The Price Is Wrong by Brett Christophers review – why capitalism can’t save the planet

Feb. 15, 2024

A clear-eyed look at the economics of energy, and why state power, not free enterprise, is the solution to the climate crisis

Vladimir Lenin once defined communism as “Soviet power plus electrification of the whole country”. His words may strike a chord with today’s green rebels who see clean energy as a force for transformative change. Yet these revolutionaries have yet to see their revolution. Last year was the hottest in recorded history and, most likely, in the last 100,000 years. While renewable energy is booming, it’s not growing fast enough to prevent climate breakdown.

The reasons for this, and what can be done about it, are explored by Brett Christophers, a professor of economic geography at Uppsala University in Sweden. Christophers has made his name through a series of books that attempt to expose capitalism’s grubby secrets, such as last year’s Our Lives in Their Portfolios about the asset management industry. His aim is to make readers understand that they have been lulled into a false sense of security by an economic doctrine that promises its adherents salvation. In the same way, the Price Is Wrong rejects the orthodox reasoning that a mix of technological innovation and market wizardry will be enough to save the Earth.

The question at stake is whether the world’s climate mitigation targets can be met by efforts to “green” the largest source of carbon dioxide emissions: electricity. Christophers is pessimistic because the transition from dirty to green fuels is currently lubricated by capitalism itself. His scepticism here is not new. Many on the left say that it is in capitalism’s nature to be destructive of the environment, the climate included.

The message is that active involvement in shaping the future is crucial.

However, the author has a more sophisticated argument. While it is true that low-cost and abundant solar and wind energy is increasingly within our grasp, the mistake is to presume that simply because renewable power has become relatively cheap, it will get built. Capitalists invest because profits are high and stable, not when prices are low and uncertain. In a world awash with the proceeds from fossil fuel extraction, Christophers thinks renewables and their volatile, wafer-thin margins don’t stand much of a chance.

In a previous life, Christophers was a management consultant and he bombards the reader with facts and figures. In 300 pages, he details how privatisation and competition have failed to produce the desired economic and environmental results. In 1985, fossil fuel-fired power plants generated 64% of electricity globally; in 2022, it was 61%. And for all the talk of markets, it is state subsidies that prop up green industries. The US’s NextEra Energy, the world’s largest producer of wind and solar power, admits it “depends heavily” on federal support. Because the world has not cracked the problem of effective storage, renewable energy is routinely wasted. In 2020, nearly a fifth of wind power generated by Scottish windfarms was discarded.

Then there is evidence that the electricity market has been subject to manipulation. Consider how, between 2020 and 2022, hard-pressed UK consumers faced higher bills after traders announced they would shut off generation ahead of the busiest periods, before offering higher-priced energy to meet the shortfalls they helped create. Bloomberg reported there was nothing illegal in this £470m shakedown.

It was political economist Karl Polanyi who introduced the distinction between real and “fictitious” commodities. Electricity, says Christophers, is an example of the latter, a resource fundamentally unsuited to being priced up and traded. Such an insight might have helped the high priests of green finance realise that the elaborate market structures being erected to produce a transition from fossil fuels to renewable energy sit on unsound foundations.

Only the state, concludes Christophers, has “both the financial wherewithal and the logistical and administrative capacity” to deliver the trillions of dollars in annual investment in solar and wind that could keep the planet from burning up. The message is that active involvement in shaping the future is crucial, and such a task is too important to be left to markets. Or, as Lenin put it, “sometimes history needs a push”.

[Top photo: A coal-fired power plant operates near wind turbines in Niederaussem, Germany. Photograph: Michael Probst/AP]