ABSTRACT
Regardless of the stance adopted, whether utopian, utilitarian, libertarian, Malthusian, cornucopian, etc., for almost as long as economics has existed, economists have invoked the ‘invisible hand of the market’ as a mechanism that supposedly ensures that it becomes uneconomical to exploit a potentially renewable resource before it is badly damaged. Pareto optimum, a basic theorem of welfare economics, states that through market exchange, with each person pursuing their private interests, there are effective controls over resources exploitation and use of the environment; it also states that, except in inefficient market situations, it is not possible to make anyone better off without making at least one person worse off. Unfortunately, the market has not been an effective control: there are plenty of examples of ruined fisheries, lost forests, etc. to prove it. At present:
‘“the free market” does not provide consumers with proper information, because the social and environmental costs of production are not part of current economic models. . . . Private profits are being made at public costs in the deterioration of the environment and the general quality of life, and at the expense of future generations.’
