Sustainable Markets and the State: Taxation, Cap-and-Trade, Pay-for-Success, and Nudging

Abstract

Sustainable markets are heterogeneous phenomena, developed and implemented to keep up the idea of free economic choice against socialist and interventionist forms of environmental or social politics. This article is a plea to understand sustainable markets from the perspective of the state. It presents the history of welfare economics as an ongoing conflict about the question of how to solve the state-versus-market divide. It analyses and compares the welfare tax, the cap-and-trade mechanism, pay-for-success schemes like Social Impact Bonds, and nudging in order to demonstrate their dependence on certain historical state formations, and it links them back to welfare economic struggles between Pigou, Dales, Coase, and Thaler. In doing so it argues for the necessity to bring about the political morality of the microeconomic technicalities of commensuration / commodification. These technicalities organize roles and positions for economic actors and state authorities in very different ways. By applying the analytical concept of the conventions of the state, this article develops a framework to understand the diversity of sustainable state/market co-constructions.