Tag Archives: review

From ‘Arab Spring’ to Fake News

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I’m late to Zeynep Tufekci’s excellent Twitter and Teargas: The Power and Fragility of Networked Protest. It analyses the impact of social media on political events such as the Arab Spring – remember that? – and Occupy. Her thesis is that online organization is a powerful political tool when combined with offline organization, but cannot substitute for it; and the evidence presented here from a range of mass protests certainly convinces me. The problem mass socially-networked protests have lies in their norms of decision making, which are slow and non-hierarchical. This makes them unable to change tactics quickly when hostile authorities respond to the protest, and so the moment passes. If, however, there is a parallel offline organisation with more conventional decision-making structures, the political protest can adapt and continue.

The book is informed by the author’s experiences visiting protests since long before Twitter and Facebook (and this makes it an engaging read). There is a lot of intriguing detail. Why, she asks, do longer-lived protests like Occupy Wall Street or Gezi Park set up libraries? Even clinics and clothing exchanges are probably unnecessary. She argues that the spirit of protest involves expressiveness – taking part is a meaningful or even joyful activity, often with a sense of ritual or transcendence..

A later interesting section of the book concerns the way authoritarian governments are fighting back against protests using social media themselves – not so much by cutting off the internet (which happened more in the early, Arab Spring, days than it does now) as by flooding social media with confusion and false information. I think the book was written before we all became familiar with the phrase Fake News, but here it is presented as a tactic of repression. Even in tightly controlled China, online comment is rarely shut down unless it looks like becoming organised offline action.

All in all, a highly recommended book, albeit not a particularly cheering one. The Arab Spring feels a long time ago, those days when democracy looked like it was still spreading rather than retreating. Tufekci herself ends on a slightly positive note, reporting a conversation with a young activist (one of Sain’s Indignados) about where things might go. The young woman replies with a phrase echoing one the Zapatistas used much earlier: “We will keep walking and keep asking questions.” As long as pepole have the energy to keep on, there’s hope.

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I read the book on my trip to the ASSA meetings, also reading Darren McGarvey’s Poverty Safari, a second book by the wonderful new discovery Mick Herron, and Svetlana Alexievich’s Boys in Zinc. All highly recommended.

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No escape from the target setting arms race?

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Among my holiday reads has been Jerry Muller’s The Tyranny of Metrics, published in the UK in a couple of weeks (can be pre-ordered now). The broad thesis of the book, which is a lively read, will be familiar to readers of the literature on the gaming of public service targets. This short book is stuffed with examples of the counter-productive results of insistence on numerical targets.

There is an interesting chapter on the origins of metric-fixation (at least in capitalist economies – the Soviet Union was always rather keen on it), which starts: “The demand for measured accountability and transparency waxes as trust wanes.” Social change following the explosion of protest against authority in the 1960s and the erosion of the post-war class certainties contributed to this process. So did the evident failures in public services and nationalised industries by the 1970s. But as the book goes on to note – and has been explored in the academic literature – public services are not like businesses, having a larger, complex set of aims and depending fundamentally on intrinsic motivation. A thriving public sector is important to the health of the wider economy: “A capitalist society depends for its flourishing on a variety of institutions that provide a counterweight to the market with its focus on monetary gain.”

The book goes on to give a range of examples of targets turned counter-productive in arenas from higher education to medicine and policing to business. Yes, business too. For here targets are linked to remuneration. Yet, as the book notes, economic theory (Holmstrom and Milgrom, as I describe here) and evidence point firmly away from rewarding the attainment of targets whenever individual effort is un-monitorable. Not that this has prevented to spread of performance pay or bonuses, Muller observes: “Although there is a large body of scholarship in the fields of psychology and economics that call into question the premises and effectiveness of pay for measured performance, that literature seems to have done little to halt the spread of metric fixation.” The book ends with a section describing how to use targets intelligently – think about what you’re trying to measure, why and for what purpose. Above all, think. The frustration is that it offers no thoughts about how to roll back the vast swathes of counter-prouctive targetry already afflicting us. Just imagine the outcry if any politician promises a ‘bonfire of the targets’ or less transparency. On the contrary, the arms race seems as intense as ever – when the pitfalls of one type of target are recognized, the solution is more complicated metrics. But dearmament is what we need.[amazon_link asins=’0691174954′ template=’ProductAd’ store=’enlighteconom-21′ marketplace=’UK’ link_id=’77f90151-ea50-11e7-b438-4348033ba2bc’]

There is no alternative?

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Is Capitalism Obsolete by Giacomo Corneo is framed as an exploration of alternatives to capitalism by an economics professor father to his idealistic daughter. The Prologue is an email exchange between them, in which she writes: “Your economic system is wasteful, unjust and alienating. And wastefulness, injustive and alienation are not the result of some natural law. They are the result of particular social rules, the rules of capitalism. And keep in mind that the capitalist economic system is the product of a relatively short period in history. Just as it once emerged, it will one day decline and be replaced with a better set of rules.”

Set up in this way, the book explores some of the alternative models posited at various times, from Plato’s Republic and Thomas More’s Utopia through anarchism and socialist planning to modern variants including ‘shareholder socialism’ (state ownership of key industries) and the currently fashionable cure-all, Universal Basic Income. At the end of this journey, the economist concludes: “There is, at present, not really much else on offer.” However unfair, wasteful etc capitalism is, there is no convincingly superior alternative. Instead, the author proposes a range of reforms – cracking down on cross-border tax avoidance/evasion, investing in infrastructure & public services etc – concluding, “A pluralist market economy with an effective and generous welfare state represents the best economic system that is currently available to us.” An appendix contains a more detailed specific reform proposal, the idea that the state should invest in quoted companies to build up a socially responsible sovereign wealth fund paying a social dividend to citizens.

I have never found the abstraction ‘capitalism’ a helpful term when it encompasses societies as contrasting as Norway and the United States, and have always quite liked the slightly out-of-fashion ‘varieties of capitalism‘ approach. Even if you think the term useful, though, looking at the news this past week, Corneo is surely rather optimistic here in seeing any possibility for reform. Capitalism might be declining, as the daughter asserts, but it looks more likely to be replaced by something worse, call it plutocracy, than by something better.

This is a slighly odd book. I guess it’s meant to be pedagogical, taking students on a tour of historical thinking about economic systems, but this makes the framing material about the current day rather perfunctory, and then the actual reform proposal is stuck in an appendix. Although a mildly diverting read, I’m not sure it works well either as a history of thought book or as a current affairs one.

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No Ordinary Woman

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I’ve really enjoyed reading No Ordinary Woman, a biography of Edith Penrose by her daughter-in-law Angela Penrose. It is a life story kind of biography – only one chapter (by Edith’s grandson Jago) covers her economic thinking in The Theory of the Growth of the Firm – but what a life.

There’s no question in my mind that, had she been a man, Penrose would be far more esteemed within the economics profession. I haven’t read The Theory of the Growth of the Firm (shame on me – got it out of the library now), and it seems it has been far more influential in management and business schools than in economics. It seems, from the chapter here, that it explores the firm as an institution, and the dynamics of the way firms shape the economic environment.  One can see how this is more at home in the business literature, valid (in fact, essential) as this kind investigation is.

But whatever its stature, Penrose had an extraordinary career as an empirical economist helping shape the field of study of multinational firms, an academic leader (head of the economics deparment at SOAS as it built its reputation, and later at INSEAD), and a public servant (serving on many public bodies and commissions after she and her husband settled in the UK). At the time the OPEC crisis erupted, she was just about the only academic who had studied the oil industry and the Middle East economies. She travelled widely, learnt Arabic and did some consultancy work in her spare time – and all this while bringing up her family and being a housewife to her husband, much-loved but clearly a traditional man of his era.

Anyway, from this affectionate biography, Penrose sounds like she would have been terrific fun and stimulating to know. And it is inspiring to read about a woman who accomplished so much against great odds. Next week in Manchester we’re hosting an event for 14-15 year old school girls to encourage them to do economics in the 6th form. Edith Penrose has to join the pantheon of female economists we’ve been preparing.

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Straight talk from Dani Rodrik

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The legion fans of Dani Rodrik will love his new book, Straight Talk on Trade. I’m one of them, and massively respect him for warning all the rest of us economists about the political economy consequences of globalisation long before these became obvious. As he writes in the last chapter of this new book, looking at recent voting trends in many countries,  “It is dawning on economists and policymakers that they severely underestimated the political fragility of the current form of globalization…. This backlash was predictable.” He has the sombre pleasure of having predicted this for a couple of decades now.

Regular readers will find many of the thoughts in Straight Talk familiar from previous books such as The Globalization Paradox and Economics Rules, and from papers such as Rodrik’s work on ‘premature deindustrialization‘. The new book updates the issues for the present context of the political success of anti-globalizers, nationalists, statists. It argues that there is little evidence of a major retreat from economic integration, and that the rhetoric and headline measures are a useful safety valve. “What looked to contemporaries like damaging protectionism was in fact a way of letting off steam to prevent an excessive build up of political pressure. … [W]e need to place the requirements of liberal democracy ahead of those of international trade and investing.”

I’m in two minds about this line of argument. It is undeniably true that the dogma of globalization gave cover to a lot of toxic practices, from financialization and speculation to multinational tax avoidance. However, I fear the protectionist, nationalist rhetoric will create its own reality – I found the argument in The Weaponization of Trade by Jack and Rebecca Harding persausive on this. Nor am I as sure about the ‘continued resilience of the nation state’ – and see its potential fracture as a dangerous moment.

On the questions of domestic economic policy and industrial policy, though, I’m 100% with Rodrik’s argument. He points out that the policies labelled ‘structural reform’ (econ jargon for politically very difficult measures) “were only loosely correlated with turning points in economic performance.” There are no silver bullets. Rather, growth take-offs “were associated with a targeted removal ofkey obstacles to growth rather than broad liberalization and economy-wide reforms.” Measures need to be targeted, and political capital and administrative resource needs to be focused on areas where there will be an early return. “In economies that suffer from multiple distortions, small changes can make a big difference.” The best policy advice is to experiment, and try local institutional innovations.

Reflecting on the lessons of past growth take-offs and failures leads into a section on the role of economics and economists – some of this familiar from Economics Rules. Economists must pay more attention to politics if they are giving policy advice, he argues, and in particular to the scope for political innovations – ideas that can durably relax political constraints and enable measures that make people better off without threatening political upheaval. Or in other words, enable the capture of efficiency gains while more or less protecting the economic rents of existing elites. Rodrik draws an interesting parallel with technological innovations, and the role of policy entrepreneurship, learning by doing, learning by experimentation, copying, serendipity and not forgetting the role of crises. “Taking ideas seriously renders the notion of interests slippy and ephemeral. Interests are not as fixed as other economists, such as Daron Acemoglu, suggest. People may need a new idea to appreciate their interests in a different, more accurate, light. “Raising the profile of ideas would also help alleviate the tension that exists today between political economy on the one hand, and normative economics and policyy analysis on the other.”

Looking at the current political context, some new ideas are surely needed, especially when it comes to global trade and investment. Rodrik has written elsehere about the need for New Rules for the Global Economy, and argues again here that the conventional policy suggestions will fail.

Straight Talk ends on a potentially optimistic note, however: “If one lesson of history is the danger of globalization running amok, another is the malleability of capitalism.  … It was not tinkering and minor modification of existing policies that produced these achievements [the New Deal, Bretton Woods], but rather radical institutional engineering.” If big, bold ideas can be implemented, the liberal democratic order may be reinvigorated. Looking at the present crop of politicians, this is only a slightly comforting thought, but I for one will take that sliver of comfort.

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