The view of mainstream financiers is that the market mechanism is the only solution for the scaling of climate solutions. Public finance from major donor countries is declining as more money goes towards defence and security.

Private finance will only come if the financiers can make money. They are waiting for the right signals. But from whom? The public sector, of course!

The invisible hand is meant to do its magic. Adam Smith minus his guardrail, the Theory of Moral Sentiments, offered a convenient metaphor that has been mishandled by free-market economists.

As Milton Friedman argued in a famous article published in September 1970, the only social-responsibility task of corporations and free enterprises is to make profits. Notably, he did not discuss corporations’ irresponsibility: How they gained their profits and whether they shared them fairly beyond their shareholders.

In effect, Friedman legitimised corporate greed and self-interest.

The Paris Agreement also runs with the dominant thread that climate solutions can best be handled by the markets. What exactly are the markets? And who the actors in these markets are is often muddied by obscure language. Now there are several books – from capitalists and non-capitalists alike – trying to understand whether markets are benefiting or failing society.

It is not my intention in this article to undertake an exegesis of these books. Markets are institutional frameworks that set the rules of the game for both private actors and State-owned enterprises, seeking to achieve the best outcomes for consumers while generating reasonable profits to sustain private enterprise and ensure there are funds for future investment.

In the domain of economic power, the relative power of actors – including the State, consumers, labour unions, the courts and private firms – shapes the balance of power within markets. This can be described as a contest between different forces seeking a rightful claim over the proceeds of income in the application of productive entrepreneurship and labour in the provision of goods and services. Consumers are often at the withering end of the power of markets.

While the State can be seen as too interfering and seeking to decide what is best for society, the markets do need the State.

It was, in a sense, how Elon Musk – the unguided missile, the ‘genius’ entrepreneur – took a step into politics through a forward contract worth $200-million, concluding a Faustian bargain with the devil himself. Musk paid his school fees.

In all the Department of Government Efficiency distraction, Musk hid from the public eye the true source of his profits: all the federal subsidies and contracts he lured and corralled to boost the profitability of his various ‘free’ enterprises.

Clearly, there was the hidden hand of collusion that favoured the most politically connected. Then his friends, the current incumbents of the US State, bit his hand because he tried to chew too much.

This idea of a separation of universes between markets and the State is fiction. This point is very clearly made in a recent book on the inner workings of Facebook. The author, Sarah Wynn Williams, illustrates two things: the extent to which a giant Big Data company such as Meta is entirely dependent on the goodwill of States and the lengths to which these companies will go to win over the State – including doing their utmost to ensure specific political outcomes for their preferred political horse. As Wynn Williams notes, Meta is obsessed with pushing up its membership numbers to increase its profits.

Coming back to the question of the State versus markets in the delivery of decarbonisation outcomes – we should all make an effort to read the works of Brett Christophers, a known Marxist scholar based in Sweden. He is lifting the lid on an important aspect of the energy market and new clean technologies: it is not the levellised cost of energy – or LCOE – that matters most, but the rate of return. This will determine whether financiers and private developers of renewables will come to the party.

One of the main thrusts of Christophers’ book, The Price is Wrong, is that the idea of liberal markets may not be conducive to the achievement of the level of scale required in renewables, because liberal electricity markets introduce price volatility.

The transition to long-term power purchase agreements, like those found in some emerging markets, is what protects merchants from price volatility risks and enables them to achieve their internal rates of return.

Christophers’ works also raise questions about whether we have overly relied on markets to solve the decarbonisation problem and whether it is sufficient to put all our eggs in one basket.

Christophers’ position has profound implications for the ability of the free market to deliver the desired decarbonisation outcomes. As he notes: “If profits are too low, developers will not invest; too high, and critics will cry foul. Thus, policymakers are forever in the position of needing to pull one (or even both) of two levers: subsidies and other support mechanisms to enable profits when they are scarce, windfall taxes to cap them when they become abundant.”

He wonders whether the scaling of clean- energy alternatives can happen without State subsidies and why, if that is the case, the subsidies are not used to support State-led renewable-energy markets? He has a bigger goal here: State participation allows for great public and democratic oversight of the energy market, which, as always, is a natural monopoly.

On the African continent, all these questions may be moot, given the choice consumers face: living as they are in some places between State piracy, malfunction and potential profiteering, and monopolies of private firms filling the gap in areas where the State is absent. For the whole thing to go the other way – more public skin in the game – politics and the political economy in Africa have to change.