Million-dollar mountains: prices, sanctions, and the legal regulation of collective social and environmental goods.

• Author: Johnston, Jason Scott
• Position: Symposium: Law and Incommensurability

INTRODUCTION

Imagine a world where every aspect of the natural environment is up for cash sale or lease. Imagine that every lake and river, every environmental good, even those held in collective ownership, is freely exchangeable for money. Suppose also that in this world, any human relationship may be created, or ended, if enough money is paid. Friendships and marriages are bought and sold, like so many commodities, using the common medium of exchange, money. Would we think it odd in such a world to express our valuation of every relationship, both among human beings and between human beings and the nonhuman environment, in terms of dollars? Would we not, in such a world, speak of our million-dollar mountain, our six-figure friend?

I believe that in this still-hypothetical world, we would indeed use dollars to value all our relationships. Further, it is only because our current social and legal practices disapprove and even sanction attempts to exchange money for some relationships that we would find it unusual and objectionable to speak in such terms. We refuse to value some goods in dollar terms because the "goods" are relationships, much of the value of which would be lost were we to allow the free exchange of such relationships for money. It is not that we compartmentalize ourselves into family member versus consumer, consumer versus worker, worker versus citizen, able to rank and compare alternative jobs but completely unable to say whether a higher income is worth less than time with one's children. It is not that our diverse values are incommensurable. It is, instead, that we do not think that money is the appropriate medium in which to express these values. The task is to explain why this should be so in order to understand the choice among alternative legal approaches to regulating and preserving collective social and environmental goods.

In this Article, I take some preliminary steps, in such a direction by developing a functional, economic account of how money-price allocation of certain kinds of relationships is likely to result in the eventual destruction of the value inherent in those relationships. This account is developed first by thinking through what might be lost were relationships among human beings, such as friendship and marriage, to be freely exchangeable for money. Crucially, a restriction on money exchange is not equivalent to a restriction on all exchanges. Rather, restricting money exchange forces delayed, bartered exchange. For barter to occur, the parties must possess attributes that they value without regard to the value these goods might bring in some other relationship. The delayed, bartered reciprocity that characterizes our closest personal relationships is how we learn to trust and to cooperate. Learning to trust and cooperate is both costly, and, if effective, vulnerable to exploitation. Legal and social sanctions against attempts to contract out of reciprocity by arranging money exchanges for the services that are typically exchanged in such relationships are justified on efficiency grounds. Such sanctions reduce outside opportunities which both lessen the incentive to learn how to cooperate and increase the incentive to exploit cooperative behavior.

This functional explanation of exchange-restricted human relationships may be extended to provide a new economic perspective on the legal regulation of our interaction with the nonhuman environment. The "tragedy of the commons"(1)--the tendency for free, collective environmental goods to be degraded by pollution and overuse--arises only when a collective environmental resource is provided as a free good. Economists have complained for decades that the environmental problem is simple, that all we need to do to cure the pollution problem is to attach appropriate prices, and that the failure to do so is simply a political failure caused by the enormous redistributive effects that such pricing would have. That such redistributive effects are an important explanation of actual legislative and regulatory practice in the United States is clear. The practice, however, has not been to treat collective environmental goods as free, but rather to regulate directly how such goods are used and to sanction impermissible uses. Under my approach, the question is why we use sanctions rather than prices in regulating such goods.(2) The answer, I believe, is that the regime of sanctions is justified precisely by the need to overcome the collective-action problem by creating an incentive for both individual monitoring of use by others, and individual sensitivity to the effect of one's use on others. We regulate use not because we are certain of the collective impact of alternative types and levels of individual interaction with the environment, but rather because we are not. Because of that same uncertainty, we prefer sanctions to pricing due to our certainty that a use should not be permitted only if it is a gross departure from, or completely unlike, those uses that experience has indicated are generally protective of the environment. We use sanctions because environmental regulation is intended to preserve the diversity, variability, and duration, not of the natural environment, but of human relationships with it. We use sanctions, finally, because we do not want to create incentives for our collective agents to derive revenues from increases in the level of harmful activities, but to detect levels and uses that threaten too much harm.

1. ARE VALUES INCOMMENSURABLE, OR IS MONEY THE PROBLEM?

   In the legal and philosophical literature, incommensurability has been understood to refer to at least three notions. The first, what Ruth Chang calls incomparability, is the idea that certain goods cannot be compared or ordinally ranked.(3) The second, related sense is the idea that all goods cannot be valued according to a single common metric.(4) This second sense is equivalent to saying that we cannot come up with a cardinal utility scale along which all goods may be ranked. The third and final sense, emphasized by Margaret Radin, is that we either cannot or should not compare some actions or choices in terms of money prices or returns.(5)

   As I have put them, the first two related meanings of incommensurability are badly incomplete. I have not specified what it means to say that we "cannot" rank all goods along a common ordinal or cardinal scale. One possibility is that by saying we cannot come up with such a ranking, one means that it is conceptually or logically impossible to do so. As a logical matter, it makes no sense to ask whether a particular complex number is larger or smaller than an arbitrary real number, because the very definition of real and complex numbers makes such a comparison meaningless: Complex numbers are not defined on the real line. So too, one might argue, it would make no sense to ask whether being a loving parent is better or worse than having an additional ten million dollars. Our conception of what it means to be a loving parent does not allow us to compare this good with a certain amount of money.

   But just as there are many number systems, so too are there many alternative conceptions of both money and human relationships. At bottom, any assertion that it is conceptually or logically impossible to rank ordinally or cardinally alternative goods is an assertion that, as constructed by us, the goods cannot be ranked meaningfully. Thus, as Cass Sunstein explicitly has noted, incommensurability (in either the ordinal or cardinal sense) is an assertion about "widespread current attitudes"(6) regarding how we value things: that reducing values to a single, unitary metric is "inconsistent with prevailing convictions" and contemporary experience.(7) This makes incommensurability a behavioral claim, but like any behavioral claim, incommensurability is, of course, fully amenable to philosophical exploration. One might argue that our conception of value implies that all items of potential value are subject to some sort of order relationship (even if partial). This would amount to a conceptual refutation of incommensurability.

   Although the literature on incommensurability may be unclear in the abstract about what is meant by the term, it provides plenty of concrete examples.(8) These examples reveal incommensurability to be a hypothesis about the undesirability of exchanging certain sorts of relationships, or aspects thereof, for money.

   This is true of both critics and defenders of incommensurability. For instance, to demonstrate the plurality of incommensurable values and diverse valuation, Sunstein (who may be given due credit for getting the legal incommensurability ball rolling) adduces the following examples: If one offers to pay a neighbor or friend cash to mow one's lawn or to compensate the friend for forgiving one's cancellation of lunch, then the neighbor or friend will be insulted, regardless of how much one offers;(9) our sense of awe and wonder upon viewing a mountain cannot be expressed by saying that the mountain is worth a certain (large) amount of money; finally, one would be a "strange creature" if one actually thought about dating and romance as participating in a marriage market.(10) In his penetrating critique of incommensurability and defense of the utility metric as an explanatory tool, Richard Epstein discusses an example put forward by Joseph Raz. In the example, a husband takes a job paying an extra $100,000 but requiring that he live in a distant city, apart from his spouse. As characterized by Epstein, Raz argues that if the husband takes the job, then this does not imply that the husband believes an additional $100,000 somehow can be judged more valuable than living with his spouse.(11) According to Raz, the value of an extra $100,000 is incommensurable with the value of living with one's spouse. Epstein finds that this ignores the likely interdependence between the husband's and the wife's...