Greed is green

Is the environment improving? And if it is, can we credit regulations for improvements in the environment? From the mid-1970s until his untimely death in 1998, economist Julian Simon became somewhat (in)famous by tirelessly arguing that, contrary to all the talk about an impending ecological catastrophe, official statistics clearly indicated that both people and the environment were becoming increasingly better off. Every important long-run measure of human material welfare (life expectancy, food availability, incidence of diseases, etc.) illustrated decades and sometimes centuries of marked improvements. All supposedly non-renewable resources (oil, minerals, etc.) were becoming less scarce rather than more. The air in rich countries was irrefutably safer to breathe in the late 20th century than it had been a century before. Water cleanliness was improving while forests in most places were making a comeback. Natural resources are not finite in any serious way, Simon explained, because they are ultimately created by the always renewable resource of the human intellect.

Simon usually had a hard time making his case in public appearances. In July, 1996, however, he experienced what was probably his finest debating moment in an event sponsored by the World Future Society. Simon’s opponent, Hazel Henderson, a private researcher and author of Building a Win-Win World, first tried to make a case that government regulation was responsible for reduced air pollution. Henderson came armed with a graph showing a decline in pollution levels in London since the late 1950s. The slope of the line was clearly downward, illustrating, she said, the effect of London’s Clean Air Act of 1956.

Then came Simon who, during the rebuttal period, presented a graph of his own. As was typical, his data went all the way back to day one, to the start of record keeping on the parameter in question. As it turned out, Simon’s chart on smoke levels in London stretched back well into the 1800s, and the line from the 1920s on showed a constant and uniform downward slope. As he proudly pointed out: “If you look at all the data, you can’t tell that there was a clean air act at any point.”

London’s level of air pollution isn’t an oddity. As economist Robert Crandall of the Brookings Institution had also observed, air pollution declined faster in the United States in the 1960s, before passage of the Clean Air Act, than it did after its passage. The same is true for most other pollutants that can be tracked to a time before they were targeted by regulation.

Nonetheless, most “sustainable development” theorists still cling to the idea that the positive trends described by Simon were the result of the relentless pressure brought by environmental lobbies on politicians who, in turn, were compelled to devote more societal resources to pollution regulation and control.

Much historical evidence suggests that good old greed was probably far more crucial in this respect. Indeed, many 19th-century authors argued that pollution, whether it be unburnt fuel released into the air or sludge dumped into rivers, was a form of waste that no competitive business could afford.

For instance, the journalist Peter Lund Simmonds (1814-1897) published in 1862 his best-seller Waste Products and Undeveloped Substances, in which he discussed the profitable recovery of previously “injurious” waste ranging from bones and other animal by-products to the acid manganese solutions of chloride of lime factories, from the scoriae of metals produced by blast furnaces to “poisonous” gases which used to escape during the process of smelting, from the distillers’ wash to the “impurities” of coal gas, and many others. Interestingly enough, Simmonds felt compelled to write at the beginning of his 420-page book that his treatment would have to be superficial because his subject was “too extensive in its scope to be discussed successfully in detail … since any one branch would of itself form a useful and interesting volume.” Confronted with the incessant rate of innovation in this field, he revised his book extensively and published a second edition in 1873.

“In every manufacturing process,” Simmonds observed, “there is more or less waste of the raw material, which it is the province of others following after the original manufacturer to collect and utilize. This is done now, more or less, in almost every manufacture.” Just as utilization was the great law of nature, man also had to provide “for converting all the material he uses into useful purposes. There must be no loss of anything once within his grasp.” The results of such creative behaviour were not only increased profitability, but improved environmental amenities.

Among countless examples, Simmonds related that a process had been developed at the Kinghole woollen mills, near Dumfries, by which the hitherto refuse water of the washing houses was now converted into valuable commercial material. “By means of mechanical appliances and chemical action,” he wrote, “the refuse formerly turned into the river Nith to the injury of the salmon, is made to produce stearine, which forms the basis of composite candles, as well as a cake manure that sells at 40s per ton.”

Similarly, Simmonds pointed out that what should be done with the fifth quarter of the animal, or the “offal,” was a question that “formerly used to be perpetually assailing Boards of Health, and other sanitary bodies who have the supervision of slaughter-houses, meat-markets, etc.” By the time he wrote his books, however, the offal of cattle suited for food, the waste from dressing skins and preparing leather, and other animal refuse had all found “distinctive and remunerative uses.” If “such skill and ingenuity” had not been exhibited in the case of bones, and if bones had been left to rot or decay, “producing fever and disease,” there would indeed have been “cause for anxiety amongst sanitary authorities.” Yet, this was not the case and it was there for all to see “how the danger is dispelled, and a source of evil becomes the agent of much good, and the subject of a thriving and prosperous industry.”

Why did Simmonds’ contemporaries behave this way with industrial waste? Simply because “as competition becomes sharper, manufacturers have to look more closely to those items which may make the slight difference between profit and loss, and convert useless products into those possessed of commercial value, which is the most apt illustration of Franklin’s motto that ‘a penny saved is twopence earned’: Our manufacturers have not been slow to appreciate this truth.”

These processes were so prevalent that an acquaintance of Simmonds, a fellow by the name of Karl Marx, later made similar remarks in Volume III of his Capital. Marx identified industrial waste recovery as the “second big source of economy in the conditions of production” (after large-scale production). As he put it: “This waste, aside from the services which it performs as a new element of production, reduces the cost of the raw material to the extent to which it is again saleable … The reduction of the cost of this portion of constant capital increases pro tanto the rate of profit.” As a result, “the so-called waste plays an important role in almost every industry.”

While Simmonds’ may have authored the first treatise that systematically described the widespread and spontaneous recycling behaviour of all industries, his book would not be the last of this genre. In the following decades, other lengthy books on the topic would be written in the United Kingdom, the United States, Germany and France, and most certainly in other languages and places. In all of these, authors went out of their way to argue that turning industrial waste into profitable by-products almost always made economic sense and that, as a by-product of such innovative behaviour, the state of the air, the rivers and the forests were usually improving.

The bottom line of green has always been black. Good entrepreneurs, engineers and technicians have always been able to figure out that pollution is wasteful and doesn’t make good business sense. Although it may prove hazardous to their belief system, some environmentalists will eventually have to come to terms with the fact that the invisible hand was busy cleaning up and restoring the environment long before they entered this world.

Pierre Desrochers is Research Director at the Montreal Economic Institute and author of the Economic Note entitled Comment la recherche du profit améliore la qualité de l’environnement.

Back to top