For thirty years, European industry depended on Russian gas. The market priced it as cheap, balance sheets counted it as an asset — and then a pipeline from Moscow became exactly what it had always been: a lever. That legacy is the bill Europe is paying now. In Why Europe’s Green Entrepreneurial State Went Bust, Johan Norberg and Christian Sandström blame the cleanup for the pain. They argue that governments trying to act like venture capitalists — funding green industrial policy, backing companies like Sweden’s Northvolt, chasing hydrogen — produced cronyism, blackouts, and deindustrialization, and that America should take the whole thing as a warning. What the authors don’t bother to mention is the alternative they’re implicitly defending: keep buying gas from countries that will hold a knife to your throat whenever it’s convenient, and call it a well-functioning market.
I’ll grant them what they’ve earned. Northvolt collapsed. It was a Swedish darling that took billions in subsidies and green loans and still went down in one of the largest bankruptcies in modern Swedish history. That happened. Hydrogen hype was overblown, and many of the subsidized projects got delayed or canceled. Spain did suffer a serious blackout. Germany did shut functioning nuclear plants and double down on weather-dependent generation, and German electricity prices genuinely are punishing. Those are facts, and the authors have receipts on every one of them.
What they don’t have receipts on is the alternative. Both authors are Scandinavian; they know as well as anyone what the actual menu looked like in 2021. The choice was not between Mazzucato’s venture-capitalism and a functioning free market. The choice was between a messy, expensive attempt to build diversified energy infrastructure and going back to buying gas from a petrostate that had just demonstrated, in the most literal possible way, what the last thirty years of “cheap, reliable” supply really meant.
The piece presents this choice as though it were obvious. On one side: an activist, Mazzucato-shaped state picking winners and losing them with public money. On the other side: a functioning market, with its built-in correction mechanism of bankruptcy and its decentralized wisdom of millions of entrepreneurs. Walk me through the “functioning market” slowly, because I’d like to know where it was for the thirty years before the Green Deal. The market spent three decades pricing Russian pipeline gas as a cheap, stable, reliable input for European industry. It did this right up until 2022, when a man with a very long table decided to remind everyone that a gas pipeline from Moscow is not a market input. It is a geopolitical vulnerability with a price tag. That’s not the invisible hand at work. That’s the invisible hand shrugging.
The Green Deal is not the cause of that bet. The Green Deal is the bill for unwinding it.
When the authors write about how industrial policy “replaces the decentralized wisdom of millions of entrepreneurs and consumers with the ideological preferences of a few people at the top,” they’re making the same rhetorical move the piece claims to critique: treating a political preference as if it were a natural law. The preference here is the one that says energy infrastructure should be a market commodity like any other, priced by supply and demand, with no strategic reserve and no diversification mandate. That preference is what built the dependency. The Green Deal, whatever its failures, is the attempt to fix it.
Let’s talk about Northvolt, since the authors lean on it. The battery factory collapsed. Fine. But China’s dominance of the global battery supply chain exists precisely because the Chinese state played the exact role the authors are scolding Europe for playing — only bigger, and with far less democratic accountability. The question in front of Europe was not “should we have a public role in building battery capacity?” It was “who will build it?” If Europe doesn’t, China keeps owning the supply chain, and the next geopolitical crisis won’t weaponize gas. It will weaponize every battery cell on a factory floor, every motor in an electric car, every grid-scale storage unit keeping the lights on. A failed subsidized company is a real cost. A successful foreign monopoly over a critical input is a cost that doesn’t end when the company goes bankrupt.
The authors warn Americans not to repeat Europe’s mistake. But America is already running its own massive green industrial policy. The Inflation Reduction Act funneled hundreds of billions into clean energy with the explicit aim of building domestic battery and solar capacity before China locked the supply chain for good. And the US defense budget has been the original entrepreneurial state for seventy years — funding everything from GPS to the internet to semiconductors, all of it public money taking public risk. The authors themselves note that industrial policy ideas are resurgent “on both the progressive left and the MAGA right.” So they know America is doing this. They just can’t quite say so out loud, because the European version gives them a convenient scapegoat.
The authors sneer at the “common good” as cronyism with better branding. But the common good is also the only language available for a problem no single firm has any incentive to solve alone. No single company will diversify Europe’s energy supply. No single company will fund the next generation of batteries on a timeline the market won’t price in for a decade. No single consumer will pay more for electricity today to avoid a blackmail scenario tomorrow. These are collective-action problems. They require collective capital. The question is not whether that capital should exist — it must, or the dependency returns. The question is whether the public should own a piece of what it funds, or hand the whole thing to distant shareholders and call it freedom.
There are models that work. Norway has run a state oil fund for decades, and it now holds over two trillion dollars — owning about one and a half percent of every public company on earth. Alaska runs a smaller version and mails every resident a dividend check every year from the return. North Dakota has run a state-owned bank since 1919, and it has turned a profit for decades. Denmark’s wind turbines are not owned by Beijing; they are owned, in large part, by the people who live near them through local cooperatives — the same people who would otherwise have every reason to oppose a noisy turbine on their horizon now have a shareholder’s reason to welcome it.
That is not cronyism. That is ownership.
The real industrial policy is the kind where the public keeps a stake. Where the patient capital comes from a bank accountable to citizens, not to a quarterly earnings call. Where the energy system is diversified not because a politician picked a winner, but because a society decided — on purpose — that depending on a single hostile pipeline for its industrial base was not a market outcome. It was a thirty-year bet that went wrong, and the bill came due.
The cleanup is expensive. The dependency was more expensive. And the market that priced the dependency — the market the authors want us to trust instead — hasn’t said a word about what it would have done differently.