Washington D.C. -- The dysfunctional family known as the Free Market Environmentalism (FME) movement held its annual pow-wow here last week, a raucous, intramural brawl worthy of the Algonquin Roundtable. The invective never rose to the level of Mary McCarthy’s great attack on Lillian Hellman--"Every word she wrote was a lie, including ‘and’ and ‘the’"--but it is amazing how many different ways fundamentally like-minded people can disagree.

There was a spirited discussion over how markets and property rights can be extended to provide genuine environmental protection as well as offer an alternative to political control of resources. This is a sign of intellectual health and vitality, and it is a measure of the success of the FME movement that we can turn our attention to the problem of how to assign property rights to certain kinds of "commons" (such as urban air) which lack intrinsic market value. When a common resource such as water, a forest, or grazing land has obvious intrinsic value, assigning enforceable property rights is fairly easy: you fence the land, assign title to an individual, and leave it to markets and voluntary bargaining to maximize benefits.

The common air we share is much more problematic. My "share" of clean air has no market value; it only acquires value in a negative way, i.e., when it becomes dirty. But since we all contribute to air pollution, an old-fashioned common law solution isn’t very practical. If we all sued each other in court, we’d end up with--what? Probably a court-supervised regulatory scheme that might look much like the EPA.

This lacuna has been referred to as the "no-mans land" in classical liberal rights theory. In our discussions last week, we referred to these tough-to-define commons as "N-space," like we used to do in mathematics class. The whole discussion quickly became all (John) Locked-up, with a hammer-and-tong debate over first principles.

Whether the problem of assigning property rights to commons such as urban air space can be solved is likely to remain a Coase call for a long time, but the debate tells something interesting about us. The drive to shrink "N-space" to the vanishing point arises from the dislike of political solutions for public problems that free marketeers have at a chromosomal level. Yet the voluntary bargaining that takes place between two private parties is also "politics," just on a smaller scale. If one party behaves irrationally or violates the other’s rights (think of the "spite fence" in property law), the next level of remedy is still "political," only through a different branch of government--the judiciary rather than the legislature. And even common law proceedings must, at the end of the day, make recourse to arguments about right and wrong, which is politics.

Some of the frustration we FME-ers feel about environmental issues arises less from the intellectual difficulties of our premises, than from the fact that we aren’t making more rapid progress changing public opinion and policy. One FME leader lamented at one point that "We’ve been screaming about regulation for years, and no one seems to have heard us." I think more people have heard us than he thinks, but it is also true that in N-space, no one can hear you scream.

--By Steven Hayward