by Steve Clark, Founder of Citizens for Clean Energy 1989 (changed to the singular "Citizen" when no one seemed to care during the '90s), and still a renewable energy advocate in Boulder, Colorado

Fat Cat at the helm of the 'Invisible Hand'

I am not an economist but I often hear people talking about the benefits of free markets in solving some of our most problematic energy and environmental issues. Such people as Amory Lovins and V. J. Vaitheeshwaran are advocates of free market solutions to energy issues. They are both very smart people with great ideas about how we can solve our energy and environmental problems.

I recently ran across the following discussion of free market economics in the new book The Cooperative Movement by Richard C.Williams:

The imagined 'invisible hand' that is supposed to be present in fair competition is borrowed from Adam Smith, who used the term to refer to the divine creator. Smith's thought was actually that God would bless a properly and morally structured free market. A refresher course on Adam Smith's thought should reveal that God's invisible hand is at work in society only if several conditions are met:

- There exists a free and open exchange of goods, as in a public auction - People all have free and open access to complete information about goods and services offered in such an auction - An adequate and fair division of labor obtains in the production and distribution of all goods and services - The entire exchange process is governed by moral norms - All contracts are enforceable - The rule of law holds, especially in preventing fraud and misinformation. -- The Cooperative Movement by Richard C. Williams

While none of these conditions exist in the modern capitalist economic system, people still taut the benefits of the "free market", and say it alone is all the economic policy we will need to save us from environmental catastrophe. This is clearly some kind of magical, wishful thinking.

The most devastating environmental problems are attributed to CO2 emitted into the atmosphere by carbon based non-renewable fossil fuel energy production and use. The product which is least applicable to free market concepts is energy, and especially the monopoly utilities and defacto monopoly of the gasoline market.

Smith never envisioned the manipulation of the market place through the media's use of commercial advertisements, most of which violate the last item on the list. This alone prevents anything like a free market because it is an extreme manipulation of people's free will. The exact opposite of "preventing fraud and misinformation" is the commonly practiced use of disinformation in both marketing and the protection of markets by industry, and the politicians serving corporate interests (that is most all of them). Concepts like clean coal and clean diesel are commonly spoken by most all politicians and are an affront to common sense and to the ideas of a rule of law that should protect citizens in the market place as well as the commons, our environment.

The use of tax subsidies to support and give advantage to coal, oil, gas and nuclear energy runs into the billions of dollars, something few other profitable businesses or industries benefit from to the extent of fossil fuel. These subsidies are the reason for the lamented need to "level the playing field" so often heard from the renewable energy industry. They are well documented in Norman Myers' book Perverse Subsidies.

There are clearly no free market conditions as envisioned by Adam Smith and there is a need to admit this so it can begin to be addressed. One place to start would be to remove subsidies to the fossil fuel industry. Unfortunately, last month's Energy Act showed that is no more likely to happen than an end to war.

Further Reading:

• Energy Crisis Won't "Wait for the Market"