Off the Spectrum

Written by: Dennis Shen

The crisis of the natural commons – our forests, our waterways, our skies, our marine fisheries, our biodiversity – is rooted in an existing failure of the international economic and regulatory system to internalize a critical externality. It reflects a system deficiency to place a price and regulate the use of the earth’s depletable and valuable natural ecosystems in a time in which continued freedom to over-use may pose real risk to the sustainability of these natural systems and in turn, the sustainability of our long-term economic path.

In 1776, Adam Smith, in the Wealth of Nations, stated that an individual, by pursuing his own interest, will be “led by an invisible hand to promote an end which was no part of his intention.” And in the case of private, tradable goods – the invisible hand of competitive markets has, in testament, done wonders to foster the efficient exchange of assets and maximize the product of human labour. But the marketplace works under assigned boundaries and if the current rules state the goal to be maximum short-term exploitation at the cost of long-term consequences, then that is exactly what the markets will institute into practice.

The reason a sustainable architecture to our global economy (that internalizes the price of common goods) has been difficult to come by is in part due to the historical misconception that the natural ecosystems are so vast that they cannot possibly be significantly influenced by man – a misconception founded on a history of people in which exploitation of nature has seemingly taken place without boundary or repercussion.