Posts Tagged ‘free market economy’

Speaking Ill

April 14, 2013 3 comments

In the last few weeks, the political climate in the UK crossed a line into a darker place. Anyone who has been following me over the last year or so will know my concerns about the trajectory that we are currently following. I recently re-watching this interview with rogue economist Steve Keen, where he talks about the danger of the rise of extremist politics as a result of the economic climate and austerity, and I am reminded that I am not alone in my fears. It is also a reminder that the UK is far from unique in these dangers: while this post will talk about the events of the last two weeks in the UK, readers in Australia, the US and other parts will no doubt recognise these problems in their own current politics.

The Philpott State…

It started off badly enough a couple of weeks ago with Iain Duncan Smith’s absurd comments that he could survive on the £53 a week that some welfare recipients are being subjected to as a result of his policies. This showed Duncan Smith to be nothing more than a school yard bully with a dangerously weak connection to the real world of many people (a more balanced report that I saw puts the figure at around £193 a week – I am fortunate enough to own my home and not pay rent and I would struggle on that amount – IDS’s figure wouldn’t even feed me).

But Duncan Smith’s nonsense – rarely a day goes by when he doesn’t fail a debunking of some sort or another – was just the hors d’ouvres to a more poisonous main course. It really got going with the Philpott trial. This was a man who had killed his numerous children in a house fire. He was also a recipient of state welfare. The Daily Mail, in a coup de grace for the Architecture of Resentment, went front page with a headline stating that the killings were a result of the welfare state – yes good people, you heard it here: welfare makes people kill their children. We need only change the story a little (instead of being a welfare recipient he was, say, Jewish) to see where this kind of politics is located in the course of history. Of course, the Daily Mail is an extremist right-wing paper – during the last election it described Liberal Democrat candidate Nick Clegg as a Nazi (ironic) – and perhaps shouldn’t be taken too seriously. But it is also very widely read and is a useful barometer of the low and more dangerous end in our political discourse. The article in the Daily Mail was shocking and hateful – it illustrates the Architecture of Resentment in the clearest manner possible. It speaks ill of the living and the vulnerable.

So far, so bad. The following day Chancellor George Osborne spoke a sanitised version of the Daily Mail’s hate speech (Prime Minister Cameron’s only contribution was to endorse Osborne’s comments). He said, and I quote, “there is a question for government and for society about the welfare state, and the taxpayers who pay for the welfare state, subsidising lifestyles like that.” His words, to be sure, are prettier than those found in the gutter press. But he was making exactly the same generalisation from a specific isolated case. His words evoke the same message, and it is a message that has been repeated endlessly for three and a half decades: the poor choose to be poor; it is a lifestyle choice (which includes, apparently, murdering children); welfare destroys homes (Now with new KILLING!). It is nothing more than the tired rhetoric of welfare dependency. This is the right-wing argument that welfare creates dependency on the state and on taxpayers. Welfare is like a narcotic, addictive and pleasurable to the recipients. The welfare state is nothing more than an opium den: at least as harmful and as undesirable.

Speaking Ill of the Living

To anyone who has ever actually depended on welfare the offensiveness of this kind of talk will be obvious. I grew up within Australia’s state welfare system. It ensured me a home, food, shelter, and an education – primary, secondary, and tertiary. To be sure, growing up within this system was far from perfect – the erosion of the social contract was already well under way even then. But I shudder to think of what my life might have turned into if I had been abandoned to the vagaries of the free market – if I could only have received the health care, shelter, and education that my capacity to buy would allow me. I am grateful for the support I received. I have gone from being a recipient of welfare benefits to paying taxation in the highest brackets, and I do so gladly.

I have proudly watched many good friends grow up within this system of support to become nurses, teachers, software developers, accountants, lawyers, musicians, restaurant owners, and so on – productive and responsible members of society, growing according to their own life plans and through their abilities rather than from whatever bargaining power they inherited. Such cases are not the exception – these are the success stories that are not told often enough. So much of our political space is polluted with fanciful talk of how the welfare state ruins people, with hardly any space to its real-life achievements. (It is curious that the Daily Mail universalises from Philpott but not from J. K. Rowling who wrote the first Harry Potter book while receiving welfare). These are cases where a worse result would certainly have ensued without the supporting social structure. The people in my life are real people, with their own goals and ambitions, hopes, fears, needs and wants. They are no different from the other seven billion people in the world in that respect.

It is certainly true that a lot of people remain within the welfare system (although the degree of intergenerational welfare “dependency” is grossly exaggerated as testified to in this Joseph Rowntree Foundation report). I have no reason whatsoever to believe that their failures are due to the welfare system, and I would hazard that their lives would have been even worse without the existing safety net, and that whatever “burden on society” that they posed would remain regardless, in some form or another.

The “dependency” rhetoric is loaded and deeply misleading, intended, like all Architecture of Resentment talk, to produce a certain result. The truth is that we are all dependents. Each day we depend (quite unknowingly) on the actions and (less recognised but just as important) inactions of many thousands of people. This deep interdependency is greatly expanded by the economics of capitalism. There are those who do depend on state welfare. To claim that they become dependent because of welfare is to get things the wrong way around. I will use the word “rely” instead of the poisoned word “depend”: such people rely on welfare. They do not form a dependency – they have one already that the state fulfils because the market will not or cannot. Some cannot work for reasons of illness, some are unlucky, some made bad choices, in many cases bad choices are forced (the best of a bad lot), and very often vulnerabilities compound each other. Some have been told for too long that they are valued by the market, and the market, finding their value to be zero, marks them as worthless. Some are simple functions of an economic framework that need unemployment to work properly – capitalism does not operate if everyone is employed: new businesses cannot start, new techniques cannot emerge, and, without the example of the destitute job seekers, employed people become unruly and might even start thinking for themselves (shock!); wages would rise and profits disappear. This is simply to say that unemployment is what economists call an “externality” – where one person benefits and another pays the price. If capitalist ideologues were more internally consistent and less expert at managing their spectacular cognitive dissonances, they would have to conclude that those who fulfil the role of being unemployed should be compensated well for the awfulness of their job by those who benefit – the profit takers. The state, in economic terms, should simply create a “perfect market” by forcing the beneficiaries of unemployment to pay for what they get from it. Of course that will never happen – profits uber alles!

Economics aside, what I can say with absolute certainty from my own experience is that welfare recipients have more than enough problems of their own without having to deal with the resentment and prejudice of ignorant people.

Breeding Welfare Scroungers…

One of the most popular welfare myths is that state welfare encourages people to have many children. The “logic” is that they are paid more welfare if they have more children so there is a “moral hazard” built into the system. This was part of the Daily Mail’s story on Philpott, and was also part of what was insinuated as a “lifestyle choice” by Osborne. Discussing Philpott with a friend, she looked at me (exasperated, as usual) and said (it wasn’t a question) “But why else would he have had so many children if not to claim the welfare benefits?” I have this sort of conversation far too often. The odd part is why people should think that this is the one explanation left over when all other candidates have been exhausted. The neighbourhood where I grew up was a government housing area with maybe a thousand families on welfare – I was one, and these are the people I went to school with. Nearly all families had between one and three children. I don’t recall a family with four or more (which is not to say that they did not exist). But I would say that the average was about two. (The number of parents might be more variable – marriage failure and economic insecurity are closely correlated). The Joseph Rowntree Foundation report above corroborates this in present day Britain. The number of children in welfare-receiving families doesn’t differ in any significant way from other families. The real question then is, if there is such a financial incentive for welfare recipients to breed, why are there not more children in welfare families than there are?

In fact, there is a case to be made that a stronger, more generous, social welfare state can reduce the chances of large families (both in and out of the welfare state). We know from studies of different cultures that the main reasons that people have very large families are to compensate for high mortality rates (from malnutrition and so forth) and in very financially insecure environments where parents rely on their children in old age. We also know that more unequal countries and countries with stingy state support tend to have higher rates of teenage pregnancy which, in turn, tends towards larger families. Today in Britain the government has proposed caps to welfare recipients so that they receive no more when they have more than a certain number of children. Using state welfare to shape people’s reproductive choices should make us all very nervous. The whiff of eugenics is deeply disturbing, and quite possibly the thin end of a very fat wedge intended to breed the poor out of existence. Caveat emptor.

Speaking Ill of the Dead

The Philpott story receded quickly, but only because the Tories got an even better opportunity to propagandise: the death last week of Margaret Thatcher. And no writing about welfare vilification and the political manipulation of the people is complete without a mention of her.

I spent (far too) much of the last week furiously arguing with people who claimed that negatively commenting on the legacy of Thatcher in the week of her death was distasteful and wicked, and that the spontaneous street parties and the campaign to top the music charts with that Judy Garland tune were the poorest of all possible forms. One should not speak ill of the dead. I have to disagree. The week has been spent by the Conservatives attempting to rewrite history, sanctifying and sanitising the memory of Thatcher’s legacy. In other words, they want to create a lie. And part of the reason for this is that they see themselves as the inheritors of her ideological project. They are right in that, of course (Blair was also in this lineage). But it is this that makes it wrong for them to try to suppress criticism of Thatcher’s legacy, even in its quirkiest manifestations. So let’s take a look at that legacy…

She was someone who was, by any honest account of public records, homophobic, racist, contemptuous of the unfortunate, an advocate of instigating war to deflect attention from home affairs, and a friend and admirer of a number of the world’s most brutal dictators. With her trans-atlantic partners-in-crime, she was the co-executor of what may be the largest process of social larceny in human history, transferring more wealth up the social ladder than ever before seen. Her economic policies stripped Britain of its public assets, brought about large-scale unemployment, and ultimately led to the financial mess that we face today (Will Hutton gives a good overview of her economic legacy here).

Apologists, of course, reject this, even if it is all on record. Some, for example, in the flurry of revisionism, have suggested that her friendship with Pinochet was a quid pro quo for his help with the Falklands. But her association with him starts well before and goes far beyond that. Pinochet came to power through a CIA-backed coup of September 11, 1973, that evicted the democratically elected Salvador Allende. This was a key stage in the neoliberal project that Thatcher was so central to. Pinochet’s regime marked the first large-scale experiment in free-market fundamentalism and involved the open complicity of many key figures of neoliberalism, including Milton Friedman and Friedrich von Hayek, who, like Thatcher later, openly praised Pinochet. This experiment proved conclusively that neoliberalism and liberty are in no way related, and that free-market capitalism is perfectly compatible with torture, rape, and murder – a lesson that I fear we have not learned thoroughly enough. Thatcher didn’t admire Pinochet (or Suharto, or Pol Pot,) despite what he was and did, but because of it. They were ideological kindred.

I attempted a Socratic thought-experiment with someone who was appalled at the street parties. I started with “If Hitler were to die today, would you not celebrate?” The experiment ended immediately with a barrage of “there’s no comparison between Hitler and Thatcher”. Actually, there is always a comparison – comparisons imply ranking, not equality. But never mind. My point was not that she was as bad as Hitler – she wasn’t – but rather to make the (what I thought was obvious) point that Hitler should not be the threshold of evil only beyond which criticism is valid. Had the experiment continued I would have moved down the scale through less evil men and women, trying to find the point where criticism becomes distasteful. Mussolini was arguably less evil than Hitler, for example, but I’d still think it appropriate to criticise him after death. Some of Thatcher’s buddies no doubt would cluster around the Mussolini-mark. And in a good-evil scale, say, Ghandi-to-Mussolini, I would hazard that the Iron Lady was closer to Mussolini than to the Mahatma.

But even if you buy into the whole “Thatcher-as-Saviour-of-Britain” line – and many do, despite the evidence to the contrary – who are you, or I, or anyone else, to decide how others should react to her death? No one can honestly deny that there are an extraordinary number of people who feel that Thatcher wronged them. I happen to agree with them: you might not. But this is neither here nor there. Only they can decide what response is appropriate. This coming week, Thatcher will be buried, and I fear that there may be violence. But maybe not. It is not for me to judge.

The press have been using the word “divisive” to describe Thatcher’s premiership. They mean that she was “controversial”. She was indeed that. But she was divisive in the other way too – she seeded division in a way that British society has yet to recover from. She was the classic “divide-and-conquer” leader, and a first class proponent of the Architecture of Resentment. Never one to let facts get in the way of a good story, Thatcher, like Cameron’s government today, was adept at vilifying the poor and those reliant on the State. Today, Thatcher’s legacy is an extreme politics contemptuous of evidence and powered by the open manipulation of people’s emotions. Speaking ill of the living is the stock trade of this government. In the face of this, we have a duty to speak ill of the dead: speaking ill of the dead is the beginning of an honest assessment of where we are and how we got here.


An Overview of my Argument

March 16, 2012 Leave a comment

I’ve been asked to do a short talk about the book I am writing so I thought this would be a good opportunity to provide a very high level outline of where I’m heading. I’d like to sketch out here in very broad brushstrokes an overall thesis, tying together some of things that have already been discussed here, and leaving for future posts the details of the remainder. Where I can, I will make links here to more detailed arguments that I have made in past posts. The remaining arguments will be regrettably brief but I will endeavour to flesh them as I progress with the book.

The case I am making is against the ideology known as “political libertarianism”. It is closely related to an economic doctrine called “neoliberalism” and the arguments I make will count against both. These doctrines are typical of the “new right” in politics, the motivations of people such as Reagan and Thatcher, but also in practice of the likes of Blair, Clinton, and Cameron. All of these have sought to “roll back the state” and to promote free market capitalism based on variations of these philosophies.

The libertarian argument is, very roughly:
1. Liberty is an absence of coercion, where coercion means physical force or the threat thereof. This is the so-called “negative” definition of liberty.
2. People have the right to liberty. Therefore the rights that people have are limited to protection against coercion. Coercion is only permissible in preventing coercion.
3. Private property can only be transferred between two parties voluntarily. This is mostly free exchange (in a market or otherwise), or in the form of gifts or bequests (e.g. inheritance). Any other mode of property transfer is coercive and therefore a violation of people’s rights.
4. The state should only involve itself in protecting people’s rights. Therefore, the state should limit itself primarily to protecting private property.
5. Taxation and the provision of welfare and services to the members a society is a violation of liberty because it requires taking resources from some to provide to others. Similarly, regulation of commerce, labour conditions, and so forth limit free exchange and, hence, liberty
6. Free market capitalism consists of voluntary exchanges, so a) the free market is the only valid manifestation of liberty and b) the state should support the free market.

In philosophical terms these claims are indefensible. In practical terms they are unsustainable.

Here, as briefly as possible, are the top-level philosophical objections.

The idea that liberty means non-coercion is simply too narrow and does not reflect any reasonable notion of what it means to be free. Freedom is not just something that individuals have. It is a function of the relationships between people in a shared real world. Libertarians conflate liberty with choice, or “revealed preferences”. But we cannot infer freedom from the fact that people choose between some options. People under dictatorships typically go along with it without struggle, and, in that sense, make choices within that context, but they cannot be said to be free. The nature of the options available to a person, and how they are shaped by the choices of others, is an important component of liberty. Arguing for freedom-as-choice, Robert Nozick was able to defend voluntary slavery as compatible with liberty. He could only do so by ignoring the likelihood that a person is very likely not free before they make such an appalling “choice”. A more plausible definition of liberty is “non-domination”. Domination implies that a person or group has significant control over the life options of others. I can dominate you and bend your will to my ends simply by having something you need. Coercion is simply the extreme point of domination and cannot exist without domination already being present. They need not resort to actual coercion to impose this control. People can be perfectly unfree before coercion need be employed (in fact, a recourse to actual coercion might point to imperfect domination). Our interaction with others is grounded in relative bargaining positions, often very asymmetrical, and it is here that we find the spectre of domination.

The idea of rights goes well beyond the prevention of coercion. Rights are social devices that protect us from “standard threats”.  The common right-wing view suggests that rights exist to protect us from the state. This is only half the story. Rights exist to mutually protect us from each other (including but in no way limited to the uses that some would put the state to). This extends the notion of rights well beyond simply preventing us from the coercion of the state. Bargaining asymmetries are an important site of standard threats and a variety of rights may be needed to effect protection.

The notion of private property, in the hands of libertarian thought, suffers from numerous problems. It is common for the ownership of property to be conflated with the ownership of one’s self – Nozick, for instance, segues between objecting to the redistribution of bodily organs, talents, and other personal attributes, to objecting to the redistribution of wealth and material goods. But the two are importantly distinct. Interfering with a person’s body and mind is a very different prospect to interfering with their property. Property ownership is a relationship to the external world. It is, importantly, a relationship between not just the owner and a thing but all people and a thing.

The property relationship is one of tyranny as much as it is one of freedom. A person’s property defines their own little dictatorship. It is a limit on the freedom of what everyone else in the world can do with that thing. It is not clear that any individual can or even should have such a unique control over any part of the external and shared world. We all need physical resources to pursue nearly all of our goals in life. Exclusive control of some resources that we can use to directly pursue our goals is thus an essential precondition to any reasonable notion of liberty. But property is also held that is not directly needed by a person. We live in a complex world where our goals can typically only be fulfilled by cooperating with others. So property can also be used as leverage against people who have the things or skills that we need to pursue our goals. Beyond that, it can simply be used as a coarser lever against others to bend to one’s will. It is here that the prime threat to liberty exists. The question is how much control over the resources needed by others is compatible with liberty.

Property exchange is both subject to, and heavily influenced by its outcomes, asymmetries of bargaining positions. It is not the only component of bargaining advantage but is surely the most important. Other components, like the very important informational advantage, and the ability to develop innate talents, are heavily influenced by property control. The relationship between property ownership and bargaining advantage is the primary contributor to the fact that property tends to concentrate in a small number of hands (anyone who can grasp compound interest can understand this, I think). It is simply not the case, as libertarians claim, that the transfer of property according to some “rules of the game” automatically produces just and fair results – the content of the rules matter very much.

Property rights are, on the whole, instrumental – they exist to serve other, more important, goals that we may have. Clearly they cannot protect these goals if the role of the state is limited to purely protecting existing property holdings. For property rights to be effective in asserting our liberty they must ensure that a) all people have some amount of guaranteed property, both for direct personal use and for exchange, and b) differentials in property ownership do not become so large as to create intolerable differences in bargaining relations. Property ownership, unchecked, contains both the seeds and the mechanism of domination. The protection of unlimited property accumulation is not a defence of liberty but a defence of power. Not only is the redistribution of wealth not necessarily a violation of liberty (or no worse than the violation inherent in defending property rights) – it is a necessary precondition to the preservation of it. Liberty and equality are not at all opposites as is often claimed.

In some cases it is preferable to protect more directly the things that people need rather than leave it to the indirect means of private property ownership and the markets. Provision of rights to health care and education fit this bill. Their contribution to bargaining positions makes it important to ensure that access to them is not subject to pre-existing bargaining advantages. The state has a clear role here that goes well beyond simply facilitating open markets.

Finally, the kinds of property that we permit in a society are important. In the not so distant past it was thought perfectly ok to own people as property. Laws in many parts still treat spouses as property in important ways. Today, the dominant form of productive ownership, the investor-owner share/stock model, is effectively the ownership of the productivity of workers (the argument on this is long, and for another day). This is no great advance on feudalism, and the arguments that defend it are flimsy to say the least. The resulting businesses look uncomfortably like authoritarian systems. They are also one of the greatest sources of compounding inequalities. A society built around worker-owned cooperative enterprises is a necessary step to fixing this.

So much for the philosophical case. What, then, of the practical objections? I can only discuss a couple of points here, but these are especially important.

It is orthodox in right-wing economics that market transactions capture everything of relevance to the world. This is patently false. Every transaction carries potential costs, risks, and benefits to people who are not involved in the transaction. Economists call these “externalities”, or third-party effects. Most discussion limits these to physical effects like pollution (and more recently, climate effects). These are very important and illuminate much in what is wrong with the property and market models. What is much less discussed is what I call “social externalities” – the side-effects of markets on people across a society. These include poverty, unemployment, crime, social instability and many other things. In an increasingly complex and interdependent world risks taken by some are leaked onto others who had no part in choosing them: risks are increasingly social. Growing inequality and, with it, growing disparities of bargaining positions have compounded the problem by making it much easier for powerful actors to shirk risk while retaining the profits (again, compounding their advantages). The banking crisis of 2008 is a dramatic example of this. Both redistribution (understood here not as welfare but as insurance) and regulation have crucial roles to play in this.

Closely related to this is the notion that private ownership ensures the best use and conservation of a resource – neoliberals would say “something that is owned by everyone is owned by no one”. This bears little scrutiny. Capitalism has an appalling track record of conservation and it can only get worse. Markets hold notoriously short-term and myopic views. An individual owning a rainforest will as soon sell or destroy it to make a profit and move on to some other profitable activity with the gains than preserve it for future use. Private ownership denies a voice to many interested parties (including the not yet existing parties of future generations). Self-interest, of the mythical “rational” type or otherwise, has little room for the consideration of others.

Markets may be blind to race, religion and gender (although this claim is much exaggerated – they are very much alive to wealth). But they are also blind to need. Market demand only recognises the presence of purchasing power, and gross inequality also means that the productive powers of a society are weighed heavily towards fulfilling the wants of the best off. The conservative argument is that the worse off benefit because the rich serve as “early adopters” and pay the price of research and so forth, paving the way to luxuries become available to the poor. This claim, like others, is greatly overstated and depends very much on the gap between the wealthy and the poor being reasonably close. (Never mind that it has been overwhelmingly the middle classes who have served this role in the last century). It also ensures that many of the things that poor need that already exist (like healthcare) are priced to suit the rich and kept out of reach of the poor. This has been even more evident in the inflation of house prices by wealthy “speculators” which did much to create the debt conditions leading to the “sub-prime crisis”, and the following financial crisis.

Finally, the overall structure of capitalism has no end-goal. It relies on perpetual growth and a form of economic obesity. Over the last two centuries we have moved from a producer economy to a consumer economy. The mechanism of capitalism has been useful in raising our capacities to meet our material needs. (The jury is out on whether this might have been achieved in other, better, and more sustainable ways). But having met those needs, and then some, the system, relying as it does on ensuring that investor/owners continue to profit, has come to depend on exponentially ever-growing consumption. We have gone from producing in order to consume to consuming in order to produce. While we adhere to a property system that insists that those with more than they need are richly rewarded for allowing the use of their excess wealth it cannot be otherwise. Rather than reap the rewards of improved productivity in better lives, we have sold (and have had to sell) those lives in exchange for things we simply do not need or even want. We have seen, in only a few decades, the growth of planned obsolescence, and increasingly short life-spans for products, along with the encroaching commodification of all aspects of life, from food preparation to the out-sourcing of the raising of our children.  At the same time we have seen the transformation from a public that saved to one that takes on personal debt in order to compete in the anti-social status consumption race, so much so that people are paying off their debts long after they have consumed their goods. This was also important in the lead-up to the banking crisis. The bailouts in 2008 have extended across generations and across all of society the indebtedness required to keep this system going. We work longer and harder than we used to and are, by most measures, less happy. The alternative – living good, sensible, fulfilling lives – cannot work because, to put it bluntly, if the “one percent” do not get their three percent per annum they will take their ball and go home, taking all of our social gains with them. Perhaps we should let them – this is a most sublime form of servitude. Libertarianism has no answer to these questions but goes a long way to explaining how we got here. The growth problem has profound implications for the way that we view society, property, employment, unemployment, the work ethic, and progress. These are just some of the vestigial ideas that past circumstances have left us with that we need to reconsider.

Or else.

Unstoppable Force / Immovable Object

February 21, 2012 1 comment

This isn’t the blog I was intending to publish this week – I had begun work on a little discussion about the situation in Greece which I may get back to hopefully before the world changes too much again. But events in the last week of my own life have provoked a somewhat different topic, and as the Hollywood saying goes, “this time it’s personal”. Even now I am reticent to write about this because my emotions are running hot on the matter, but then sometimes there are truths to be found in passion. I need to be somewhat circumspect in what I write as it may have further (legal) implications for me that I would wish to avoid. But, at least as far as I am aware, my own life experiences remain my own property to do with as a please, and if I have signed away that much then my problems are indeed serious. So I will tell my tale, avoid naming names, and try as best as I can to relate it back to the more general philosophical ideas that this blog is committed to…

My dirty little secret (well, at least one of them, and the only one that I will offer up today) is that I earn an income by writing software for investment banks. Over recent years, as my philosophical and moral compass has moved in a particular direction, leading to a growing amount of cognitive dissonance for me. How can I be involved in an industry that I have so many issues with, both ethical and practical? The income from the work has allowed me a degree of luxury to pursue frequent periods of unemployment in which to pursue the real thing: writing music, reading politics and philosophy, and, now, writing politics and philosophy. I offer that not as excuse but simply as explanation.

My discomfort with the industry and my role in it may have come to a sudden head in the last week. And in coming to be, I might just have discovered the neoliberal answer to that age-old philosophical riddle: in a battle between the unstoppable force and the immovable object the former destroys the latter. Last week Wednesday I resigned from my current role, and on Thursday I was fired from it, with immediate effect. This all goes back to last November when the company announced that all contractors (of which I was one, being paid a day-rate) would undergo a security screening process. This is common practice in this industry when applying for a role but relatively uncommon during employment (although I suspect it is becoming more common). This process involves checking that people have worked where they claim to have worked, have no criminal record and so forth. So far so good – I have nothing to hide. As I was away on holiday for most of the period of December and January, most of this story takes place in the last few weeks. (There are some details that relate to the earlier period too, but in the interest of clarity I will skip over that bit and go straight to when I returned after my break).

So, as I mentioned, I arrange my work through term-based contracts in order to have periods where I am not formally employed. This is where the problem begins. Bureaucracy gets upset when the world fails to meet their box-ticking model of the world, and nothing looks more suspicious to the protestant work ethic than periods of not being in paid employment. My periods of actually living, henceforth to be referred to as (employment) “gaps”, fail to conform to the box-ticking worldview despite being relatively common amongst day-rate contractors and eminently laudable. They are a priori reasons for suspicion. This led to a demand for documentation of my “gaps” – specifically, travel documents, passport stamps, flight tickets, and bank statements. I declined to provide these, pointing out that, despite respecting that they wish to minimise their risks, such documents are private and not pertinent to the role. I invited them to pursue their search, suggesting that any irregularities that might be of interest to my employer can be best found through criminal record checks (to see if I am or have been a wanted fugitive), Interpol (to see if I am a global terrorist) and credit checks (to look for those kickbacks from my life of crime and corruption). These are all (with the exception of Interpol) standard practice for such screenings. (I mention as an aside here that such credit checks cannot possibly be to see whether I can pay my bills – they will always owe me money and never vice versa, and since 2008 this is not even a funny joke). I confess here to “picking a fight” – this is something I feel very strongly about and it is a practice that I abhor. I have encountered these demands from prior employers and ended up acquiescing after an appropriate token protest. But, having taken full ownership of my home last year and having a little in the way of savings in the bank, I decided this time I would make the principled stand. To continue the tale, the unstoppable force responded that these documents were required by policy. To which the immovable object responded that the company had no more right to these private documents than I had to demand proof of what they do on weekends and holidays. Not only that, but these documents do not demonstrate an absence of misdoings. Such an absence is, by definition, impossible to positively demonstrate – to compensate, the process starts with a presumption of guilt. That aside, if I were inclined to engage in nefarious activities (and I think I’d be rather good at it) I would most certainly not do so in a way that showed on my regular bank statements. I need not even do my wrongs during periods of non-employment – I could just as easily do them while employed. The irony is that if I actually had something to hide I would be more than eager to provide any documentation that would suggest otherwise. Or imagine that I had travelled to, say, Iran (I would very much like to) – what conclusions could be drawn from this? Then there is the “slippery slope” argument. By opening up my private life to (frankly pointless) intrusion I encourage the practice to grow – what next, proof of what I do on Sundays? (Maybe they wish to know whether I am a good church-goer – I am not, maybe it’s just “policy”).

Anyway, never argue with a machine. This went on for a few weeks, and after repeated demands for these documents and repeated attempts to explain and defend my own position I gave up and tendered my resignation – life is too short – expecting to work the remaining four weeks in peace. The following day my contract was terminated with immediate effect: the immovable object ceased to exist, at least as far as the unstoppable force was concerned. I was notified by email, mid-afternoon. The reason given was that by failing to provide necessary documentation I posed a security risk. Score: Unstoppable Force 1 / Immovable Object nil.

I have to say a word or two about the legal structure under which I worked in this job. Bare with me – this will hurt more than a little. On the surface of it, I went to a building on many weekdays and interacted with real people doing things that were hopefully useful to someone and that resulted in money appearing in my bank account from time to time. Here’s how (as I understand it) the law sees it: Legal Entity “A” (that would be me) is employed by Legal Entity “B” (the umbrella company) who enters into a contract with Legal Entity “C” for my services who then enter into a legal contract with Legal Entity “D” (the company in whose service I ultimately laboured). Did you follow that? Yeah, neither did I – but I’m learning in a real hurry at the moment. During the screening process “C” and “D” were quite happy to bombard me directly with emails and phone calls, right up to the moment of the final email. I replied to that final email, expressing disappointment that my resignation had been superseded by immediate termination (causing both financial and reputational loss as it did) and that I would not even be able to hand over my work to my teammates. And then the real reason for the existence of “C” became clear. My line manager (one of those real people who I worked with, and an employee of “D”) had been instructed not to communicate with me as I was in fact an employee of “C”. So “C” essentially operates as a legal shield, a firewall, for “D”. My post-firing email to “C” and “D” was replied to several days later by a representative of “C” with a statement that all enquiries to them should be made through my immediate employer, Legal Entity “B”. “B”, being a company set up for no other purpose than to administrate invoicing and tax collection wants nothing to do with this disagreement. The contract that they entered into with “C”, unbeknownst to me, contained sufficient scope for “D” (by way of “C”) to dismiss me for any reason they choose at any time. They also suggest that the contract that they (“B”) have entered into with “C” has no bearing on “A” (me), which is patently silly – it is on my behalf that they entered into that contract and it is the terms of the B-C contract that have allowed my dismissal without notice or recourse. So I now find myself in a surreal M. C. Escher maze with staircases that take me nowhere, with no obvious line of recourse or response. Which is where I find myself today.

That, then, is my sorry tale of woe. So what, beyond giving me a place to vent my current anger and tell a ripping good yarn, is the point of this discussion? There are several that could be made.

Firstly, some ironies within the context of Entity “D” – the final employer… In a period of history where investment banks are seen as immoral and unprincipled it is a curious display for them to eject staff that have taken a moral and principled stance and because of that stance. The only morality in evidence is, as ever, shareholder uber alles. Then there is the further matter of whether the shareholder is even well protected by any of this. Part of my stance was that the demanded documentation did not show reduced risk. Furthermore, this process has been going on for several months now and affects many hundreds, probably thousands, of workers in that company. All of them have the threat hanging over their heads. I am now personally a head-on-a-pike in that workplace, a warning of the price of not complying. This affects morale and productivity in the workplace in all the obvious and predictable ways. Bravo for people management, puttin’ the “H” back into “HR”.

Secondly, I took a principled stand largely because I am relatively well off. This needs to be acknowledged honestly and openly. I was able to stand up for what I believe is right only because I felt that I could absorb the costs of doing so. This will not be the case for most people. The sort of practice that I have taken a stand against proliferates because people give in to it. They do so, by and large, because they have mortgages to pay and children to feed and school. I mean by this to cast serious doubts on the conventional right-wing notion of responsibility. Responsibility is not and cannot be compatible with making heroic and costly efforts – it cannot exist as an isolated social norm and must be supported by other social norms. The two groups best positioned to stand against such forces are those with nothing to lose and those who have so much that they can afford to lose. The former are largely ignored, the latter largely disinterested in biting the hand that feeds them. And so the invisible hand leads us once more into darkness.

Thirdly, there is the matter of the law. I have commented elsewhere on problems about the notion of the rule of law – how the fact of law is only important if the content of the law is fair. As one friend told me this week, legal institutions are not about dispensing justice – they are about dispensing law. I have to say explicitly at this point that I don’t know how my current situation would test against the law. I suspect that the law would do me no favours (that the content of the law would not be to my advantage), but actually testing this is an entirely different matter. Part of my objection to the notion of rule of law is not only that the content of the law is important but so too is access to the law. A major problem in labour laws is that the people who should be protected by it also have difficulty using it. Even I, as a relatively wealthy individual, have serious doubts as to whether it would be economically rational to flush my own resources (money, health, and happiness) down the s-bend of legal action that in all probability I would lose. At the very least, the byzantine lattice of legal firewalls between me and the company to which I provided my services would ensure a lengthy and unpleasant battle. And, of course, big employers rely on this. This is never truer when the action one wishes to test against the law relates to their income. This is to say simply that far from equality under the law, access to the law, by being subject to the market and to wealth, is characterised by my overall theme of unequal bargaining power.

Finally, there is the issue of the legal edifices that have been erected here. Party “C” exists for one and only one reason – to provide “D” with all of the benefits but without any of the attendant accountability and responsibility. This is yet another ugly way that corporate law makes a lie of the neoliberal emphasis on responsibility. To repeat, I cannot complain too much – I am a reasonably well paid professional, at least when they pay up. The point I am about to make does apply to me and those like me, but has a greater moral force in the more general case. Such company structures exist everywhere these days. We find their spectre throughout the corporate world, and we should fear their shadow whenever we hear such euphemistic terms from government as “public private partnership”. It is common, for example, for people providing “building services” (janitorial, catering, and so forth), hotel cleaners, and many other low-paid workers to be employed by outsourced companies who act as firewalls to those who benefit from these services. Under this legal cover they can be fired without notice, denied standard benefits, held on tenure without pay, and treated generally with impunity. It’s all perfectly legal. It’s all perfectly compatible with neoliberal “liberty”, both to the beneficiaries of the work and to the workers (who “choose” to agree to these terms). But of course it makes a mockery of the word “liberty” in doing so. It’s not “efficient” in any normal sense, but the overhead costs of coordinating these occult structures are more than matched by the savings made by companies who no longer need to meet pesky obligations to real people. Which means, of course, more money for the shareholders. Repeat after me: “Shareholders uber alles!”.

Life on the Monopoly Board

January 9, 2012 Leave a comment

Here is an (trimmed down) extract from the book chapter I am currently working. I have tried to remove reference to earlier arguments in the book so it can stand alone (please quiz me on where I have failed to do this!) Because of its origin, this post is longer and “harder” than usual so feel free to run away! The argument here follows on pretty much directly from the argument in “In All Fairness”. This extract makes extensive reference to Robert Nozick’s “Entitlement Theory” which, for the purposes of this discussion simply states that property can only be transferred from one person to another voluntarily – i.e. an economy of free exchange. This rules-out things like taxation which are non-voluntary…

The second and third rules in Nozick’s Entitlement Theory, when the remainder of Nozick’s thought is taken into account, state simply that property cannot be transferred to another without the voluntary consent of the holder of the property.

The acquisition principle contains no obvious limiting factor – property can be endlessly accumulated by a property holder. Well, perhaps not endlessly – we exist in a physically limited world, so the hard limit of accumulation is all available physical property. We may also add various types of “non-tangible” property – contracts and the like – but we shouldn’t get hung up on this at the moment (ultimately they must all make some claim on the physical world). The limiting case is that in which a single person ends up owning and controlling all of the available property. The acquisition principle takes no special account of this scenario – as long as the rules were followed in acquiring the property this is as valid a state as any other. We can see from the board-game Monopoly how such accumulation might occur within a well-defined set of similar and seemingly fair rules – the game ends when only one player has property (as real estate and/or money), and the more property one controls the easier it becomes to further accumulate.

Is such a hypothetical case realistic? Perhaps not (although it is not entirely inconceivable). Is it important? Most definitely. Let’s work through an (admittedly farfetched) example. Imagine that some person produces some consumable commodity that is both short-lived and extraordinarily compelling to most consumers (it need not be so to all, just the majority) – perhaps some sort of Willy Wonka–like character. Consumers voluntarily buy and consume this product. They can’t get enough of it and always want more, so he makes more and sells it to them. “A-ha!” I hear you exclaim – “this sounds a lot like a drug and should be banned”. This is a difficult area in Nozick – everyone has acted voluntarily so, by his rules, no harm has been done. Government interference would constitute a violation of Nozick’s rules. In any case, these qualities are not essential to the argument. Assume that the product doesn’t harm the consumer in any medical sense so they can continue to consume indefinitely. Soon they spend all their money on this product. Our producer has become immensely wealthy at this point. He is making as much of his product as can be consumed. So he takes his idle wealth and starts buying up other businesses, left, right and centre. The former business owners, of course, spend their windfall on his commodity. This goes on and on until he owns all the businesses. At this point he owns all the available employment and can set wages as he pleases. This continues and eventually all property belongs to him as he need only agree to such wages as ensure the subsistence of the workers (and not even that if he wishes – he is not obliged to part with his property if he doesn’t want to). He now, and entirely compatibly with Nozick, declares rules that apply as conditions of access to his property (we might call them “laws”). Provided that he does not use coercive force to ensure their compliance, and uses solely the carrot/stick of the means of subsistence under his controls, it is entirely legitimate.

We have moved from Nozick’s definition of liberty, following his rules to the letter, until we arrive at this point. At no point did an involuntary (by the libertarian definition) transfer of property take place – it was all conducted in accordance with Nozick’s Entitlement Theory. At no stage was there a violation of negative liberty. No one ever had a gun to their head. Three more things are worth noting. First, this situation did not require that each and every person transact with our would-be dictator – it is sufficient that all the businesses ended up under his ownership. Gravity, as it were, takes care of the rest. In fact, it the initial commodity with which he made his fortune is ultimately irrelevant: this was merely the “step-up” that enabled his later acquisitions. What is relevant is the increasing degree of control that it gave him. Second, the end-state applies to all subsequent generations: we might argue that the initial generation “agreed” to their tyranny by transacting in the way that they did, but we cannot possibly hold this for their children, their children’s children etc. They simply inherit the outcome of their parents’ generations. Finally, and critically, the non-monopolists in this society cannot use coercion to assure their own needs – to do so would be a violation of libertarian negative liberty. The state here, as feared by anarchists, upholds the rights of property against the interests of the people.

It is important is that we understand what this world looks like in which a single person owns all property. It is easy to imagine. Every person except one would have to agree to whatever terms that this single monopolist demands in order simply to eat and have shelter. The monopolist can simply dictate terms that ensure that the multitude is kept alive to continue their servitude but that will in no way allow them to strengthen their own bargaining position. I hope that it would not be controversial to describe this scenario as tyranny – no person except one is truly free here. It has become a dictatorship of the first order with complete dependence on a single person. And yet Nozick would have no choice but to either insist that everyone is free in this scenario or admit to a problem with his principles. Philippe van Parijs constructs a similar illustration to demonstrate how such an appalling result can come from the strict application of libertarian property rights. His example is set on an island that is expensive or difficult to leave. In such a society, the sole property owner can

“impose on the other inhabitants any condition she fancies. If they are to be allowed to earn their livelihood, they may have to work abysmally long hours, for example, or give up their religion, or wear scarlet underwear.”

Nozick’s theory tells us explicitly that people in such a state are free. Parijs’ response is unequivocal: “On any intuitively defensive interpretation of the ideal of a free society… this is plain nonsense” (Parijs, 2003, p. 14). When liberty is compatible with dictatorship then liberty clearly has no true meaning, or a meaning so debased as to be without worth.

Monopoly enjoys a peculiarly ambiguous role within libertarianism. The Nozickian version has the least problem with it.

His theory ignores the issue with one minor exception: when an individual has control of all of a certain important resource (e.g. “the only water hole in a desert”), such that (and only if) doing so creates an emergency situation, the ownership rights may be overridden. However, he tactically adds that “the theory does not say that owners do not have these rights, but that the rights are overridden to avoid some catastrophe” (Nozick, 2009, p. 180)

In the hands of Hayek and Friedman, monopoly is a clearer problem. To them, wide dispersal of property reduces opportunity for coercion. Any monopoly creates the opportunity for coercion and is therefore antithetical to liberty. Hayek makes this point here:

“In modern society … the essential requisite for the protection of the individual against coercion is not that he possess property but that the material means which enable him to pursue any plan of action not be all in the exclusive hands of one other agent. […] The important point is that the property should be sufficiently dispersed so that the individual is not dependent on particular persons who alone can provide for him with what he needs or who alone can employ him.” (Hayek, 2006, pp. 123-4)

Milton Friedman makes a similar point:

“So long as effective freedom of exchange is maintained, the central feature of the market organization of economic activity is that it prevents one person from interfering with another in respect of most of his activities. The consumer is protected from the coercion of the seller because of the presence of other sellers with whom he can deal. The seller is protected from coercion by the consumer because of the other consumers to whom he can sell. The employee is protected from coercion by the employer because of other employers for whom he can work, and so on.” (Friedman, 2002, pp. 14-5)

So, by their account, property dispersal is an important means of undermining the potential for coercion and hence underwrites liberty. They hold this view regardless of the inherent possibility in the private property system to lead to monopoly. Of course, a major component of the ideological stance of both Hayek and Friedman is their fear that state will manifest a monopoly and that by owning the means of production they will have effectively implemented a society of servitude. Any property monopolized in the hands of the state, in their view, necessarily aids the state’s ability to act coercively. This is a valid and important concern, but no less important is the possibility that it can occur in individuals or groups that are not the state. Our hypothetical monopolist is not the state but has acquired the same characteristics of the state that are opposed by libertarians (except for the monopoly of violence which is, in any case, ruled out under libertarianism) – by threatening starvation he can determine every aspect of every life bar what they are thinking (and even this is not safe). Libertarians must object to this outcome as much as if the monopoly were held by the state.

The standard neoliberal approach to monopoly has been limited to support for antitrust laws that seek to break down commercial monopolies. It is difficult not to suspect that the economic libertarian’s concern here is more with the supposed economic efficiency effects of competition than with any impact on real liberty (and contrary to the impression one might get, these are certainly not the same thing, and not even necessarily compatible). We need to distinguish here between the process of competition and the outcome of it. The point of competition is to produce winners and eliminate losers, and as this process continues barriers to entry typically rise. It may well produce winners but there is little reason to believe that it will be effective at generating competitors in an ongoing and enduring manner. The most fundamental justification of capitalism is at odds with its general tendency: productive competition, more or less by definition, inches toward monopoly. Colin Crouch argues that the Chicago school of neoliberalism, of Milton Friedman fame, has been more concerned with the outcome of competition than the process. As such it quietly endorses the results of oligopoly and monopoly (while publicly claiming the opposite). He points out that this leads to a corporate type of “nanny state” with big business making the judgements about welfare in a way that is no better than when the same result occurs by government (and, we might add, without the merits of the democratic process) (Crouch, 2011, p. 55). The outcome that has been promoted and welcomed, he plausibly claims, is

“the destruction of small and medium-sized enterprises, the dominance of giant corporations and the replacement of the demotic idea of consumer choice by a paternalistic concern for ‘consumer welfare’.” (Crouch, 2011, p. 17)

Beyond productive competition, there is a certain faith that competition between enterprises sufficiently checks the more problematic underlying monopoly that we explored in our example – that of broader property ownership. However, the thresholds for commercial monopoly have, in neoliberal states, been set very high, and in practice to little effect. The thresholds for personal wealth monopoly have been checked by various “leftist” taxes that neoliberals have consistently opposed and, wherever possible in the democratic context, weakened. Friedman’s criterion above, that liberty depends on the maintenance of “effective freedom of exchange”, implies that productive competition is a sufficient guard for liberty (and of course, neoliberalism is all about productive competition). But our example, which consisted of nothing but freedom of exchange, suggests otherwise. It is not a sufficient guarantee if the result is possible. As long as commercial activity and not ownership is the measure of monopoly we have a genuine problem. There is no reason why our monopolist / dictator could not simply set up as many multiple companies in direct competition with each other as he likes, and thus evade an anti-trust lawsuit. This fact would say nothing about how he treats the people under his control.

Regardless of whether we follow Nozick or Hayek and Friedman here, we are left with an odd little puzzle. When there is a single producer of a good then we have monopoly and this is bad. But when there are two (or three, or whatever antitrust laws decide) then things are fine (but should we consider their relative sizes?). Similarly in Nozick, one monopoly owner of something in a catastrophe is a condition that magically creates some special obligations, but the existence of two owners is not and does not. Surely this is, at the very least, arbitrary. Not only is the setting of a threshold bizarre, but even the very fact of the threshold is puzzling. If transfers that are just, starting from a just starting point, can only ever lead to just outcomes, then it is most peculiar that they may think that a monopoly “justly” arrived at is somehow an exception that should be handled differently. The objection to productive monopoly by Hayek and Friedman doesn’t get them off the hook – if anything makes their objection more conspicuous. Despite differing with Nozick as to the significance of monopoly, they do, after all, hold to a system of free exchange that is, in its essentials, the same as Nozick’s.

The issue here is the arbitrary and exceptional handling of the monopoly state.  What does our fictitious monopolist / dictator example tell us about the threshold problem? If, as I maintain, the end-result of our story was unfreedom for all but one person, at what point did the people’s freedom disappear? This process must have involved literally billions of voluntary transactions. Is there any one point in the process that we can point to and say “this is where freedom disappeared”? Let’s modify our scenario a little. Assume that all the property in the world is now split evenly between two people instead of one. This brings us ever so slightly closer to the libertarian ideal – after all, the property is twice as dispersed. Two people cannot both be the state and everyone can now choose between them. Are the remaining people still slaves? It is difficult to see how they are not. There is no reason to believe their situation has materially changed, or that any one of the two property owners will offer them terms that might improve their circumstances. The two owners have a common interest in getting the most out of people for the least outlay. One of the most striking effects of a market is the tendency for prices and terms to converge. Our people will still need to give their services to one of two people who, in practice, will more than likely be identical. So, no great improvement then. What if the property was distributed between three people? Ten? One hundred? 1 percent of the population? 10 percent? At what point are these people free? Is it clear that their real options are improving or that the range of genuine choice is improving? And if so, then at what point or points? These are not easy questions to answer, and libertarianism offers no insight. But it seems likely that we are moving here from dictatorship to stages that we might describe as “oligarchy”, “plutocracy”, or “aristocracy”, although the thresholds to these are as arbitrary as that of monopoly. It is also clear that we are no longer in the realm of the deeply hypothetical. These are all “natural” and valid outcomes to the libertarian. They are also outcomes that come close to describing the real world. The neoliberal decades have seen a marked growth in the concentration of wealth.

The problem comes from treating monopoly as a binary state: there either is a monopoly or there isn’t, and from this the libertarian concludes that there either is a threat to liberty or there is not, or, in Nozick’s case, that there exist special obligations or not. By treating monopoly as a state we are left with treating the problems related to its existence as a curious and baffling exception to the otherwise homogenous rules of private property. But surely it cannot simply be the case that the freedom of the people in our hypothetical example exists before, and disappears after, the final transaction that placed ownership in one person’s hands. Liberty is a matter of degree, and it deteriorates as the process of wealth concentration occurs. So rather than talking about a state of monopoly we must talk about the degree of monopoly (or of concentration, or its converse – the degree of ownership dispersal, or, to get controversial, of “equality”). We must understand monopoly as being a scalar rather than a binary notion. The degree of monopoly affects many things in society: an individual’s opportunities; the dispersal of political control (and, by implication, the way in which the rules (or laws) of a society are shaped, and how they, in turn, further affect property dispersal); the potential for coercion and, at least as importantly, domination to occur; and even what a productive society actually produces (and for whom).

Monopoly, in our language of rights, poses a standard threat to liberty and to the quality of the lives of all but the monopolists. If justice is historical (and, given that we must reject this notion as implausible, even if it is not), then the injustice of monopoly lies not in the state of monopoly but in the process that produces it. The Entitlement Theory contains no inbuilt protections against monopoly, so we must treat the theory as containing an unaddressed standard threat. We must look beyond Nozick’s theory to rights against that outcome, and to the mechanisms that act as a corrective against it.

Property has the general characteristic of becoming easier to acquire the more of it one has (remember: it takes money to make money). This gives wealth-making capacity a roughly exponential characteristic. Note also that the greater the share of a society’s wealth that a person has, the closer to monopoly they are. Both of these observations suggest that to counter the threat of monopoly we must implement an opposing tendency that increases in force in a likewise roughly exponential manner. The rules of the Entitlement Theory must be supplemented with a “bias” that acts as an opposing force, becoming ever stronger the more that the tendency towards the undesired result manifests. The most obvious and empirically effective means of achieving this is are progressive taxes that increase in steepness the wealthier someone becomes. This could be a wealth tax (perhaps a progressive inheritance tax) which addresses the outcome of concentration on a periodic basis, or an income tax which addresses the inputs to the process of concentration as it occurs, or combinations of these and other mechanisms. This is our first justification for a progressive tax structure. It will not be the last.

Crouch, C. (2011). The Strange Non-Death of Neoliberalism. Polity Press.

Friedman, M. (2002). Capitalism and Freedom. University of Chicago Press.

Hayek, F. A. (2006). The Consitution Of Liberty. Routledge Classics.

Nozick, R. (2009). Anarchy, State, and Utopia. Blackwell Publishing.

Parijs, P. V. (2003). Real Freedom For All: What (If Anything) Can Justify Capitalism? Oxford University Press.

Democracy and the New Year

December 31, 2011 Leave a comment

And so 2011 comes to an end and 2012 is upon us.

2011 was an extraordinary year, perhaps the most so in decades, and one from which the effects will be felt for a long time to come. Charlie Brooker of The Guardian recently compared this last year to an end of season finale. So many big things have happened in the past year that, as he reminds us, many events, that in a normal year would be highlights, are likely to be forgotten. I’ll list just a few (with many, no doubt, notable omissions) as a reminder: we saw the Arab Spring (still unfolding); we saw the death of Osama bin Laden and the overthrow of Gaddafi; there was the extraordinary volatility of global markets (ongoing, and demonstrating the continuing failure to rectify the events of three years ago); the horrifying massacres in Oslo; riots in London; the emergence of the Occupy Movement; the near shut-down of the US Government over failures to agree on budgets, a symptom of an increasingly dysfunctional political process and the chasmic ideological divide that sits under it; the public humiliation of Rupert Murdoch in the UK, the end of a newspaper that has existed, for better or worse, for more than a century, and the bursting of the festering public sore about the proper relationship between government, the press, and big business; the replacement of governments in Greece and Italy as a result of the financial crisis; broader debates and questions about the future of the European project; and, just when I thought nothing more could be squeezed into the year, an almost certainly illegitimate election in Russia and the death of Kim Jong Il in North Korea.

The overwhelming characteristic of 2011 was the sheer amount of uncertainty that it left in its wake. what will the Middle East look like in years to come? What of Europe? Employment prospects and future prosperity? China? The year has raised far more questions than it has answered. As someone who is trying to write a book about what is wrong in the world, having the world in such a volatile state of flux has been more than a little frustrating. I remember a period in July and August where the relentlessness of the news drove me very close to despair.

Perhaps one of the biggest questions for the future is that democracy. Many of the year’s events come back to this point. There should be little doubt that democracy is not in good shape right now and shows no sign of improving. Time Magazine anointed the collective entity “The Protester” as its person of the year.  Protest was, in differing ways, at the heart of the Arab Spring, the Occupy Movement, the problems in Greece, and the London Riots. The uncertainty in Europe is the inevitable result of forming a unified economic zone without a matching political zone, and the European “democratic deficit” has never been more apparent. The denial to the Greeks of a referendum over the imposed austerity measures, and the more or less automatic imposition of a technocracy in Italy are worrying signs. The fear for many citizens, and what underlies movements such as Occupy, is that democracy has finally mutated into the plutocracy that it has been heading towards for a few decades now, the proportional-representation-dollar-democracy of Milton Friedman’s fantasies. In the UK this has been overt: David Cameron walked away from negotiations on the future of Europe explicitly to protect Britain’s financial industry, and the moneyed class that it serves.

There is every sign that democratic processes right now are failing to do their job. There is too little genuine debate, and representation is skewed against, and is uninclusive of, the interests of the majority. To give a simple example of how wrong it can all go, we had a referendum in the UK this year on whether to adopt the “Alternative Vote” (AV) election system in favour of the single vote system currently in place. The public discussion leading up to the vote was simply appalling and contained, almost exclusively, misinformation. I watched, horrified and infuriated, as one Tory member spoke on television, declaring as a categorical fact that the AV system leads to hung parliaments. He cited the example of Australia (which has used the AV system for a century now). Yes, Australia had a hung parliament in the 2010 election. So too, in the same year, did the UK with its first-past-the-post voting system, as did Belgium with its proportional-representation system. Had the respectable Tory member spent just two minutes and taken the simple expedient of googling up the Australian voting history he would have discovered that the 2010 election result was an anomaly. More disappointing still was that no one else did this either and so this lie, and many others with it, is what the British public took with them to the polls. The only conclusion that the evidence showed is that democracy can lead to unclear results. The broad and increasingly common occurrence of close elections betrays a deeper truth: we are no longer happy just to “kick the rascals out” – we want to have a choice that doesn’t reduce to one between rascals: we want both a higher calibre of politicians and a higher calibre of political discussion that includes us.

Across the pond in the US the situation is, if possible, even worse. In the aftermath of the failed budget super-committee, Grover Nordquist tells the American people that they must decide whether “they want a European welfare state or a return to true America” as if this is an adequate description of the available options. But this is not political discussion. It contains no information but merely employs the (now familiar) intimidation tactic of implying that anyone who disagrees is unpatriotic. I don’t mean to single out Republicans here – I’m sure that the rhetoric of Democratic Party is just as unconstructive. Citizens on both sides of the political divide deserve a better and more informative discussion. There is no true America (or Britain, or France, or …), just the choices that an informed polis makes. Democracy is not voting – what happens before the vote is more important. I hesitate to predict anything about the events of 2012, but one event that will (almost certainly… most likely… maybe… well who can say anymore!) occur is the US presidential election. I am looking forward to hearing such alien words as “gubernatorial” bandied about. But US elections have been far too closely correlated to the amount spent on campaigning and too little on the quality of discussion, and I fear the worst. I fear that, regardless of the outcome of the election, it will have so little legitimacy that it may result in civil unrest. Not a crystal-ball prediction, this, just a fear. There is only so much a citizenry can take. And that’s just my fear about one relatively little event that we already know about. What of all the events that we currently know little or nothing about? I fear what may happen when citizens around the world have had enough. We sit on the knife’s edge. A government over-reacts with force, someone is made a martyr, and we are through the looking glass. Civilisation is a surprisingly fragile thing. We need change – dramatic change – but not, I think, revolution. I’m forever an aggressive gradualist.

So I wish you all a qualified Happy New Year. We take with us more uncertainty than anyone can be comfortable with, but we might also take with us some hope.

In All Fairness

December 23, 2011 2 comments

This entry owes a lot to discussions had in the last couple of months that have helped me fill an important gap in my book, so a big thanks to all involved. I will try to avoid any super-hero references this time…

A core principal of neoliberalism and the new-right is that fairness means treating everyone the same, that is to say that rules apply identically to all people and make no reference to the characteristics or status of a person and without discriminating between such characteristics. This principal underlies the notion of “the rule of law”, private property, and the free market (your dollar is no different to mine), as well as opposition to institutions such as progressive taxation (discriminating against the wealthy) and wealth redistribution (and again). The libertarian Robert Nozick applies this idea in his “entitlement theory” which outlines a framework for full private property rights, free exchange and free markets. In the jargon, the notion of treating all identically is called “procedural justice”.

So how plausible is this idea? Do we really equate fairness (or, if you prefer, justice) with rules that apply identically to all?

The board game monopoly shares many of the characteristics of procedural justice and the free market – all rules apply equally and in the same way to all with no regard to whether you are the shoe, the iron, or the thimble, whether you are rich and own hotels or poor. There is money and property, there is an element of chance, and so forth – just ignore the welfare-state interference that occurs every time you pass go and the occasional random tax, and what you have is basically a (simplified) free market economy. Now imagine that I were to ask you to play the game with me, except instead of the standard amount of money issued to each player at the start of the game I suggest that I start with $10,000 and you start with $1. Better yet, imagine that we start the game with the amount of money, hotels etc. that resulted from a game that our parents played. To make this more interesting, neither of us is allowed to know the outcome of our parents’ game. Would you agree to play the game with me under either of these terms? I would argue that you would (politely) decline. And I’d wager that you’d do so because the game wasn’t fair. Monopoly is just a game of course, and a bit of fun and we can play and still walk away friends regardless of the winner. But in real life, this is precisely the game that libertarians insist that you to play. Your starting position in the game is irrelevant to the fairness of the game because we all play to the same rules. We should note that the rules of Monopoly (the game) are designed to produce exactly one winner and up to five losers. To anyone who takes fairness seriously, the similarity between the game and the real-life system of private property and free exchange should be deeply concerning. The rules of society should not aim to produce winners and losers but to facilitate happy, peaceful, and prosperous co-existence.

The problem here is that we simply don’t equate treating people identically with treating people fairly. We recognise that differences need to be accounted for if we are to be fair. Karl Marx once noted that nothing is more unequal than treating unequal people equally. And he was right. Recognising and accounting for differences is fundamental to our sense of fairness. Take some sport games. Golf has a handicap system which explicitly gives a head start to less capable players. In my misspent youth, I occasionally played in social snooker competitions with a similar handicap system (a great help given my relative lack of talent with a cue). We require boxers to box in weight classes, discriminating by size so that boxers compete only with comparable boxers. In school sporting events we have similar aged children compete with each other.  We have separate events for the Olympics and the Paralympics because we recognise the absurd unfairness of pitting a full-bodied athlete against a wheelchair user. In all these cases we discriminate. And it is because we discriminate that we feel that these games are fair. Speaking of wheelchair users, we allocate special spots at public venues for them that are close to the entrance with extra room to manage their chairs. This discriminates in their favour (and against all other drivers), but only because it helps them to come closer to the normal functioning taken for granted by others.

Fair rules do discriminate and it is important for fairness’s sake that they do so. In the examples above we can see that the discrimination is intended to create a level playing field. It does so by neutralising biases that exist in the remainder of the rules either by limiting the conditions or by compensating for differences. Of course, there are kinds of discrimination that we believe do make the rules unfair – e.g. references to religion, or race (but then sometimes such discrimination in the form of positive discrimination can be important in neutralising existing and overwhelming biases too). What we are after here is not equal treatment but equal consideration.

So what constitutes fair discrimination? Arch-neoliberal Friedrich von Hayek has argued, on behalf of libertarians, that discrimination is legitimate only if the group discriminated against agrees to it. This is hardly plausible. We don’t consult murderers before making that illegal, and we don’t consult the feelings of those who love to drive faster than is safe for everyone before formulating a speed limit (a discriminating rule against those who love to speed). More generally, we disregard the objections of someone who is seeking to protect an advantage that a particular configuration of rules may give them. Nozick argues that fairness can only be judged from the outcome of the application of a set of rules – if the rules have been followed then the result is fair. But this gets it completely around the wrong way. We judge whether the rules are fair by comparing the outcome to our metrics of fairness. Our notions of fairness precede and exist outside of the rules, and it is only when they permeate into the rule-making process, such that the rules are designed to produce fair results, can we hope to claim that the rules themselves are fair. If the outcomes of a set of rules frequently appear unfair to us (as is overwhelmingly the case under the free trade system with its extraordinary biases towards the haves) it is a reasonably likely sign that the rules themselves are not fair, and that we should start looking for some unequal treatment in order to get some equal consideration (or else re-write the rules from scratch).

John Rawls, in his landmark work A Theory of Justice, offers us a thought experiment that is helpful here. He proposed a rule-making body that is made up of a group of people who are behind what he called “the veil of ignorance”. Behind this veil none of the people know any of their own characteristics – their wealth, intelligence, race, gender, religion, physical abilities or disabilities, talents or lack thereof, and so forth. They are aware, however, that people do have these characteristics (just not which ones they themselves have). From this hypothetical position (which Rawls calls “the original position”) they are asked to design the basic rules of a society, knowing that they could be any person in the real society. Unsurprisingly, Rawls named the set of rules that flow from this process “Justice as Fairness”. Whether we agree or not with the set of rules that Rawls believed would flow from such a process (there have been excellent arguments both ways) there is nevertheless something compelling about this method and what it tells us about how we conceive of fairness. By being faced with the possibility that they might be in any of a variety of circumstances, rich or poor, healthy or sick, and so on, each participant considers what would be a fair system to encompass them all. They might conclude that handicapped parking at public locations should get special treatment in the way described above; they might conclude that no person should be so wealthy that they dominate the direction of their society; that the poor should receive extra money and that those with wealth should give some of that to help the poor; that gross economic inequality is an unhealthy condition for a society for a number of reasons. They would recognise various vulnerabilities and forms of domination that might exist and formulate rules that address them. But only by removing knowledge of, or ignoring their own advantages, would they reach these conclusions. Nozick argued against Rawls claiming that the ignorance of their situations removed the whole person and made the process meaningless. But he misses the point. The point is that the deciders are aware of the possible characteristics and how the mix of people with those characteristics might interact with each other. They consider the situation from the point of view not only of a person who may have certain characteristics but also from the viewpoint of those that have to share a society with such a person. That in itself is enough information. A benign and wise Martian, for example, could use this information to design a set of rules.

Recall my proposed Monopoly game, wherein we each started the game from the end result of a game between our parents. If you knew that my father ended up with all the money and hotels on each street and yours ended up with nothing you would rightly believe that you were being treated unfairly. If the roles were reversed you would be all too eager to commence the game (a familiar situation to those who have followed the development of neoliberal control in the last few decades). Behind a veil of ignorance, we might agree that the normal starting state of the game was much fairer for all. Or we might even agree that such a game was rather silly and we should go and throw a Frisbee in the park instead. But if we were faced with those rules applying to the real world, knowing that it was not a game, we would be likely to reject the Monopoly rules altogether and work from a different starting point.

In the real world, of course, we cannot replicate Rawls’ hypothetical situation. The best we can settle for, and this is not so bad after all, is a democratic process in which all of the notorious biases are removed – those of wealth, privilege, power, and greed; in which the deliberators are the broadest and most representative set of members of society possible (as opposed to the unrepresentative representatives that plague our current systems); where each meet under conditions of deliberative equality. From there we have some chance that fair social rules will emerge. I have absolutely no doubt that such rules will be crammed full of discriminations and distinctions. And I am equally sure that the rules will be all the better for it.