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The Next Economics: CiviceSocial Capitalism Chapter j 11 211

the publicly regulated monopolies that had supplied California with power for
a century of economic growth.
This chapter argues for a new set of tools by which the economics of the
power sector can be reformulated to create new solutions and opportunities for
the future of all citizens. The old neoclassical competitive model that gave
deregulation to California, most of the United States, and now the world, needs
to be replaced with a new energy/environmental economic model that builds
on networks, flexibility, and innovation. Such a new economic model is well
rooted in civic markets.

A New Framework for Understanding Energy and Economics
Within the Context of Civic Society
The concept of “civic markets” is put forth in this chapter to highlight the
differences that need to be addressed in managing a complex industry such as
electricity. However, civic markets also apply to other infrastructure sectors
like water, waste, transportation, and education where market forces can be
relied upon either technically or financially to be honest. In addition, civic
markets are likely to be in the new economy and concentrated in industries that
are expanding rather than contracting.
This is most clearly seen not only in monopolist industries such as energy
but also in industries involving other public infrastructure such as airlines and
airports and information and telecommunications, industries with high envi-
ronmental impacts such as the natural resource industries, as well as service
industries such as health and welfare. Even industries that depend on a steady
stream of innovation from university and government research laboratories
such as pharmaceuticals, life sciences, and biotechnology are moving rapidly
toward civic markets or partnerships between public and private sectors. The
framework for the new economics is rapidly evolving and is reflected in a
growing body of thought in politics as well as business and economics (Clark
and Lund, 2001).
According to conventional neoclassical economics, companies should
operate with little or no government interference. Ideally companies have no
regulations and taxes, etc., but contribute to societal needs on their own. Adam
Smith’s (rev. 1934) concept of the “invisible hand” and more recently the Bush
administration’s (2001) application of it in outlining its “energy plan,” are
good examples of this neoclassical economic perspective: government should
not be involved in energy business activities, especially regulations. In any
industry, as in any country, it is argued that there is a “balance” between
supply and demand that keeps prices low due to competition among the
companies for customers. It is the supplyedemand balance that is the basis for
all energy economics and the rational for deregulation in California as well as
similar conventional economic justifications elsewhere in the United States
and worldwide.