Varieties of Derisking

In recent years, the debate over climate policy has moved away from the earlier consensus in favor of carbon pricing and towards an investment-focused approach, illustrated by the passage of the Inflation Reduction Act (IRA), along with other similar measures in the US and, to an extent, in Europe. 

There are good reasons to welcome this shift, both as a more promising response to the challenge of climate change and as a turn away from the neoliberal consensus of previous decades. Industrial policy is better able than carbon pricing to address the real requirements and constraints of decarbonization. It offers the possibility of a more robust political coalition in support of aggressive climate policy, and a way to overcome the long-standing problem of chronically weak demand in the advanced economies.

At the same time, the specific approach to industrial policy embodied in measures like the IRA raises a number of concerns. Do these policies target the right constraints and the most important barriers to rapid decarbonization? Do the subsidies and incentives impose sufficient discipline on private business to meaningfully redirect investment? Will the direct-pay provisions meaningfully increase the role of public and nonprofit enterprises, or will the IRA further entrench the dominance of for-profit businesses in energy and other sectors—ultimately undermining both climate and broader economic objectives? Does the industrial policy approach risk a zero-sum competition between national governments, and will it exacerbate tensions between the US and China? 

On Tuesday June 6, Phenomenal World and the Polycrisis hosted a panel around these concerns, thinking about industrial policy, state capacity, macrofinance, and the green transition. The discussion featured Skanda Amarnath (Employ America), Melanie Brusseler (Common Wealth), Daniela Gabor (UWE Economics), and Chirag Lala (Center for Public Enterprise), and was moderated by JW Mason (John Jay College). Watch the full recording of the event here. This transcript has been edited for length and clarity.

A discussion on industrial policy and decarbonization

JW Mason: What are the fundamental economic constraints that industrial policy needs to overcome in the climate transition? What are the barriers to the required private investment? Is it just that private returns are too low, making subsidies an insufficient solution? Or are there other problems that require a public sector involvement—problems of finance, coordination, uncertainty, and so on? In other words, what is it that we would like industrial policy to do?

Skanda Amarnath: The conventional wisdom about carbon taxes was that if you put a certain price on carbon and keep it in place, substitution will happen over time, and therefore it’s the only thing that needs to be done. What’s changed in the thinking is an acknowledgement that decarbonization is an investment challenge. It’s a capital stock challenge. What does it actually take to get the requisite capital stock to support decarbonized consumption? Emissions are both a production and consumption phenomenon. There is demand for oil, gas, and coal across the world, and viable substitutes have to be made available. But those substitutes require investment, which can happen but doesn’t always—hurdle rates and certainties interfere. Then there’s the technological element. There are parts of the transition that aren’t yet fully solved for, especially with regards to commercial scale. 

While the public balance sheet is a valuable and important tool, it’s not going to solve every problem. Fiscal ambition can lead to success, but there are just as many cases of corporate welfare and corruption. We must be able to learn from how investments are deployed—are we achieving the goals we’re aiming for through investment? How do we use the power of the government purse, at least in advanced economies, to build a more capable government over time? The next five years will see hiccups as the IRA is deployed. There will be unintended consequences, and it’s important that people within government learn from those mistakes to better realign policies towards the goal of lowering carbon emissions.

JWM: So the question is, why do we need industrial policy at all?

CHIRAG LALA: I think we have to answer a few questions first. What do we expect investment to do? And why is investment not happening at the requisite speeds or the requisite volume in the areas we would need for decarbonization? We need not just new generation systems, but new heating systems, industrial equipment, transportation equipment, and so on. I want to dig into the work of Alex Williams at Employ America, who notes the difficulties of obtaining a stable cash flow and stable gain over time, which presents a challenge to both private and public enterprises. An example of this in energy projects—if you’re trying to put up a new solar project or a new battery, but you get stuck in an interconnection queue, there’s no risk premium that can compensate you for getting stuck in that queue. If your project doesn’t get built, it doesn’t generate income, which means undertaking that investment in the first place might not be something you even attempt. This is just one barrier for energy generation. 

We can conceptualize industrial policy and evaluate it for whether it is sparking capital expenditure by asking how it addresses the various barriers to decarbonization across different sectors and projects. Is it opening up new capital investment opportunities for both private and public enterprises? This is industrial policy’s primary purpose. 

JWM: It’s not simply about prices being wrong, but there are hard barriers that you can’t overcome with a subsidy or by changing prices. You need to identify specific hard constraints and try to remove them. This is a panel on derisking, and in our world, that term is associated with Daniela Gabor more than anybody else. Daniela, you’ve described the “derisking state” in both the US and perhaps even more so in Europe. You’ve identified a number of policy characteristics that fit this model.

The derisking state focuses on the production of investability; the fundamental problem is enabling or convincing private capital to take ownership of the assets we want them to take ownership of. The derisking state works primarily through price signals, making some investments more attractive. It shifts economic risk from the private sector to public balance sheets, maintains the primacy of the central bank, and does not require any kind of central coordination or planning. That’s just a broad description, but could you explain what distinguishes this “derisking” approach from other forms of economic management? Where does the IRA fit in?

Daniela gabor: How you frame problems of decarbonization is shaped by your understanding of the political economy of derisking. To me, Chirag framed the question of decarbonization through a derisking logic, where the problems are risks to private investment, and you have to remove them, not just by granting subsidies or tax credits, but also through what the World Bank would describe as “regulatory derisking.” I’ll take a different starting point to describe problems of decarbonization: in our current climate crisis, private capital is engaged in systemic greenwashing. From there, you get a very different diagnosis. 

I also wanted to make it very clear that although I have spent the last few years theorizing the derisking state, I did not invent the term. Deutsche Bank introduced the term in a 2011 report for the United Nations Development Programme. They argued that private investment into renewables in the global South would require regulatory or financial derisking to escort private capital into those public policy priorities. Derisking was born in Europe as a logic of statecraft. It’s not a particular policy framework or a particular industrial policy approach. It was adopted by the World Bank in 2017 upon the introduction of “maximizing finance for development.” What is interesting now is that we have moved from saying, “We should de-risk private investment, and we need private investment from institutional capital, like BlackRock and other asset managers, to be put towards Sustainable Development Goals (SDGs) in the global South.” Now, we are saying, “We should guide capital towards industrial policy priorities.” That’s the big shift exemplified by the Biden Administration. What are the geopolitical factors that have put derisking at the center of green industrial policy? At its core, derisking sets up a particular type of relationship between the state and private capital. 

It’s important to resist the temptation to celebrate a paradigm shift. Derisking offers a plausible political compromise to bring together Republicans and Democrats. It doesn’t require fundamental change, it just requires more fiscal resources for bribing private capital to support certain policy priorities. But it does not change the relationship between the central bank and fiscal authorities, and it does not reform institutional capital. 

The developmentalist literature in the work of Robert Wade or Dani Rodrik emphasizes disciplining private capital. Derisking is not consistent with discipline. This is the difference between derisking and earlier experiments with industrial policy. 

SA: “Derisking” is a term that’s used quite commonly in a lot of private sector parlance, perhaps less pejoratively than Daniela probably likes to use it. But I think descriptively it’s accurate. Many administration officials use the term “derisking” openly to describe the IRA. But does “derisking” merely entail subsidies or is it something more? Is it bad per se, or are there varieties that actually have legitimacy? 

What BlackRock wants for their investment products is very different from how the IRA is structured. They are obviously financial beneficiaries, but the IRA is not structured to go through BlackRock. That’s a major contrast with the 2000s US housing bubble and bust, which actively celebrated the derisking of financial products to intermediate more capital towards housing and homeownership. It’s fair to say that the IRA is not trying to change its relationship with the Fed, but it is, in some ways, trying to bypass it. The derisking approaches are different—the difference between derisking a financial product for more financial inflows, leading to more fixed investment, versus subsidizing that fixed investment. 

cl: One aspect of Daniela’s derisking definition that I really like is the concept of the production of investability. Whatever we end up defining derisking as, it’s important to acknowledge investment as such in certain sectors. What would happen under the right circumstances that often doesn’t happen, and why not? Where I would disagree with Daniela is that I think the production of investability happens both for private and public actors. There are factors that also prevent public actors from undertaking investment, and if those can be mitigated, then in some sense you’ve de-risked public investment as well. In certain cases, the public sector is not dealing with so-called risks—things you can assign probabilities to or try to hedge against, using interest rates or the pricing of capital or subsequent gains from the investment.

The state is often certifying lines of activity for accumulation by private actors or for possible capital expenditure by public actors. These barriers cannot be compensated for by the price system. I could critique a carbon tax on this basis as well: a carbon tax functions on the idea that a high enough price carbon emissions will spark investment in alternatives, so that substitution effects can take place. The problem with this, of course, is that the carbon tax might not address any of the actual barriers to undertaking certain kinds of capital expenditure in energy. We can talk about planning, we can talk about industrial policy, but we’re ultimately talking about a space where activities are made possible or not. 

DG: Why do I understand derisking as the intervention in price signals? I would argue that I define derisking through how European technocrats and politicians think about it—steering price signals without fixing them. You don’t have price controls, you don’t deal with inflation with a muscular state. But you steer price signals, even where they don’t exist. For example, the Germans are creating a green hydrogen market where it didn’t exist before, through a series of derisking measures that compensate private investors and reduce the uncertainty of the price signal for private investors. I’m very comfortable standing behind that definition of derisking, because that makes it conceptually clear that derisking is about the relationship between public and private capital, between the state and private capital. The state cannot de-risk itself unless it offers or has companies that operate as market companies. There are examples of the Danish state ownership of 51 percent of companies like Ørsted, who are doing energy infrastructure. 

I think it confuses things to argue that there is a public derisking. To me, derisking is about shifting risks from the private sector onto the state balance sheet, not just by fiscal measures but also by regulatory measures. The World Bank, the UNDP, and the Deutsche Bank have, from the beginning of this discussion, emphasized the importance of regulatory derisking—removing obstacles to the formation of a price signal and market. I don’t think anybody goes around thinking that the state de-risks itself, though raising the question of the state is important. We can argue whether or not state companies should care about price signals. But there are models of capitalism where state companies do not care about price signals, where they buffer the end users from the consequences of market volatility. 

This takes me back to Skanda’s point—Why is this a central bank story? You’re correct in the sense that BlackRock is not as important as a political actor, though of course BlackRock sent someone to the Biden administration to write the IRA. But that’s why I would make a distinction with the CHIPS Act, which to me is much better than the IRA. The CHIPS Act moves away significantly from the logic of derisking because it focuses on strategic state priorities. 

But we have to remember is that the IRA embraces the relationship between the state and private capital—the state steers price signals and makes investability. This isn’t a smooth process, there’s no tried and tested process for this. But what the IRA did is change the European approach—there are many more “sticks” and it disciplines carbon capital. The IRA is not just a question of greening or incentivizing private investment, manufacturing, or clean tech. It’s also a question of shrinking fossil fuels and carbon capital. That’s a very different story from the standard story of industrial policy in the developmental state literature. 

JWM: Melanie, do the IRA and the CHIPS Act constitute a fundamental shift in the intellectual climate? Is this at least a step in the direction of a broader substitution of public planning for market coordination? Or is that just wishful thinking on the part of those of us who’d like to see a shift? 

MELANIE BRUSSELER: As several people on this panel have already argued, there’s now a greater shared understanding that decarbonization is a problem of investment and divestment. We need to transform existing capital and infrastructure stocks through investment and divestment very rapidly and at a spectacular volume. It’s important to stress that, when we talk about investment, we’re talking about capital equipment installation, not necessarily financial flows. The policy paradigm for so long has been to let market coordination more or less take over, relying on the constitutive elements of private investment—private profitability and the liquidity preference, which guide private investment but also hinder the multiple criteria that we’re trying to address right now. But market coordination is a fundamental issue for decarbonization. I’m borrowing the language of Yakov Feygin in a very Leontief vein—the fossil system and the renewable system are both very complex integrated machines. You can’t just swap parts from one to the other. They are very incongruous, so you need to synchronize investments to make sure we don’t have mass economic turbulence, in terms of price stability but also in terms of the functioning of our productive systems. 

How do you build a coherent renewable energy system and an economy on top of that? I don’t think market coordination can do that. What would be different about non-market coordination? Regardless of the decarbonization imperative, economic democracy is an end in itself. But within the decarbonization paradigm, we want to see public coordination take over through institutions of public investment, public asset ownership, public enterprise, and pluralistic decision making, which would deliver investment and divestment directly, by having the state undertake essential activities and investments, and then coordinating amongst public institutions and private actors. There would be a much stronger hand for state bureaucracy. Macrofinancially, the price policies of the transition would move away from monetary dominance. More broadly, we would embrace the risk bearing capacity of the state through public ownership. I would like to provocatively call this the potential for “democratic derisking”—taking whole sectors into public utility models and having systemic public options for capital investment in order to stabilize and expand green production networks, as well as to stabilize green industry. 

I think of democratic coordination as institutionally moving towards a green mixed ownership economy, with much more systemic public ownership and using equity stakes not just to passively subsidize private investment but to have strong control rights. So where does the IRA stand in this configuration? I agree and disagree with Daniela. The IRA’s passage has ushered in a spectacular volume of subsidies for private capital. That’s both compelling and frustrating, structuring the undertaking of capital expenditure to private actors. I think it’s right to point out that this is a continuation of this logic of producing investability. I love the phrase that Tim Barker revived, “bribing to capital formation,” where the fundamental issue is leaving this to private decision making. 

At the same time, it’s important to stress that we’ve moved quite strikingly towards concern for capital expenditure. It’s a completely different animal than just worrying about how to get financial actors to do certain things. While there are pitfalls, this is a shared project to manage and coordinate this move—we have subsidies out there that could be undertaken, but it’s subject to further public investment and coordination. This is becoming the shared framework of future policymaking and experimentation, and we need to seize the opportunity. 

SA: There is a form of derisking in the IRA—even if it doesn’t run through BlackRock, BlackRock surely benefits. But the part that sticks out to me from Melanie’s comments is that there is a certain necessary kind of fixed investment. If left to the private sector, that fixed investment, even once it has social value, tends to be a free cash flow drain—investment tends to only be justified if it overcomes certain hurdle rates in the private sector. That is a risk calculation that I don’t think of as being the same as a price mechanism. I think this will be necessary in areas where investment is subject to a lot of uncertainties. One good example would be Cleveland-Cliffs, a steel producer in the US. It is emissions intensive, and we don’t have scalable, tested solutions for emissions-free steel production. IRA incentives and IRA derisking provide very important tax credits for scaling up. If you can change industry behavior to try things that drain free cash flow in the short run, they of course need potential returns in the longer run. But changed behavior is really important to changing the system itself.

There are many reasons the IRA looks the way it does—legislative procedure has gone through financial mechanisms, not just regulatory mechanisms, just to get through reconciliation. But we need to focus on substance over form. Sure, it may take the form of carrots that are attractive for the private sector, but the ultimate goal is to change behavior. My biggest concern with painting things with a broad derisking brush is that there are definitely examples where derisking can go wrong, but there are also places where it has a legitimate purpose in the energy transition. How are we going to tackle this challenge? 

JWM: That was very clarifying. Can we separate derisking as a descriptive term from descriptive derisking as a normative term? Can we imagine a democratic derisking, a derisking paradigm of economic management that is nonetheless serving social needs through a democratic political process?

DG: I would say the short answer is no. I like the idea of democratic derisking, but I think it’s fundamentally inconsistent with how I understand derisking. There’s a bigger question: Can we or should we expect to tackle the climate crisis through private capital? I’m not sure the answer is yes. Skanda and I agree on trying to change the behavior of private capital. But after living in Europe and following the policies there, I see derisking as a macrofinancial issue, not just an industrial policy issue. For the last five years, the European Commission and European governments have been trying to change behavior through discipline and penalties. You can change the cost of capital and stimulate fixed investment not just by increasing returns, but by making it far more expensive or to invest in dirty assets. There are different kinds of pathways to changing behavior of private capital. My worry is that with the IRA, we are very quickly moving far away from what we had in Europe. 

These policies in Europe weren’t perfect, and they were open to political contestation and watering down, but the ECB tried to discipline fossil capital and change risk return profiles, changing investability and behavior through penalties on dirty credit. We don’t need democratic derisking. The harsh reality is that you can change behavior in different ways. We are now changing behavior in a way that BlackRock would approve of—adding a lot of carrots and not enough sticks. Why can’t we pursue the European version? 

MB: On discipline, I think it can be tricky to talk about the role of credit guidance and the greening of the financial system. Credit guidance is a necessary tool in the macrofinancial toolkit, but I think positive and negative credit guidance is often overplayed in terms of driving capital expenditure and divestment. It’s unhelpful to think that penalizing carbon investments through the financial system would lead to an orderly divestment from fossil fuels. Ultimately, the phase out of fossil fuels will have to happen on the state balance sheet, because you have to maintain a certain level of capacity and then phase out. Credit guidance can help that along but it’s not the fundamental mechanism by which it’ll happen. 

Our conversation on derisking is circling around the question: what should we be publicly invested in? And what will rely on private investment alone as a result of political constraints? The language of derisking can still be quite helpful as we turn from financial market shenanigans to the actual governing of capital expenditure. For example, in the UK, the Contracts for Difference model is a classic form of derisking—it entails backstopping private investment. But there are currently some issues with it, as we face inflation and higher interest rates. Wind turbine developers claim they need to raise their prices to expand capacity because their profits have been eroded, because private generators are fueling the lessening of subsidies through these contract pressure models, also called a reverse auction. They’re fighting for profit share in this space, we’re left with the question: which capacity do we want to be expanding? Do we want to govern the capacity to produce private wind turbines, or do we want public generation that directs that investment and stabilizes that production network? As we move into fixed capital investment, there’s a way to be appropriating this language of derisking. I don’t even know a better term for it.

SA: Financial investment and fixed investment look very different when it comes to decarbonization. Decarbonization is about the real capital stock, both for divestment and investment purposes. The derisking logic is in the financial context, targeting certain risk financial instruments. Leaving aside the normative aspects, I’m not sure that this is going to be a key lever for how we’ll drive fixed investment. A running theme of the last few decades is that if we just give finance certain conditions, it’ll lead to certain fixed investment conditions, and I’m not convinced that this is true. 

We need to further parse out the varieties of derisking. I don’t really see how CHIPS is that different from the IRA—industry lobbied for it. There were some Republicans and Democrats who saw the national security benefits of having an industrial base around leading edge and legacy CHIPS, but I think there’s definitely room for public and private sector alignment of interests. But I don’t think it’s actually that different in terms of governance design. Yes, there are some strings attached and some conditions, but CHIPS is largely grants that support the investment and operations of semiconductor manufacturing companies. There may be disciplining of firms, but at best, it’s collaborative, and at worst, it’s a set of conditions to make sure that firms invest a certain amount. It’s larger grants and subsidies, not a new regulatory state around semiconductor manufacturing. Daniela, what does an IRA look like without a pejorative derisking structure? What would the IRA need for fundamental change?

CL: I want to add onto this concept of discipline. I think of industrial policy more generally as creating the possibility of spaces for investment—public or private—that didn’t exist previously. It reduces the salience of the carrot v. stick differentiation. When you look at how policies end up sparking capital expenditure, you start to miss the point where the policy goes from being an inducement to being a disciplining device on capital. One example is the American Rescue Plan. Firms were pressured to consider certain kinds of capital investment that they might not otherwise have, relative to what they might have done with free cash flow—either discard it in buybacks, return it to shareholders somehow, or just not use it and have it sitting on their balance sheet. In one sense, the ARP was an inducement because it gave firms potential customers and potential profitability opportunities. But it was also a disciplining device—the one aspect of financial capital that would have demanded certain cash flows became relatively less powerful. Other industrial policy devices can also be thought of in this way. Carrots can open a large opportunity for firms to make them consider a space that they hadn’t before. In some sense, the distinction between discipline and carrots is blurred.  

DG: Chirag, we can play language games in which everything sounds like conditionality or discipline for private capital, but I’m not particularly interested in that. I agree that putting penalties that change risk returns on dirty assets is a necessity that also plays with a price signal. And yes, that doesn’t take us into state control of the pace or nature of credit creation. But the excessive amount of lobbying in Brussels and in London against these measures makes me think that there is something at stake that we should not discard simply because it doesn’t take us into a universe where the state is much more powerful in terms of disciplining private capital. 

My observations simply have to do with the fact that the derisking logic of statecraft accommodates greenwashing and is inconsistent with Paris targets. I am worried that it doesn’t take us where we want to be, for reasons that Melanie pointed out. When market conditions change, some private actors may change their mind, and we cannot afford this. I use the notion of the close control of credit, which requires the state to do much more work than credit guidance. I’m putting political impossibility aside for a second, but the state must do more to restrict the free flow of capital across and within borders, and this is why decarbonization is fundamentally a macrofinancial issue. We need changes in the structures of finance, in institutions of coercion.

I was very dismissive of the CHIPS Act at first, but Twitter conversations have persuaded me that there is some level of discipline. The Biden administration is far more ambitious than Europe, in terms of operational milestones like a restraint on share buybacks or prior due diligence. The purpose of disciplining institutions is that strategic industrial policy must ensure that capital doesn’t go in another direction when market conditions change. The state needs to have the capacity to closely steer investment. The CHIPS Act does this more than the IRA. It would require the IRA to say, we can’t shift from small electric cars to electric tanks, because that does not solve the problem of climate change. 

SA: I think the operational milestones are quite similar in CHIPS and the IRA—the work of the Loans Programs Office, the commercial liftoff reports tied to certain projects, ensuring the goals are achieved. There are places where the Department of Energy and the Department of Commerce look quite similar. It’s a form of indicative planning.

JWM: Melanie, to what extent is the IRA relevant in the international context, in the UK and the EU in particular? Or would you hope that a future UK Labour government, for example, would support a different kind of model?

MB: There’s been a lot of European activity on how to respond to the IRA. The EU was certainly concerned about the trade aspects, but there were also internal politics, with some actors wanting more fiscal spending and industrial policy. In the UK, there’s a really exciting development with the potential of a Labour Government, which has pledged to spend upwards of 300 billion pounds across ten years on a “green prosperity plan,” which is still largely undefined. But it does feature a commitment to create British energy—a public renewables generator. They want to be a green energy superpower akin to Électricité de France (EDF) in France. They’ve also proposed creating a sovereign wealth fund with a green mandate, which is quite rare, and closer to the National Investment Authority proposal in the US context. 

One lesson that the UK could take from the UK experience is to think creatively around fiscal constraints. Discussions around debt and fiscal stability should account for the fact that public assets generate revenue. In the UK, Rachel Reeves and the Labour Party still emphasize maintaining fiscal discipline. The IRA, on the other hand, is made up of uncapped tax credits—for better or for worse. The UK political project could question this fiscal rule.  

JWM: Daniela, what would be the dangers if the EU were to follow the US example? Was there a more promising model in Europe that is in danger of getting sidelined by the IRA approach?

DG: I’m not as optimistic as Melanie. I understand the sovereign wealth funds as derisking machines, as opposed to machines for creating public ownership. They are not articulated towards a public or state-driven decarbonization project. While this conversation is about derisking, I’m working in parallel on what I call a big green state. It summarizes a range of approaches, but it does not allow private capital to set the pace and direction of decarbonization, as is currently happening. The dangers in Europe resemble the way that different US states are competing for the IRA money. But in Europe, it’s far more obvious, because the macrofinancial relationship is far more delicate and open to political contestation. With the IRA, we have moved from the EU wanting to decarbonize quickly, even with Chinese clean tech imports. The EU now wants the global market share in clean tech. In other words, it’s industrial policy in the old, traditional way. 

In the paper, I look through the scenarios where the European Commission uses the term “derisking multiplier,” making some bizarre approximation for the amount of money you need for a percentage of the global market share. But it’s the politics of how to get European capitals to agree on a Europe-level budget. The difficulty of the delicate arrangement, then, is that France, Germany, and countries with more fiscal space are not allowed to promote their own industries through state aid. Since the pandemic, however, the easing of these restrictions which were meant to level the playing field has mainly benefitted France and Germany. It turns back to the same problem that Melanie identified—in the end, the immense challenges we face cannot rely on market coordination. What we need is big state balance sheets and state capacity that do not repeat the mistakes of communist enterprises. My postgrad studies focused on central banks actions in post-communist countries, where they needed to dismantle state-owned companies. Now, I’m going to study how we put them back together.

SA: I think Daniela’s piece is very provocative—is derisking a race to the bottom or the top? There’s going to be a need for experimentation and overcapacity, erring on the side of redundancy. Many countries and companies will try to figure out how to push down cost structures in a way that leads to more investment and capacity. The developed world must use its fiscal policy space to allow emerging and underdeveloped countries to also pursue decarbonization paths. We have to make that space available, and part of the IRA and derisking is worth rescuing and celebrating.

CL: The private sector is an existing set of institutions that will continue to exist for the foreseeable future, and we need them to undertake decarbonization activities as well, in many cases against their previously expressed interest and intentions. If our policies succeed in creating a boom in green capital equipment, then we would have the political responsibility for the next steps—the fight doesn’t end there. I think if you’re looking to spark a politics of democratic investment, you have to be prepared for what comes next.

MB: Ultimately, I think we have to view social transformation as an iterative, uncertain process of transforming institutions, tools, and enterprises. It’s going to be a constant fight. It’s up to us to move the politics towards the socialization of investment, abolition of fossil fuels, and the eventual flourishing of the planetary cooperative commonwealth.

DG: I think the distinction between financial capital and capital investment is a bit too neat in this panel, but I am a bit more hopeful after this. I’m generally quite skeptical, but I will go with Melanie’s insight that all small political changes might take us somewhere better.