“Edison to Enron … [is] the second part of a three-volume series on the history of American energy, told through the distinction between productive and predatory capitalism. Bradley is a very much underrated economic historian, largely because of his ‘amateur’ [nonacadmic] status, but there is a remarkable amount of learning in his books.”
– Tyler Cowen, ‘What I’ve Been Reading,’ Marginal Revolution, November 15, 2011.
Last Friday afternoon in our nation’s capital, Robert L. Bradley, Jr., a prominent figure in the esoterica of energy markets, unveiled the Project on which he has labored for a decade before a full room at the American Enterprise Institute. Kenneth Green moderated, and comments were provided by Stephen Hayward and yours truly. My formal remarks follow.
The Project
Enter stage right, our protagonist with The Bradley Project. He has three arrows in his quiver, a trilogy of books that will be the authoritative commentary on American political capitalism and energy policy inspired by the rise and fall of Enron (where Bradley worked for 16 years).
He artfully aims his first arrow, (Capitalism at Work: Business, Government, and Energy) a political economy text that forges a path for his second onslaught (Edison to Enron: Energy Markets and Political Strategies), a history text that applies the economic principles of Book 1 to the natural gas and electric industries from their 19thcentury inception to about 1985.
Both books are dense and lengthy–but very readable. Bradley tackles the vast literature behind subjects and provides hundreds of pages of documentation. For the most serious scholars (are there many anymore?), he provides Internet appendices per chapter, no less than 52 for Book 1 and 74 for Book 2. The extra mile seems to have been run in virtually all instances.
His actions set the economic, political, and historical stage for his yet unleashed third arrow, a text that will mine the Enron debacle and its aftermath for trenchant insights that will help both academics and energy professionals better understand what happened but more importantly, develop insight for the future regarding the nexus of politics and the market economy.
· Act I (today): the Bradley Project is brilliantly conceived, brilliantly executed, and will stand the test of time.
· Act II (tomorrow): his perspective pierces the veil that hides the excrescence that passes as the current sorry state of energy policy.
· Act III (Saturday): dare we venture that there is such a thing as sound government intervention, heretical as that may be in this crowd.
· Act IV (Sunday): the future or, who is John Galt?
Best, Worst of Times
After almost 30 years as a market advocate in energy policy, I thought I knew something about economics, but now I know more thanks to Book 1. I thought I knew something about the gas and electric industries, but now I know more thanks to Book 2.
Bradley has done something truly historical and extraordinary. His most compelling pronouncement – and historical contribution — is the inaccuracy of much of the criticism blaming deregulation or competition on dysfunctions in energy markets.
The real culprit is political capitalism, by which he means the use of the political process to gain competitive advantage. He is thus quite critical of the policies implemented and the corporations that advocate on behalf of the public interest as camouflage for their own self-interest. Enron’s enthusiasm for global warming is a prime example. But his points could not be timelier in light of the protestations of the Occupy Movement in opposition to capitalism.
It is obvious to any serious analyst that much of the critique from the Occupy Movement is well founded in that it criticizes past policy that has protected wealth from the consequences of market outcomes. The Movement goes off the rails however in blaming capitalism rather than the clowns in Washington for adopting policies that created the risks of crisis and then bailed out the wealthy participants who fell into the government’s traps. It is in vilifying the outcomes of bad policy that the Tea Party Movement and the Occupy Movement find common ground. These Movements diverge, however, on the cure for what ails us.
Book 1, Capitalism at Work, is a comprehensive journey through the great names of market economics over several centuries. One should understand the theory of capitalism before using it as a scapegoat. All I can say is that I have never found such a readable history of economics/political economy in a single book.
Given that I run a program funded by a BB&T Grant for the Moral Foundations of Capitalism at Randolph Macon College, I especially liked his first three chapters, on Adam Smith, Samuel Smiles, and Ayn Rand respectively, where he concentrates on the moral defense for capitalism, rather than just relying on its success as a societal organizing model. His use of the Enron debacle as a continuing case study to ground many of his points is very insightful and helpful to understanding the application of these principles in the real world.
Book 2, Edison to Enron, applies the principles derived from Book 1 to the most comprehensive histories of the natural gas and electric industries that I have read. I have been a natural gas and electric expert for more than 30 years and yet I found a treasure trove of fascinating stories about these industries that I had never known. Given the criticality of two industries to our economy and our future prosperity, he has provided an indispensable compendium of insight and information. It is both academically robust yet written in a readable style that makes the history gripping.
Book 3, Enron and Ken Lay: An American Tragedy, surveying the business history of the company, the court trials of Enron executives, and the post-Enron world (Enron writ large!) is a brilliant. Wait a minute, he hasn’t written Book 3 yet! Anyway, I can’t wait to see the movie.
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Ken Malloy is founder and Executive Director of CRISIS & Energy Markets! (caem!), a pro-free market think tank; a Senior Fellow with the Ocean State Policy Research Institute (OSPRI); and adjunct professor at Randolph-Macon College. At Randolph-Macon, he teaches law and economics relating to energy and environment and directs the Capitalism Matters! program.
Ken was formerly the CEO of the Center for the Advancement of Energy Markets, which he founded in 1999 to promote competition in electricity markets. Ken was named by Public Utilities Fortnightly as one of five “Energy Innovators: Ringing in an Age of Enlightenment.” For four years, the Center produced the nationally recognized Retail Energy Deregulation Index (RED Index), a report card on 67 international jurisdictions’ electric competition policies, as well as many other studies and reports.
Winsome introduction to this important work. The political influence that has created incredibly undulating playing fields, in the process perverting the marketplace and many of the practical benefits of capitalism to society, should now be public enemy number one.