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24 February 2021

The Texas catastrophe shows how capitalism is destroying the planet

The economic misery imposed on Texans demonstrates how neoliberalism has created a rigged market and a client state.

By Paul Mason

In Texas this month, nature struck capitalism with such force that it created a modern parable: the parable of the people who did not want a government.

The Texan energy system was designed to be self-sufficient in order to avoid US government regulation. By avoiding regulation, the state ducked any obligation to prepare the grid for extreme winter temperatures, any obligation for suppliers to actually supply electricity, and any cap on pricing when demand exceeds supply.

So when sub-zero temperatures took down power lines, froze wind turbines and even the gauges in gas-fired power stations, four million Texans suffered a prolonged power outage and some burned furniture for heat and to boil snow for drinking water. Some of those whose lights stayed on were presented with five-figure electricity bills and the profits of some energy suppliers soared

When well-heeled people try to tell you there is “no such thing as neoliberalism”, that the term is an insult dreamed up by the left, and that capitalism is the most rational and efficient system imaginable, the one-word answer “Texas” should, in future, spice up the conversation. Because Texas did not get this way by accident. A corporate elite, standing at the nexus between fossil-fuel extraction and financial chicanery, took control of the machinery of government, inured themselves to democratic control, and imposed the logic of the market on the energy system.

In the 1990s, the Republican governor of Texas George W Bush worked with the Enron boss Kenneth Lay and others to break up the system of state-regulated utilities that had worked since the 1920s. Bush became president in 2001. Lay drove Enron to bankruptcy in the same year. But before then, they normalised three principles that tipped Texans into a world of cold, hunger and darkness.

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First, the creation of a spot market for energy, whereby a new class of middlemen can get very rich, very quick, by standing between the producer and consumer of electricity and outguessing them over supply and demand.

Second, self-sufficiency. While the rest of the US deregulated via a series of regional trading organisations, which could meet surges in demand across state lines, Texas opted to keep the Electricity Reliability Council of Texas, its state-wide grid operator, which now functioned simply as a market oversight body, self-sufficient on principle. 

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The third principle was “retail choice”. Thanks to a state law passed in 2005, Texans can “choose” between a long-term energy contract at a predictable price, or monthly household bills subject to the fluctuations of wholesale prices. 

[See also: What the Texas storm reveals about climate politics in the US

If you’re wondering why any population, especially one distributed in remote rural towns between storm-prone subtropical coastlands and a red-hot desert, would buy this arrangement, again, the answer is neoliberalism, in its fullest sense. Neoliberalism was never just a policy: it is a belief system. A belief that the more you let the market govern your life, the happier you are going to be. A belief that competition will drive prices down; that the two parties of any deal are better policemen than the state; a belief in the fairness – and in the Texan case, God-givenness – of getting rich quick by screwing your customers.

The former Texas governor Rick Perry was probably justified when – in the aftermath of the disaster – he insisted: “Texans would be without electricity for longer than three days to keep the federal government out of their business.” Or, at least, justified when it comes to the rural, white, conservatives who form the Republicans’ electoral base. 

As with all irrational belief systems, the crisis triggered acute cognitive dissonance. With people still shivering in their homes, and $10,000 fuel bills landing on the doormats of those who weren’t, the governor of Texas, Greg Abbott, rushed on to Fox News to blame the failure of wind and solar power for the outages, claiming that the outage proved “the Green New Deal would be a deadly deal for the United States of America”.

According to Abbott, the very measures designed to mitigate climate change, and thus reduce the chances of freak weather events, are the main problem, even though there is no chance of them being implemented.

But while some wind turbines froze and solar is no use in a whiteout, it was the inadequate distribution grid and poorly maintained gas-generation plants that tipped the system over the edge. Two-thirds of what failed in Texas was fossil-fuel energy. And, of course, what really failed was the market.

There is no market incentive to invest in resilience when a lack of resilience spikes your profit margins. The liberal state emerged out of, and alongside, capitalism precisely because the market is not a force of nature but a social relationship that has to be created by the state and re-created every morning through regulation and state oversight.

 [See also: Philippe Sands on why “ecocide” should be a crime]

Neoliberalism, despite its claims, never involved a free market or a small state: it created a rigged market and a client state. And here’s where the full meaning of the Texan parable needs to be understood.

This wasn’t regulatory failure, it was political failure. Look at the electoral map of Texas Congressional District 35. In a state whose constituency boundaries mainly resemble squares drawn on a prairie, TX-35 looks like a 95 mile-long raptor claw, with one end hooked around the city of San Antonio and the other the city of Austin.

It was designed in 2011 as part of a racially inspired gerrymandering project by the Republicans, who had taken over the state’s legislature in the 1990s. TX-35 is designed to include as many Democrat-voting black and Hispanic people as possible, leaving the heavily Democratic city of Austin largely represented by Republicans. (A seven-year court battle to declare the boundaries void ended in 2018 when the conservative-dominated US Supreme Court ruled there was “insufficient” evidence that the state legislature had acted in “bad faith” when it drew up the maps.) 

There are similarly weird shapes around each major city on the electoral map for the state legislature, which are more convincingly explained by boundary manipulation. The Texan power grab was, according to the political scientists Nicholas Stephanopoulos and Eric McGhee, one of “the most extreme gerrymanders in modern history”.

As a result, control of the Texas state legislature is unlikely to change hands anytime soon, despite the rapid demographic shifts arising from Hispanic migration and the arrival of Apple and other Big Tech employers, whose workers might traditionally vote Democrat. 

So the problem is not simply deregulation, climate change complacency and greed – it is that an incumbent right-wing political elite has begun to regard the prospect of losing power as unthinkable, and to deploy a strategy of deliberate cognitive dissonance, in which decarbonising and regulating the energy system in the interests of both people and planet is depicted as an existential threat.

The usefulness of parables is that, wherever they were told by the leaders of great humanistic religions, they were almost always the story of a schlimazel, a perpetually stupid or unlucky person who is saved from self-destruction by listening to advice or becoming virtuous. In the parable of Texas, which deregulated its energy system only for that energy system to become hyper-expensive and dysfunctional, the schlimazels are the voters, who have more or less continuously swallowed the right’s mixture of white supremacy and deranged reliance on fossil fuels in the belief that it was good for them.

The point of a parable is to learn from it. The allure of free-marketry is dying by the day; China’s epoch-making rise from mid-ranking industrial power to technological superpower in just 20 years is an advertisement for the efficacy of state-directed investment, and Covid-19 has given statism impetus across the world.

What is not dying is the right’s attachment to power and its preparedness to subvert democracy to retain it. Which is unfortunate, because within 30 years we need to rid the world of net carbon emissions, ending all gas and coal-fired power production in places such as Texas, while deploying wind, wave, solar and nuclear on a scale that the market alone, even when regulated to promote safety and innovation, cannot achieve fast enough.

The Texan example looks like an outlier. In reality, it is the story of the human species’ relationship with the natural world writ large. So long as we go on voting for politicians who won’t decarbonise fast and furiously, we are committing the same basic mistake. We need to learn from it and quickly. 

[See also: Tackling the climate crisis means the end of capitalism as we know it]