By now, the socialist tag has become something of a verbal tic among conservative critics of the Green New Deal who want to paint the climate plan as some sort of totalitarian overreach into capitalist “free markets.”
While there’s nothing new about red-baiting and political suspicions of state-led planning, the framing of energy development in “capitalist” vs. “socialist” terms relies on a mythical understanding of the American energy business and its history.
The nation’s energy sector has never functioned as a capitalist “free market.” In fact, the pervasive use of fossil fuels today is the product of corporate-friendly policies through which the government has subsidized the industry and performed the spadework for its expansion. For more than two centuries, the state has worked on behalf of fossil-fuel interests not just to mend market failures or level the playing field, but also to create markets for energy firms and build infrastructure that ensure their profitability.
American fossil-fuel companies have long understood their reliance on the government. The nation’s earliest coal companies, launched in the first years of the 19th century, secured market advantages through state instruments and controls. At the time, many Americans, though they’re long forgotten now, resisted coal power because they found it more expensive than wood and water power, and less convenient than the brawn of human and animal muscles. The country’s coal men mobilized and lobbied state and federal lawmakers to bankroll “internal improvements” to reduce transportation costs and create new markets for their resources.
The energy business thickened its political friendships with the state, often in conjunction with the railroads and steel industry, throughout the 19th century. This relationship was extremely beneficial for them.
The coal companies counted on the National Guard to break strikes, suppress labor conflict and maintain the smooth and uninterrupted flow of their commodities. Federal and state politicians granted energy companies the right of way on private estates and opened public lands for mineral companies to stake their claims. The nation’s energy firms even expanded their holdings abroad and created the “strategic” need for U.S. foreign policy to align with the protection of mineral resources overseas (we now call this “energy security”).
In short, the nation’s fossil-fuel executives were successful at shaping the political-economic order to suit their interests. And this was no secret. The industry’s tycoons became famous almost overnight for securing political favors and handouts, by graft and corruption, or whatever means necessary. John D. Rockefeller’s Standard Oil even became caricatured in the popular press as “the octopus” — a political animal that ensnared government institutions and squeezed politicians in its grip.
The 20th century brought a deepening of the relationship between fossil-fuel companies and the government. While the Revenue Act of 1916 subsidized oil and gas explorations with tax policies, the Mineral Leasing Act of 1920 eased development of fossil fuels on public lands. These policies provided private firms the incentive to scratch and claw the earth without obvious markets.
Congress passed the Connally Hot Oil Act of 1935 only after major oil firms begged the government to protect them from the hard-edge of the free market. This new law instituted government sanctions that pro-rationed surpluses to keep prices from falling and shielded inefficient producers. The next year, the Rural Electrification Act connected Americans to the electric grid and, though rightly celebrated for “modernizing” rural society, bestowed beleaguered and struggling coal companies with millions of new consumers.
During the post-World War II era, the fossil-fuel industry thrived even more. The new world of highways and drive-throughs and strip malls and suburban cul-de-sacs turned the price of a gallon of gas into a symbol of economic health and well-being.
Once again, government initiatives were at the heart of this domestic success. As one executive of Standard Oil of California (later renamed Chevron) summed it up, “a more coordinated, consistent approach to energy matters at all government levels is essential.” Over the next half century, policymakers retained a fierce incentive to keep energy prices low for the sake of pocketbook politics. Sure enough, the federal government fixed prices, raised tariffs, implemented quotas, doled-out subsidies, slashed taxes, funded R&D, enforced takings on private property, sold-off public lands, lent military force, and even, as our current president speculates, invaded countries — all on behalf of fossil-fuel conglomerates.
Trump’s presidency has shred whatever subtly there once was to the old ruse. He has told fossil-fuel interests that their “full potential can only be realized when government promotes energy development” and promised to “eliminate the barriers to domestic energy production, like never before.” He has floated plans to prop-up unprofitable coal plants with taxpayer dollars, which some state lawmakers have now pursued, and he has signed executive orders in recent weeks to clear the pathway for pipelines — over the pleas of private landowners, stakeholders and indigenous nations.
Rep. Alexandria Ocasio-Cortez (D-N.Y.), the main champion of the Green New Deal in Congress, was right to point out the “hypocrisy” at play: that critics of the resolution decry subsidies for green energy systems as “socialism,” but these same lawmakers support multimillion-dollar bailouts for fossil-fuel interests in the name of capitalist “freedom.”
There’s a clear political effort at work to short-circuit the Green New Deal through name calling. But the plan, so far, is no more socialist than the original New Deal, a set of experimental policies and economic prescriptions that leftist critics complained only “saved capitalism from itself.” In fact, the Green New Deal steers clear of the most straightforward socialist course: nationalizing energy companies and bringing them under state and worker control.
A look at the Green New Deal resolution shows that it instead seeks an urgent solution to entangled problems of climate change and economic inequality by marshaling government power to promote renewable resources. In that regard, it remains more clear-eyed about the government’s historic role in energy planning than any call to rely on the market’s invisible hand. As the Harvard business scholar Richard Vietor once put it, “For better or worse government intervention into the energy industries has been the norm not the exception.”
And so a serious question remains: Do contemporary policymakers not realize the extent that the government already serves the interests of fossil fuels, or are trying to cover it up by branding their version of corporate welfare “capitalism”?