Hi Joseph, I'm cutting what I'm replying to down to this, because it seems to be the key paragraph.
> What it seems to come down to, is that you look toward price-driven or In market-driven system for emission control in manufacturing.You refer to real and shadow prices, depending on weather the system is capitalism, market- socialism (the system which would be socialism except that it's not), or socialism. I think this is the same type of belief in prices that leads other environmentalists to talk about establishing the "true price" of things. In my opinion, even if this is restricted to the manufacturing sector (and a system of prices might not make much sense if it is restricted to the manufacturing center), this caves in to neo-liberal illusions about the market. Prices are not really a rational system of planning: they are the agency for the law of value under capitalism, and shadow prices are a way of introducing the shadow of capitalism into any system they dominate. To answer your minor point first. Once you have an emissions price for manufacturing it makes sense to have it everywhere. Too much leakage otherwise, and price will serve as reinforcement in other sectors. In short you spotted a key point. Now I'll give you the reference you requested, but I also don't think these links address your point directly or in sufficient detail, so will provide a reply below. Here is a short post. http://gristmill.grist.org/story/2008/12/31/22430/356 This is longer and more detailed, but the detail is mainly technology. http://gristmill.grist.org/story/2008/11/25/17212/723 So now to answer your key question: why is manufacturing different? The answer is that manufacturing is diverse, but to get there we need to start with the other sectors. In most sectors you can plan via setting general requirements without having to decide the details, In regulating building efficiency, you don't have decide what to with this building over here and worry how it varies from that one over there. In regulating buildings you want to say something along the line of so many emissions per square foot, so many emissions per person (resident or full time employee equivalent) and building must main a minimum air quality and comfort level. The per square foot is avoid miserably small inefficient buildings. The per person is to avoid buildings with low emissions per square foot that waste huge amounts of space driving up emissions per person. And the air quality and comfort level rule is to avoid builders, landlords and operators complying with rule at the expense of human health and comfort. Now you also probably want public programs to use public investment to meet these requirements with known technology. But the rules don't specify how much of each means get used; nor they prohibit clever discoveries that mean requirements by some other method. But the former is more important than the latter. They are leaving to the people on the ground level, the people who would know, to determine the balance between efficient appliances and insulation and weather sealing, and heat pumps, and efficient lighting, and solar generation and what have you. So there is a good balance between central planning, and bottom up planning by those who have to actually implement the improvements. Top down planning sets standards. Bottom up planning determines how to implement those standards. And most economic sectors have a basis for striking this balance. In transport the top down can set rules for emissions per passenger and per freight ton. (We need to also do extensive public planning and investment in rail systems, bike and pedestrian paths and electric cars.) In electric power we can set standard of emissions per kWh, and public investment in transmission, storage, smart grids, and in wind and solar generation. But manufacturing, there is no good top down way to set standards. There are over 10,000 facilities covered under the EU ETS. Many of them are power plants. But thousands are industrial facilities. More important are the tens of thousands not covered under the current ETS. These facilities are in a multitude of industries. Each of those industries is in turn a multitude sub-industries. (For example, the paper industry includes pulp and paper. Paper includes newsprint, office paper, cardboard, many different grades and sizes for packaging (packaging including anything from packing paper to butcher paper, to wrapping paper for gifts and so.) All these sub-industries have differing ability to use recycled input. And the same thing is true for every type of metal, every type of plastic, every type of glass. And again it is not just raw materials. There are different ways of fabricating the same material for use as input in making various products. There are the factories that use these raw materials to actually make products, many of which are inputs to other products. Further, there are some products where the raw materials are a small fraction of environmental impact, where most impact is at actual fabrication. But for many others you reduce impact drastically, just by selecting raw materials that took fewer emissions to make. So while you don't have to set a standard for each facility, a planning driven process would require you setting standards for many thousands of different types of facility. If you wanted to actually set technology requirements rather efficiency standards, if you wanted to regulated on a per process basis than then you multiply your complexity even more. And I'm not even scratching the paint on the complexity of our industrial system. Pricing is a tremendous computation saver. I think someone calculated that to plan our industrial economy in detail without use of prices (or some other common factor to weigh everything against everything else along a single dimension) would require more computing power than can physically exist in the universe as we know it. And its not necessary. Even in a planned economy you could set a shadow price on emissions high enough that your planning process would automatically eliminate them. As to prices being a capitalist phenomena: I seem to remember Marx thinking a labor currency was a good example of a tool that would be useful in a socialist society. Now there are, in my opinion, serious flaws in the idea, but leaving those aside, a labor currency is definitely a way of using price in planning. For that matter capitalists did not invent pricing. Hell, paper currency was invented by the Chinese by 140 B.C. Ancient Sumer probably invented commodity money; at any rate their culture is the earliest we know used it. But finding some common basis on which to value disparate goods is probably something that comes about as soon as the number of people in frequent touch with each other arises beyond the number in a single village or troupe. I mean a lot of hunter gatherer cultures found reason to do this. When you question price, you seem to be taking the losing side in the calculation debate. Now one thing about the calculation debate is that on many issues you can argue who won. Is a planned economy feasible? One side says that if planners use shadow prices it is quite feasible. Another says, no, you need to use market prices; accept no imitations. But what both sides agree on is that you have to use some form of pricing if you want to run an industrial society. Those who want to do without price are the undisputed losers of that debate. If you find the term "price" too problematic, then think of it as a lowest common denominator. It is one thing to say that exchange value should not trump use value. It is another to say that exchange value is not an important component of use value in an industrial society. As soon as we have enough specialization that most of what we use is made by people we don't know personally, and most of what we produce is used by people we don't personally, (and that is true of most people) the only way to coordinate all this disparate production is to include pricing (maybe under another name) as part of the planning process. Alienation can be reduced, but it can't be eliminated in a production system of more than a certain complexity. Che Guevara made the point that if you want to eliminate exchange between socialist enterprises on the basis of commodity pricing that is all the more reason to keep track of costs. If, for good socialist reasons, you want to provide something at less than the cost of production then you damn well need to keep track of what that cost was: the cost doesn't disappear just because it is not passed along directly. An emissions price IS a shadow price. In manufacturing as far as I can tell it is the only means available for deciding how to reduce greenhouse gases. In all other sectors it still makes a useful reinforcement. If it would have to be used under non-market socialism it certainly has to be used under capitalism. On Fri, Feb 13, 2009 at 9:36 PM, <[email protected]> wrote: > Hi Gar, > > Sorry to take so long to reply. I wrote something out the day before > yesterday, and then lost it in a power surge. Oh well....So I'll try again to > reply. The good part of this is that I can now blame my lack of eloquence > on having lost all the really good formulations with the power surge. <g>. > > >> > * An important issue raised by your note concerns planning. We seem >> > to have a somewhat different ideas about what planning is. I think that the >> > type planning that we need must include the direct regulation of >> > production. >> > True, all sorts of things can be called planning, and really are planning >> > *in >> > some sense or other*. No doubt various environmentalists talk of >> > "planning", >> > and yet mean some very neo-liberal types of things. Relying mainly on >> > subsidies to industry, setting up a cap and trade market, setting the price >> > for a carbon tax, are all planning of a sort. But they are alternatives to >> >> Nowhere did I imply this, I'm talking about things like regulating >> emission per square foot and per person, regulating emissions per >> passenger and ton mile, regulating emissions per kWh. And direct >> public investment like upgrading rail systems, building electric power >> lines, creating efficiency utilities that provide residential >> efficiency upgrade paid for out of utility bills (and subsidized >> besides). Also a combination direct public ownership of wind and solar >> farms with neoliberal subsidies for private wind and solar farms. >> > > Oops. Sorry to have created confusion about your views. In part, this is > because I couldn't quite make out what your views were on planning. But I > should have asked questions instead of proceeding as I did. > > But the other thing that comes up in this paragraph is that I had some > points that *I* wanted to make about planning with respect to market > measures. There *is* a sort of "planning" involved with cap and trade and > other market measures: the government really does have to work at creating > the artificial emissions market, no doubt bureaucracies get set up for this > and for the "Clean Development Mechanism" (although part of this bureaucracy > is privatized), and so on. But it's planning for the sake of market measures, > and not direct planning or traditional environmental planning. Similarly, > subsidies and public expenditures of various types don't distinguish between > market measures and direct environmental planning, because neo-liberalism > makes liberal use of subsidies and other government actions in order to > promote its market fundamentalism. > >> > * You say that the biofuel fiasco is a result, not of the market >> > measures, but of poor planning. I don't agree. It is actually a prime >> > example >> > of the lack of a system of overall environmental planning. >> >> But did not say it was poor environmental planning. It was poor >> planning. More specifically it was not a case of a carbon tax or a >> cap-and-trade or of anything resembling it. Of course it was an >> interaction between planning and markets, in short a result of the way >> real markets work as opposed to neo-liberal wet dreams of the way they >> are supposed to function. But it specifically is not a case of carbon >> taxes or of carbon-tax like things failing. > > Here you seem to denigrate that the biofuel fiasco is the fiasco of > market measures, by saying that it is a matter of poor planning, and then you > distinguish between "poor environmental planning" and "poor planning". I > don't understand at all the distinction that you are making. > > You also say that the biofuel fiasco is "a result of the way real > markets work as opposed to neo-liberal wet dreams of the way they are > supposed to function." This is very well put, and I agree. I just don't see > how this fits in with the rest of the sentence about "an interaction between > planning and markets". You identify the issue as that of the way markets > *really* work, and you avoid the neo-liberal twaddle about distortion of the > market. So how then is the biofuel fiasco a result of "interaction" of > markets and planning, other than in the same sense in which carbon trading > too is a result of "interaction" of markets and planning, because the > government has to carry out neo-liberal planning to set up the artificial > emissions market? > > Moreover, for that matter, carbon trading actually was involved with the > expansion of the production of Brazilian and Asian biofuel. The EU Emissions > Trading System (ETS) resulted in firms looking for more and more biofuel, and > I believe European firms were involved in these purchases. And the fact that > the ETS had this result wasn't a flaw of the system, but flowed naturally > from its operation. The ETS is supposed to mean that firms, following price > signals and the "invisible hand" of Adam Smith, simply do what they have to > do to improve their balance sheet to the max. Buying biofuel was one way to > meet their obligations under the ETS and make money. They weren't supposed to > worry about where the biofuel came from or what an increase in overall > biofuel production meant, and they didn't. > > American corn ethanol wasn't a matter of cap and trade, true. But I never > said that cap and trade and the carbon tax are the only market measures that > exist. In the case of corn ethanol, the government used subsidies and > regulations to make it profitable to produce ethanol. You say that corn > ethanol was a result of poor planning, and I agree that the government did > plan *in a certain sense*. But the plan was to make ethanol profitable, and > encourage farmers and firms to jump in along the lines of, simply, "the more > the better". That's planning, but -- in the my opinion --the same type > planning that also occurs in market measures like cap and trade. > >> Incidentally I don't agree that biofuels could have been a force for >> good except on a very small scale. Past a certain point we can't grow >> biofuels without either displacing food production, fiber production >> or wildlife habitat. We can produce some, but not a huge amount, I >> would save a maximum of 11 percent of current world energy production >> could be produce sustainably via biofuels, more realistically 7 >> percent and perhaps as little as 3 percent. And if you notice that >> this range has almost a 4 to 1 ratio between minimum and maximum, that >> is because I think our ignorance of what constitutes sustainability in >> biofuels is that great. > > I couldn't say about the exact figures, but the general idea you develop > here seems right to me. In my writing on biofuels I say things such as that > "At best, they [biofuels] can supply only a small part of energy needs and > be one limited component of an overall environmental plan. And for them to > play this role, there will have to be more research as well as careful > attention to their effect on farming practices and overall land utilization." > ("Al Gore's Nobel Peace Prize and the fiascos of corporate > environmentalism.") And I poke holes in the claim that cellulosic biofuel has > solved all the problems of corn ethanol. > > Of course, the world is going to continue to need a lot of energy, even > for environmental purposes, and it certainly seems reasonable to do research > into various sources including the various types of biofuel. Getting > experience through the production and use of small quantities also seems like > an appropriate thing to do. Instead, the bourgeoisie created a biofuel > bubble, because it would be profitable to various capitalist interests, and > also because the bourgeoisie no doubt likes the idea that all that has to be > done as far as environmentalism is a slight change of fuel. It seems to me > that it's an example of market methods (Al Gore's "using market capitalism as > an ally") turning what might be a small, limited good into a major pain. > > > > Well, take the generation of electrical power. I >> >> Umm no. In energy jargon generation of electrical power is usually >> considered separately from manufacturing. I agree that electrical >> generation is area where regulation and public investment will work. > > In considering the issue of efficiency, you raise the difference between > electrical power and manufacturing. You distinguish between "most sectors of > the economy" and manufacturing. You develop this further: > >> And I would say the argument for a carbon tax or >> auctioned permit price is even stronger under capitalism - >> specifically for manufacturing. Now if you read some of the stuff >> I've written on Grist you will see I've gone into this in more detail. >> That is in most sectors planning makes more sense than price driven >> means of reducing emissions. But manufacturing is the exception. It >> is not that price does not have many of the same flaws in >> manufacturing as it has in other sectors. It is just that, unlike >> other sector, in manufacturing the other choices are worse. > > I don't agree with this distinction. As far as I am aware, the case for > traditional envrionmental (and safety and health) regulations as opposed to > market measures is as strong in manufacturing as in other sectors. When > documents like "Carbon trading: a critical conversation" show that emissions > trading is worse than regulation, I don't think they make a distinction > between manufacturing and other sectors. > > I would like to see your articles that do make this distinction, and I > would appreciate it if you could give me some references. As of now, I've > seen some material from you that doesn't seem to make this distinction. For > example, take your article "Carbon trading: a carbon tax, blindfolded and > handcuffed, with its shoelaces tied together" (nice phrasing! even if I don't > agree that the carbon tax really is any better). It makes no distinction > between other sectors of the economy and manufacturing, and even uses an > example from manufacturing ("a hated pig-iron manufacturer"). But in your > reply to me, you say an "auctioned permit price" (i.e. cap and trade with the > original emission certificates distributed by auction) and carbon tax are > suitable "specifically for manufacturing", and that this is so even under > socialism. > > At this point, I would like to ask something. This seems to say that, > in your conception, the carbon tax and/or auctioned permit system would only > be for manufacturing. Is that really what you are saying? And if so, how do > you have a carbon tax only for manufacturing? As I have seen you say in your > articles, the price of the carbon tax gets passed on by the manufacturer. > That is, once its imposed on the manufacturer, it filters through the whole > system. I'm confused here about what you conception is. Could you clarify? > > But back to the problem of regulating manufacturing. I don't think that > this is as hard to deal with as you seem to think. Environmental, safety and > other regulations have at times in the past been imposed on manufacturing, > and there's been workplace inspection. And the additional ones for global > warming would probably amount to banning various bad processes, as well as > demanding the efficiency of the products manufactured; these are things > which, I believe, have been done successfully in the past. > > To show the difficulty, you raise the issue of deciding how to > distinguish between super-efficient plants (i.e. with low carbon emissions) > and inefficient ones. But this is mainly a problem with respect to cap and > trade and similar systems, not the traditional regulation. If bad processes, > for example, are banned, then super-efficient factories which have already > given up these processes have no problem. With cap and trade, there is always > the problem of how to hand out the original certificates (which will then be > used or traded as the various recipients wish). This is a problem which, I > believe, you have illustrated in various of your articles on cap and > trade,.And, as you say, "It is not that price does not have many of the same > flaws in manufacturing as it has in other sectors." It's just that for some > reason you think anything but price-driven efforts flops really badly in > manufacturing. > > Now, in the illustration in your reply to me of how things would work, > you seem to put in effect a form of cap and trade system. (I'm don't really > understand how you would make the original distribution of permits. You > mention both setting an initial total amount of certificates, and a price, > and bidding. But in any case, it seems to the me that the auctioned cap and > trade system represents "bipartisanship" in market methods -- the problems > of both cap and trade and the carbon tax, all rolled into one.) > > What it seems to come down to, is that you look toward price-driven or > In market-driven system for emission control in manufacturing.You refer to > real and shadow prices, depending on weather the system is capitalism, market- > socialism (the system which would be socialism except that it's not), or > socialism. I think this is the same type of belief in prices that leads other > environmentalists to talk about establishing the "true price" of things. In > my opinion, even if this is restricted to the manufacturing sector (and a > system of prices might not make much sense if it is restricted to the > manufacturing center), this caves in to neo-liberal illusions about the > market. Prices are not really a rational system of planning: they are the > agency for the law of value under capitalism, and shadow prices are a way of > introducing the shadow of capitalism into any system they dominate. > > So thuse are some of the things that occurred to me in thinking about > your last note. > > Regards, > > Joseph Green > > > _______________________________________________ > pen-l mailing list > [email protected] > https://lists.csuchico.edu/mailman/listinfo/pen-l > _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
