in The Road to Serfdom Hayek ends up committing himself to a view of environmental regulations that’s well tot he left of where today’s center-left politicians are:
Nor can certain harmful effects of deforestation, or of some methods of farming, or of the smoke and noise of factories, be confined to the owner of the property in question or to those who are willing to submit to the damage for an agreed compensation. In such instances we must find some substitute for the regulation by the price mechanism. But the fact that we have to resort to the substitution of direct regulation by authority where the conditions for the proper working of competition cannot be created, does not prove that we should suppress competition where it can be made to function.
Of course the correct free market riposte to this proposal is that we can create a price mechanism. So instead of having the guys in the EPA building try to tinker with everyone’s factories, we could establish a legislative ceiling on the quantity of greenhouse gas emissions we’re willing to tolerate and then allocate permits to do it. That way the price mechanism—à la “the use of knowledge in society”—will be able to uncover the most economically efficient way of undertaking the reductions. But I guess Big Government Hayek doesn’t think that will work.
I’ve been saying this for a while now. Cap and trade is the pro-market solution. Those who are opposed to cap and trade are anti-government not pro-market. And in some cases, to do nothing is to embrace Carbon Socialism and put the costs of carbon onto the state rather than the users.