Derisking, as a weak strategy of stabilizing on behalf of capital, often triggers political backlash since it uses public power to secure disproportionate distributional gains for investors. It is also ridden with coordination failures, since it assumes that the state can stabilize markets by modulating price signals without controlling them. Despite such systemic fragilities, the derisking regime remains politically appealing because it promises effective crisis management without institutional change and large public spending. Derisking is the path of least institutional resistance, the mark of a state that has hollowed out its capacity for direct intervention. This is why, in a situation of large price shocks—the kind triggered by petro wars, climate disasters, or supply chain shocks—derisking can easily tip into carbon shock therapy.
Daniela Gabor, Benjamin Braun, Against Carbon Shock Therapy
