Accounting for progress

I read Stephen Macekura’s The Mismeasure of Progress: Economic Growth and its Critics in proof, and just enjoyed reading it again now it’s been published. People who know about my work won’t be surprised to hear that this is just my cup of tea. The question preoccupies me as much as it ever did – what counts as progress and how do we count it? – along, increasingly, with the issue of who gets to answer the question.

There are now quite a few books about the limitations of GDP, or history of GDP, or both (eg as well as my GDP: A Brief But Affectionate History, Matthias Schmelzer’s The Hegemony of Growth, Philip Lepenies The Power of a Single Number, Ehsan Masood’s The Great Invention, Brett Chrostophers’ Banking Across Boundaries, and more). So Macekura has this recent literature to build on as well as older classics including Alain Desrosieres and Theodore Porter. What he brings is a unified story about the critics of GDP and the System of National Accounts told from the 1940s on, and particularly including the perspective of the economists and statisticians working on or in developing economies.

That the arcana of economic statistics matter is clear from the start: “Accounting and accountability are closely intertwined,” Macekura writes. His framework is James Scott‘s powerful concept of state ‘legibility’. This makes the imperialist habit clear when it comes to the history of national accounting in the colonies of western powers. As one Colonial Office official put it, the UK had to ‘level up’ its colonies, and would do so by increasing their GDP growth. Hmmm. That term is oddly familiar.

The heroes of the tale in some ways are economists such as Phyllis Deane of NIESR and Dudles Seers, founder of the Institute for Development Studies, for their appreciation that economies are not all the same. The fabric of life in low income countries was profoundly different from the standard framework it was supposed to fit. However, western critics of the focus on economic growth – whether for this reason or because of the increasing concern with environmental limits – were in turn criticised by some economists and others from the countries concerned, who considered that to not prioritise growth was a western luxury. “The Limits To Growth report [1972] prompted a strong backlash from experts in the Global South,” Macekura notes. He goes on to argue that, “Growth critics often sought to replace one set of numbers in governance with another. They mounted a technocratic critique of technocracy that claimed the basic problems of contemporary life could be resolved through the use of socially relevant and more specialized data.”

The book ends with a picture of the critics of growth and of GDP (overlapping but certainly not identical sets) in recent times, flagging questions such as the measurement of the financial sector, as well as the ever-more pressing sustainability issues. He ends with a call for a wider set of metrics but also for enfranchising people to participate in the debate about progress. There is certainly quite widespread interest in matters of measurement, for all kinds of reasons, now. GDP is rapidly losing its legitimacy but the need for the social accounts that enable accountability is more important than ever.



What you need to know about Strongmen

I’m biased about this one: my dear friend Professor Ruth Ben-Ghiat at New York University has a new book out. It’s Strongmen: How They Rise, Why They Succeed, How They Fall. The book looks at how personal authoritarian regimes come about in democracies orĀ  through democratic processes, and covers strongmen ranging from Hitler and Mussolini, Mobutu and Pinochet, to Putin and Trump. It’s an illuminating approach because the book discusses their common tactics and features across time and space – for these types learn from each other – and also tracks changes, for instance in the use of different types of media over time. The book also ends on a cheerful(ish) note: strongmen do fall. And the more personal their authoritarianism, the more inevitable that end is. Their methods are counter-productive in the end because they do not govern well, people can eventually lose their fear of opposing publicly the regime and resistance has an impact, and they age: posing with no shirt doesn’t work so well as muscles sag.

Anyway, do read it. It’s so relevant. I’m not going to celebrate Trump’s defeat until he actually goes. There are a lot of wannabe authoritarians around elsewhere as well as the ones we have currently in countries such as Hungary or Turkey. This book has great insights about the dynamics of strongmanism, which I fear will not go away any time soon.



Talking about the future

One of the things I like about Brett Christophers’ books is that they always make me think, and always provide an immensely well-informed critique of aspects of economics that economists don’t interrogate enough themselves. His new book, Rentier Capitalism: Who Owns the Economy and Who Pays for it?, is no exception. It’s an essential read for anyone thinking about what UK governments might need to do differently as the pandemic upends the economy, and people’s jobs, without doubt feeding an appetite for some significant change in the philosophy of public policy.

The new one is a natural follow-up to the author’s previous book, The New Enclosure: The Appropriation of Public Land in Neoliberal Britain, on the inequalities and inequities of land ownership in the UK. Landowners are one form of rentier. The new book argues that rentiership has, however, spread to many parts of the economy, and particularly so in the UK. At one level, the argument is a compelling attack on the way successive governments have taxed (or rather failed to tax), regulated (or failed to regulate), and generally favoured big companies and their ever-wealthier executives at the expense of the public good – in other words, the rest of us. We pay more for shoddier goods and services, either directly or as taxpayers, than we should.

It’s hard to argue with any of the targets skewered in the book: extractors of mineral wealth, the financial sector, the big outsourcers – whose incompetence is getting another outing in the test, track’n’trace fiasco – the gatekeeper digital platforms, the private equity firms running so much infrastructure, the exploiters of patents and ludicrously long copyright periods. Indeed, the book kindly quotes things I’ve written myself on some of these outrages.

Having said that, I have one small issue and one bigger issue with the analysis. The small issue is about the way he defines rentiership – as the earning of income from an asset whose ownership confers monopoly power. Assets can be intangible as well as tangible of course, but I’m not entirely convinced that everything presented as an asset in the book is one. To my mind, an asset is something with a stock, which can be depleted or augmented, providing a flow of services over time. Land, or oil, or physical infrastructure, for sure. Digital platform markets – probably. Outsourcing contracts – not so sure, it depends. Perhaps as a competition economist I see everything as a competition problem, but I think the common issue in all these examples is monopoly power and the artificial scarcity it creates, and we should be analysing monopoly rents, and their regulation.

The bigger issue is about the way the concept of an asset is becoming more or less demonised in some areas of social science, as an effective synonym for the use of money in inappropriate domains. Debate about the limits of markets is time-honoured and I have no problem with it. But if it is now inappropriate to regard anything as an asset, how on earth can we think about sustainability? To give a specific example, I can understand why some people think it is morally wrong to put a market price on clean air or biodiversity, even while making the economist’s counter-argument that refusing to do so imposes an implicit price of zero, which is even wronger. However, if we don’t think about nature as an asset, whose stocks we should steward, I find it hard to see how to embed concern for the future in policy choices. In my work thinking about how to get beyond the policy short-termism of a focus on GDP growth, measuring and understanding the whole range of assets available to people has been key.

There have been a number of books recently criticising ‘assetization’ so Brett is not alone. My questions to the various authors, all I think people inclined to the left of politics, is a serious one. How does ‘assetization’ differ from ‘monetization’? Are the arguments about it really distinct from those about monopoly power, as made for example by Thomas Phillipon? And above all how are we to think about, and name, those things in which we should be investing, or at least not depleting, to have regard for the future?




The digital Faustian pact

James Ball’s The System: who owns the internet and how it owns us is pretty sobering reading, not least as 2020 has turned online access into even more of a necessity than it already was. (Though I can’t be the only person in despair at the prospect of yet another Zoom/Teams/Hangout etc, & mystified as to why some people are so sure we’ll all want to stick with working from home forever now. )

Anyway, the book. It’s a nice overview of all of the dysfunctions of the modern internet – corporate and state surveillance, monopolies, hackers and fraud, and the belated beginning of tougher regulation. It’s particularly good at explaining enough of the origins and technologies to make it clear how things have turned out the way they have. For instance, the reminder that key innovations were funded by the US government so none of the pioneers thought about business models – in contrast to the older communications networks, where billing was an important engineering requirement. A fateful oversight. For hence the toxic reliance on advertising – and there’s a great chapter on this – with its constant need to get people to click.

This book is far, far better on the potential for, and drivers of, surveillance than the over-rated rhetorical doorstop of Shoshana Zuboff’s Surveillance Capitalism book. I also really enjoyed learning from The System about some new things about the physical internet infrastructure – the Border Gateway Protocol was new to me – how packets make their way through the physical network. It’s frankly terrifying, the reliance on a short-term fix that started life scribbled on a couple of napkins decades ago and hasn’t changed too much since.

All in all, although some of the material is fairly familiar now, a very well-informed book and also really well written. For me, worth it for the chapter on advertising alone, which explains the origins of the online ad market and horrifying extent of the tracking targeted ads requires. We have a systemic Faustian pact – great free services in exchange for our souls. If I were in charge of regulating the online world, advertising and the business models would be my number one target. Regulators are supposed to be agnostic about business models – but there needs to be a mixed economy of models for that rule to apply.




Modern thinking and the 1920s

There have been lots of books of late about the Vienna Circle and 1920s philosophy, and I’ve been reading them all. It started with Exact Thinking in Demented Times by Karl Sigmund, which I bought for the title and stayed to enjoy. When lock-down started in March Cheryl Misak’s biography of Frank Ramsey: A Sheer Excess of Powers (Ramsey was the English translator of Wittgenstein) was a welcome diversion. Lately I finished Wolfram Eilenberger’s Time of the Magicians: The Invention of Modern Thought 1919-1929, which ranges over the lives and thought of Walter Benjamin, Ernst Cassirer, Martin Heidegger and – again – Ludwig Wittgenstein. Along the way I read Quinn Slobodian’s economics-inflected Globalists. And now I’ve started David Edmonds’ The Murder of Professor Schlick: The Rise and Fall of the Vienna Circle, a cracking read at least so far: Chapter 1 has set me up to read the rest of it over the weekend.

Whether I could give you pithy summaries of the philosophical world views of the protagonists is another matter entirely. Take Time of the Magicians. My undergraduate exposure to Wittgenstein in the late 1970s was an aversion therapy that will last a lifetime – it was impossible for me to understand a word. Heidegger is famously incomprehensible. Walter Benjamin is hardly known for his pellucid prose and after all influenced the Frankfurt School. All three of them, Eilenberger writes, rejected the conventions of academic philosophy and aimed for a “constellation of dramatic tensions that hover around the word ‘cult’.” And of course they succeeded, with three entirely different cults – linguistic philosophy, existentialism and cultural Marxism.

Cassirer is the least well-known of the bunch and yet seemed to me, reading this, the most sympathetic. Perhaps this reflects my being able to grasp what he was on about. Sadly, he represents old-fashioned thought as against the modernists. The Stanford Encyclopedia bills him as a bridge between the analytic and continental traditions in philosophy, between science and the humanities.

I confess to glazing over at paragraphs explaining Dasein, but the tale around the philosophy is compelling stuff – extraordinary characters and lives (except poor old bourgeois Cassirer, at least in the 1920s), intellectual rivalries, and ideas mattering. Perhaps that’s why the intellectual ferment of Vienna, Berlin, Cambridge etc in the 1920s is so compelling – especially knowing what came in the decades afterwards. Or perhaps all these authors are responding to a sense in the air that another hinge in history is upon us. Or perhaps it’s just the centenary effect. In any case, I’ve enjoyed all of these books, Dasein notwithstanding.