Climate change and liberal political economy
Scholars, policymakers, and activists continue to debate the most effective ways to mitigate climate change and adapt to its effects. Some argue that societies should engage in centralized planning, similar to war-time economic planning from the past, to avoid the worst of the impacts. The perspective of liberal political economy following in the traditions of F.A. Hayek, James M. Buchanan, and Elinor Ostrom critiques such attempts at centralised planning. Specifically, a “war footing” would severely exacerbate epistemic problems, perverse incentives, and political power problems, reducing the capacities to discover effective means of climate mitigation and adaptation.
Liberal political economy provides an alternative perspective to a centralized, militarized approach. Elinor Ostrom argued that effectively coping with climate change requires a "polycentric approach," meaning a governance arrangement that has many overlapping decision-making centers with some degree of decentralization. There are at least six advantages that polycentric systems have for coping with climate change: 1) competition, 2) cooperation, 3) perceptions of legitimacy that lead to coproduction, 4) mutual learning through experimentation, 5) institutional resilience/robustness, and 6) emergent outcomes that are socially desirable but not centrally planned. The combination of these six factors gives polycentric governance systems distinct advantages over more top-down ones, especially in terms of epistemics and incentive compatibility.
About the speaker
Jordan K Lofthouse is a Senior Research Fellow with the Mercatus Center at George Mason University, as well as a Senior Fellow with the F. A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics. He received a Ph.D. in economics from George Mason University. His research uses the insights of the Austrian, Virginia, and Bloomington schools of political economy to explore environmental issues and economic development. He recently published the book An Economist’s Guide to Environmentalism with Bloomsbury Academic.
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