Adam Smith and Karl Marx disagreed about many things, but they would surely have concurred that the very idea of a ‘carbon market’ is bonkers.

The carbon market in 2007 was worth $64billion: how could this be? A market is supposed to be the exchange of products that are the result of somebody’s work, for the satisfaction of somebody else’s needs. Smith stated that the value of the product is proportional to the amount of work expended in it: ‘The real price of everything’, he wrote in the Wealth of Nations, ‘is the toil and trouble of acquiring it’ (1). This goes for markets in bread or tables, iTunes or diamonds, no matter what nature the ‘work’ or how frivolous the ‘need’. But a market in carbon: quoi?

Quietly and without fuss, all the rules of classical economics are being torn up – in a way that could be very foolish indeed. As we approach the deal-making at the UN conference on climate change at Copenhagen, it is worth thinking about exactly what we are doing here. . .

This is nothing compared to the plans of green economists – the most megalomaniac of whom must be Britain’s Lord Nicholas Stern of Brentford, currently issuing thoughts for the day on everything ranging from world diet (everyone should go vegetarian) to the desired world total carbon emissions two generations’ hence (20 gigatonnes by 2050) (3). Stern envisages a global carbon market – which encompasses world economic production and consumption, as well as the ‘work’ of trees in removing carbon dioxide from the atmosphere – and hopes that Copenhagen will take us a step in that direction.

We've been down this road before and really ought to have learned something. Deformed societies resulting from the ululations of deranged economists are neither novel nor interesting. What a bore.

The truth is that carbon is a new, strange kind of value. Most values of commodities develop spontaneously out of the exchanges of sellers who have a product, and buyers who want it. The state may tweak this, or channel it, but the foundation of market value is civil society.

Carbon value, by contrast, is value created by bureaucratic measures. The carbon market is not based in the needs of buyers and the productive capabilities of sellers, and has no spontaneous logic or levelling principle. Instead, it is completely created and structured from above.

Like the funny money in derivatives markets that were based on naive concepts, the money in carbon markets is illusory, a shell game by grifters.

At base, carbon markets are a state-sanctioned permission to produce. They are the requirement that any industry wanting to produce anything must go through a system of bureaucratic sanction. If we look at the real-world impact of the carbon market, it is quite clear that this system could only have come out of the sclerotic, over-ripe economies of the European Union.

Carbon credits act as a tax or check on industrial activity – but by the same accounts, they are a compensation for economic stasis. They in effect invert the laws of economics, and make growth appear as a cost, and slowdown as a gain. In this topsy-turvy world of the carbon market, the EU’s industrial weaknesses miraculously appear as strengths.

And, up is down. These people are unhinged, ungrounded, living in a fantasy novel.

Every economic collapse – in Russia, in Europe in the credit crunch – has resulted in profits made from selling off carbon credits. A crisis or slowdown in production is offset by the ‘production’ of carbon savings. For example, the closure of a Lithuanian power plant was rewarded by a greater carbon ration, and therefore a compensation for shutdown (24).

As the economic crisis hit, and production was cut, companies rushed to cash in their surplus carbon credits: these were now, in effect, compensation for economic decline. Mark Lewis, a carbon analyst at Deutsche Bank, said: ‘This [Emissions Trading Scheme] was not designed as a scheme to give corporates cheap short-term funding options in the face of a credit crunch meltdown… but that appears to be what’s happening.’ (25) Oscar Reyes of the Carbon Trade Watch is quoted saying that ‘it is no surprise that it [ETS] is now being used as a cash cow to see firms through a difficult financial phase’ (26). Bryony Worthington lamented the fact that the ETS is ‘now a cash redistribution exercise’ (27). . .

There is one effect of carbon markets that predominates: which is to redistribute both resources and control over resources away from both industry and consumers, to a state/managerial bureaucracy. The bureaucratic elite is – in the first instance – the creator of carbon value, and their interests are also served by it. . .

And so we find that under the guise of saving the planet, perhaps it is rather that Nicholas Stern is actually saving himself. The implication of his proposals is to justify the creation of a vast bureaucracy of green economists, to supervise and sanctify world industrial production. Perhaps it is time to challenge the myth of carbon value, before these bureaucrats are allowed to build their global castle in the sky.

The scam is much larger than the self-aggrandizement of bureaucrats. Carbon fat cats like Al Gore have profited immensely while doing nothing at all of value. The screeching of wanna-bes for ever more controls so that they too can enrich themselves doing nothing of value - talk about irrational exuberance and financial bubbles! - is driving the current bacchanalia in Europe in general, Copenhagen in particular.

The more apparent these threats are to you the more you should oppose such activities. The threats are real but these are not the people who should be be developing policies to address them. Their ideas are infantile, their understanding is minuscule, and their general maturity is low.