What the energy ‘debate’ can teach us about economics

If, like me, you’ve forced yourself to read the accounts of the energy “debate” between the parliamentary parties and between the federal and state governments, you might have noticed something: virtually all of the discussion revolves around whether any particular measure, or the discussion of measures, or a decision or lack of decision on measures, will encourage or discourage investment in the production of energy (by whatever means).

What this tells us, among other things, is that the official “science” of economics is bullshit – or, to put it more politely, is ideology. According to that ideology, the market delivers the greatest benefit to the greatest number. Yet we have all the parties that enthusiastically endorse that ideology arguing about the best way to force the market to produce what they know it would not produce if left alone.

The federal government has gone as far as criticising banks that decline to finance coal mines because they believe that changes in the energy market might result in loans not being repaid. Milton Friedman must be spinning in his grave.

Among these various proposals on how to teach the market to “behave”, some, such as subsidising coal-fired electricity, are stupider and more damaging than others. But they all share a fundamental flaw, which is reliance on the market to efficiently provide a social need.

Disciples of Milton Friedman will tell us that the problem is past (and current) manipulations by various interested parties, which have resulted in the market not really being free. But this says only that markets would work exactly as economic “science” pretends they do if people didn’t have and seek to defend their interests (which, according to market theory, are what they are pursuing when they go to market).

I am not a partisan of “free markets”, not even in the unlikely event that someone were to create one somewhere some day. Small-scale markets might facilitate the distribution of goods desired by some but not all of society, even in the early stages of a socialised economy. But they are not capable of solving major social problems, precisely because they focus on individual behaviour when collective action is needed.

Sufficient electricity and zero carbon emissions are not counterposed. To reduce greenhouse gas emissions very quickly, society could seize a fraction of the vast wealth that the market has delivered to the undeserving few, and devote it to developing non-polluting energy production in the service of all.

To such an idea, the economic ideologists object: to do that, you’d have to abolish capitalism. Yes, precisely.