It’s rare to see quite so much economic nonsense and ignorance on display in just one sentence outside a Noam Chomsky book.

The EMH is not based on Smith’s invisible hand: and Smith didn’t argue that markets were an invisible hand anyway. What he actually said was that people are led to employ their capital close to home rather than abroad “as if led by an invisible hand”. And the EMH does’t refer to any of this at all: it simply says that in a market prices will reflect the information available about what prices should be. That really is it: it’s not about markets being efficient in allocation, not about their being efficient in distribution, it’s purely about their efficiency in processing information.

Which is why Hawken’s point is silly as well: we all know when markets do not work well in processing information (indeed in distribution or allocation): when there are externalities. That is, things which are outside the information purview of the markets. In this example, the costs of CO2 pollution are not encapsulated in market prices and thus they don’t influence them. Which is why we’re all running around thinking cap and trade or carbon tax so that they do: and thus market prices will be affected.

Jeebus, if people are going to write about the economics of climate change you’d think they’d try and bone up a little on economics, wouldn’t you?