Environment, not planning: the neoliberal depoliticisation of environmental policy by means of emissions trading

Abstract

The turn to market-based instruments, such as emissions trading, in environmental policy has received considerable attention. Contributing to a critical assessment of these instruments by investigating the political theory of emissions trading, one of their central mechanisms, namely their depoliticising effect, is highlighted by discussing the early contributions of neoliberal thinkers and proponents of market-based instruments (Hayek, Coase, Dales) in environmental governance. These thinkers responded to the growing politicisation of environmental limits to economic growth by devising a mechanism by which the implementation of these limits could be depoliticised. This ensured that the fundamental questions of ‘what is produced, by whom, and for whom’ (Hayek) are not raised politically. Emissions-trading mechanisms are neoliberal, not in the sense that they commodify or privatise nature, but because they entrench the power of investors.

Keywords:

• environmental governance
• emissions trading
• market-based instruments
• neoliberalism
• depoliticisation
• economic democracy

Acknowledgements

An earlier version was presented at the Historical Materialism Conference in London 2013, and at the Centre Walras Pareto d’études interdisciplinaires de la pensée économique et politique (University of Lausanne) where I received very helpful comments. I would especially like to thank Maxime Desmarais-Tremblay for his numerous remarks and his suggestion that I also consider the Virginia School of Political Economy (Buchanan) as well as Harold Demsetz in this brief intellectual history. Due to space constraints, I am not able to follow his advice here, but I will explore these avenues in subsequent work. I am also grateful to the editor and reviewers of Environmental Politics for their help in sharpening my arguments. Of course, I remain solely responsible. This work was supported by the Swiss National Science Foundation under grant n°148071.

Notes

1. One could distinguish between ‘depoliticisation’ (of an object that had therefore been politicised) and the ‘non-politicisation’ of an object (thereby implying that the object in question had never been politicised). This distinction, however, is not crucial in my discussion, and I will therefore use ‘depoliticisation’ for both cases.

2. This definition does not imply that putting objects under the realm of the state is necessarily a good thing, or that politics can happen only within the state. But in democracies, such politicisation at least opens the possibility of democratic and public deliberations and decision-making (a real mechanism), which may or may not be actualised depending on the circumstances.

3. This is where my argument differs from, and hopefully complements, constructivist accounts of carbon markets such as MacKenzie’s (2009) that tend to neglect the structure of power in a capitalist society. MacKenzie offers extremely interesting analyses of the politicisation of the initial allocation of emissions permits, for instance, but he does not ask whose power is being reinforced by the very mechanism of emissions trading (as opposed to relations of power within the mechanism itself). Similarly, Lane’s important article on the construction of the opposition between command-and-control and market mechanism (Lane 2012) could be complemented by the perspective I am highlighting here. Lane convincingly demonstrates how the superior ‘efficiency’ of market-based mechanism was produced by economists from the 1970s, yet he gives few reasons as to why these economists would engage in such a construction. Rereading the ‘promiscuous’ history of the construction of the emissions market with the concept of depoliticisation could prove fruitful and potentially temper his conclusion that the development of these markets is not explained ‘by their implementation within a broader neoliberal system of governance’ (Lane 2012, p. 600). For instance, such a rereading could show that not only is the superior ‘efficiency’ of market-based instruments constructed (as Lane argues) but that the very criterion of economic efficiency is itself depoliticising and discriminating towards capital accumulation, regardless of the use values produced.

4. But see O’Neill (1993, 2007) for political theory arguments against the advancement of market mechanisms in environmental policies.

5. Of course, this politicisation of production could remain potential and not actual as states’ administrators could use a variety of strategies to depoliticise their actions. Yet, the ‘technical’ or ‘administrative’ task performed by the state’s agency could also be politicised in democracies, either within the formal policy process (in parliament, etc.) or outside of it, through political campaigns, environmental movements, trade union demands, etc. Obviously, in order to succeed, these demands would have to be grounded in a much stronger level of social conflict and democratic class struggle than what is currently the case in industrialised democracies.

6. In this reading, the preference of business representatives for emissions trading over other policy instruments can indeed be explained by the fact that emissions trading is a ‘hedging strategy’ against other policy choices ‘perceived to be more costly’ (Meckling 2011, p. 44), but only if one understands ‘costly’ here not simply as a monetary burden, but in a deeper political sense related to the freedom of investment.

7. Yet, considering the subsequent use of Dales’s ideas in the context of greenhouse gas emissions reduction, it may be useful to note a portion of his writing saying that: ‘Wastes that enter water and air systems not as identifiable outfalls or “emissions points,” but at hundreds of thousands, or millions, of points, pose special problems. […] Pollution Rights markets don’t seem practicable’ (Dales 1968, p. 98).

8. Although he does not refer to it, Dales’s argumentation here has an evident affinity with Arrow’s ‘impossibility’ theorem.

9. Interestingly enough, although he concedes the point that there must be some sort of political decision over the total amount of pollutions emitted, Dales offers a solution where this decision is not made directly by a political authority, but rather by an independent board, insulated from party politics: ‘The intent of the legislation establishing the WCB, like the intent of legislation establishing all such boards, would be to insulate it from party politics. […] I don’t think that members should all be experts or all amateurs; a mixture would be more to my liking. None of them should be a party hack’ (Dales 1968, pp. 77–78. The author’s emphasis).

10. Very different democratic social choices are also possible. There are no guarantees that the outcome of a democratic process will be social and ecological justice. But as radical democratic theorists would argue, democratic class struggle itself is the best means to increase social awareness and political engagement beyond one’s interests and restricted horizon (Bachrach and Botwinick 1992).