Combining equity and the precautionary principle: examples drawn from hog production in Poland

Journal of Economic Issues, June, 2005 by F. Gregory Hayden

In real-world operations, [N.sub.B], [N.sub.E], and [N.sub.T] are decided together and function together. They cannot function separately because all production includes belief commitments, ecological substance, pollution, and technological processes. The whole array of belief, ecological, and technological norms work together again and again, around the clock, both in the shadows and with full transparency, and in various kinds of institutional situations in order to determine the structure and processes of institutions. (4) Likewise, it is crucial for welfare and equity determination to include the evaluation of all three together.

Each major norm has a number of subnorms ([n.sub.B], [n.sub.T], and [n.sub.E]) that apply to particular institutional situations. Major norms obligate subcriteria, as--

[N.sub.B] [contains] O ([n.sub.B1] & [n.sub.B2] & [n.sub.B3])/I

[N.sub.T] [contains] O ([n.sub.T1] & [n.sub.T2])/I

[N.sub.E] [contains] O ([n.sub.E1] & [n.sub.E2])/I

The first row informs that [N.sub.B] directs ([contains]) an obligation (O) of subcriteria [n.sub.B1] & [n.sub.B2] & [n.sub.B3] to be adopted by institution I, where the conjunction (&) means that the subcriteria are to be applied together. The second and third rows similarly inform [N.sub.T] and [N.sub.E] for the same institution. This is demonstrated in digraph format in figure 1. Therefore, all subcriteria are applied together as ([n.sub.B1] & [n.sub.B2] & [n.sub.B3]) & ([n.sub.T1] & [n.sub.T2]) & ([n.sub.E1] & [n.sub.E2]). Scott 2001 also does not recognize this conjunction.

[FIGURE 1 OMITTED]

Although all three norms are represented in production situations, this does not mean the norms are correct. Because beliefs must be applied does not mean they are the belief norms of society in general. For example, the rules of the European Bank for Reconstruction and Development (EBRD) stipulate that producers like Smithfield should not receive funding, yet the norm actually instituted was to finance Smithfield, even though it adopted technological processes that damage ecological systems. (5) Network analysis models need to specify what belief, technological, and ecological norms are actually guiding the industrial behavior and operations to allow judgments to be made about whether equity criteria are appropriately being established and met. Because [N.sub.B], [N.sub.T], and [N.sub.E] function together, when any one or all of them are not correct, the consequence is inefficiency. If this is the case for social-belief criteria about equity, there is equity inefficiency. Efficiency requires that a social consensus on normative criteria be utilized to judge the consequences of industrial procedures and operations. (6) For example, at one of Smithfield's Polish hog facilities, in the spring of 2003 "when the ice melted, the manure--with a payload of nitrogen, phosphorus, artificial hormones, antibiotics and other waste products-seeped toward the nearby villages and lakes. The water turned brown, children got eye infections and skin rashes," and the smell was overwhelming (Washington Post Weekly, February 9-15, 2004). The eye and skin disease delivered to children is obviously unfair and unjust; thus the production process is inefficient. Furthermore, Smithfield generated an oversupply of hogs which drove down the price of hogs and financially destroyed thousands of local hog producers. This socially deviant behavior is an example of inequitable treatment of local farmers.