“Strange Markets” and the Climate Crisis

The “strange markets” of the title are those dealing in high-yield financial products such as credit default swaps, collateralized debt obligations and currency derivatives that were created in the 1980s and 1990s – and that ultimately triggered the financial crisis of 2008. But “ecosystem service markets”, including carbon pollution rights markets, have been developed over the past few decades as well and can also be considered "strange".

It might at first glance seem just a coincidence that two ambitious and novel markets were created at roughly the same time by some of the same people in the same country (USA). What could a project spearheaded by Wall Street investment banks have to do with the Kyoto Protocol? Aren’t pollution markets about saving the world and uncertainty markets about making money?

Despite appearances, however, the new uncertainty market of financial products and the new carbon pollution market are not only cut from the same cloth, but also interact closely with each other and pose many similar dangers.

The carbon market that now plays such a dominant role in international climate policy is often presented as an environmentalist strategy that should be embraced by all who support pollution control, forest conservation and indigenous rights. But consideration of the origins, development and politics of this and other “strange markets” of recent years suggests that it should be treated as part of the history of commodification, capital accumulation and capitalist crisis rather than of environmentalism.

The carbon market does not signify a “greening of capitalism” or an accounting reform pushed “from outside” on a reluctant business class, but rather a characteristic (if spectacularly ill-conceived) neoliberal initiative to forge new profit opportunities out of contemporary crises, only some of which involve the climate.

(This book chapter was written for Crisis financiera o crisis civilizatoria (Financial Crisis or Civilisation Crisis), published in Quito, Ecuador in October 2010 by Instituto de Estudios Ecologistas del Tercer Mundo, Acción Ecológica and Oilwatch.)