Abstract
This chapter discusses key insights from Adam Smith’s economic book The Wealth of Nations in relation to his philosophy book The Theory of Moral Sentiments. When considered together, it becomes clear that for Smith, markets are embedded in society, and together with the state and the community economy make up the economy. Moreover, he attached specific moral values to each of the three economic domains: freedom to the market, justice to the state and caring (‘benevolence’) to the community economy. He argued that every well-functioning economy forms a balance between these three domains and their values. This insight helps to explain the failure of the EU Trading System (ETS) in carbon emissions. Preventing climate change is not a matter of free choice but of a combination of justice and caring for the earth, nature and humanity.
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Notes
- 1.
For the most recent data, see the website of NASA on climate change: https://climate.nasa.gov/, Accessed on May 18, 2020.
- 2.
https://ec.europa.eu/clima/policies/strategies/2030_en, Accessed on May 18, 2020.
- 3.
Information can be found on the website of the European Energy Agency, for example in their briefings: https://www.eea.europa.eu/publications/the-eu-emissions-trading-system, Accessed on May 19, 2020.
- 4.
This is called the Clean Development Mechanism and is a policy instrument of the UN to help poorer countries to reduce their carbon emissions: https://cdm.unfccc.int/, Accessed on May 19, 2020.
- 5.
J.P.M. Sijm, K. Neuhoff & Y. Chen. “CO2 Cost Pass Through and Windfall Profits in the Power Sector.” Climate Policy 6, 1 (2006): 49–72.
- 6.
See www.iea.org. For an overview of energy use, see the report: IEA. “Key World Energy Statistics 2019.” https://webstore.iea.org/key-world-energy-statistics-2019, Accessed on May 20, 2020.
- 7.
ODI. “Fossil Fuel Subsidies in Draft EU National Energy and Climate Plans.” ODI Working Paper 562 (London: ODI, 2019), https://www.odi.org/sites/odi.org.uk/files/resource-documents/12895.pdf, Accessed on May 20, 2020.
- 8.
The data can be found on the independent monitoring website Carbon Brief: https://www.carbonbrief.org/analysis-uk-wind-generated-more-electricity-coal-2016 Accessed on May 22, 2020.
- 9.
EUROSTAT: renewable energy statistics, https://ec.europa.eu/eurostat/statistics-explained/index.php?title=File:Share_of_energy_from_renewable_sources_2018_infograph.jpg, Accessed on May 20, 2020.
- 10.
https://www.nrc.nl/nieuws/2019/01/25/die-co2-heffing-voor-de-industrie-moet-er-komen-a3651737, Accessed on May 20, 2020.
- 11.
CBS. “Emissie-intensiteit broeikasgassen Nederlandse industrie” (Den Haag/Heerlen: CBS, 2018), https://www.cbs.nl/nl-nl/maatwerk/2018/51/emissie-intensiteit-broeikasgassen-industrie, Accessed on May 20, 2020.
- 12.
Corporate Europe Observatory. “Captured States: When EU Governments are a Channel for Corporate Interests” (Brussels: CEO, 2019). https://corporateeurope.org/en/2019/02/captured-states, Accessed on May 16, 2020.
- 13.
Adam Smith. An Inquiry into the Nature and Causes of the Wealth of Nations, vol. I and II (Indianapolis: Liberty Fund, 1981 [1776]). From here onwards, I will refer to this book as TWN.
- 14.
TWN: Book I, Chapter ii, p. 26.
- 15.
Adam Smith, Lectures on Jurisprudence (Oxford: Oxford University Press, 1987 [1763]).
- 16.
Adam Smith, The Theory of Moral Sentiments (Indianapolis: Liberty Fund, 1981 [1759]).
- 17.
Mariana Mazzucato, The Value of Everything—Making and Taking in the Global Economy (London: Allan Lane, 2018).
- 18.
Mazzucato, The Value of Everything, p. 6.
- 19.
https://www.unenvironment.org/ozonaction/who-we-are/about-montreal-protocol, Accessed on May 22, 2020.
- 20.
See the previous note.
- 21.
This was the key argument in my PhD thesis, which was published as Irene van Staveren, The Values of Economics—An Aristotelian Perspective (London: Routledge, 2001).
- 22.
One type of greenhouse gas that is not having an effect on the ozone layer has been added to the Montreal Protocol recently in the Kigali Amendment (hydrofluorocarbons—HFCs). This illustrates that the protocol is flexible enough to add more substances. Time to add CO2 to it!
- 23.
TWN, Book IV, Introduction, p. 428.
- 24.
TWN, Book V, Chapter II, p. 870.
- 25.
Stefano Carratini, Simon Levin, and Alessandro Tavoni. “Cooperation in the Climate Commons.” Review of Environmental Economics and Policy 13, 2 (2019): 227–247.
- 26.
Hier Opgewekt—Lokale Energiemonitor 2019, www.hieropgewekt.nl, Accessed 29 May 2020.
- 27.
https://www.peoplepowersolar.org/, Accessed 29 May 2020.
- 28.
https://base.socioeco.org/docs/a118_doc1.pdf, Accessed 29 May 2020.
Bibliography
Carratini, Stefano, Simon Levin, and Alessandro Tavoni. “Cooperation in the Climate Commons.” Review of Environmental Economics and Policy 13, 2 (2019): 227–247.
CBS. “Emissie-Intensiteit Broeikasgassen Nederlandse industrie.” Den Haag/Heerlen: CBS, 2018. https://www.cbs.nl/nl-nl/maatwerk/2018/51/emissie-intensiteit-broeikasgassen-industrie, Accessed on May 20, 2020.
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IEA. “Key World Energy Statistics 2019.” https://webstore.iea.org/key-world-energy-statistics-2019, Accessed on May 20, 2020.
Mazzucato, Mariana. The Value of Everything—Making and Taking in the Global Economy. London: Allan Lane, 2018.
ODI. “Fossil Fuel Subsidies in Draft EU National Energy and Climate Plans.” ODI Working Paper 562. London: ODI, 2019. https://www.odi.org/sites/odi.org.uk/files/resource-documents/12895.pdf, Accessed on May 20, 2020.
Sijm, J.P.M., K. Neuhoff, and Y. Chen. “CO2 Cost Pass Through and Windfall Profits in the Power Sector.” Climate Policy 6, 1 (2006): 49–72.
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———. Lectures on Jurisprudence. Oxford: Oxford University Press, 1987 [1763].
———. An Inquiry into the Nature and Causes of the Wealth of Nations, vol. I and II. Indianapolis: Liberty Fund, 1981b [1776].
Staveren, Irene van. The Values of Economics—An Aristotelian Perspective. London: Routledge, 2001.
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van Staveren, I. (2021). Chapter 9: Adam Smith on the Abuse of Markets. In: Alternative Ideas from 10 (Almost) Forgotten Economists . Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-57609-7_10
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