On Social Immortality

When people think of "spaceship earth," they generally imagine a closed economic system. By this conception, all the flows are recycled, except solar energy flows. The idea is attractive because it implies a kind of social immortality. Until the far-off day when something happens to the sun, there is no reason why human existence cannot go on, generation after generation. Actual spaceships are not immortal, of course. Apollo's lifespan was considerably less than a month; and from the first day vital stocks were depleted while satellites of garbage began to accumulate around the spaceship. There is some irony in the fact that the economies of primitive tribes approximated the concept of spaceship earth far more closely than the actual Apollo spaceships. And modern economies seem to be moving away from the conditions of spaceship earth to those of spaceship Apollo.

Our drift away from "spaceship earth" is exemplified by the twin problems of too much waste and too few raw materials. Greater recycling is often suggested as a solution to both problems. The question is how much recycling is just the right amount. A purist might tempted to answer: "Recycle everything." But then are we to stop burning fossil fuel while waiting for new coal to form? Are we to stop using paint because its use is dissipative? A more sophisticated version of spaceship earth is not to require that all sector flows be brought into balance. Instead of closing down copper mines, in this version, technology would be channeled and stimulated sufficiently to offset the tendency toward rising costs as the better grade ores are depleted. Instead of a long-run steady state in flows, the sophisticated version recognizes that to achieve social immortality it is sufficient to maintain forever constant costs for service flows.

Somewhat in opposition to this view is the traditional economic one that what needs to be done is to levy pollution taxes, solid waste disposal taxes, and eliminate existing subsidies for the extraction of virgin materials. With these improvements in market efficiency whatever amount of recycling or inter-temporal self-sufficiency occurs is the "right amount."

But economic theory can be pushed further to suggest that we cannot rely on market forces, even with the customarily recommended improvements, to lead us to the socially most desirable amount of recycling. A major difficulty relates to linkages of value over time. Linkage between present and future is a mechanism by which the future can influence the welfare of the present. For example, our present efforts at species preservation or wilderness preservation are more valuable to us if we believe that the next generation will increase its own efforts at preservation. Diversity of species is an asset whose value continues over many generations. Our efforts at species preservation are not just for our generation or the next, but for many generations. Thus our valuations of our efforts of preservation depend on our beliefs about future actions. Since all the "traders," present and future cannot bargain in a single room, there is no way for present markets to take into account these asset linkages. Consequently the market will provide too few of these assets whose value is linked over time. The most important time-linked asset is the long-run livability of the planet itself. Even greatly unproved markets give us no guarantee that the planet will be inhabitable a century from now.

People tolerate many forms of market imperfection—monopolies and misleading advertising, for example—but they make great sacrifices for their children and genetic lines. Let us assume, therefore, that some form of social immortality is considered by many to overshadow the more narrow goal of economic efficiency. With this goal of the long-run livability of the planet, it seems that we should try to estimate various possible futures which would result from present policy choices. We then choose those policy choices which lead to desirable future states. The procedure is a common one for macro-economic problems such as inflation and unemployment. For example, we decide that a 6 percent inflation rate is "unacceptable" but a 3 percent rate is "acceptable." The goal seeming right and feasible, the money supply is then manipulated to achieve it.

One obvious policy instrument to move the economy toward a steady state of social immortality is the severance tax. Long-run population policies are perhaps even more crucial than material flow policies. The two policy areas are similar in that, for both, very gentle incentives can have enormous effect over a 200-300-year time horizon. A severance tax leads us toward spaceship earth in several ways. It raises the price of virgin material relative to secondary, and hence encourages recycling. More important, in the longer run it stimulates technology to develop production processes that further take advantage of the relatively cheaper recycled materials. And, of course, severance taxes, in the long run, favor product durability and service-intensive commodities over material-intensive ones.

Severance taxes are like import tariffs in that they are collected at a small number of entry "ports." They are far easier to collect than disposal taxes levied upon the final owner of a material. As states with anti-litter laws have found out, it is impossible to prevent surreptitious dumping. Schemes to collect disposal taxes at the last manufacturer have to provide for recycled content. And then definition and certification of "recycled" becomes a difficult problem, while the problem of surreptitious dumping remains with processors before the final manufacturer. Administrative costs of collecting a disposal tax are much higher at the final consumer than at the first processor. It may be that the best place to collect a disposal tax is at the latter, where it becomes a severance tax. To resolve the question one must weigh the reduction in administrative cost against the loss of efficiency from collecting the disposal tax "too early."

Severance taxes are understandably unpleasant to mining companies and something of a pipe-dream to recycling companies. How can severance taxes come into being, one may ask, while depletion allowances, which are negative severance taxes, are so well entrenched?

It is misleading to talk about specific resources as immutably non-renewable with dates upon which each will "run out." But the entire planet can be viewed as a single asset which managed in one way is renewable and managed in another way is nonrenewable. Economic theory tells us that even greatly improved markets will provide us with "too little" of the time-linked renewable asset. The point is that the earth is an asset whose type can be changed; we have a choice as to which type of asset we want it to become. A hundred years from now the choice may no longer exist. We may have irrevocably transformed spaceship earth into a progressively more hazardous and time-limited spaceship Apollo.

A minimum requirement which might appeal to many people is to provide enough incentives for recycling so that we do not foreclose the opportunity of a comfortable spaceship earth a hundred years from now.