This chapter examines economic rationalism, a discourse of environmental problem solving which builds on its advances in all areas of political life to generate alternatives to and remedies for the pathologies it identifies in both administration and liberal democratic governance. Economic rationalism may be defined by its commitment to the intelligent deployment of market mechanisms to achieve public ends. It differs from administrative rationalism in its hostility to environmental management by government administrators — except in establishing the basic parameters of designed markets. The chapter first considers the issue of privatization and private property rights before discussing less radical strands that stress market incentives but not necessarily private property. It also describes the discourse analysis of economic rationalism and concludes with an assessment of the limitations of economic rationalism, including its treatment of government.
Economic rationalism involves the intelligent deployment of market instruments to achieve public ends such as environmental protection and resource conservation. The instruments in question can involve the establishment of private property rights in land, air, and water; “cap and trade” markets in pollution rights (emissions trading); tradeable quotes in resources such as fish; green taxes, such as a carbon tax; and the purchase of offsets to compensate for environmentally damaging behavior. These instruments have been adopted in many countries, though with some resistance from those who believe there is more to life than economic reasoning.