I would argue that financial stability has everything to do with environmental sustainability (though I will admit that this comparison is a bit hard since environmentalists seem to bend over backwards to NOT define “sustainability” very precisely). In fact, I think that sustainability is baked right into the heart of capitalism.
The reason for this comes back to the magic of prices. Of all the amazing, wondrous things we celebrate in the world, prices may be the most overlooked. Just think of it: with no governing structure or top down ruling board, a single number encapsulates everything most everyone in the world knows about a particular product: both its utility and relative scarcity, both now and as anticipated in the future. It is a consensus derived voluntarily between millions of people who never meet with each other and likely never communicate with each other.
It is amazing to me that people who talk so much about their concern for scarcity tend to be the same folks who ignore prices and even eschew markets and capitalism. But in prices we have a number that gives us a single metric telling us the world’s consensus on the current and future scarcity of any commodity.
We do know that prices can miss some things. Perhaps most relevant today, they can fail to include the cost of emissions (ground, water, air) associated with that commodities extraction, refining and processing, and use. But compared to the effort of trying to create some alternate structure for managing product scarcity, this is a relatively simple problem to fix (simple technically, but not necessarily politically). Estimates of these pollution costs can be added as a tax (e.g. a carbon tax on fossil fuels to take into account climate effects of CO2 emissions) and prices will continue to work their magic but with these new factors added.
Warren Meyer, “Sustainability Is Baked Right Into the Heart of Capitalism”, Coyote Blog, 2019-10-10.
March 10, 2024
QotD: Sustainability
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