The Free Market and the Environment

by Dean Ohlman

My own personal bent regarding economics is toward the traditional capitalistic, free-market system of the United States.  Call me a born-and-bred conservative, Republican capitalist. 

However, after a great deal of research, reading, and theological study, I’ve come to believe that the recommended free-market approach to our environmental problems will not work without a new paradigm in economics. I now believe that the only approach capable of addressing the degradation of our environment is stewardship economics – one that recognizes that the natural world has been given to us by the Creator as a trust and that protecting the environment is primarily an issue of personal conviction and responsibility. We must individually examine our way of living and then make the proper changes to ensure that the earth will be able to sustain all its inhabitants in good health and happiness. Certainly we may continue to operate economically by most free-market principles, but at the same time we must avoid the following shortcomings common to contemporary free-market economics in the West. 

Belief that resources are unlimited 

Contemporary free-market economics often ignores the Law of Entropy. The first law of thermodynamic, of course, is the Law of Conservation, which declares that the amount of energy, and the matter from which it comes, is constant in the universe. But the second law, the Law of Entropy, also states that energy flows in one direction only: from order to disorder, from available to unavailable, from usable to unusable. And how we use that energy determines how rapidly it becomes unavailable.

Responsible environmental scientists are saying simply that the earth's environmental resources (orderly, available and usable energy) are being used by the industrial North at a rate that is unacceptable for rational people.

Free-market champions often create the impression that available energy is infinite. They give little credence to the conclusion of ecological scientists that more people using more fossil fuels at an ever-increasing rate is an environmental disaster in the making. 

Free-market environmentalists, a new breed of economists who do grant that there may be a few true environmental problems, still readily dismiss the alarm about energy resources. Their claim is that there will always be alternative sources of energy to fuel the engines of commerce, and that human creativity expressed in new technologies will always solve our problems before they become too serious (an undefined condition). “Regardless of the entropy law, mankind will find a way.” 

I don't have their faith. I don't believe that God will dismiss our sin of material greed that easily. For the practical purposes of mankind's existence, the universe is a closed system. And except where God directly intervenes, as in the miracles of both the Old and New Testaments, the Laws of Thermodynamics continue as they have from the beginning. In light of the entropy law, it is wise to conclude that the best economy is that which meets the needs of all the people with the least amount of waste. Free-market environmentalists hold that free-market economics ensures that goods are produced at their most efficient level. If ruining the ecological sources of life and building up mountains of waste are efficiency, it’s a deadly efficiency. 

Belief that growth can continue indefinitely 

Contemporary free-market economics has a blind commitment to economic growth. This goes hand-in-hand with the first shortcoming. If you don't recognize that energy and matter are limited, you tend to believe that growth can go on forever. That, however, is unrealistic. The earth's resources are limited, so you cannot forever be increasing the GDP and not eventually come to the point where certain things are used up.

Economic theory has a funny way of concluding that things will never be totally depleted: things become too expensive before they reach that point. This means that our economic system leaves the dregs of the almost depleted resources in open pits and devastated landscapes and goes on to something else.

The truth is that the idea of economic growth must give way to the concept of economic maturity, the state in which use of the environment is as close as possible to sustainable. The Law of Entropy, however, holds that no use of energy is ever 100 percent sustainable.  This means that the goal of human progress should be this: relative sustainability in the process of providing for the needs of all people while preserving healthy ecosystems.

Much of the economic growth free-market people would like to see continue is that which allows people to fulfill every want – every desire of the materialistic heart.  Little sober thought is given to meeting the essential needs of all living members of the global community (animals included).

Committed to affluence 

Contemporary free-market economics is marked by hostility to lifestyle change and to bringing living standards into line with reality. The stark truth is that the entire world cannot live like the modern American if that lifestyle is based upon the way we are presently consuming the environment. The resources are too limited and the environmental cost too high.

This means that Americans must either become more frugal and live more simply than we do, or we must be certain that the rest of the world is kept from attaining our same "high" standards of living. If the rest of the world continues to aim for the American consumer lifestyle, our environment will be degraded at an even greater rate. 

Some have estimated that if only 20 percent of the world's population lived like Americans, most known available energy resources would be depleted in one generation. Or, in the logic of economic theory, most known energy resources would become too expensive for all but the very rich to afford. 

In fact, is this not one of the major reasons new homes and new automobiles are rapidly getting beyond the reach of the new generation? Reality seems to be raising its ugly head – that, more soon than late, for the majority of Americans a lower standard of living may no longer be a matter of choice. 

Resistance to cooperation

Contemporary free-market economics is based on human competition, not on human cooperation. Although human competition in the form of capitalism has proven to be more successful in producing wealth than socialism (which is supposedly based on human cooperation), it has proven to be extremely harmful to the environment. 

This is particularly true in reference to the commons, the elements of our surrounding environment that do not belong to anyone in particular (atmosphere, watersheds, oceans and so forth). By competing with everyone else for these sources of life, we are destroying them.

In fact, we are not only competing with our neighbors, we are competing with our unborn children and grandchildren by stealing their sources of life even before they are alive and able to compete. Cooperative stewardship must eventually prevail if we are to save our environment from disaster.

The free-market system appears to have become little more than economic Darwinism where only the fit survive – and to hell with the rest. Not a dog-eat-dog world, but a man-eat-man world. 

Skewed material values 

Contemporary free-market economics thrives on hoarding, hedonism and haste. As a result, the current free-market approach to the world’s environmental problems is generally championed by the comfortable and the affluent – the majority of Americans.

An obvious reason for such support is the comfortable materialistic lifestyles we don't want to change. The common feeling among many of us is this: "I want all I can get; and I want it fast!" And this is not a bias held by the have-nots toward the haves, because the have-nots are motivated by the same things – they just don't possess them yet, and will likely be kept from obtaining them by the haves.

The universal American advertising pitch is based on the understanding that the majority of Americans want as many things as they can get, as much fun as they can get with a minimum of responsibility, and getting it as fast as they can. And we have effectively exported this mentality to the remainder of the world that enviously strives to be just like us (such envy also fueling anger and terrorism directed toward the United States). 

Absolute property rights 

Contemporary free-market economics is dominated by the belief that the rights of private ownership are virtually absolute. Most people never stop to realize that everything an individual owns will someday be owned by someone else, either privately or corporately – even what we supposedly throw away. The motor oil a person uses and then discards in his own back yard may in a few months be owned by his neighbor – in his drinking water.

The rights of private ownership must always involve responsible use; so if I own a thousand-acre timber lot, I do not have the right to harvest that timber in such a manner that harms my neighbor or negatively affects the commons – especially the vital sources of life like air and water.

In addition, we have responsibilities to those not living now who will eventually own our property. In particular, we must think of our children and our grandchildren, our most likely heirs. 

Contrary to good economic sense, much of what is privately owned in America today is being used as though there will be no tomorrow. Free-market environmentalists point out that a good farmer would want to conserve his soil for his own future economic stability and for that of his descendants. True, but the free market has forced “good farmers” off their land and given it to the agribusinessmen in Chicago, New York and Los Angeles where short-term profit is the bottom line, at the expense of our nation’s bottom land. These dirt-dumb investors could care less that in a generation half their pay dirt might be at the bottom of the Gulf of Mexico, upon the waters of which they blissfully sail.

In addition, there is little acknowledgement that property rights that were common when land was plentiful and human impact limited must change as land becomes scarcer and human impact becomes greater. 

Non-economic values ignored 

Contemporary free-market economics has no consensus regarding elements within the environment that cannot be readily valued by economic standards. How much is a wild daisy worth, or a coyote, or a swamp, or a forested mountain, or a million acres of uninhabited tundra?

In theory, free-market environmentalism states that if some human being or group of human beings values these things, it should be possible to establish an economic value for them. In practice, however, the values that are placed on them are skewed by human hoarding, hedonism, and haste and fail to take into account the life-critical worth of a sound ecosystem.

There is little obvious motivation for people to understand the place of these elements in the web of life, their aesthetic value, or their spiritual value – indeed their value to God in His grand creation scheme. It is blind human acquisitiveness that “sees” only lumber in a forest, coal in a mountain, crops in a prairie, and oil beneath the surface of the sea.

Free-market environmentalism has not yet demonstrated a way, or a propensity, to ensure that values greater than economic values will always be considered. Shouldn't some entity with knowledge, authority, and influence rise to ensure that these values are considered in decision making about resource use? To relegate that responsibility to business and industry, which has shown great resistance to thinking ecologically, is akin to hiring the coyote to guard the sheep. It seems that the only entity that could take on this role is a community of wise, generous, and spiritually grounded citizens with the knowledge and will to make responsible decisions that consider all the values of the material world, many of which we still do not totally grasp.

Isolation from the environment 

Those who champion contemporary free-market economics are often so isolated from the creation they don't see the problems. The truth is simple: if we don’t take the early warnings of disaster from the environment, we will suffer severe negative consequences.

The businessman considering his daily commodities dealings will not see that the crops he makes his living from are being grown at the expense of the land – that for every bushel of corn in his portfolio, four bushels of soil are being eroded away and that the land is being degraded further by the constant application of chemicals and impounded water. He will not recognize that our agricultural establishment is practicing a sort of reverse alchemy: using gold to turn soil into sand. He must either go out there and see for himself—with informed eyes, or he must begin to listen to scientists and researchers who are not controlled by the huge petrochemical and farm machinery companies. Heeding office-bound economists is unwise when the condition of the land is at stake.

There is a frightening arrogance among many free-marketeers that makes them assume that damning research doesn’t need to be listened to – as if ignoring the bad news will make it go away. It is such hubris that makes them enemies of the responsible ecologist. Because we have isolated ourselves from the land, we don't realize that every dollar we make and spend has an environmental cost. 

No sense of urgency 

Many corporate champions of contemporary free-market economics are too big and tradition-bound to move quickly enough to deal with the problems. Free-marketeers often speak critically of big government and its "slow and ineffective" bureaucracy without ever recognizing that the free-market is dominated by big business and industry, which are also plagued by ineffectiveness and inertia.

In fact, since there are so many actors in the free-market, it’s almost impossible to get them all to reach a consensus on something as complex as the environmental problems we are facing. Big business and industry may be able to react faster than the federal government, but they are still woefully slow – and still mostly self-serving.

Abandonment of the Judeo-Christian ethic 

Contemporary free-market economics is still tied to the old theory that the poor always benefit from the wealth of the rich.  When there was a seemingly unending supply of natural resources, it was true that the poor generally benefited from the wealth of the rich. Now, however, in a world marked by growing scarcity, by their refusal to adopt a stewardship ethic, the affluent are leaving less and less for the poor.

In many places in the world the gap between the rich and the poor is widening rapidly. With the abandonment of the Judeo- Christian ethic, there is no moral basis for sharing.

[Ten percent of the U.S. population owns 82 percent of the real estate (and 86 percent of the stock and 88 percent of the bonds and 91 percent of the businesses) (Federal Reserve Bank data in Left Business Observer, April 3,1996, p. 5). The top five percent of landowners [not five percent of the total population] own 75 percent of the land (Geisler, Rural Sociology 1993, 58(4): 532-546)].            

With the helm of economics in the hands of wealthy and mostly self-centered materialists, there is little hope for the poverty stricken. The destiny of the poor is hopelessly tied to the religion of the rich.  The small minority of Bible-believing, God-fearing individuals actively practicing their faith within business and industry are all that remains to keep some degree of charity alive. 

No conscience 

Contemporary free-market economics has no heart or conscience. Woodrow Wilson, in fact, noted just before our entry into World War I that America was in the grip of an economic system that was “heartless.” The bottom line for the free-market is always money, never people. This being the case, people are often sacrificed without a blush.

Consider the timber companies of the Pacific Northwest. When their potential harvest is reduced by government restriction, they cry public tears for all their unfortunate timber workers who will lose their jobs. Without a tear, however, they will privately and quietly automate their industry to make more profit for their stockholders and lay off thousands with hardly a pang of guilt. That's hypocrisy. If they really cared for their people, they would make their operations more labor intensive – and tolerate the smaller sum on the bottom line. But is there anything in economic Darwinism that would even consider anything so outrageous as a morally-directed conscience?

It is the profit motive of the free-market system that makes it work. With no Christian compassion, however, the desire for profit swiftly becomes plain selfish greed.  

Atheism by default 

Contemporary free-market economics recognizes no responsibility to God. The reason the free market benefited America in the past is that it originally had a near consensus on spiritual values. Therefore, it was guided by moral principles and an understanding of the ultimate transcendence of the soul. 

Today this is not so. There is no Creator recognized by the free-market; therefore there is no understanding of the ultimate meaning of the earth, of the ultimate destiny of mankind, nor of the responsibility of mankind to its Maker.

The correct view of the earth, the stewardship view, is ultimately based on an inherent understanding of human responsibility to God and compassion for your neighbor. A humanistic, atheistic free-market system is by definition man-centered and hence destined to conflict with the Creator and His creation. 

Sinful behavior continues unabated

Just as it is true with socialism, it is true that capitalism without Christianity is cruel. In fact, because it is so efficient, capitalism can do a great deal of damage to both land and people in a very short time. Socialism is a team of horses. Capitalism is a tractor. Both can be misdirected, but misdirected capitalism is likely to have far more serious consequences. 

How is an economic system misdirected or mishandled? Just like any other human endeavor: by God-ignorant, self-interested thinking and its resultant avaricious behavior.

The point I'm seeking to make is simple. The majority of people in the Western world today are utilizing free-market economics in a non-Christian manner. Their behavior is marked by greed, haste, self-centeredness, and virtual worship of personal comfort and pleasure. 

Living in this manner, people ignore several socially stabilizing and economically merciful Christian considerations: consideration of others, consideration of God's prior claim on the earth and its resources, consideration of self-denial that refuses to sacrifice the ultimate on the altar of the immediate, and consideration of self-discipline that is willing to wait for the highest good for the whole community of mankind.

Self-gratification destroys 

Without these Christian considerations, the keystone of capitalism – private ownership of property – becomes adulterated to the point of meaninglessness. When people use both their own property and the environmental commons to satisfy their own desires without consideration of God or others, environmental degradation is the inevitable result.

America became great not merely because of the free market and private ownership of property, but because these attributes were utilized in a Christian manner. In reality, socialism operating under Christian principles can also be an effective and efficient economic system. Its weakness comes perhaps in its greater susceptibility to totalitarianism. 

Capitalism has inherent safeguards that allow it greater resistance to totalitarianism. But once the malignancy of godless humanism has a foothold, its demise is equally as certain.

The Conclusion 

The conclusion of the matter is this: free-market environmentalism won't work for those who have abandoned the Christian understanding of creation stewardship. Salvation for the creation is the same as it is for the individual: acknowledging Jesus Christ as Lord. Proper regard for the creation is based on acknowledging Jesus Christ as Creator and Sustainer of it.

With this understanding we can more easily grasp the truth that the greatest sermon ever preached on economics and the environment was the Savior's Sermon on the Mount.  In this masterly treatise, Jesus declares these things:

• The meek shall inherit the earth;

• We must pray daily for and earnestly desire God's kingdom coming to earth;

• We must do unto others as we would have them do unto us;

• We are not to hoard material things on earth, but make spiritual rewards for ourselves in heaven;

• We cannot serve both material wealth (mammon) and God;

• If we maintain those values, we really do not have to worry about our physical needs because the Creator, who values mankind above plants and animals, will provide for our needs – doing it not by miracles, but through a healthy ecosystem operating by His laws of thermodynamics. 

What is the end of all this? Any economic system that fails to see Jesus as Lord is bound to fail. The Gospel alive in the hearts of people is the answer not only for the restoration of mankind, but also for the restoration of the land—and the cosmos.  There can be no other conclusion.

 “Our present sufferings are not worth comparing with the glory that will be revealed in us. The creation waits in eager expectation for the sons of God to be revealed. For the creation was subjected to frustration, not by its own choice, but by the will of the one who subjected it, in hope that the creation itself will be liberated from its bondage to decay and brought into the glorious freedom of the children of God. We know that the whole creation has been groaning as in the pains of childbirth right up to the present time. Not only so, but we ourselves, who have the firstfruits of the Spirit, groan inwardly as we wait eagerly for our adoption as sons, the redemption of our bodies. For in this hope we were saved” (Rom. 8:18-24 NIV).