Convivial costs


This is a brief addendum to my earlier essays on Conviviality and Good Governance.

In writing my recent paper about diesel cars, I found myself using the idea of “social cost.” The Business Dictionary defines this as “the expense to an entire society resulting from a news event, an activity or a change in policy.” Wikipedia calls it “the private cost plus externalities.” An externality from something is a cost or benefit that affects a party, who did not choose to incur that cost or benefit.

This set me thinking about how a convivial order, which includes a minimal system of good governance, would deal with such costs. (I’m assuming that an unintended benefit to others, or positive externality, wouldn’t require any action by anyone – except that the doer might choose to stop doing it.) The most obvious example of such a cost is the cost to others of pollution, such as air pollution, water pollution and noise pollution. But it can also be applied to other activities, such as the cost to innocent individuals of bad, politicized regulations and taxes. In this paper, however, for simplicity I’ll use the word “polluter” for the party causing such a cost.

In my earlier thinking, I had assumed that things like a small amount of unintentional pollution could be traded off against small inconveniences that we all cause to each other. But the example of pollution from diesel cars convinced me that it’s a little more complicated than that. Good governance will have to be able to deal with negative externalities, after all.

In a convivial order, there’s no such thing as social responsibility. This is because the convivial order is logically prior to any particular society. And thus, in a convivial order there can be no such thing as social cost. But each individual in the convivial order does have a responsibility to all other individuals; not to harm them unjustly. Thus, where a negative externality exists in the convivial order, I’ll call its associated cost the convivial cost.

Convivial costs will not always lead to a requirement to compensate. Often, the amounts will be simply too small to be worth pursuing. But when compensation to the victims is justified, it may or may not be accompanied by a “cease and desist” requirement. If there is no component of intent or bad faith, then such a requirement, I think, should not be levied if the cost to the polluter of doing so would be greater than the costs at issue. It doesn’t make any sense to require scrappage of a car worth £10,000 in order to save £27 worth of pollution a year! Better to pay £27 a year to the people affected by the pollution. So, if the polluter cannot cost effectively abate the externality, the compensation may need to be recurrent.

Convivial costs are of several types. The simplest case is where there is a single polluter and a single victim. In this case, all that is needed is to estimate the cost accurately, and to determine whether, and if so how much, compensation must be made. A harder case is with a single polluter and multiple victims. In this case, it will be necessary to apportion the compensation between the individuals affected, each according to their situation. Harder still is when there are both multiple polluters and multiple victims. Not only must the costs of the pollution be assessed for every single polluter, according to his situation. But also the compensation must be apportioned between all the victims.

In practice, with a situation such as pollution from diesel cars, the polluters would be divided into groups according to how much pollution their cars produce. And the victims would be divided into groups, according to the areas in which they live and how close they are to major roads. The role of good governance in the process then becomes, as I said in the diesel cars paper, a router; making sure the right amounts are collected from the right people, and the right amounts are distributed to the right people.

In good governance, what would trigger a court to investigate a claimed externality? I expect this would usually be through some kind of “class action” suit brought by representatives of the victims. And what would the court do? One, it would identify the polluters, and group them according to their level of pollution. Two, it would identify the victims, and group them according to the level of loss – for example, an increased chance of death or illness – they suffer. Three, it would decide:

  1. Whether the matter is sufficiently grave to lead to a need for compensation.
  2. If so, for how far into the past compensation should be paid.
  3. Whether or not “cease and desist” is appropriate.
  4. Whether the compensation should be one-off or recurrent.

And the court would apportion the costs accordingly.

All this will require considerable scientific and technical expertise, which the court will have to commission. The cost of this expertise will need to be included in the costs to be paid by the losing side. But, in complete contrast to today, the process will be completely objective and apolitical. And the outputs of the technical labours, including the justifications for the numbers, will be made available to both sides in the dispute, and to the public as a whole.

Under good governance, there will be no zealots trying to hype issues such as these, or vested interests trying to block just compensation. And there will be no greedy politicians with their hands in the till. Wouldn’t that be a far, far better system than what we suffer today?

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8 comments

  • Neil,

    Very interesting. Some questions:

    (i). Isn’t there a risk here that polluters could factor in the costs and decide to pollute anyway, so that the compensation in effect just becomes a tax? I assume this happens already under the existing system. There are even ‘ecological taxes’ (as economists call them) in some jurisdictions.

    (ii). How will the “cease and desist” be enforced if there is no state? Is non-payment treated as a disconvivial act, for instance? If so, what would be the juridical basis for this where the polluter has not entered into any obvious sort of contract with the ‘victim’? Will it be a tortious liability or assumed a priori as a ‘common law’ principle that everybody who enters property is impliedly contracting not to pollute, or something similar?

    (iii). Does the assessment of convivial costs depend on the identification of individual victims who have locus to claim compensation? If so, how do you address the possibility of harms to non-human animals and the physical environment (especially in wilderness areas that might be terra nullius)? Or are we theoretically assuming ubiquitous private property ownership as a sine qua non of a convivial order (i.e. any harms are compensated to the owner, not the victims per se)?

    (iv). Could the proposed system for assessing convivial costs also provide an alternative basis for punishing disconviviality? I’m thinking especially of financial crimes which could be dealt with as torts already under the existing system. Could we therefore have a regime for the assessment of ‘disconvivial costs’, either alongside or as an alternative to punishments for disconviviality?

    • (1) Well yes, there’s a risk of a polluter continuing to pollute and to pay. But if the situation (for example technology) changes, such that the polluter now could abate his pollution cost-effectively, the claimant can re-apply and the polluter will be told to “cease and desist.”

      (2a) In the full convivial order, the only criminal punishment available is ostracism. In the half-way house I looked at in the Good Governance paper, there is an organization, a minimal governance, which is granted the authority to do certain things, including imposing criminal punishment if that is justified. But that organization isn’t a state. It doesn’t have sovereignty, and its functionaries don’t have any immunity.

      (2b) Yes, I think that in the full convivial order non-payment of compensation for pollution would be seen as disconvivial – particularly by the victims of the pollution! In the half-way house, it could be seen as a criminal offence. Let’s remember that this payment was ordered by a court/arbitrator in the first place. So non-payment would be seen as something like contempt of court, I think.

      (3) Yes, we do need to identify the victims specifically. And harm to animals or land is, in effect, harm to the owner, if there is one. So yes, I’m assuming that all lands and animals (that are owned) are owned by an individual or society. The case of harm done to land or an animal that isn’t owned by anyone is an interesting one; very good question, Tom. My immediate reaction is that it wouldn’t be seen formally as a crime or a disconvivial act; but it would be seen as stupid and wasteful, so the polluter would find himself under social pressure anyway.

      (4) Yes, that looks like a good idea. I’ll have to mull it over.

      • Thanks Neil.

        On point (ii), the issue remains of how you would enforce convivial costs where the polluter has not contracted with the victims or the landowner. Would the liability be in tort? Or would there be some general principle that visitors impliedly contract when entering land that they will not pollute or harm anything or anyone on it?

        To an extent this problem could be resolved by establishing non-statist or quasi-state legal structures that formalise duties and obligations between landowners – a good vehicle for this would be an English private limited company, in which all the local landowners are members and therefore contract with each other through the corporate Articles of Association. Other methods of establishing inter-contractual relations could be trust deeds, leases and commonhold arrangements.

        How do you also address the need for judicial innovation? Are you relying on common law and market acceptance of judicial service providers? You might then be creating a kind of kritarchy, as judges and arbitrators culturally tend to form a clique in society with a shared understanding of the law and shared interests, etc. Consequently, there may be demands for democratic law-making to govern such situations and innovate the law in line with what the community wants as opposed to the parochial interests of the judiciary, which potentially then leads us down the slippery slope of politicisation and statism.

        Regarding (iii), for land that is terra nillius, or just unowned or unclaimed, two principles could operate:

        (1). Where a specific victim is identifiable, it is assumed in law that their chosen judicial service provider has jurisdiction to accept and adjudicate their claim against the alleged polluter.

        (2). Where the harm is to the land itself, ferae naturae or flora, this could be considered a disconvivial act and therefore be treated as a crime, with the addition that the offender must pay for the costs of clean-up and a fine.

        (3). Irrespective of (1) above, individuals on their own private initiative could form commercial enterprises or even community interest companies or trusts to hold unclaimed land on a not-for-profit basis for the general public benefit. I would assume the latter might happen where the relevant land cannot be viably exploited commercially at that time and is otherwise unliveable and unsuitable. Private companies might move in where land has been polluted and there is an offer from somebody to pay them for the purposes of clean-up. The land might have some ecological or scientific value or be of historical or archaeological interest – typically this might include arctic areas, mountains, rainforests, and so on. The CIC or trust could perhaps appoint private contractors to superintend such land and its costs might be met out of donations from the public and any funds raised from tourist activity. Thus such land would cease to be unclaimed and harms or pollution inflicted would be assessed for convivial costs in the same way as any other case.

        • On (2), I don’t think it’s a matter of an individual “entering land.” Pollution can enter land without the polluter being, or ever having been, anywhere near. Water pollution from upriver, for example. So yes, it’s more like a tort. And I see the payment as a kind of “liquidated damages” (or, in the case of air pollution, “aerated damages!”) for the consequences of that tort.

          And I’m not sure that kritarchy is necessarily such a bad thing. At least, in comparison with the statist systems of government today. In “Good Governance” I put forward the idea of a quality control system, intended to forestall takeover of the justice system by a clique. But further; “democratic law-making” has no place in conviviality. The laws of convivial behaviour come from human nature, not from a legislative.

          On (3), what you are describing is the appropriation of previously unclaimed land by a society formed for the purpose. Nothing wrong with that. But this approach can also be used with land, which the owner can’t make use of for whatever reason. Indeed, that’s exactly what environmentalists wanting to preserve a particular species ought to be doing; buying some of its habitat, and establishing a colony.

  • This all seems to assume that diesel users are only imposing costs. If your ambulance that’s speeding you to hospital is using diesel is it a cost or benefit?

    If your truck bringing supermarket provisions is running using diesel is that a cost or a benefit.

    This is all, in fact, technocratic nonsense. Stick to principles, identify who is harmed and who is causing the harm and address accordingly. Generic issues caused by the use of technology is part and parcel of an industrialized civilization.

    See also: http://www.cmu.edu/homepage/environment/2012/summer/pine-trees.shtml

    • I think the examples you give would be convivial costs. Costs are considered purely in an economic sense here, so the operators of ambulances would have to factor in the payment of convivial costs when pricing their services. Presumably this would incentivise the development of more efficient technologies that pollute less.

      Convivial costs are not meant to be generic. A specific victim is identified, however I do mention in my question (iii) above the issue of what would happen when there are generic externalities.

    • Yes, Tom is right. In fact, that’s exactly what I’m aiming to do – identify who is harmed, and how much, and who is causing the harm and how much.

  • Another thought on this: if there is no a priori concept of social responsibility, there is a danger that some communities would have discretion to define ‘convivial costs’ very narrowly, based on externalities that are limited to contractual responsibilities to victims. This may be of benefit to a community where it is believed that the negative externalities will be suffered by another community or will be difficult to detect due to the harm being of a generic nature: for example, drilling activities could harm a local biosphere but not cause any immediately obvious losses to human actors.

    Some communities could consciously decide to have no effective regulatory framework for addressing the ecological consequences of their activities.

    Maybe a way of incorporating ‘ecological externalities’ (i.e. not just pollution but wider harms, such as long-term damage to the local or global biosphere) could be to have a central arbitration service that can pass down arbitral awards against individuals, corporations and entire communities based on findings of tortious liability. The assumption would be that there is a universal duty of care that is enforceable in appropriate circumstances.

    I think you’ve already dealt in a previous article with the problem of how arbitral awards would be enforced under conviviality, but a further problem arises of how a society (if I may loosely call it that) of convivialists then deal with a bordering society that has fallen out of conviviality and is the subject of a cross-community arbitral award that it refuses to pay. Assuming we still have separate ‘societies’, and thus discrete convivial orders, then we must assume that one convivial order will not have executive authority over another, though the disconvivial society will have contracted with the arbitration service that rendered the award, so legal answer is simple enough, but how would be award be practically enforced without violence or the threat of violence?

    One possible answer would be that the arbitral award falls on members of a community individually, and each member of the disconvivial community who complies with the award would have implicit standing to then proceed against disconvivialists who do not pay. Thus, cross-community arbitral awards would be enforceable against individuals in the same manner as intra-community awards, and non-payment would be a disconvivial act, enforceable in the usual manner. The only lacuna in this is that you could have a situation where an entire community refuses to pay. What then?

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