The massive gas leak in Bhopal, the consequences of which Union Carbide (via Dow, which took it over) continues to evade, was due, in part, to equipment failure. Below is a comparison of the market valuation of Union Carbide and the S&P 500 (both indexed; October 1 = 100).
- Union Carbide 1984.JPG (44.49 KiB) Viewed 3383 times
Union Carbide’s relative value plummeted 30%[1]. Although the figures used for valuation are only equity, I feel confident with the narrow measure as the time scale is not long enough for a drastic change in debt.
We cannot reduce the decline to any one quantifiable component of the assets under Union Carbide’s control. Instead, this graph is a picture of falling confidence on the part of owners in the obedience of a whole array of entities that impact the firm’s earnings. My current interest is how some of the confidence pertains to the material components. Infrastructure is constantly surprising us, almost exclusively for the worse. Can we consider such surprises ‘disobedience’? I think we can. The Bhopal plant was a complex assemblage of human and non-human entities. When it exploded and released deadly gas that killed thousands of people, the market’s response was to reduce the value of the owner of the plant. Only a qualitative analysis will approach the whole story. Part of that analysis should be the disobedience of the materials, which likely spawned new research into insuring the event would not be repeated. Political economy requires more extensive trans-disciplinarity than just ‘politics’ and ‘economics.’ Engineering, material sciences, chemistry… all is quantified through capitalization, so how can a understanding of capitalism that claims to know more than the market itself ignore these disciplines and the entities they work with?
[1] It's absolute decline was 30.43%. It's relative decline was 30.45% as the S&P gained 0.02% over that period. Union Carbide was likely a component of the S&P 500 at the time, so differential calculation that excluded it from the denominator would show a greater relative decline. If anyone can locate a summary of the historical components of the S&P 500, that would be extremely useful.