Incentivization, Externality Pricing and Coasian Economics
Debate over the method to tackle environmental issues has been under debate since the eighteenth century, when Adam Smith came out with the Bible of Capitalism "The Wealth of Nations" whereby he argued an absolute free hand to markets with the firm belief that the markets will find the solution to every problem. This can be argued to be a novel position with respect to environmental issues, as till then laws were passed in England for curbing pollution (or at least the visual aspects of it). Though Marx and Engels did believe in the absolute control of the State, a middle path alternative to incentives and State control really turned up in the nineteen twenties, with A.L. Pigou coming out with arguably the Socialis't Holy Book, "The Economics of Welfare". He argued consistently for both aspects, saying that while it is okay for enterprises to make profits, to tackle problems arising due to industrial activities, profits must be taxed and the monies turned around...