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.

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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.

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A hymn to expertise

How often could you say a book about the workings of government departments, even including a Department of Agriculture org chart, is as gripping as a thriller? Michael Lewis is such a teeth-gnashingly good writer that he’s pulled this off with The Fifth Risk. Ostensibly about the chaos the Trump ‘administration’ is bringing to government as it expropriates whatever it can for personal financial benefit, the book is fundamentally a description of and hymn to the vital role of expertise in modern societies.

Expertise, and a strong sense of public service mission. It does so through interviews with a range of experts who have recently left government service – experts on nuclear weapon safety (managed by the Department of Energy), child nutrition (USDA), meteorology (the NOAA in the Commerce Department) and even social science (also in the NOAA, because what was the point of ever more accurate tornado warnings if people didn’t respond to them by evacuating their homes?)

It is, therefore, fundamentally a terrifying book. All these dedicated scientists waited for the new Trump administration to contact them after the election. And waited. And waited some more. Nothing. No interest in governing, in detail, for instance in why a small town storing nuclear waste might poison vast areas of the western United States and the Colorado River if the DoE didn’t spend billions a year on remediating and containing the problem. And of course, the ‘Administration’ gets away with it because so many voters had no interest either. This is where we are.

Anyway, a brilliant book. Do read it.

 

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Once upon a time in the British Economy

Managing the Economy, Managing the People: Narratives of Economic Life in Britain from Beveridge to Brexit by Jim Tomlinson is an interesting economic history of modern Britain. It appealed to me from the first page, where Tomlinson talks about the absence of a fixed meaning for the term ‘the economy’. The book therefore focuses: “[O]n the ways in which successive governments, in seeking to manage the economy, have sought simultaneously to manage popular understanding of economic issues.” In other words, to manage the economy is to tell a persuasive story about it – to have a narrative in other words.

This is not, as many economists’ first instinct will tell them, woolly nonsense. It is because there are many possible self-fulfilling (or self-averting) outcomes, given the role of both expectations about the future and interactions between individuals. In different ways many fine economists are starting to incorporate such insights, from Roger Farmer in macroeconomics to Robert Shiller, George Akerlof and Dennis Snower, Kaushik Basu, and George Akerlof and Rachel Kranton.

Anyway, as Tomlinson points out, talking about the electorate misunderstanding economic reality is therefore missing the point that economic outcomes are to some degree always constructed (and besides, it backfires – people don’t like to be told they’re stupid and should listen to clever folk). The body of the book therefore traces the ebb and flow of these political and policy acts of construction, and the interplay of ideas, ideologies, and events. The first part considers some of the key narratives, broadly chronologically – “You’ve never had it so good,” “rolling back the state,” etc. The second part looks at the period through the lens of key macroeconomic indicators, and why some are more salient at specific times due to the way they feature in public debate.

An interesting conclusion considers two broader narratives’: the rise of neoliberalism; and deindustrialisation. Tomlinson argues that while academics (outside economics) focus on the former, the latter – having had a briefl flurry of scholarly interest in the late 1970s – is more significant in understanding the trajectory of people’s lives in postwar Britain. The book comes to a rather sudden halt, and it is by no means a vanilla economic history of Britain, but it’s a stimulating read.

 

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Crashed

Adam Tooze’s much-praised history of global political economy from the period just before the Great Financial Crisis to the present – Crashed: How a Decade of Financial Crises Changed the World – is indeed a terrific read. It’s a detailed (600+ pages) synoptic account of the political forces that enabled a few dozen banks to entwine the world’s economies in an interlinked web of credit at massive scale, and the political reactions to and consequences of the crisis. One might quibble that some parts of the story are sketchier than others, but then it’s always a good sign to be hankering after more of a book rather than less. Making the parts into a convincing whole is a major achievement.

There are several central points the book emphasises. One is the extent to which the dollar underpinned the whole global financial market construct – and consequently the extent to which the Fed bailed out the whole world after the crisis. Another is busting the myth that the crisis was Anglo-Saxon: the continental European banks were in it up to their eyeballs, with equally ineffective regulatory oversight, such that they too had massive maturity mismatches (like the US banks) and also massive currency mismatches (whereas it was all dollars for the US banks). Tooze is also forensically critical of the lack of a coherent European policy response – both the ECB (especially under Trichet) and the German political establishment come in for particular fire. The policy response to the Greek crisis in particular was abysmal – as was clear at the time. It was always apparent, certainly by 2012, that debt restructuring was essential, and that the bailout was for German and French banks more than for Greece.

The book explores the interplay between the financial crisis and geopolitics, particularly the desire of both China and Russia to ensure the transition – already heralded but revealed by the role of the dollar to be exaggerated – from a unipolar to a multipolar world. Above all, it draws the lines from the possibility of the crisis, and the crisis response, to the current political situation: “Though it is hardly a secret that we inhabit a world dominated by business oligopolies, during the crisis and its aftermath this reality and its implications for the priorities of government stood nakedly exposed. It is an unpalatable and explosive truth that democratic politics on both sides of the Atlantic has choked on.”

Quite so. Here in Brexit Britain, those working in the City have by and large continued to draw their large bonuses, retire early, holiday in exotic places, while post-crisis ‘austerity’ due to the way the crisis torpedoed public finances means many fellow citizens need to use food banks and are seeing local services like social care and libraries starved. Whatever you think about the consequences, the anti-establishment protest vote, in the UK and elsewhere, is entirely understandable. I’ve been completely gobsmacked by how little consequence of the crisis there has been for the financial sector and those working in it. The same went for the rest of Europe, creating “the sense that Europe’s welfare state was being subjected to a relentless program of rollback driven by the demands of bankers and bond markets.”

So too in the US. Tooze describes the election of Trump as the “most disorienting event experienced by the American political class in generations.” It seems likely to me to be even more damaging for the United States than Brexit will be for Britain. Disorienting, but really hardly surprising. It isn’t only the lasting, scarring financial, emotional, health costs the crisis inflicted on millions of Americans (“The grief and distress caused by the crisis were forces to be reckoned with”) but also the way the Fed’s crisis response and the Obama administration programs contributed to polarising American politics. This happened elsewhere, too. Inevitably perhaps, during the firefighting technocratic responses took priority over democratic legitimacy. We see the lasting consequences in the (slightly abstract) disdain for ‘experts’.

Nobody comes out of Tooze’s account particularly well, although some fare less badly than others (eg Bernanke vis a vis Trichet). Some readers will disagree with the economic diagnosis – for there are people who believe the austerity was essential, the fiscal bomb having been detonated by the crisis. There is more sympathy for the Syriza government than many of its interlocutors in Brussels, Berlin and Paris would share. There will be too much detail for some readers – it helps to know what haircuts and CDOs and repos are. Nevertheless, ten years on, Crashed is an essential read to understand the state of the world, and a troubling read, thinking ahead to the next ten years.

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