IDEAS home Printed from https://ideas.repec.org/a/sae/reorpe/v57y2025i2p244-259.html

The Relationship Between Energy and Capital: Insights from The Wealth of Nations

Author

Listed:
  • Simon Mair

Abstract

To deliver low-carbon transitions, we must understand the dynamics of capital. To this end, I develop a theory of energy-capital relations by reading Adam Smith’s The Wealth of Nations from an energy-analysis perspective. I argue that, for Smith, capital is any resource used to support production with the intention of generating profits through market exchange. In The Wealth of Nations , capital enables access to new sources of energy and increases energy efficiency. This theory of energy-capital relations explains trends seen in historical energy data: because it is profit driven, capital does not save energy, it redirects it to new uses. This suggests that low-carbon investment can only enable a low-carbon transition if coupled to a systematic challenge to the profit drive. JEL Classification : B12, O44, P18, Q43, Q57

Suggested Citation

  • Simon Mair, 2025. "The Relationship Between Energy and Capital: Insights from The Wealth of Nations," Review of Radical Political Economics, Union for Radical Political Economics, vol. 57(2), pages 244-259, June.
    • Handle: RePEc:sae:reorpe:v:57:y:2025:i:2:p:244-259
    DOI: 10.1177/04866134241294096
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/04866134241294096
    Download Restriction: no
    File URL: https://libkey.io/10.1177/04866134241294096?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Abad, Leticia Arroyo & van Zanden, Jan Luiten, 2016. "Growth under Extractive Institutions? Latin American Per Capita GDP in Colonial Times," The Journal of Economic History, Cambridge University Press, vol. 76(4), pages 1182-1215, December.
    2. Mikołaj Malinowski & Jan Luiten Zanden, 2017. "Income and its distribution in preindustrial Poland," Cliometrica, Springer;Cliometric Society (Association Francaise de Cliométrie), vol. 11(3), pages 375-404, September.
    3. Hrnčić, Boris & Pfeifer, Antun & Jurić, Filip & Duić, Neven & Ivanović, Vladan & Vušanović, Igor, 2021. "Different investment dynamics in energy transition towards a 100% renewable energy system," Energy, Elsevier, vol. 237(C).
    4. Leandro Prados de la Escosura, 2017. "Spanish Economic Growth, 1850–2015," Palgrave Studies in Economic History, Palgrave Macmillan, number 978-3-319-58042-5, January.
    5. Finn, Mary G, 2000. "Perfect Competition and the Effects of Energy Price Increases on Economic Activity," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 32(3), pages 400-416, August.
    6. Roni Hirsch, 2021. "Risk and Trouble: Adam Smith on Profit and the Protagonists of Capitalism," American Journal of Political Science, John Wiley & Sons, vol. 65(1), pages 166-179, January.
    7. Cannan, Edwin, 1921. "Early History of the Term Capital," History of Economic Thought Articles, McMaster University Archive for the History of Economic Thought, vol. 35.
    8. Ann E. Davis, 2019. "Salvation or Commodification? The Role of Money and Markets in Global Ecological Preservation," Review of Radical Political Economics, Union for Radical Political Economics, vol. 51(4), pages 536-543, December.
    9. Keen, Steve & Ayres, Robert U. & Standish, Russell, 2019. "A Note on the Role of Energy in Production," Ecological Economics, Elsevier, vol. 157(C), pages 40-46.
    10. Ronald L. Meek, 1954. "Adam Smith And The Classical Concept Of Profit," Scottish Journal of Political Economy, Scottish Economic Society, vol. 1(2), pages 138-153, June.
    11. Edwin Cannan, 1921. "Early History of the Term Capital," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 35(3), pages 469-481.
    12. Geoffrey M. Hodgson, 2014. "What is capital? Economists and sociologists have changed its meaning: should it be changed back?," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 38(5), pages 1063-1086.
    13. Broadberry, Stephen & Guan, Hanhui & Li, David Daokui, 2018. "China, Europe, and the Great Divergence: A Study in Historical National Accounting, 980–1850," The Journal of Economic History, Cambridge University Press, vol. 78(4), pages 955-1000, December.
    14. Heinz Kurz, 2010. "Technical progress, capital accumulation and income distribution in Classical economics: Adam Smith, David Ricardo and Karl Marx," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 17(5), pages 1183-1222.
    15. Pamuk, Şevket, 2006. "Estimating Economic Growth in the Middle East since 1820," The Journal of Economic History, Cambridge University Press, vol. 66(3), pages 809-828, September.
    16. Beth Stratford, 2023. "Rival definitions of economic rent: historical origins and normative implications," New Political Economy, Taylor & Francis Journals, vol. 28(3), pages 347-362, May.
    17. Stratford, Beth, 2020. "The Threat of Rent Extraction in a Resource-constrained Future," Ecological Economics, Elsevier, vol. 169(C).
    18. Ward, Marianne & Devereux, John, 2012. "The Road Not Taken: Pre-Revolutionary Cuban Living Standards in Comparative Perspective," The Journal of Economic History, Cambridge University Press, vol. 72(1), pages 104-132, March.
    19. Ichiro Sugimoto, 2011. "Economic Growth of Singapore in the Twentieth Century:Historical GDP Estimates and Empirical Investigations," World Scientific Books, World Scientific Publishing Co. Pte. Ltd., number 7858, September.
    20. Pirgmaier, Elke, 2021. "The value of value theory for ecological economics," Ecological Economics, Elsevier, vol. 179(C).
    21. Kyoji Fukao & Debin Ma & Tangjun Yuan, 2007. "Real Gdp In Pre‐War East Asia: A 1934–36 Benchmark Purchasing Power Parity Comparison With The U.S," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 53(3), pages 503-537, September.
    22. Herman E. Daly, 1968. "On Economics as a Life Science," Journal of Political Economy, University of Chicago Press, vol. 76(3), pages 392-392.
    23. Johan Fourie & Jan Luiten Zanden, 2013. "GDP in the Dutch Cape Colony: The National Accounts of a Slave-Based Society," South African Journal of Economics, Economic Society of South Africa, vol. 81(4), pages 467-490, December.
    24. Markevich, Andrei & Harrison, Mark, 2011. "Great War, Civil War, and Recovery: Russia's National Income, 1913 to 1928," The Journal of Economic History, Cambridge University Press, vol. 71(3), pages 672-703, September.
    25. Malanima, Paolo, 2011. "The long decline of a leading economy: GDP in central and northern Italy, 1300–1913," European Review of Economic History, Cambridge University Press, vol. 15(2), pages 169-219, August.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Julien Vastenaekels, 2023. "Degrowth and Capital: Assembling a Power-Centred Theory of Change," ULB Institutional Repository 2013/362596, ULB -- Universite Libre de Bruxelles.
    2. Jutta Bolt & Jan Luiten Zanden, 2014. "The Maddison Project: collaborative research on historical national accounts," Economic History Review, Economic History Society, vol. 67(3), pages 627-651, August.
    3. Prados de la Escosura, Leandro, 2019. "Human Development in the Age of Globalisation," CEPR Discussion Papers 13744, Centre for Economic Policy Research.
    4. Tiago Cardao-Pito & João Silva Ferreira, 2018. "‘Fair Value’ accounting as the normative Fisherian phase of accounting," Accounting History Review, Taylor & Francis Journals, vol. 28(3), pages 149-179, September.
    5. Leandro Prados de la Escosura, 2015. "World Human Development: 1870–2007," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 61(2), pages 220-247, June.
    6. António Henriques & Nuno Palma, 2023. "Correction to: Comparative european institutions and the little divergence, 1385–1800," Journal of Economic Growth, Springer, vol. 28(2), pages 295-295, June.
    7. Simon Mair, 2022. "Writing our way to sustainable economies? How academic sustainability writing engages with capitalism," Environment and Planning A, , vol. 54(7), pages 1460-1474, October.
    8. Tiago Cardao-Pito, 2017. "Organizations as Producers of Operating Product Flows to Members of Society," SAGE Open, , vol. 7(3), pages 21582440177, August.
    9. Broadberry, Stephen & Korchmina, Elena, 2024. "Catching-Up and Falling Behind: Russian Economic Growth, 1690s–1880s," The Journal of Economic History, Cambridge University Press, vol. 84(4), pages 997-1028, December.
    10. Cardao-Pito, Tiago, 2025. "The end of capitalism as a concept: Towards a new political economy for understanding monetary societies in the biosphere," Innovation and Green Development, Elsevier, vol. 4(1).
    11. Bassino, Jean-Pascal & Broadberry, Stephen & Fukao, Kyoji & Gupta, Bishnupriya & Takashima, Masanori, 2019. "Japan and the great divergence, 730–1874," Explorations in Economic History, Elsevier, vol. 72(C), pages 1-22.
    12. Engler, John-Oliver & Kretschmer, Max-Friedemann & Rathgens, Julius & Ament, Joe A. & Huth, Thomas & von Wehrden, Henrik, 2024. "15 years of degrowth research: A systematic review," Ecological Economics, Elsevier, vol. 218(C).
    13. Prados de la Escosura, Leandro & Rodríguez-Caballero, C. Vladimir, 2022. "War, pandemics, and modern economic growth in Europe," Explorations in Economic History, Elsevier, vol. 86(C).
    14. Broadberry, Stephen & Lennard, Jason, 2024. "European business cycles and economic growth, 1300–2000," Explorations in Economic History, Elsevier, vol. 94(C).
    15. Zenonas Norkus & Jurgita Markevičiūtė, 2021. "New estimation of the gross domestic product in Baltic countries in 1913–1938," Cliometrica, Springer;Cliometric Society (Association Francaise de Cliométrie), vol. 15(3), pages 565-674, September.
    16. Lisha Mengge, 2024. "Foreign trade and economic performance in China, 1860–1911," French Stata Users' Group Meetings 2024 14, Stata Users Group.
    17. Bryer, R. A., 2000. "The history of accounting and the transition to capitalism in England. Part two: evidence," Accounting, Organizations and Society, Elsevier, vol. 25(4-5), pages 327-381, May.
    18. Emmanuel Bovari & Victor Court, 2019. "Energy, knowledge, and demo-economic development in the long run: a unified growth model," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-01698755, HAL.
    19. Broadberry, Stephen & Gardner, Leigh, 2016. "Economic Development In Africa And Europe: Reciprocal Comparisons," Revista de Historia Económica / Journal of Iberian and Latin American Economic History, Cambridge University Press, vol. 34(1), pages 11-37, March.
    20. Palma, Nuno & Reis, Jaime & Rodrigues, Lisbeth, 2023. "Historical gender discrimination does not explain comparative Western European development: evidence from Portugal, 1300-1900," Explorations in Economic History, Elsevier, vol. 88(C).

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • B12 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Classical (includes Adam Smith)
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • P18 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Energy; Environment
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q57 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Ecological Economics

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:reorpe:v:57:y:2025:i:2:p:244-259. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: http://www.urpe.org/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.