A victory described in detail is indistinguishable from a defeat*

[edit: added a few clarifications to pars 4, 5, 7 and 8]

One of the things I criticize economists for in my book for their sociological naivety and political duplicity is the idea that designer markets will unleash 'innovation'.  The US Sulphur Dioxide Market (Title IV of the 1990 Clean Air Act Amendment), is a kind of linchpin of neoliberal market environmentalism in this regard.  Whiggish neoclassical economists like the prolific Robert Stavins and Denny Ellerman haven't just defended the scheme to justify the creation of a national carbon cap-and-trade scheme, their careers were built on constructing the original scheme itself; whilst Stavins actually lobbied for its introduction and continues to be an influential player in the US climate policy ring.

It's widely accepted that the scheme did the job, though social democratic and other lefty types question the degree to which it was more effective than more direct controls in Europe.  Germany, for example, simply legislated for power plants to install scrubbers.  The cost was quite high, though not as high as anticipated, and the environmental result was much better than in the US.

As Donald Mackenzie has detailed, the US sulphur scheme is an historical and conceptual link between the small scale, often ham-fisted markets the EPA instituted during the 1970s and 80s and the 'flexible mechanisms' of the UNFCCC, which would not have achieved its scale (or legal status) without the US Imperial ambitions for a global market.  Mackenzie is actually quite sanguine about the prospects for emissions trading in the EU, though I do wonder whether the recent Sandbag reports of miserly actual reductions thanks to the GFC has forced him to reconsider this position.

What's at stake in assessments of emissions trading is geopolitically significant in a number of ways.  As John Gray has argued repeatedly, the ideology of neo-liberalism rests on the distinctly American illusion of economic globalisation as Enlightenment.  The dismantling of Keynesianism by neo-liberals saw one system of risk distribution (ethno-population welfare) displaced by another (financialized risk)... or so the GFC has taught us - the Efficient Market Hypothesis was not the apothesis of Enlightenment, its nobel prize winning proponents believed.  As Gray puts it, the US is actually a limiting case in the sense that its project reflect its own insecurities and tensions - it's no basis for cosmopolitan civilization.  In this spirit, I take a crack at the US Sulphur Scheme as a kind of linchpin in these narratives of progress and cost-effectiveness, from two angles.

The first line of critique (an ambitious one for sure) runs through Foucault and Polanyi who, in their very different ways, locate the origin of 'our' modern understanding of 'the economy' in the 19th Century.  For Foucault, 'life' and 'economy' were born together: changes in the field of biology saw the difference between organic and inorganic become fundamental at the same time as studies of commerce moved from the surface signifiers of 'wealth' in the 18th Century to the political economy of Ricardo and Marx's 'all embracing presuppositions and moments in themselves'.  Polanyi's Great Transformation tracks the dissolution of the 'organic' in a different sense: mercantilist bonds through the liberal construction of 'fictitious' commodities of property and labour.  For Polanyi, the only 'real' free market in history was around the 1820-1860s, when a 'double movement' began and society recoiled in horror at the devastation wrought by liberalism, responding with labour unions, child protection, and, most significantly for my purposes: the Alkali Inspectorate - the first society in contractualist England to use public funds to protect private property - it's only with this expertise that Coasean bargaining around 'negative externalities' can occur in the original article 'Problem of Social Cost.'

This detour allows me to run counter to the thrust of Timothy Mitchell's argument that the economy as we understand it today did not emerge until after the Second World War with the Welfare State when GDP calculations were performed in national 'centres of calculation'.  Instead, I argue that this scientific organization ('framing') of the social and political boundaries of industry was a precondition for contemporary understandings of the economy.  Liberalism, in other words, was made by regulatory projects, and regulatory projects made modern liberal science.  There's a lot more here that I don't have space to go into, particularly the Marxist take on Regulation...

As far as climate change goes, Polanyi's legacy lives on the work of Larry Lohmann and Foucault in just about every Geography department in the UK and North America... as far as I know, they're more often viewed antagonistically than not**

The second line of critique follows the performativity/STS crowd (Mackenzie, Callon, and others) who are particularly au fait with the historical coproduction of liberal science and economics.  In a recent-ish interview Callon describes how his notion of 'framing' was developed from work he was doing on the role of Kenneth Arrow and other post-War economists, an idea he's been pursuing for over a decade now.  He saw their work as integral to performing the post-war science/society settlement: you scientists provide techno-gadgets; we, society, will continue to fund your 'basic' research***  Framing, for Callon, describes the work of delimiting markets these sciences can then provide.  If firms (like power plants) had to account for everything, markets would be impossible.  Instead of complicating the story with social structures, as economic sociologists try to, Callon's injunction is to understand how economists - in the broadest possible sense, including scientists - simplify the world to fit their models; and what calculative arrangements are necessary to make the fit work in practice?

This is well trodden ground thanks to Mackenzie's meticulous work, so finding fresh angles hasn't been easy. As it turns out, the calculative 'frames' used by economists (general equilibrium modelling of allocation effects, ex post studies of cost effectiveness) have excluded some pretty important factors to make their models sing.  So I disagree with Mackenzie on some key points, most notably policy additionality and technical innovation.  Freight rail deregulation - a completely exogenous reform to the CAAA - was the key factor in bringing compliance costs below what was anticipated in the ex ante modelling studies conducted by the likes of Environment Defense Fund and others. 

The 'technical innovation' of the CAAA is pretty hollow, and certainly not the basis for a global carbon market stimulating groundbreaking innovations that will solve climate change.  (That, I've been convinced ever since I've been involved with electricity restructuring in detail, will require far more localized political pressure).  Essentially, the 'market' made an existing commitment to cut pollution more cost effective using known technologies (scrubbing and fuel switching) in an oligopolistic market.  

The central lesson for my thesis is that regulatory markets require an enormous amount of 'boundary work' in the sense of rhetorically separating the work performed by market and non-market calculation.  Externalities are where the action is for studies of economization.  This boundary work is necessary because of the ideological aversion of neoliberals to 'planning', for reasons Will Davies has explained far more convincingly and thoroughly than I could.  This feeds into problem of the 'conditions of felicity' for performativity: economists can't simply enunciate their models for them to become true, they're embedded in social and historical forces - this is why I go back to Foucault and Polanyi to situate the significance of the neoliberal break.

So rather than 'a Star' or a 'living legend' as US Progressive Economists like Dallas Burtraw and Stavins claim, I prefer to think of the US Sulphur Dioxide Scheme as a victory... one that demands detailed description.

*Satre, The Devil and the Good Lord (1951) 

**I suspect this is a result of the way Polanyi's concept of 'embeddedness' is treated, bleached and hung out to dry by the analytic philosophy biased US academy.  Fwiw, I side with the neo-Foucauldian critique of 'community' as equally as problematic as neoliberal units of analysis 

***Science studies scholars like Brian Wynne and Michel Callon have mounted powerful critiques of 'linear' innovation models that underpin the neoliberal attack on Universities through defenses of basic research (yet another reason the truthiness science warriors are idiots.)