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

Simon Mair

Review of Radical Political Economics, 2025, vol. 57, issue 2, 244-259

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

Keywords: economic growth; low-carbon transitions; Adam Smith; history of economic thought; capital; energy; capitalism (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:sae:reorpe:v:57:y:2025:i:2:p:244-259

DOI: 10.1177/04866134241294096

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