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

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  • 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
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    Keywords

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    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

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