Uncertainty Markets and Carbon Markets: Variations on Polanyian Themes

Enormous new markets in uncertainty and in carbon have been created recently, ostensibly to enhance the cost-effectiveness of both finance and climate action. In both cases, however, creating the abstract commodity framework necessary to make sense of the notion of 'cost-effectiveness' has entailed losing touch with what was supposedly being costed, helping to engender systemic crisis. The new financial markets expanded credit and multiplied leverage by isolating, quantifying, slicing, dicing and circulating diverse types of uncertainty; the resulting unchecked pursuit of liquidity led to a catastrophic drying up of liquidity. The carbon markets, meanwhile, by identifying global warming solutions with reductions in an abstract pool of tradable pollution rights and linking them with 'offsets' manufactured through quantitative techniques, ended up blocking prospective historical pathways toward less fossil fuel dependence and thus exacerbated the climate problem. Unsurprisingly, both markets have provoked strong, if diverse and confused, movements of societal self-defence. This pattern of action and reaction constitutes a chapter in the political history of commodification as significant in some ways as that describing the movements to commodify land and labour analysed by Karl Polanyi.