Externalities are subjective in that they presume the definition of a market failure in the first place. Nobody has the right to project the appropriate quantity or price of a market upon anyone else unless they're trying to discriminate against weirdos behind an appeal to pragmatism. The definition of a problematic side effect to someone isn't automatically a problematic side effect to everyone. Therefore, people who live creative lifestyles become condemned when social democracy labels externalities against how they see things.
What's more important, however, is that many people who acknowledge externalities only acknowledge material forms of pollution. For example, if you ask social democrats about information pollution regarding freedom of speech, they'll look at you like you have two heads. Social democracy does not have deep considerations towards discourse ethics or attention economy. Instead, it expects people in hectic environments to embrace the chaotic stimulus around them rather than being able to depend on the government for preserving social fabric.
The free market can deal with externalities, but only if it recognizes that you can't have property without properness, and you can't have customers without customs. Free markets need to recognize that they have a social responsibility to sustainable lifestyles, and this means producing and consuming products such that people remain psychologically intact with their communities. That way, everyone is on the same page in practicing a heritage which defines bad side-effects together.
