Robust Political Economy

Robust Political Economy

Classical Liberalism and the Future of Public Policy

New Thinking in Political Economy series

Mark Pennington

This important book offers a comprehensive defence of classical liberalism against contemporary challenges. It sets out an analytical framework of ‘robust political economy’ that explores the economic and political problems that arise from the phenomena of imperfect knowledge and imperfect incentives.

Chapter 8: Environmental Protection: Green Leviathan or the Minimal State?

Mark Pennington

Subjects: economics and finance, political economy, politics and public policy, political economy, public policy


INTRODUCTION If poverty relief and the delivery of ‘social justice’ both at home and abroad are considered by many to illustrate the limitations of a classical liberal agenda, then these obstacles are thought minuscule when compared to the imminent threat of environmental breakdown. To focus on the superiority of ‘spontaneous orders’ in an era when concerns have shifted to the potentially calamitous environmental ‘disorder’ wrought by markets may seem misguided, and to illustrate the irrelevance of classical liberalism to the most pressing issues on the contemporary public policy stage. Notwithstanding such an unfavourable background, this chapter argues that a classical liberal framework may be best placed to meet the challenges represented by the demands of environmental protection. Specifically, a focus on issues of knowledge generation and incentives points towards decentralised solutions to collective-good problems as the most robust way of addressing issues of resource depletion. Markets and private property rights have an important role to play in facilitating the discovery of solutions to environmental problems and in providing the incentives necessary to deliver environmental improvements, and may be better placed to do so than command and control regulations and centrally determined pricing schemes. Moreover, where rules and regulations are required to counteract ‘market failures’, they may be better adapted to the problems in hand if allowed to emerge via a ‘bottom-up’ process of evolutionary competition. Where this is not possible owing to the global nature of environmental dilemmas then even in this ‘worst case’ for classical liberalism there may still...

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