Unregulatability in Financial and Carbon Markets
by Larry Lohmann
first published 21 July 2009
Can the financial derivatives markets be regulated? Can the carbon markets be regulated? The questions are parallel, according to this article from the June 2009 issue of Carbon & Climate Law Review. Both markets have involved new attempts at commodification: in the case of the financial markets, commodification of an unprecedented range of uncertainties, and in the case of the carbon markets, commodification of climate benefits or the earth's carbon-cycling capacity. Regulatory responses inspired by neoclassical economics, which assume that any problems can be handled by "internalizing externalities", are unlikely to succeed. A more pragmatic approach looks to decommodification in both markets. Both approaches, interestingly, have attracted supporters from wide ranges of the political spectrum.