Beware the Siren Song: Keep the Water Economy Away from the Three Roads to Serfdom
Updated: Aug 28
Looking through the DIT lens, using the analytical system of Figures 5 and 6, what Bauer has revealed is that what Chile implemented was in effect done in the opposite direction from what should have been. The Other Forum(s) of Figure 6 should have been created first, followed by introducing the Water Forum of Figure 5 to help with addressing the use and abuse of water. Like Bauer frames it, and, the frame is consistent with the DIT lens, the argument needs to be “… against ‘free’ markets and narrow economics, not against all use of market based instruments and analysis in water management (p. 135).” For more support for said claim, see the Reviews also in my Blog Free Market Environmentalism (FME) Fails to Tell the Whole Story and Fallacies of Free Market Environmentalism .
DIT also supports the Bauer contention that the older institutional economics needs to be brought into play along with neoclassical economics, and work to reflect the law in social context. It is exactly what DIT works to do: DIT is an integration of neoclassical&neoinstitutional (old line institutional back to Veblen and Commons, not North and Williamson) economics (see Lynne 2020).
And, a final point, helped by the following image:
The image reflects the DIT lens applied in reviews of Hayek (1944; The Two Roads to Serfdom) which points to the dangers of state Socialism with all public property on and below path 0M, the road 1 to serfdom; the works of the Neoliberals after WWII, but especially since the Libertarian Economist Friedman (the brainchild of Free Market Environmentalism, FME) declared the need to be free to choose, and that business had no social responsibility other than to maximize stock price P, reviewed in The Two Roads from Mont Pelerin which unfortunately leads to moving toward extreme greed Scroogism with all private property on and above path 0G, the road 2 to serfdom; and, what happens when either extreme state Socialism (toward pure communism with all public property) on or below path 0M, or extreme greed Scroogism (toward pure capitalism with all private property) on or above path 0G? Well, said systems fail, so a demagogue generally with authoritarian tendencies always arrives on the scene promising to fix the failure, like Pinochet in 1973 Chile for the failure in state Socialism below road 0M, and Trump in 2024 America for the failure in greed Scroogism above road 0G, leading down (SHORT VERSION) THE THIRD ROAD TO SERFDOM: AUTHORITARIAN NATIONALISM . The system crashes with authoritairan Serfdom, on the road 3 to serfdom.
The overall goal for the water economy (and the larger economy) is to avoid all 3 roads to serfdom. Bauer intuitively recognizes that bigger challenge and makes clear the Chilean pendulum swung too farm, from road to serfdom 1 (state Socialism) toward road to serfdom 2 (greed Scroogism), and, ironically shifted to the greed Scroogism road to serfdom 2 by first crashing on the authoritarian serfdom road 3, and then imposing FME --- putting the Chilean water economy on greed Serfdom 2 --- impose on Chileans whether it was wanted or not.
It is now time for Chile, and for every country on the Spaceship Earth, to nudge the water economy onto the DIT road to prosperity characterized by economic&social efficiency. DIT points to the balanced road 0Z in the image as the road to prosperity. It is the only way to avoid serfdom. Said prosperity is made possible on the “bliss” road 0Z through striking a reasoned and good balance in the joint profane&sacred.
Try DIT. You might like (D)IT.
References
Anderson, Terry L and Leal, Donald R. Free Market Environmentalism for the Next Generation. New York: Palgrave Macmillan, 1991/2015.
Bauer, Carl J. Siren Song: Chilean Water Law as a Model for International Reform. Washington, D.C.: Resources for the Future, 2004.
Cox, Michael, Arnold, Gwen and Tomás, Sergio Villamayor "A Review of Design Principles for Community-Based Natural Resource Management." Ecology and Society 15, 4 (2010): 38
Lynne, Gary D. Metaeconomics: Tempering Excessive Greed, Palgrave Advances in Behavioral Economics. New York: Palgrave Macmillan, 2020.
Lynne, Gary D. “Cargo-Cult Economics to Metaeconomics: Toward a Humanomics with a Theory.” Review of Behavioral Economics 12, 3 (May 2025): 257-289. See Cargo-Cult Economics to Metaeconomics: Toward a Humanomics with a Theory | Review of Behavioral Economics | Emerald Publishing https://www.emerald.com/rbe/article-media/1328572/pdfviewer/11046275
Ostrom, Eleanor. Crafting Institutions for Self-Governing Irrigation Systems. San Francisco: ICS Press, 1991.
Ostrom, Eleanor. "Design Principles in Long-Enduring Irrigation Institutions." Water Resources Research 29, 7 (July 1993): 1907–12.
Ostrom, Eleanor. "Beyond Markets and States: Polycentric Governance of Complex Economic Systems." Nobel Prize in Economics Lecture, 2009.
Wilson, David Sloan. Does Altruism Exist? Culture, Genes, and the Welfare of Others (Foundational Questions in Science). New York: Yale University Press, Kindle Edition, 2015.
Comments