Tag Archives: political economy

Casting off the digital chains

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The joy of travel to conferences – conversations with people you wouldn’t set up a Zoom to chat to, hearing new research you wouldn’t dial in to a webinar to hear, and the travel time for reading. It definitely (still) outweighs the aggravation of checking in. My recent Eurostar journeys saw me through Jamie Susskind’s The Digital Republic: On Freedom and Democracy in the 21st Century.

We held a workshop on a first draft of the book at the Bennett Institute, where Jamie is an affiliated researcher, so I suppose I’m bound to look kindly on it. It’s an ambitious and largely persuasive diagnosis of the political problems caused by the power of big tech, and a set of proposed solutions. It’s thoroughly argued – as you’d expect from a skilled lawyer –  and avoids the sweeping generalisations and analytical wooliness of some well-known attacks on the digital giants.

The book has many parts. It starts by setting out the fact of digital power and why this is a significant political problem – and one created by law: “There is nothing natural about the power of modern business corporations. They accrue power because the law allows them to.”  It follows this with an analysis of the more granular problems, such as dark patterns, the coding of significant ethical decisions, the pretence that ticking the T&C box is meaningful consent (“When we click ‘I agree’ we are usually surrendering, not agreeing”), and so on.

The book then moves on to set out four republican principles (NB not in the US party sense of the word, but in the engaged, free citizen sense):

  • the preservation principle: democracy must be protected
  • the domination principle: no power can be unaccountable
  • the democracy principle: powerful tech should reflect the moral and civic values of those it affects
  • the parsimony principle: governments shouldn’t constrain companies more than they have to.

All seem perfectly reasonable, at least in the abstract. Then, refreshingly for a book about the need for countervailing power to big tech, Jamie has a lot of proposals. Among them are:

  • deliberation and mini-publics to determine the limits of digital behaviours
  • tribunals to hear complaints about treatment by big tech
  • professional certification of software and ML engineers
  • an inspectorate of algorithmic decision making
  • a duty of openness on tech companies
  • more appropriate anti-trust policies
  • minimum standards for social media platforms eg to prevent harassment, foreign interference in elections etc

I don’t agree with all of the suggestions – some (eg compulsory licensing for anyone who codes software) seem to fall foul of the parsimony principle – but that isn’t the point; the point is that governments are not powerless in the face of digital power. Indeed there is an awful lot they could be doing to tackle the ills while recognising the great benefits the tech titans have brought.

Anyway, I enjoyed reading the book, and relished its can-do approach. I agree about the need for constraint on unaccountable digital power. Was I wholly persuaded? No, and mainly because there’s an assumption of beneficent governments doing all this on our behalf. It’s reasonable to doubt either their goodwill or their competence. More on this in my next post after I’ve finished reading Deirdre McCloskey’s latest offering.

61pyJfOI4FL._AC_UY436_QL65_Other reviews: Joahn Naughton in The Guardian, Andrew Lilico in The Telegraph….

What comes after the Knowledge Economy?

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Nick O’Donovan’s Pursuing the Knowledge Economy: A Sympathetic History of High-Skill, High-Wage Hubris is an interesting evaluation of the policy consensus of the 1990s and early 2000s concerning the opportunities afforded by digital technology and globalisation for a transition to better jobs in the western economies. My own 1997 book The Weightless World (25 years ago this year!) features as one of several capturing that economic policy zeitgeist, what the book terms (following Peter Hall) a ‘growth regime’ – “a set of economic policy ideas and assumptions that are underwritten politically by a distinctive coalition of supporters.” In other words, a mental model of how the economy can prosper that becomes the policy zeitgeist. (Although I’d challenge the focus of this concept on just firms and governments, as the concept ignores the household and voluntary sector, both large and being affected by digital.)

The book traces the historical evolution of the policy ideas, mainly the centre left (Blair & Brown in the UK, Clinton in the US), and the way the financial crisis torpedoed any optimism about new opportunities to upskill the workforce and create satisfying new jobs. It also politely critiques the knowledge economy analysis in itself, essentially for unfounded optimism about the scope for new technologies to complement rather than substitute for labour and for ignoring the transition costs associated with globalisation. O’Donovan also points out the policy blind spot – until very recently – about increasing market concentration and rent extraction. Just a few people have long pointed to this as a source of economic problems, among them Brett Christophers.

There certainly was plentiful hype – Thomas Friedman’s books leap to mind. I’d defend The Weightless World on the basis that it predicted greater spatial and income inequalities and paid attention to social tensions, and would argue that I was prescient (much too soon…) about gig employment patterns and new digital currencies. But I also overlooked the costs for some people of the reordering of global production, or at least assumed policy would be sensible enough to look after them. At the same time, the Knowledge Economy paradigm did encapsulate some significant changes under way in the structure of the economy. I think O’Donovan somewhat underplays the insights while rightly pointing out the irrational exuberance.

The book ends by linking the failure of the Knowledge Economy growth regime to post-2008 political polarisation, and hoping that the current period of disillusion and volatility will in fact prove an opportunity for a new, better “growth regime” to develop. Let us hope….

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Post-neoliberalism?

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The Rise and Fall of the Neoliberal Order: America and the World in the Free Market Era by my Cambridge colleague Gary Gerstle has quite rightly been highly praised. It covers a whole century, starting with the New Deal and post-world war 2 era to preface the bulk of the book, its characterisation of the neoliberal turn from the start of the 1980s. It ends with Trump and the turn away – so Gary argues – from neoliberalism to something as yet undefined. Neoliberalism is described as a commitment to free trade and financial flows, to free movement of people and openness to others, and to deregulation and the expanded scope of markets. Interestingly, he frames the point about the expansion of the market domain in terms of characterising people as consumers, instead of workers, and argues that Ralph Nader played a key role in this regard through his influence on Jimmy Carter, as the old order started to give way to the new.

The book gives a twin-tracked account of what drives these transitions from one era to another. One set of drivers consists of events – economic crisis in particular, so the 1970s commodity shocks at the start and the GFC at the end. More surprising is the role attributed to the Soviet Union: the 1917 Revolution as a stimulus for New Deal politics; Cold War contestation paving the way for business and financial interests to reach a modus vivendi with organised labour through the 1960s in order to avert any threat of domestic socialism; and consequently the collapse of the Soviet Union in 1989 as a destabilising force because it took the brakes off corporate and financial self-restraint.

Another interesting aspect of the argument is the linking of administrations generally seen as being opposed to each others’ policies – the difference between Republican and Democrat being less decisive than that between Eisenhower and Reagan or Kennedy and Clinton. As Gary puts it, the feature of a ‘political order’ is that the opponents of the government also buy into it; it becomes the water in which almost everyone swims.

The FT review described the book as an instant classic. There are lots of talks and pods online for anybody who wants a taster. As the subtitle says, it’s US-focused; an analysis of how the neoliberal order got exported would be interesting. I highly recommend it – I read it in just a couple of days of travel. And it set me thinking about what the next political order might turn out to be…..

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More incompetent than neoliberal?

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“Neoliberalism is a term which should, I think, not be used,” writes David Edgerton in his chapter in The Neoliberal Age? Britain Since the 1970s edited by Aled Davies, Ben Jackson and Florence Sutcliffe-Briathwaite. I agree. It’s handy shorthand for a philosophy of government that has had some prominence since 1979/80 but is used in ways that obscure rather than illuminate ideas. Some writers (eg Wendy Brown) using the term seem to class *all* economists/economics as neoliberal, yet lumping Joe Stiglitz with Eugene Fama really seems bizarre even though both think about how information shapes people’s individual economic decisions.

This conference volume is an exploration of the nuances and hence the question mark in its title. The broad conclusion is that something more complex and even contradictory than an ideological neoliberal movement has been going on. This is despite the rhetoric deployed by some UK politicians since Thatcher – the reality has been messier. As my colleague Peter Sloman puts it in his chapter on the welfare state: “The conjunction of anti-welfarist discourse with welfarist practice is not unique to the UK but is perhaps particularly striking in Britain.” We’ve never walked the talk fully – because politics. The editors’ intro sums this up nicely: not only have there been other intellectual influences than any neoliberal or free market ideologies, but to paint everything for the past 40 years as part of a grand neoliberal tide ignores “the role of economic and social change in setting broad constraints on the path of public policy.”

In fact, just revising a paper some co-authors and I are about to resubmit on the UK’s levelling up plans has made me glumly ever more certain that the dominant trend in UK politics is sheer incompetence, wired in to structures of government. We have a centralised state so determined to cling on to its power to determine policies that it repeatedly undermines the capacity of all the devolved and local governments and other agencies either to feed information in to the policy-making process or to implement the resulting decisions. Sovereign Westminster/Whitehall omnishambles.

Anyway, I haven’t read all the chapters yet but this is an interesting book, testing the neoliberal lens on a range of policies and perspectives, and finding it distorts the messiness of the historical landscape.

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How to invent ideas

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I found Zorina Khan’s Inventing Ideas: Patents, Prizes and the Knowledge Economy very interesting. It uses an impressive assembly of empirical evidence about inventors, patents, the administrators and recipients of innovation prizes and awards, and industrial exhibitions – largely in the US, UK and France – to support a specific analysis of what enabled the US to become the most innovative and richest industrial nation from the late 19th century on. As she points out, much of the literature asks why Britain was the first country to experience an industrial revolution, so the question itself is distinctive.

Her argument is that compared with Europe, there were “dramatic differences in the new approach to growth that were manifested in early US policies.” The key difference – supported by the mass of evidence – is a far greater emphasis in the US on patents (as a market-oriented innovation system) rather than prizes and awards (an administered system). A second and consequential difference is the preponderance of incremental and commercially successful innovations in the US. “Elites have always mistrusted markets: wealth and influence often lead to the convistion that the insights of the favored fiew can outperform spontaneous co-ordination,” Khan observes. The US was strongly anti-elitist (at least in that era), whereas “the most significant variable affecting whether or not a British inventor received a prize was elite education at Oxford or Cambridge,” neither university at the time focused on technical or scientific excellence.

Along the way to supporting its argument that the marketplace of ideas beats elite technocracy, the book demolishes quite persuasively the recent trend toward innovation prizes as an effective incentive mechanism. Less persuasive is the argument that patent trolling is no greater a problem than it ever was (although there clearly was a lot of litigation over patents in the 19th century).

It also makes the point that European and American patent systems operated differently. The specific institutional details mattered. So the conclusion one could draw is that the underlying elitism of European societies and egalitarianism of the US does more to account for latter’s emergence as technological leader. In which case, the longer term outlook for the US staying at the frontier may be less rosy. In any case, much food for thought in the book, and fascinating empirical and historical detail.

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