Science, public policy, and global warming: rethinking the market-liberal position.

• Author: Dolan, Edwin G.
• Position: Viewpoint essay

A survey of market-liberal or libertarian publications and websites finds a large and growing literature on the issue of global warming. Almost without exception, this literature conveys a comforting message: Our planet is in good health. The markets that regulate resource use are working well. The only real dangers come from ill-considered policy initiatives that, if implemented, would do more harm than good. It would seem that the message is well received by its audience--it is repeated, embellished, and applauded with little variation.

In this article, I take a contrarian position, not so much with respect to the science of climate change as with respect to the arguments used by market liberals in support of their message of comfort and complacency. One problem area concerns the proper use of scientific evidence in reaching conclusions regarding public policy. It seems to me that market liberals are often reckless in the degree of certainty they professes regarding climatological hypotheses that are, in fact, still controversial and in early stages of development. A second problem concerns the use of cost-benefit analysis. Market-liberal writers are prone to make cost-benefit arguments regarding climate policy that they would never accept in other contexts. Third, the literature on global warming is often weakly rooted, if rooted at all, in the core principles of classical liberalism from which modern market liberalism has evolved. Instead, it is, for the most part, indistinguishable from what is said by conservatives. It might even be said that there is no market-liberal position on this issue--only an echo of arguments made by Republican patriots and the carbon lobby.

In short, the whole issue of global warming policy, as viewed by market liberals, needs to be revisited. This can best be done by going back to some of the classical liberal sources, particularly Friedrich Hayek and John Locke, from which modern market-liberal thought is derived.

Hayek on Liberalism, Conservatism, and Science

A good place to start the rethinking process is with Hayek's essay, "Why I am Not a Conservative" (1960). Hayek identifies a number of traits that distinguish conservatism from market liberalism ("liberalism" without a modifier, in his terminology):

* Habitual resistance to change, hence the term "conservative."

* Lack of understanding of spontaneous order as a guiding principle of economic life.

* Use of state authority to protect established privileges against the forces of economic change.

* Claim to superior wisdom based on self-arrogated superior quality in place of rational argument.

* A propensity to reject scientific knowledge because of dislike of the consequences that seem to follow from it.

Hayek points out that it is wrong to represent the political spectrum as a line, with leftists at one end, conservatives at the other, and liberals somewhere in the middle. Instead, he represents the political playing field as a triangle with socialists, liberals, and conservatives each occupying their respective corners.

When the political left advances proposals for increased state intervention in free markets, liberals tend to see conservatives as their natural allies. This was especially true in the 1940s and 1950s, the background for Hayek's 1960 essay, when socialism seemed to be on the ascendancy. In Hayek's view, the alliance of liberals with conservatives was reinforced by the fact that, in the America of his time, it was possible to promote individual liberty by defending long-established institutions, not just because they were long established, but because they corresponded with liberal ideals.

In our own day, alliances between market liberals and modern conservatives are still possible, but as the nature of conservatism has changed, issues have emerged where market liberals' natural allies are found on the political left. Defense of human rights and due process against expanding executive power is one example. Protecting freedom of personal choice against government-imposed standards of morality is another. In these cases the alliance of market liberals with the left is rooted in genuine shared values.

In addition, market liberals and parties of the left may sometimes form a united front to attack the entrenched privileges of state-favored elites. However, in this case the alliance is more opportunistic than principled, since the two allies are likely to see different solutions to the problem of privilege. Whereas the left seeks to overthrow privilege by imposing state regulation, market liberals want to remove regulations in order to expose privileged positions to the influence of competition.

In order to apply Hayek's political triangle to the issue of global warming, we need to address several questions. One issue is what the status is of the privileges and interests of those who are threatened by the possibility of climate change and of those who are threatened by proposed actions to mitigate it. Which of these has the greater claim to the sympathy of market liberals, when viewed in terms of the standards they apply in other areas of public policy? Another issue is what the values are that lie behind the positions taken by various parties to the debate. The issue of values may determine when market liberals can make principled alliances with one of the other corners of the triangle and when they want to make only tactical alliances. Still another issue is what manner of argument should be employed. For example, what is the proper attitude toward the purely scientific element in the global warming controversy? It will be worth taking a closer look at this last issue before proceeding further.

Hayek expresses himself so well on the role of science that it is worth quoting him at length:

Personally, I find that the most objectionable feature of the conservative attitude is its propensity to reject well-substantiated new knowledge because it dislikes some of the consequences which seem to follow from it--or, to put it bluntly, its obscurantism. I will not deny that scientists as much as others are given to fads and fashions and that we have much reason to be cautious in accepting the conclusions that they draw from their latest theories. But the reasons for our reluctance must themselves be rational and must be kept separate from our regret that the new theories upset our cherished beliefs .... By refusing to face the facts, the conservative only weakens his own position. Frequently the conclusions which rationalist presumption draws from new scientific insights do not at 'all follow from them. But only by actively taking part in the elaboration of the consequences of new discoveries do we learn whether or not they fit into our world picture and, if so, how. Should our moral beliefs really prove to be dependent on factual assumptions shown to be incorrect, it would hardly be moral to defend them by refusing to acknowledge facts [Hayek 1960: 404]. This passage raises obvious questions for the global warming debate. What lies behind the skepticism of market liberals regarding the propositions that the world is getting warmer at a rate that is unusually rapid in climate history, if not altogether unprecedented, and that this apparent trend is likely the joint product of natural cycles and human activity, rather than of the former acting alone? Are liberals correctly rejecting an inadequately grounded scientific fad'? Or are they refusing to acknowledge facts for fear that doing so would upset their cherished beliefs?

Perhaps some market liberals believe that global warming poses an unacceptable dilemma that would force them, one way or another, to act against their deeply held principles. They might, on the one hand, believe that the mechanism of market adaptation through spontaneous order is too fragile to cope with the pace of environmental change that some climatologists foresee and, on the other hand, think that the only imaginable policies for coping with climate change involve an intolerable degree of state intervention. If so, they might refuse to consider evidence that a problem exists rather than face a perceived choice between roasting or succumbing to tyranny in order to remain cool.

Fortunately, the supposed dilemma is a false one. Liberals have long acclaimed the market as a way of adapting to change, and climate change should be no exception. For example, Robert Davis (2000) of the University of Virginia has showed how air-conditioning and other market-mediated innovations, have, over recent decades, reduced mortality from urban heat waves.

Also, market liberals should know well that effective environmental policy does not have to take the form of heavy-handed command-and-control measures. In dealing with local air pollution, traffic congestion, and land-use issues, market liberals have developed imaginative, workable proposals and in several cases have made headway in getting them adopted. As recently as the 1970s, market-based solutions to environmental problems were regarded as libertarian science fiction. Beginning with the use of averaging, banking, and trading in dealing with lead gasoline additives in the 1980s, and continuing with policies dealing with CFC (chlorofluorocarbon) phaseout, NOx (nitrogen oxide) precursors for acid rain, and continuing with the very recent Environmental Protection Agency measures on mercury pollution, market mechanisms have become very much part of the mainstream. Similarly, congestion pricing for urban roadways, also once regarded as science fiction, is now an established policy in cities like New York, Singapore, Melbourne, and Toronto. The same kind of market-oriented policies should be possible in the case of climate change.

In short, if one takes into account both the market's potential for adapting to change and market-based policy alternatives, there is no reason for market liberals to be anything but open-minded toward ongoing...