In the Beginning … All Costs Were External

By Ed Beardsworth

Are we in just another cycle, where we charge ahead with renewables and care for the environment, but then forget all about it when oil prices drop? The saga is all too familiar, and cynics can’t be blamed for seeing deja-vu all over again.

This time, however, it feels different. Reality seems to have penetrated so many layers and segments of society, government and business. What’s more, there is a very long standing historical trend that lends hope to the notion that we’re really doing it this time – the process of internalizing externalities.

Garret Hardin, famous for creating the concept of “tragedy of the commons”, published a (now out-of-print) book “Exploring New Ethics for Survival–The Voyage of the Spaceship Beagle” (1972). Reaching far into prehistory, he outlines the evolution of the process of “the internalization of so-called external costs” from early pre-history, the time of the cave-man.

The first “cost” to be “internalized” was probably the fruit on a tree. Someone said “mine”. Then, the red dirt you need to make iron. And on from there.

Cost of -When Internalized (approx)

Raw materials B.C.
Labor a.d. 1000-1862 (ending slavery)
Raising & Educating labor 1800-1900
Industrial Accidents 1875-1925
Industrial Diseases 1900 onward
Pollution cleanup yet to be internalized
Pollution prevention yet to be internalized

Each episode required a fundamental cultural “value shift”, as the established order fought the change bitterly, claiming bankruptcy and ruination would ensue. Each time, the fight was long, often lasting until the old order simply died out or was forced aside, unable to see the light or admit the errors of their ways.

Hardin’s development of these ideas is worth reading. Drastically summarizing, he argues that “right to throw way” into the air, water or onto the land, is perhaps the last major externality yet to be fully internalized, noting that on the “spaceship earth”, there is no place that is truly “away”. The struggle parallels exactly the process of change that took place in every previous episode of internalization.

Perhaps he would be somewhat optimistic now, all these years later farther along in the struggle, that progress is being made.

I wrote these words in 1996. OK, probably a bit overly optimistic then, but an understatement if anything of what we’re seeing today:

Perspectives on Externalities

There is a world wide movement underway to begin thinking about externalities in new and many would say more enlightened ways, as an aspect of industrial, business and social activity that is no longer just the province of environmental idealists and idealogues. Major corporations are starting to realize profound economic implications (e.g. higher profits!) of taking a more comprehensive (holistic) view of production systems, and are adopting strategies that take into account, for example, the “cradle to grave” aspects of their products, from what resources are used to make them, to how they are used, to their ultimate disposal.

Ed Beardsworth is a long time fixture in the cleantech sector, is the Research Director of and the Director of the Hub Lab. He was formerly with EPRI and Brookhaven, and has a PhD in Physics from Rutgers.

3 replies
  1. Andrew Neilson
    Andrew Neilson says:

    Great post, should be read by all those promoting carbon capture and 'storage' or nuclear energy. Both technologies rely on 'disposing of' harmful by-products 'somewhere else' with the risks and costs of later escape or harm borne by the State (because private firms, financiers and insurers cannot assess or carry the risk). Surely we have learned the lesson that there is no 'somewhere else'…out of sight should *not* mean out of mind….whether it's above us in the atmosphere or buried below us.

Leave a Reply

Want to join the discussion?
Feel free to contribute!