A few days ago, John Kay wrote a characteristically brilliant column about money, Money, like hat wearing, depends on convention, not laws.  It was about the acceptance of Scottish bank notes – in Scotland, and in some places in London, but not elsewhere. He wrote:

“There is a widespread reluctance to accept that behaviour is governed by social norms rather than legal rules or abstract principles. I wear a tie today not because I want to, or because anyone requires me to, or because I think that it is right that I should do so, but because of a shared convention that I will. …

I tip in restaurants or cabs, but not post offices or doctor’s surgeries. Often there is some underlying reason for these practices, although I cannot think of one that applies to the habit of tie-wearing. But in any event it is custom, not reason, that leads me to do it. The Scottish pound is accepted where it is accepted, and not where it is not. There is really no more to it than that.”

As it happened, I was reading at the same time John Searle’s [amazon_link id=”0199576912″ target=”_blank” ]Making the Social World: The Structure of Human Civilization[/amazon_link], which is about exactly the same point.

[amazon_image id=”0199576912″ link=”true” target=”_blank” size=”medium” ]Making the Social World: The Structure of Human Civilization[/amazon_image]

Searle makes the even stronger claim that all human institutions are created and sustained in existence by “collective recognition”, which is dependent ultimately on communication. He sees all institutions as general examples of Austin’s “performative utterances”, which “make something the case by declaring it to be the case.” (p69)

There are many examples, of which money is one. So are political institutions and roles: the prime minister is the leader of the party that wins the most seats in a general election because we agreed that it is so. Another example I’ve been pondering is property: intellectual property is clearly an abstraction dependent on social convention, but physical property is too. When I buy a meal in a restaurant, convention tells me I have bought the food, and can take home what I don’t finish, but I can’t tuck the plate into my bag to take away when I’m done.

There’s an even more interesting question arising from this issue of performativity in the economy: what is the effect of the new forms and scope of communication on economic and political institutions? Intellectual property is on the front line of the struggle between old institutions and new ones shaped by the new technologies.  Facebook and Twitter and the like offer completely new opportunities for performative declaration. Many other struggles will follow.

100 Scottish pounds

An interesting report in this morning’s Financial Times says North American book retailers are refusing to stock Amazon-published titles (such as a forthcoming self-help book by Deepak Chopra) because Amazon is pushing authors to sign exclusive deals that prevent other retailers from selling digital versions of their books. The report comments: “Amazon Publishing is a more direct threat to publishers and agents, but their position is complicated by their reliance on its website to sell books.” ‘Complicated’ is a polite way to express their lack of market power.

This is fascinating stuff for a competition anorak like me. Amazon is doing the classic giant corporation thing of trying to leverage a strong market position in one market into neighbouring markets, and to control as much as possible of the entire vertical supply chain. The competition authorities should be keeping a watchful eye on this already.See Timothy Wu’s brilliant book [amazon_link id=”1848879865″ target=”_blank” ]The Master Switch[/amazon_link] for past examples of concentration in these network markets.

Having said that, publishing is not short of massive corporations itself, and the big ones can probably look after themselves. Meanwhile, plenty of smaller publishers seem to be doing rather well, innovating to serve readers and authors better using the new technologies.

Then, while these two sets of titans – Amazon and the big publishers – slug it out, the retailers on whom they have all depended are struggling, facing a real margin squeeze. Readers are benefiting from variety and innovation but not from reduced prices – so there is successful exploitation of market power somewhere back up the supply chain. And the authors? A few superstars benefit from network dynamics and the rest are in the same weak position as ever, albeit with some new opportunities to self-publish and self-market.

I should add that all the links on this blog go to Amazon’s UK site, only because the associates programme allows me to make enough to offer vouchers to the occasional guest reviewer. If Abe Books or another online retailer were to launch a similar programme, I’d happily switch.

As another aside, I’m a fan of real books rather than e-readers, and definitely hate the Kindle specifically for its ugly greyness and small screen. Last night I was reading a delightful book by Susan Hill, [amazon_link id=”1846682665″ target=”_blank” ]Howards End is on the Landing[/amazon_link], and found she agrees: “No one will sign an electronic book, no one can annotate in the margin, no-one can leave a love letter casually between the leaves.”

[amazon_image id=”1846682665″ link=”true” target=”_blank” size=”medium” ]Howards End is on the Landing: A year of reading from home[/amazon_image]

I use postcards and concert tickets as bookmarks – it’s always a pleasure to pick up a book again and see what drifts out from between the pages. Yesterday it was a postcard from Balthazar’s on Spring Street in New York, a memory of brunch with dear friends.

Balthazar's

A while ago I read [amazon_link id=”0141003251″ target=”_blank” ]The Morbid Age[/amazon_link] by Richard Overy, an utterly brilliant overview of the inter-war years. It was published in 2009, when the parallels between the 1920s/30s and our own time were not as obvious as they have since become. Although there are certainly differences, there is now a similar odd, febrile mix of technological and cultural innovation combined with a sense of crisis, anxiety and an almost existential despair about democratic politics.

[amazon_image id=”0141003251″ link=”true” target=”_blank” size=”medium” ]The Morbid Age: Britain and the Crisis of Civilisation, 1919 – 1939[/amazon_image]

One of the many points that struck me in Overy’s account was his description of the widespread interest in serious matters. For example, the Left Book Club, which I’d always imagined to be the minority sport of a few intellectuals, was a mass market phenomenon. There is certainly plentiful evidence of this seriousness these days: huge interest in online university courses; sales of ‘popular’ science, history, economics books; flocks of people attending debates and lectures; audiences for current affairs and foreign news…..

These serious appetites are well in evidence, too, in just my limited reading of this weekend’s book and culture sections of the papers. Here are just a few themes:

The internet and society. John Naughton discusses David Weinberger’s [amazon_link id=”0465021425″ target=”_blank” ]Too Big to Know[/amazon_link] and Evgeny Morozov’s [amazon_link id=”014104957X” target=”_blank” ]The Net Delusion[/amazon_link] & his recent New York Times essay (Death of the Cyberflâneur) about the decline of online flânerie (with HT to [amazon_link id=”067404326X” target=”_blank” ]Walter Benjamin[/amazon_link]). Richard Sennett’s new book on community (ok, the theme of all of his books), [amazon_link id=”0713998741″ target=”_blank” ]Together[/amazon_link], features in The Guardian, Observer, The Independent.

[amazon_image id=”0300116330″ link=”true” target=”_blank” size=”medium” ]Together: The Rituals, Pleasures and Politics of Cooperation[/amazon_image]

Mechanisms. The book behind the movie Hugo, Brian Selznick’s [amazon_link id=”1407103482″ target=”_blank” ]The Invention of Hugo Cabret[/amazon_link] (Observer). The Black Scholes Equation, one of those featured in Ian Stewart’s [amazon_link id=”1846685311″ target=”_blank” ]17 Equations that Changed the World[/amazon_link] – see also John MacCormick’s 9 algorithms that changed the future and my recent musings on the performativity of economics, Frankenstein Economics. Here’s a review of Nick Harkaway’s [amazon_link id=”043402094X” target=”_blank” ]Angelmaker[/amazon_link], featuring a maker of clocks and automata.

[amazon_image id=”043402094X” link=”true” target=”_blank” size=”medium” ]Angelmaker[/amazon_image]

Here, by the way, is a fascinating article about the Enlightenment and 19th century interest in automata – and here a 21st century animatronic singing face.

Freedom, and its erosion. John Kampfner reviews Rebecca MacKinnon’s [amazon_link id=”0465024424″ target=”_blank” ]Consent of the Networked[/amazon_link]. Nick Cohen has a new book out, [amazon_link id=”0007308906″ target=”_blank” ]You Can’t Read This Book[/amazon_link], reviewed here by Denis McShane.

The state of the nation. Charles Dickens is everywhere, given his anniversary – see this review in the Sunday Telegraph of [amazon_link id=”1848313918″ target=”_blank” ]The Dickens Dictionary[/amazon_link]. Here is an essay by Alex Preston on a flock of new state of the nation novels. I’m especially looking forward to John Lanchester’s [amazon_link id=”0571234607″ target=”_blank” ]Capital[/amazon_link]. Not to mention the wave of books about (in-)equality, the economy and all that.

Time to stop blogging and start reading.

[amazon_image id=”0571234607″ link=”true” target=”_blank” size=”medium” ]Capital[/amazon_image]

A little while ago I came across this delightful essay, On Being the Right Size, by [amazon_link id=”0199237700″ target=”_blank” ]J.B.S Haldane[/amazon_link], courtesy of the always-interesting Farnam Street blog. An essay that seems to be about biology (and for more on this see 2010’s Royal Institution Christmas Lectures by Mark Miodownik) ends with a clever twist as an article about the optimal size of political institutions, and its relation to communications technology:

“[J]ust as there is a best size for every animal, so the same is true for every human institution. In the Greek type of democracy all the citizens could listen to a series of orators and vote directly on questions of legislation. Hence their philosophers held that a small city was the largest possible democratic state. The English invention of representative government made a democratic nation possible, and the possibility was first realized in the United States, and later elsewhere. With the development of broadcasting it has once more become possible for every citizen to listen to the political views of representative orators, and the future may perhaps see the return of the national state to the Greek form of democracy. Even the referendum has been made possible only by the institution of daily newspapers.”

Today, for irrelevant reasons, I had to spend hours waiting and re-read the Haldane essay, along with this one from Foreign Policy magazine about the complementary roles of online social networks and old-fashioned on-the-ground political organisation. Put these thoughts together with Dunbar’s Number, which says the size of the human neocortex limits our number of stable social contacts to a relative small 150 (or 230 – estimates differ). And there is an obvious essay question: what does the widespread adoption of social networks imply for the optimal size of political territory and mode of participation? Not to mention the obvious follow-up – are any political reformers at work getting us from here to there? After all, the degree of dissatisfaction with conventional politics strongly suggests reform is needed to revive participation.

[amazon_image id=”0199237700″ link=”true” target=”_blank” size=”medium” ]What I Require From Life: Writings on science and life from J.B.S. Haldane[/amazon_image]

Alec Russell reviews favourably (in today’s Financial Times) a new book by George . Ayittey, [amazon_link id=”0230108598″ target=”_blank” ]Defeating Dictators: Fighting tyranny in Africa and around the world[/amazon_link]. The review describes it as an essential read for anyone interested in learning how to topple dictators, and anyone tempted to think it’s ok for the west to work with authoritarian regimes which are economic liberalisers, because they’re on the pathway to political freedom. Wrong, according to Prof Ayittey, who has an earlier book about African kleptocrats, [amazon_link id=”0312080581″ target=”_blank” ]Africa Betrayed[/amazon_link].

It is both encouraging – because a basis for realism – and depressing – because of the reality – that there are now a number of clear-eyed diagnoses of the nexus of political and economic problems in African countries. Martin Meredith’s [amazon_link id=”0857203878″ target=”_blank” ]The State of Africa: A History of the Continent Since Independence [/amazon_link] is a rather pessimistic analysis of the continuing shadow colonialism casts over present day political dysfunction. Deborah Brautigam’s [amazon_link id=”B005PUWRM4″ target=”_blank” ]The Dragon’s Gift[/amazon_link] is a fascinating study of Chinese investment in Africa, its geo-political and economic purposes, and the difficulties encountered by the Chinese. Tim Besley in [amazon_link id=”0691152683″ target=”_blank” ]Pillars of Prosperity[/amazon_link] is excellent on why politics matters for economic development.

We shouldn’t be too pessimistic, though. Africa’s economic performance has improved somewhat in recent years. Besides, understanding is always a better foundation for action than ignorance.

[amazon_image id=”0230108598″ link=”true” target=”_blank” size=”medium” ]Defeating Dictators: Fighting Tyranny in Africa and Around the World[/amazon_image]