When the American life insurance industry developed in the late nineteenth century, one advocate described it as “the organized love of men for their families, the capitalization of affection.” Others, however, initially considered it to be, as economic sociologist Viviana Zelizer puts it, “a profanation which transformed the sacred event of death into a vulgar commodity.”
The first U.S. commodity futures market, the Chicago Board of Trade, was founded in 1848. A century earlier a members-only guild of Japanese merchants had begun to meet in Dejima to buy and sell contracts based on forecasted fluctuations in the price of rice, Tokugawa Japan’s staple crop as well as the basic unit of taxation.
Despite pulling in almost $400 billion in annual revenue in the U.S., the electric power industry offers no physical product: unlike oil, natural gas, and coal, electricity cannot be easily transported across different power grids or stockpiled. Demand is constantly fluctuating, which complicates things for investors, since power must always reach consumers immediately. “Every second,” writes economist Peter Cramton, “supply and demand must balance.”