The ‘social license’ is behind the shift to a carbon economy and the shift from the petro-chemical industries. The discussion moved from the automotive industry and how consumers willingly take up the new products that promote better environmental outcomes. It was further discussed that a similar change is influencing the other industries. The shift in the valuer attitudes is remarkable in that whatever economic theory you are predisposed to, or learnt in school, you will in all likelihood find value by participating in the carbon economy.

History has a way of repeating itself, and Adam Smith as the ‘father of capitalism’ described the ‘guiding hand’, which can be interpreted as a ‘social license’ that is part of 2015 regulatory thinking. Even those that follow Karl Marx writings will find a ‘social license’ forms a valuable and insightful regard to the specific mechanisms of an economic system.

We find that Marx and Smith diverged drastically in their political ideologies (not unlike the Labor and Liberal parties in Australia). However, their economic theories were similar in that both hold the labour theory of value as a core belief. Each believed that the number of labour hours put into an object created the value and thus the worth of the object. This is where the carbon economy differs in that the value is clearly in the hands of the valuer and not the politic as our government would like. It could explain why the traditional control mechanisms are not working, there is a disquiet in the community, and effectively communicating the political message ‘of value’ is seemingly on an uncomfortable setting.

The Austrian school of economics espoused its theory of subjectivity. From this theory, it follows that a product possesses value only if there exists a valuer. They say the object must be useful to a consumer in some way; if it is not, it is not valuable. The consumer’s feelings or subjective analysis give the object its value. Because of the laws of supply and demand, if the subject warrants a high value it will be commensurable with a high value.

The carbon economy can already show subjectivity of the price sets its value without regard to your politics. We say this as the carbon economy is already seen that the more desirable or valuable object on our connection to the trinity of human existence, with heaven and earth. The trinity concept is as much eastern as it is western in its connection. How high a price we are prepared to pay is to be proven. But, there is a universal willingness to try and it indicates this is the most logical reason for its value.

The carbon economy also indicates that the labour theory of value is incorrect because even though hours of labour might have gone into building an object, if no one wishes to purchase it, it has no worth and cannot be made commensurable with anything else. That not us saying that it is the indications of commercial reality that includes the need for sustainable outcomes to be demonstrated through the money practices of today and it strongly appears the social license is driving this trend.

For the success of the carbon economy lessons, from history you cannot ignore Marx and Smith. They still influence our current economy and we will still be affected by their ideas. Albeit these times do indicate a leaning to Smith is more fashionable. That said, Marx had brilliant insights into the workings of an economy and thought extensively about the mathematical side of economics. Political theory aside, Marx’s writings are valuable and insightful in regard to the specific mechanisms of an economic system. Smith is not called the “father of modern economics” for naught. The idea of the laws of supply and demand and the invisible hand can be found in high school and college economics teachings around the globe. Aside from the mistaken labor theory of value, Smith’s economic and moral theories are respected and employed in modern free trade economic systems today.

There is much debate about whether or not the so-called “moral Adam Smith” is compatible with the “economic Adam Smith.” Some believe there is a discrepancy between his discussion of morality and virtue and his thoughts on capitalism fueled by self-interest; Others brush off this claim as mere misunderstanding and say Smith’s “virtue” consisted of at least three major elements: prudence, justice, and benevolence. Prudence – a characteristic of self-interested conduct and economic pursuits. Justice (described as a ‘negative virtue’) – conduct in accord with public laws meant to restrain excessive self-interest. Benevolence (the highest form of virtue) – featured through private relationships.

Where carbon economics will not agree with Smith is that one may choose to relish only their commercial virtues; the person may become successful in business, but not be a completely moral being and have a place in our society. Carbon Economics would say they have no social license.

Adam Smith began writing on the importance of a free-trade economic system while he lived in mercantilist England. Smith had the foresight to realize that the mercantilist system was flawed. Mercantilism stressed the need for “large reserves of bullion” to reap economic benefits. Smith disagreed with mercantilist theories and expounded on the importance of free trade. The Wealth of Nations sought to discuss just that, the wealth of the nation as a whole. Rather than focusing on how much land the rich had or what the king acquired, Smith discussed how each individual person could successfully reap his or her own economic benefits and thus add to the nation’s wealth. He cited that in a free trade economy, a person has the ability to earn money and should then use it to purchase other goods (or capital to create their own business) which will then lead to growth in the economy. Smith believed that by earning and spending money, the economy would be stimulated and thus grow.

Smith wrote The Wealth of Nations during the late 1700s, during which a mercantilist society still existed. He realized the need for a better and more efficient economy that would benefit each citizen and the entire nation at the same time. What you may not know is that Smith merely envisioned the free society, he did not actually live it.

Marx wrote in the late 1800s, when the industrial revolution was in full swing. He personally saw and studied the filthy and dehumanizing conditions in which British factory workers labored. That experience led him to think capitalism was the source of every ill in society. He was only exposed to the exploitation of workers who labored long hours for meager wages while rich factory owners’ reaped benefits. In addition to his geographical and historical background, there are two key reasons as to why Marx indicted capitalism for all the problems in the world, these also exemplify his error: He believed that the class in which a person is born is the one in which he or she will remain. He blames capitalism for entrapping human beings

The beauty of a capitalist system is that it is free—we can own property, start a business, and live our lives as we so desire, provided we are not harming anyone.

There is the issue: providing we are not harming anyone. This where the social license is best measured. It is the measure of the carbon economy. What we can hope is that we will live to see the carbon economy proven – those actions are not harming anyone!