The Austrian School of Economics, Private Property, and Environmental Externalities

Abstract

One of the most pressing issues of our modem era is environmentalism. With the increasing industrial capacity brought on by modernization, our focus has recently shifted toward trying to understand the impact production processes have had on the environment. The discipline of economics, with its systematic analysis of production and market activity, must address issues relating to the environment if we are to both ensure proper stewardship of our planet and its resources, and guarantee an economy that provides for the material needs of people. Little work has been done in analyzing issues of the environment from the perspective of the Austrian school of economics, and so this project seeks to begin such an analysis. An Austrian solution to environmental externalities is dependent on a correct analysis of private property, so, for this paper, the institution of private property is significant. We will begin with a brief introduction to the major contributors to the Austrian tradition, and will then describe how this economic tradition can be interpreted to address environmental issues. A brief history of the political and economic understanding of private property will be given, followed by a more detailed treatment of the Austrian school's theory on private property. We will describe how property rights can be infringed, as well as political and legal recourse for such infringement. We will end with a comparison between public and private efforts at conservation. The appendix will contain an Austrian analysis of some current environmental legislation. This research demonstrates that an attempt to derive an Austrian position on the environment is difficult, since there is little primary work to draw upon. However, given the school's theory of private property, we can conclude that the Austrians would view environmental problems as a result of an insufficient system of property rights, and these problems could be controlled and lessened by reforming the current legal understanding of property and private property rights.