throwback Thursday, I decided to use a paraphrased throwback title from 2007.
