Not all automation is equal

Democratic Capitalism at the Crossroads: Technological change and the future of politics by Carles Boix is a good complement to the widely reviewed The Technology Trap by Carl Frey. It takes a political science perspective on the same deep trends in technology, and even uses the same geographic shorthand for the succession of technological/economic paradigms: Manchester, Detroit and Silicon Valley.

Coming from a different perspective, Boix provides new-to-me insights, and particularly about similarities between the sucessive technological revolutions. For example, in an 1835 book, The Philosophy of Manufactures, Andrew Ure described the factory as “a vast automaton composed of various mechanical and intellectual organs, acting in uninterrupted concert for the production of a common object, all of them being subordinate to a self-regulated moving force.” Echoes of cybernetic visions – see for example Eden Medina’s fantastically interesting Cybernetic Revolutionaries on Project CyberSyn. Or a 1934 book, The Mechanization of Industry by Harry Jerome, which estimated that almost half the labour productivity gains in the first 30 years of the 20th century resulted from “the mechanization of the handling systems”. Echoes of the role of logistics now, for example set out in the McKinsey’s study into US productivity in the late 1990s – Walmart and wholesaling.

After the historical section, Boix goes on to the implications for politics today, and particularly the increased vote for extremist parties – the highest since the 1930s. Writing this on the day “Boris”Johnson is expected to become the UK’s prime minister, with Donald Trump beginning extra-judicial deportations from the US, and strongmen on the march in other countries, it is hard to be optimistic. However, Boix, like Frey, implicity raises one question without addressing it: what made the production paradigm of the mid-20th century. which also led to massive automation, able to deliver widely shared gains, and why is the direction of the earlier and later technological revolutions so different? I haven’t seen a persuasive answer.

415Rzs1j8qL._SX327_BO1,204,203,200_

Share

Trains and other illth

I thoroughly enjoyed reading Ruskinland: How John Ruskin Shapes Our World by Andrew Hill over the weekend. As the subtitle indicates, it isn’t a biography but rather an exploration of the influence Ruskin has had in a number of domains, from helping establish the National Trust as steward of the countryside – and encouraging the formation of the Sierra Club in the US – to shaping views about art, to influencing views about capitalism and the dignity of labour on the left of the political spectrum.

I’ve never read a biography of Ruskin, and he doesn’t emerge from this book as an obviously likeable character. In fact, pretty weird. The book I have read (bought at Brantwood, Ruskin’s home in the Lake District) is his famous anti-capitalism, anti-industrialism tract, Unto This Last. Ruskinland sent me back to it, and it still seems completely unconvincing and hyperbolic, for all that no sentient being would deny the horrors of the Industrial Revolution, or even modern capitalism.

Count me in on the need to ensure environmental sustainability, decent pay and working conditions, well-crafted homes etc. But it’s vacuous not to recognise the trade-offs involved in machine-enabled growth. Machines, mass production, raised standards of living, increasingly freed women from domestic drudgery. Trains – which Ruskin hated despite using them a lot – enabled people to escape the social constraints of village life and find urban anonimity. Unto This Last seems to me unadulterated romantic conservatism. Sustainability is easier for the rich. As Hill agrees, Ruskin was also an illiberal ultra-Tory. And adds: “Like today’s Twitterati and online opinionistas, he often adopted an extreme stance for effect.” Counterproductively so, in may case.

So Ruskinland hasn’t changed my views, but it’s a great read & the issues it raises are absolutely pertinent today as we survey the ‘illth’ (that handy Ruskinian neologism) being created by modern capitalism.

41GHcMwWhGL._SX350_BO1,204,203,200_

Share

An unpopular confession

It isn’t often I give up on a book, still less one that has arrive garlanded with praise, and which I’m predisposed to agree with. However, I can’t manage another word of Shoshana Zuboff’s Surveillance Capitalism: The Fight for a Human Future at the New Frontier of Power.

From what I’d gathered from early reviews, her argument is that Google and Facebook have become too big, deploy great power unaccountably, pose grave threats to democracy and accumulate for profit masses of data about all the individuals using their services. It’s rather hard to disagree with this, and indeed legislators and regulators around the world are gearing up to respond, albeit more slowly than would have been ideal. Only this month Germany’s Bundeskartellamt banned Facebook from connecting data about individuals from different sources, and India forbade Amazon to sell its own products on its platform. Those with powers to fine and to put people in prison are coming for the digital usurpers.

Having read a few chapters, this is still what I take the argument to be. You just wouldn’t know it from the extraordinarily impenetrable language. For example:

“Surveillance capitalism rules by instrumentarian power through its materialization in Big Other, which, like the ancient tyrant, exists out of mankind while paradoxically assuming human shape.”

Or:

“As for the Spanish Data Protection Agency and the European Court of Justice, the passage of time is likely to reveal their achievements [with regard to the right to be forgotten] as stirring an early chapter in the longer story of our fight for a third modern that is first and foremost a human future, rooted in an inclusive democracy and committed to an individual’s right to effective life. Their message is carefully inscribed for our children to ponder: technological inevitability is as light as democracy is heavy, as temporary as the scent of rose petals and the taste of honey are enduring.” [italics hers]

There are over 500 pages of this, and it was too much when I found myself having to read everything several times to work out the meaning. What’s more, there are some analytical lacunae – no Bentham, no Foucault in a book about surveillance? And Zuboff clearly believes what the digital titans claim about the effectiveness of their data gathering in selling us; yet we’ve all had the experience of being followed by ads for the thing we just bought or being creeped out by evidence of such joining up in a way that will make us never shop at a certain outlet again. They have become conduits for alarming shifts in people’s beliefs and behaviour, for sure, but in an accidental way. I don’t know if it would be more or less scary if they were actually in control of the social trends they’ve unleashed.

Mine is a minority view, as all the reviews of the book I’ve seen have been almost adulatory. No doubt you should believe those who had more patience than me and read the whole damn thing.

Share

State, market – and community

Raghuram Rajan is best known for publicly warning of an impending financial crisis in August 2005, at the annual Jackson Hole conference, for which he was mocked by some of the big names present. He then wrote one of the best books about the underlying causes of the crisis, Fault Lines, still well worth reading. Subsequently he was the highly respected central bank governor of India. Not surprisingly, I was very much looking forward to his new book, The Third Pillar: How Markets and the State Leave the Community Behind. The subtitle says it all, and I couldn’t agree more. There is a false dichotomy in much public debate, the claim that organising the economy is a matter of either the state or the market, whereas it is impossible to disentangle the two. But more than this, other non-market, non-state institutions are part of the economic system too. This includes businesses – as Herb Simon once pointed out – but also the kind of institutions Rajan considers in this book, civic and above all local organisations responding to specific local need.

He opens by stating: “In my adult life, I have never been more concerned about the direction our leaders are taking us than I am today.” Surely this sense that capitalism and liberal democracy are fundamentally broken is widespread. The argument here is that part of the solution is to recognise the importance of the neighbourhood and include it as part of the balance of a mixed economy. In a sense community and market are at different ends of a spectrum – from personal relationships to anonymity, Gemeinschaft and Gesellschaft. Rajan argues for some decisions to be taken at the level of the community, rather than the remoter processes of market and state.

The first part of the book is a concise historical survey looking at the emergence of the state and the market. The second part turns to the context of modern capitalism, driven toward the goal of shareholder value maximisation, and fuelled by technological innovation and automation. Rajan is highly critical of the shareholder value mantra – and it’s interesting to see a growing chorus of criticism of Milton Friedman’s toxic contribution to capitalism, such as Colin Mayer’s recent Prosperity. Rajan points out: “When an enormous source of independent power, the private sector, is passive or, worse, rendered suspect in the eyes of the community because its every action has to be in pursuit of corporate profits, there are fewer checks on the arbitrary power of the state.” He argues that the “enormous gamble” states took in the early years of the 21st century – that borrowing in deregulated financial markets would be the source of broad-based sustainable growth – utterly failed. Populism is thus the legacy of the financial crisis.

The book then considers some of the manifestations of the failed gamble, and this echoes a now sadly all too familiary genre studying the decline of communities around all the western economies, such as Janesville and The Unwinding. Rajan advocates the devolution of power, “from the international sphere to nations, and within nations from the federal to the regional to the community level.” The Third Pillar needs to be reinvigorated. There needs to be more scope for people to fill in gaps left by formal economic structures, to experiment with structures of political and economic governance, to create meaningful, non-market local work. I agree with this, again, but the book wisely accepts that this is not easy and local success will be slow. There is a bootstrapping process to get localities onto a virtous circle.

Rajan does not offer specific proposals, and in a way could not because it’s in the nature of local solutions not to be easy to generalise. It would be well worth trying to understand more systematically what kinds of decisions are best taken at what level of governance – as far as I know there is relatively little social science on this, although it’s easy enough to see that, say, climate change policy or digital competition policy needs international co-operation, whereas public services could be far more devolved and differentiated. The issue of Victorian institutional innovation also intrigues me: among the responses to the Industrial Revolution were the emergence of trade unions, mutual savings societies, working men’s literary and philosophical clubs, co-operatives…. is there any comparable social innovation today, and is anybody tracking it and sharing the lessons?

The Third Pillar is published in a couple of weeks, available for pre-order now. It’s author was very right in 2007. He’s very right again now.

Share

The future of capitalism?

The Future of Capitalism, Paul Collier’s new book, is not a small subject. In fact, the first half of the book is largely retrospective, looking at how capitalism got into today’s mess. There is a particular focus on the loss of moral compass in the organising structures of collective life – the family, the firm, the state. This echoes a number of authors identifying growing individualism, fed by the ideology of ‘the market’, as a corrosive force progressively undermining the conditions that enable it – Bell’s phrase ‘the cultural contradictions of capitalism‘ encapsulates it neatly.

Collier – a distinguished economist whose career has centred on developing economies –  expresses this critique with eloquence and conviction. He has a particular focus on the role of economic theory in validating self-serving behaviours such as bosses paying themselves hundreds of times more than their workers, and sketches an alternative approach to economics which embeds social norms and social influences on preferences. He blames the utilitarian and Rawlsian approaches to ethics, and advocates the communitarian alternative. I’m not persuaded by communitarianism, but surely you have to be pretty obtuse – a banker, maybe – to disagree with the diagnosis. Nobody thinks capitalism is doing just great at the moment.

It is of course harder to address the challenges than to diagnose them, and in a short book like this you can’t expect a detailed policy agenda. The book identifies three divides to be tackled: between successful global cities and ‘left behind’ places (although he deoesn’t use this term); between the skilled, well-paid, globe-trotting elite and the rest; between the rich and poor countries. It ends with the observation that capitalism is the only economic order capable of creating mass prosperity, but that it has not worked to do so since the 1945-70 period. This skates over the evident failings of postwar capitalism, which created the conditions for the ideological turn of the 1970s: inflation, shoddy nationalised industries, insider-outside labour markets and so on. Still, the suggestion here is that what’s needed is a combination of a rediscovery of ethics by political leaders (I’m not holding my breath on this front) and the shaping of identity around a shared sense of belonging to a place (rather than the more abstract ‘nation’ or identity-politics groupings).

This left me feeling a bit depressed. I can’t shake the feeling, despite only listening to the news while hiding behind the sofa these days, that it will take some cataclysmic event to reset current political dynamics. Another aspect of the turn to individualism in the 1970s was the existence of an intellectual framework on which to hang the political transformation, and I don’t see as yet a sufficiently broad and consistent alternative to the isolated individual, self-interested, rational choice model. Something for us economists to work on – as indeed Collier and others have started to do.

Share