The Iron Fist versus The Invisible Hand: Interventionism and Libertarianism in Environmental Economic Discourses

Abstract

Drawing from a broad range of sources, we define and discuss the two primary ways of contemplating issues related to environmental economics, namely interventionism and libertarianism. We then interpret a cellular automaton as a model that allows for either approach, as well as anarchy, and show that interventionism exponentially reduces the number of possibilities while libertarianism, even when only probabilistically applied, tends to retain rather than destroy the underlying economic complexity. Thus, the libertarian, ex-post, remuneration approach may deserve more than the scant consideration it typically receives in such discourse, while the interventionist, ex-ante, regulation approach may have hidden long-term dangers not previously recognized. More generally, the approach outlined here may prove useful as a mechanism by which various regulatory proposals may be tested and compared.

Keywords: intervention, libertarianism, state, environment, free market, energy, innovation, climate change, efficiency, policy; pollution, welfare, economic, cellular automaton, model