Sunday, December 11, 2011

The Corporate Welfare Origins of the Environmental Movement

Meanwhile, the states moved in to compel cartellization and virtual socialization of the crude oil industry.  The oil-producing states enacted laws to enable governmental commissions to fix the maximum amount of oil produced, and this system is basically still in effect.  The state laws were enacted under the public guise of "conservation," which is a pat excuse for any compulsory monopoly or cartel in a natural resource. --Murray N. Rothbard, America's Great Depression, 5th edition, 283 (emphasis mine).
The origin of the environmental or "conservation" movement, (or today the term "sustainability" seems to be more popular) is in an anti-competition and pro-corporate welfare movement designed to protect the interests of the producers.  In Murray N. Rothbard's introductory quotation, the natural resource monopolists, who are getting their monopoly-privileges from favorable state laws, are using "environmentalism" and "conservationism" as an excuse for fixing production levels so that they can then increase their prices.  Rothbard's quote is a textbook example of how monopolies are deliberately formed through government interventionism.  This fact should be trivially obvious; in fact, back during the Great Depression Era these observations were fairly well-known.  In his 1944 masterpiece, the Nobel Prize winning economist F. A. Hayek observes that the deliberate formation of monopolies by government policy was commonplace.  Hayek writes that
anyone who has observed how aspiring monopolists regularly seek and frequently obtain the assistance of the power of the state to make their control effective can have little doubt that there is nothing inevitable about this development.  (93, emphasis mine)
This deliberate policy of government to create monopolies, which are meant to protect the vested interests of a handful of producers by protecting them for the effects of competition, is at the heart of Rothbard's introductory quotation.  The rational behind the "conservation" scheme in the oil industry has nothing to do with "saving the earth" or about "sustainability."  Instead, the real motivation is to raise the prices of oil in order to improve the profitability of the oil companies.  The "conservation movement" is simply a cover story for state created and state enforced (as we will see using coercive state power) corporate welfare:
In 1931, new oil discoveries in East Texas drove the price of crude down from one dollar a barrel to 2 1/2 cents a barrel, and cartelists and conservationists set up a hue and cry.  The lead was taken by Oklahoma's Governor "Alfalfa Bill" Murray, who ordered a general shutdown of the crude oil industry until the price of oil should rise to the "MINIMUM FAIR PRICE" of one dollar a barrel.  (Murray N. Rothbard, America's Great Depression, 5th ed., 283, emphasis mine).
The issue of ongoing "new oil discoveries leading to 'ruinous' competition for the existing established players" is an issue going back to the American Progressive Era.  As Gabriel Kolko notes in his study of the American Progressive Era entitled The Triumph of Conservatism:  A Reinterpretation of American History, 1900-1916, the new and independent oil companies were seriously attacking the dominant position of Standard Oil.  "In a spiralling market for oil," writes Kolko, "such as existed from the turn of the century on, Standard, conservative and technologically uncreative, was no match for the aggressive new competitors" (42).   Kolko's major thesis is that all voluntary attempts to cartelize a market will normally fail; consequently, the only effective way to establish a cartel is through the coercive power of the state.  Kolko summarizes his findings by writing that
voluntary agreements among corporations in the forms of pools and agreements of EVERY kind usually failed.  Consolidations and mergers were the next logical step, and also failed.  The proliferation of new competitors undermined the possibility of attaining economic rationalization, with profit, by voluntary economic means.  (56, emphasis mine)
Therefore, to establish a cartelized natural resource industry, the tools of state intervention and physical coercion were employed.  As Thomas J. DiLorenzo notes in his book How Capitalism Saved America:  The Untold History of Our Country, from the Pilgrims to the Present, the entire oil industry was deliberately cartelized by the National Industrial Relations Act or NIRA (June 16, 1933, see page 186) as well as almost every other industry in the United States.  Di Lorenzo writes that "the NIRA also cartelized the oil industry with a provision that created state 'control boards' to restrict the amount of oil sold in interstate and international commerce" (188).  To ensure legislative compliance, the oil producers got the help from the police state to enforce their "environmental conservation" movement.  Rothbard notes that in the oil industry, Oklahoma Governor "Alfalfa Bill" Murray "sent the Oklahoma National Guard into the oil fields to enforce his decree with bayonets" (Murray N. Rothbard, America's Great Depression, 5th ed., 283, emphasis is mine).

Using the "environmental protection" line as a cover story for a policy of deliberate corporate welfare is not limited to the oil industry.  In fact, the American Progressive Era is full of examples of most industries crying "save the environment" so that they could line their own pockets with federal taxpayer dollars.  Thomas Di Lorenzo, in his book entitled Hamilton's Curse:  How Jefferson's Archenemy Betrayed the American Revolution--and What It Means for America Today, notes that the loudest environmentalists are usually the biggest supporters of corporate welfare and cartelization of industries.  Di Lorenzo writes that
Teddy Roosevelt was a "progressive era" president (and admirer of Hamilton) who is credited with being a great environmentalist for having nationalized thousands of acres of land and built dams and other "conservation" projects with taxpayer dollars.  But this, too, was a form of NEO-HAMILTONIAN CORPORATE WELFARE.  Mining, farming, timber, and other interests lobbied for these programs because they would be enriched with "free" dams and irrigation, waterway improvements, cheap, subsidized water (mostly for agriculture), cheap timber lands (leased for next to nothing from the government), and cheap access to grazing lands.  (142-143, all emphasis is mine)
One could go on and on with examples but the point remains:  ENVIRONMENTALISM IS JUST A "SOCIALLY RESPONSIBLE" WAY OF SNEAKING THROUGH CORPORATE WELFARE PROGRAMS.  Environmentalism manipulates people by playing on their sense of "trying to do the 'right thing' for the 'common good.'"  However, this is actually just one of the oldest tricks in the book for tyrants to manipulate the mob.  In fact, Etienne de la Boetie mentions this "oh but we in the government are doing the common good" trick in his 16th century discourse on tyranny.  The rhetoric about saving the environment is just the cover story for getting the public to go along with these neo-Hamiltonian corporate welfare schemes i.e., the big federal government must subsidize big businesses and the federal government must protect big businesses from competition because competition has a strong tendency to progressively lower prices.  No justification exists for corporate welfare; consumers who want products will pay for them and make the producers of the desired (desired by the consumers' based on the consumers' value judgments) goods profitable.  Finally, there is no such thing as a "fair price" imposed by government decree and enforced by the National Guard armed with bayonets.  Fairness of price can only be determined by the voluntary agreement of the buyer and the seller.  It should be obvious now that the "environmental conservation" movement uses patently unfair methods to achieve its patently unfair goal.  The assumption that the "environmentalists" are somehow taking the "moral high ground" in debates is, I think, a false assumption.


  1. Well written! Excellent tid-bit on the manipulation of the public through corporate-government partnership.

  2. Thanks Jaime! Yes, it was Franz Oppenheimer who identified the crucial distinction between the economic and the political means for attaining wealth. The economic means is through work and voluntary trade; the political means is through coercion and compulsion, i.e., through the police power of the state. The "political means" are an illegitimate and anti-social way for attaining wealth.