Picture this: you are at a luxurious restaurant in New York City, just minutes away from indulging in expensive, decadent, and mouth-watering caviar. How would you feel if I told you that the caviar that you are soon to place in your mouth is completely artificial? You might feel inclined to blame the restaurant, or the fishermen, or even the waiter or waitress. But what you do not know is that the real reason that you are being duped by those artificial fish eggs is due to the free enterprise system, competition between businesses, and the lack of private property.
The Caspian Sea is a prime location for sturgeon, the fish from which caviar is harvested- or so it used to be. Due to declining water levels and an increase in water pollution in the sea, the sturgeon population is rapidly declining . Pollution in the Caspian Sea is highly due to the dumping of waste and sewage, oil fields and refineries, and other land-generated pollution. The Caspian has been known for its vast variety of caviar species, generating ninety percent of the world’s sturgeon population . While the caviar business has been negatively affected because of the decreasing populations of sturgeon due to the pollution, this is just one example from a multitude of environmental issues that are unfortunate byproducts of the free enterprise system and the competition between businesses.
In a free market enterprise, private businesses are able to compete with each other with little government intervention and control. The businesses operate for profit, and the driving forces are market competition, profit, and the law of supply and demand. The competition forces companies to obtain raw materials and other factors of production at the lowest price possible. The competition between companies, with the end goal of a sky-high profit in mind, drives the increase in pollution because the competing businesses utilize the cheapest methods of obtaining materials. Why would a company spend money and materials on waste management when they could just dump all of the waste into an unoccupied plot of land? Why would a company update their headquarters with the most recent environmentally friendly architecture when they could just pocket that money and keep it for their greedy selves? Businesses are inclined to prefer to choose the easier and cheaper route so that they can properly compete with other similar corporations. They claim to hold the consumers’ best interests at heart, but the way in which low prices are possible is more damaging to the consumers in the long run. In the end, it is all about which company earns the most money, yet the detrimental effects on the environment and on humanity are nearly always overlooked and ignored.
In addition, the lack of private property leads to issues about who cares for unoccupied land. When land is essentially free to take and use, people inevitably become greedy, and the over-exploitation of land and natural resources can lead to landslides, erosion, and more. When land on the Black Sea was not owned by any individuals, it was grossly mistreated. People hauled gravel away from the beach because it was free and did not belong to any one person in particular. The lack of gravel caused major erosion, the collapse of multiple buildings, and many landslides in years past, all due to the lack of private property, and these subsequent problems have continued to this day .
In Liberty and Property, Ludwig von Mises argues that capitalism serves the consumers and businesses should strive to provide its customers with lower prices than its competitors. He claims that “there is under capitalism one way to wealth: to serve the consumers better and cheaper than other people do” - however, how companies and businesses offer low prices often becomes an issue and a threat to the health of consumers and of the environment. Eco-friendly machinery and products are almost always more expensive than traditional products, so businesses are less inclined to want to sell those products or invest in eco-friendly architecture or methods. When polled, sixty-six percent of North Americans agreed that “the environmentally friendly alternatives for many of the products I use are too expensive” . Even though eco-friendly options are ultimately better for society and the earth, they are less popular because of their typically higher prices. Similarly, M.J. Jolda of Marcal Small Steps stated that “consumers have been conditioned to believe that if it is better for the environment, it must be worse for their wallet” . Because engineering environmentally friendly products is more costly, many businesses are opting to take the easy route and keep making products cheaply so as to entice consumers with low prices. von Mises reiterates the significant impact of competition when he states that “the consumer is king, is the real boss, and the manufacturer is done for if he does not outstrip his competitors in best serving customers” . What von Mises neglects to mention is that the lowest prices are not always the most beneficial for customers and their health, and competition often may do more harm than good.
The free enterprise system does not allow for much, if any, government intervention, and even von Mises states that “government is essentially the negation of liberty” . Because the state of the environment is concerning more and more people and is spreading throughout the media, consumers have begun to show an increased interest in eco-friendly products. Unfortunately, businesses have responded by claiming that their product is good for the environment and the consumer even when it is not; the price remains the same and the consumer believes that they are helping the environment, when in reality the product is still not eco-friendly. As a result, the United States government has taken steps to implement policies regarding environmentally friendly products, which are also known as Environmentally Preferred Products (EPPs). The regulations and rules for a product to be approved are strict. These products have “a lesser or reduced negative effect on human health and the environment when compared with competing products” . If the government had just sat back and watched the businesses fight tooth and nail for consumers rather than stepping in, prices of products would indeed be lower, and while that may seem like a good thing for society, human health and the environment would be at increased risk. Even though government intervention and policies may be pesky for consumers, they are certainly beneficial for the environment and for the good of the earth that we live in.
von Mises also argues that customers are “always right” because what they buy or abstain from buying determines what has to be produced, the quantity and quality of what needs to be produced, and how much money a business will make or lose . Even though the majority of consumers are still stuck in the “environment is cost” mentality, many leading brand names are beginning to increase their efforts for the well-being of the environment . DuPont, the world’s third largest chemical company, plans to reduce its greenhouse gas emissions by sixty-five percent, and Unilever plans to halve the environmental impact of its products . Even though von Mises is adamant that consumers are the king, the boss, and have the last say, businesses are leading the change to help care for the environment .
The free enterprise system invokes too much competition and does not take consumers’ health and the wellbeing of the environment into consideration. Without the extreme competition and with heightened government intervention and policies, competing businesses would not cause detrimental effects on the environment because they would not be vying for the lowest prices and most profit. Contrary to Ludwig von Mises’s opinion, government is not the negation of liberty; if the government does not act to aid the environment, our liberty to live as we do today will be restricted.
- Diba, Bahman Aghai. “Pollution in the Caspian Sea.” Payvand Iran News. p., 30 July 2002. Web. 09 Dec. 2014.
- DiLorenzo, Thomas J. “Why Socialism Causes Pollution.” The Freeman: Foundation for Economic Education.p., 01 Mar. 1992. Web. 09 Dec. 2014.
- Dolliver, Mark. “Consumers Don’t Warm to Eco-Friendly Products.” N.p., n.d. Web. 09 Dec. 2014.
- “Environmentally Preferred Products.” United States General Services Adminsitration.p., n.d. Web. 09 Dec. 2014.
- Pollution in the Caspian Sea.d. Http://edition.presstv.ir/detail.fa/138459.html.n.p.
- von Mises, Ludwig. Liberty and Property. p.: n.p., n.d. Print.
- Zokaei, Keivan. “Environmentally-friendly Business is Profitable Business.” The Guardian.p. 14 Oct. 2014. Web. 9 Dec. 2014.