Urbanites, farmers and barbarians

One of my all-time favourite books is James Scott’s (1998) Seeing Like A State, because of its sheer capacity to be thought provoking. So I eagerly ordered his new book, Against the Grain: A Deep History of the Earliest States. It is equally well written and enjoyable, ranges across disciplinary boundaries in a most refreshing way, and again compels you to stop and think. But … it just isn’t as persuasive in its big picture perspective on society.

Against the Grain sets up a received wisdom, more or less Whig interpretation, version of early human history as a process of agrarian settlement, urbanisation and progress toward civilisation. There were setbacks and collapses of course, all kinds of bad stuff happened. Still, the contrast between a marginal life as a hunter gatherer and a more prosperous settled existence as a farmer, and the progression to bigger towns, cities and civilisations, has been the narrative.

Scott argues that this narrative is ‘in tatters’ and offers his alternative: that ecological pressures undermined the viability of the happy hunter gatherer life, forcing agrarian settlement in which people were worse off nutritionally. The adoption of crops (wheat & barley) which could be stored, and divided easily, made the settlements attractive booty. So the agriculturalists were not only less prosperous than when fishing or gathering, they also were more likely to become victims of raids by nearby mini-states for both food and prisoners – either to do hard work in mines or fields, or in the case of women to serve as breeding stock or work on textiles.

For sure the conventional account seems to have its anomalies, and it’s easy to accept there are all kinds of unexplained historical developments. But Scott’s alternative narrative has its holes too. For one, he doesn’t explain how the earliest smash-and-grab states came about – what made them become more than their neighbouring impoverished but passive communities.

He also brings to bear an antipathy to state power structures – the same emotion that makes Seeing Like A State, about 20th century state-created disasters, so compelling. Take this example:
“I am tempted to see the late Neolithic Revolution, for all its contribution to large scale societies, as something of a deskilling. Adam Smith’s iconic example of the productivity chains achievable through the division of labor was the pin factory, where each minute step of pin making was broken down into a task carried out by a different worker. Alexis de Tocqueville read The Wealth of Nations sympathetically but asked, ‘What can be expected of a man who has spent 20 years of his life putting heads on pins?’

“If this is too bleak a view of a breakthrough credited with making civilisation possible, let us at least say that it represented a contraction of our species’ attention to and practical knowledge of the natural world, a contraction of diet, a contraction of space, and perhaps a contraction as well in the breadth of ritual life.”

It might be personal taste that makes me shudder with horror at the romantic vision of barbarians roaming the steppes, in harmony with nature, with a rich shamanistic appreciation of the world. But the vision also stumbles against – as far as I know from my amateur reading – good evidence that the slow progress of urbanisation in early history was accompanied by increases in longevity and health, and an economic surplus that enabled some (a slowly growing minority eventually trickling down to the majority) to acquire decorative clothing, jewellry and artefacts. There is also the constant steady flow over the centuries of people from countryside to cities, even though cities are evidently difficult and unhealthy places, even now. There is something very many people find compelling in urban variety and pockets of opportunity. Scott convinces me only this was not a linear Whig-like progression, at least in the ancient earliest eras of which he writes.

Still, this is a book well worth reading, gripping and full of interesting stuff. Not surprisingly, the sections on agriculture are great. “The key to the nexus between grains and states lies, I believe, in the fact that only the cereal grains can serve as a basis for taxation: visible, divisible, assessable, storable, transportable, and ‘rationable’.” No other crops have all these features, he argues. Wheat has a harvest while lentils can be picked at any time. Cassava is left in the ground until needed and can sit there for a couple of years. What is 10% of such a crop? I enjoyed also the section on writing – for accounts – as a key signifier of statehood.

As I finished reading Against the Grain, a couple of very interesting reviews were published. Here is Walter Scheidel in the Financial Times and Samuel Moyn in The Nation.

 

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Competitive brains and centrally planned computers

I’ve enjoyed reading (late) Daniel Dennett’s Intuition Pumps and Other Tools for Thinking, although I’m very far from being an expert reader. His materialism seems perfectly inuitive to me. I have no problem thinking that consciousness is the outcome of an accumulation of brain functions and that the life on earth we observe is the outcome of evolution by natural selection rather than an intelligent Designer. I’m not sure the book will change any minds, though, or reason people out of different beliefs. (Reason can only be deployed against people already open to it.)

However, Dennett thinks the brain is something like a computer, and starting with a detailed description about computing, routines and subroutines, and how software works is certainly a useful approach – the key difference being that a computer is a bureaucracy, a planned economy in which routines form orderly queues, while the brain is anarchic, super-competitive. As Dennett put it in The Edge interview about the book:

“They’re [ie your neurons] struggling amongst themselves with each other for influence, just for staying alive, and there’s competition going on between individual neurons.”

Another lens on Biological Market Theory.

Dennett’s metaphor of the ‘self’ as a ‘centre of narrative gravity’ is nice too – there is no physical location in your body for your centre of gravity, and different shoes or gaining weight will shift it a bit, but it’s still a meaningful thing. There is no ‘hard problem’ of consciousness, Dennett argues (maybe this was why The Hard Problem was one of Tom Stoppard’s less thrilling plays).

The book is a mixture of ‘tools for thinking’, or in other words techniques for critical thought and reasoning, and applications of the tools to consciousness, evolution and free will , and discussion of the philosophical debates about these thorny subjects. It’s very clear although some parts require immense concentration, at least from me. This is why I had to give up philosophy, but this book was worth the effort. If only all philosophers could write so clearly. I’ve always suspected that – like economics – the less intelligible the philosopher, the harder they find it to explain what they’re trying to say, the less they understand it themselves.

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They’re watching you

I thought I was as concerned as the next person about online privacy and the harvesting of my data by big tech companies. Then I read Exposed: Desire and Disobedience in the Digital Age by Bernard Harcourt and realised that there are people who are far more worried about it than me. This is a very emotional book, and I’m not entirely sure what to make of it. Quite a lot of the material it covers is pretty familiar – for example, it draws on Edward Snowden’s revelations and all that has subsequently been written about them, and refers to books such as Tim Wu’s The Master Switch although it was presumably written before Cathy O’Neill’s Weapons of Math Destruction.

What Exposed does is join the dots to develop a picture of a society which is – not George Orwell’s Big Brother (because it exploits desire rather than repressing it), not a Surveillance State (because it is the state wedded to the private sector titans), not Jeremy Bentham’s (or rather Foucault’s) Panopticon (because the transparency is individualized not mass) – but rather the union of all of these.

The first part of the book sets out the limitations of each of these common metaphors for the digital world, arguing that the links between corporates, spies and governments are so tight they make the old military-indsutrial complex look amateurish. The second part describes what Harcourt refers to as the ‘Expository Society’, describing our willingness to reveal so much about ourselves online. The third part goes on to paint a portrait of a dystopian social collapse, with constant surveillance destroying people’s self-esteem to create passive consumers, and the border between incarceration and constant observation blurring. (In a striking comparison, the book links willingly worn smart watches to electronic tags imposed on offenders.) The final part offers a few (but not many) thoughts on how to resist.

While there is certainly much to worry about in the digital 1984/panopticon/surveillance world, I’d make three observations.

First, this is a very American-centric book. No other country (save perhaps China?) incarcerates or punishes so many of its citizens. Few others, not even the UK, are so thoroughly marketized. Germans have a completely different view of what is unacceptable in terms of invasion of privacy.

Secondlyly, there is another side to some of the phenomena. Harcourt paints as oppressive the ability of digital platforms to match more closely people’s wishes – he callis it doppelganger logic. There is something magical about this too. I thought of The Double Life of Veronique.

Finally, we can as the book suggests take measures to stop generating so much data exhaust for the big companies and spies to hoover up – the final chapter points to some steps. But we can also expect our anti-trust authorities to look closely at the duopoly of online ad revenues, the fraud in the online markets, and we can expect our governments to protect our privacy and identity. European authorities are starting to cotton on to this. We can also shop less, use the digital platforms more to swap or buy second hand – the sharing economy could yet deliver on its promise of subversion.

The most interesting chapter to me (as a statistics nerd) is the one about the evolution from classification by group in the 20th century, and the use of actuarial logic, to algorithmic data mining to pinpoint individual characteristics in the 21st century. I think Cathy O’Neill’s book shows that we are too far away from individual knowledge, in fact, and have a toxic mess of attributing group characteristics to individuals by algorithm. Anyway, this links to the emerging debate about whether there can be too much information for markets to work – insurance markets may collapse, for instance, as insurers learn too much about individuals and move away from group risk.

Anyway, I’m not going to wear an Apple watch, will check my Firefox add-ons, and will use Olio to give and take rather than sell and buy. Exposed goes over the top but it’s surely right that citizens need to worry more about privacy and digital power.

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Pricing progress – yes please

I pounced on Eli Cook’s new book, The Pricing of Progress: Economic Indicators and the Capitalization of American Life. The author is an historian, and I enjoyed reading the historical detail, which traces the evolution of economic measurement of the US economy from Alexander Hamilton on. The early chapters set up a contrast between the use of ‘moral statistics’ – essentially detailed social statistics – in public discourse and policy in the earlier part of the period and the forerunners of the economic statistics we are used to today. Hamilton was an outlier in his day, the book argues, in seeking to price everything. It was not until the late 19th or early 20th century that the commercial mindset predominated. And Cook – like many modern critics of capitalism from Polanyi on – regrets that shift.

This framework means the book sees more continuity than I (and others) would between pre-World War 2 statistics and modern ones. Cook’s argument about that continuing essence is this: “One of the key elements that distinguishes capitalism from previous forms of cultural and social organization is capital investment, the act through which basic elements of society and life – including natural resources, technological discoveries, cultural productiond, urban spaces, educational institutions, human beings and the fiscal nation state – are transformed (or capitalized’) into income-generating assets valued and allocated in accordance with their capacity to make money and yield profitable returns.”

It seems to me there are two separate arguments here. One is about the spread of money as a metric. Concerning the ‘moral statistics’ of the mid-19th century, Cook writes: “Moral statistics did not measure social welfare in units of money, as the American people’s general disdain of the pricing process held strong through the 1840s.” Indeed, he notes an ‘explosion’ in the use of the word ‘priceless’ in the 1830s and 1840s – although this was a sign, perhaps, of this approach coming under pressure. The book portrays the 1850s as “a watershed decade for the pricing of progress”. This is a well-aired debate, to which the economist’s response as always been that it is impossible to weigh up trade-offs without measuring in common units, and money is at least as good as any other. Anyway, this dislike of money as the metric of value of culture, natural resources etc will resonate with many readers.

The point about regarding all of these things as income-generating assets is a distinct one. The book starts by defining this – just like the theory of a company’s market cap – as the net present value of the stream of future earnings. The first example is the shift (in 17th and 18th century England) from seeing land as a forum governed by traditional relationships to the enclosure of land and its valuation estimated as a multiple of expected rents. The book sometimes uses ‘capitalization’ with a different meaning – often, just ‘aggregated’. It does acknowledge right at the end that modern (system of national accounts based) economic statistics are different from predecessor statistical frameworks such as those of William Petty or Thomas Jefferson: “There is one important difference between GDP and some of the previous forms of capitalization documented in this book.” That is, of course, that GDP pays no attention to asset values at all. All that matters is the current flow of resources, no matter what the inter-termporal trade-offs or depreciation.

This seems at least as important a watershed as the transition to valuation based on market prices: if only we had capitalized natural resources then we might not be in the current dangerous environmental situation! It is true that at in microeconomics the ‘capital’ metaphor has persisted and spread – we have human capital, cultural capital, social capital etc. Some of these are more persuasive than others – natural capital is as real as physical capital. I find the concept of human capital and investment in one’s capabilities a useful one, though Cook disparages it. And – being an economist – would argue we should be doing more pricing of assets we ‘value’ (in the normal everyday sense) in order to take more care of the future than has been the case for the past 70 years or more. The more we ‘capitalize’ the future benefits nature will give us, by looking at the value of tomorrow now, the better we will look after the assets.

So although there is a lot to enjoy in The Pricing of Progress, the elision of monetization and capitalization is confusing and frustrating. It lasts up to the final page, where Cook criticizes Donald Trump for comparing running America to running a business. I agree – but would not describe it remotely as a “capitalizing vision for America,” as Cook describes it. On the contrary, Mr Trump seems to have no concern at all for America’s assets, as he and his family extract as much value short term as they can. Read this book for its insights into the growth of a commercial mindset in 19th and early 20th century America, including the role of slavery, but I don’t think it adds a lot to the current debate on economic measurement.

Price: £18.72
Was: £23.95
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Competition, competition, competition

Grazing along my bookshelf this morning, postponing getting to work, I found ‘Industrial Concentration‘ by M.A.Utton in the Penguin Modern Economics series – 1960s/70s paperbacks for the people providing overviews of different fields in the subject. This one was published in 1970 and it’s fascinating as a window on the historical evolution of competition policy.

One distinction it draws, certainly no longer valid, is between tough American anti-trust policy with a legacy dating back to the Sherman Act and relatively weak and new British competition policy based on 1948 legislation under the Monopolies Commission, which Utton describes as always willing to accept ‘public interest’ arguments for allowing mergers of big companies. American policy was far more willing to tackle the structure of an industry, he argues.

Hence UK business had become far more concentrated in the 1950s and 60s, although with effects mitigated by greater openness to foreign competition via trade than the relatively closed US economy. At the time of writing, the newish (1966) Industrial Reorganization Corporation (IRC) in the UK was busy promoting still more mega-mergers to create ‘national champions’, with the companies involved given a nod and a wink to say they would not be referred to the Monopolies Commission.
Interestingly, a recent Yale Law Journal article by Lina Khan argues for a return from the Chicago School emphasis on consumer welfare as measured by current prices to Sherman Act-inspired interventions in market structure, in the context of the digital giants. But it isn’t just the digital sector; there’s pretty convincing evidence of increasing concentration across the US economy, as The Economist recently summmarised.

The UK’s history of competition policy has been brighter recently thanks to the formation of the independent Competition Commission and now Competition and Markets Authority (with its excellent economists, including my son). There have been blips – notably the very bad decision during the financial crisis to make finance a sector exempt from the usual competition rules, in order to allow the Lloyds-HBoS merger. Still, the independence of the watchdog and the removal for the most part of vague ‘public interest’ considerations has been beneficial. However, vigilance is needed.

It isn’t only the challenge of ensuring the giant digital companies, with their giant network effects and economies of scale, continue to deliver for social rather than just private gain. The EU’s State Aid regime has been a massively important backdrop to domestic policy. If the Brexit train wreck continues, it will be essential to carry the regime over into domestic policy.

This is all the more important in the context of both the likely negative impact of Brexit on key sectors – there will be queues of badly affected businesses asking for special help or dispensations – and the aim of having a more strategic approach to economic policy, an industrial strategy. Nobody (in theory) wants a return to the ‘picking winners’ (ie losers) days of the IRC.

A really tough competition policy is the best way to avert this. It needs to include not just State Aid rules but also a rethink about the weak sector regulators in network sectors like water and telecoms. This is why we on the Industrial Strategy Commission have been putting so much emphasis on competition policy.

(I note the Amazon price for this book is algorithmically weird – original cover price was 40p.)

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