One of benefits of the market mechanism,
by which, for example, economic goods are bought and sold, is that
self-interest is relied on; people don’t have to be told to buy or sell a product
because it can be in their self-interest to do so if the price is right. As an
alternative to regulatory standards, a government can create units of pollution-allowance
that businesses can purchase so to be lawfully able to pollute in so far as a
purchased unit allows. In the E.U.’s emissions trading system, “operators of
power plants and factories have to buy tradeable allowances to cover every
tonne of carbon dioxide they emit.”[1]
Business could buy and sell allowances so as to cover the amount of pollution
that is anticipated. In this way, the market mechanism efficiently allocates
pollution in line both with the interests of the companies and the public
interest—the latter being made concrete in the decision on how much pollution
per allowance and how many allowance units to create. Crucially, the company
private interests are put within the purview of the public interest; the
tail is not directing the dog. In political economies in which political-campaign
contributions by businesses are high, especially if unlimited, the tail can
indeed wag the dog, such that the public interest is determined by private
interests. This is one reason why the Citizens United (2010) U.S.
Supreme Court case is so significant. It allows corporations and labor unions
to spend unlimited amounts of money on political campaigns and directly on
advertisements—both being beneficial to elected officials in positions to curry
favor through legislation and regulations favorable to business (or labor). The
informal exchanges of political donations and legislation or regulation
comprise a market of sorts. So, the market mechanism, which is created or at
least regulated by government, can serve for good or ill, from the standpoint
of the public interest. Using the
mechanism, such as the E.U. president proposed in 2024, on behalf of ecosystems,
is for good rather than ill, and thus using, in effect, the self-interest of
farmers could be better than relying on regulatory requirements that farmers
expend some money and effort to beef up their local ecosystems.
1. Robert
Hodgson, “Von
der Leyen Moots ‘Nature Credits’ Market to Avert Ecosystem Collapse,” Euronews.com,
September 13, 2024.