Climate change is often chalked up to “market failure.” We’re told that, despite prevailing assumptions that prices accurately transmit “signals” about the costs of goods and services, emitters like power plants, refineries, automobiles, and households simply do not pay the full ecological costs of their emissions. Hence, the market has failed.

To fix the problem, the argument goes, we must internalize the costs of emissions into the price mechanism so that emitters pay the full costs of their actions. If we could craft a policy that accurately monetized the ecological costs of emissions — a carbon tax, or fee and dividend scheme — fossil fuels would become costlier and renewables would be more competitive and cost effective. The failure could be corrected, and the market would succeed in guiding us to a clean energy future.

Accounting for ecological costs has become the primary way of crafting environmental policy for public officials and legal experts. But the rhetoric of cost internalization is a political dead end for a left climate politics.