24 September 2008

The market: a means not an end

Recent research showed that of the 121 fisheries using Individual Transferable Quotas 14% were over-fished to the point of exhaustion. By contrast, those fisheries without ITQs suffered twice the rate of collapse (28%). David Bollier takes up the story:
The New York Times faithfully trumpeted the news: “Privately Owned Fisheries May Help Shore Up Stocks.” But are ITQs truly effective because they rely upon a “market-based system”? Or do they work because they set overall fishing limits, a commons-based solution?
Mr Bollier was pointed to research by Seth Macinko and Daniel W. Bromley, who have written:
All the talk about rights-based fishing and [ITQs] is a red herring that throws all of us off the track of what is important. [ITQs] do not work because they are rights, or because they are property rights…. [They] work because they involve an assigned catch, as opposed to having catch be determined competitively.
This chimes with my belief that the market is only a means to various ends. They can be effective and efficient, but it when it comes to crucial social and environmental goals, markets must be subordinated to specified outcomes. Markets allocate resources efficiently; but that's a fairly limited vision. If we are to use their formidable efficiencies to solve social and environmental problems, they need to be constrained by the political process. A Social Policy Bond regime would do that: specific outcomes would be debated and agreed. Social Policy Bonds would be issued that targeted these goals. Until the goals were achieved, the bonds would not be redeemed. Their value would be inextricably dependent on how well investors achieve social goals.

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