The culture of markets: The political economy of climate governance
A talk by Janelle Knox-Hayes, Georgia Institute of Technology
Anthropogenic climate change poses a grave threat to societies around the world. It is a collective action problem. The greenhouse gases that generate climate change are produced by virtually every sector of every economy. The predominant response of governments around the world is to mitigate climate change through the capping and trading of emissions. The idea of managing pollution through the pricing of externalities is a form of market governance emerged first in the United States with its acid rain trading program and gained wide-spread acceptance with the establishment of the European Union Emissions Trading System (EU ETS). Increasingly countries in Asia are mimicking the design of the EU ETS and attempting to establish their own emissions trading systems. This study explores the establishment of emissions trading as a form of market-based governance in the United States, Europe, Australia, China, South Korea and Japan. The markets are treated as institutions and analyzed first as system of climate governance, and second to understand divergent political economies of market governance. Although attempting to develop similar systems, each of the cases analyzed has produced different results. The markets and climate policies established reflect the legacy of socio-political and cultural context on institutional transfer. Each country expresses a varying degree of ease or unease with the establishment of markets as systems of climate governance. Exploration of market adaptation adds new insights to theories of varieties of capitalism. The study particularly highlights issues at the interface of political and economic governance in different political economies, including issues of citizen, state and industry participation, and the materiality of economic and financial productivity.