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Friday, 20 April 2018

Hostile Territory

After she triumphantly claimed that the decision to destroy the Windrush landing cards had been taken under the last Labour government, and not while she was Home Secretary during the coalition (a ploy echoed by Nick Timothy claiming that she was on holiday when the infamous "Go home" vans were approved), Theresa May signed off Prime Minister's Questions on Wednesday by saying that antisemitism was running rife in the Labour Party. This was opportunistic hype (the Commons cameras helpfully cut to a stony-faced Ruth Smeeth and Luciana Berger on the opposition back-benches), but it was also chutzpah. The first legislation that directly and systematically addressed immigration during the modern era was the 1905 Aliens Act, which was passed under the Conservative administration of Arthur Balfour. This was implemented in response to fears over unchecked Jewish immigration from Eastern Europe, which had been stimulated since the 1880s by both the pull of the United States and the push of pogroms in Tsarist Russia (as the preeminent global shipping hub, Britain was often the first stop in a longer journey for European emigrants and some, due to waning funds or waning desire, got no further).

Though the 1905 act preserved the principles of generous asylum that had been a characteristic of British policy since the French Revolution, it was unquestionably an antisemitic initiative whose passing owed much to the new popular press that arose in the final years of the Victorian era and its symbiotic relationship with the radical right, notably the xenophobic British Brothers' League. The parallels between today's right-wing press and UKIP are obvious, down to the organisation's steep decline once its major goal ("England for the English") had been achieved. The new Liberal government that took office in 1906 did not repeal the act, though it wasn't particularly energetic in enforcing it either. The problem of illegal aliens and their supposed bad habits had been exaggerated and the political dynamic was driven by a desire to "do something" that would satisfy the press. That said, the Liberal's "let sleeping dogs lie" attitude highlighted their lack of interest in making a more generous immigration policy a matter of principle, which we find echoes of in the 2010-15 coalition.


Outside of wartime, there were no further attempts to implement immigration controls until the 1948 British Nationality Act. This wasn't directly concerned with immigration as such, the chief purpose of the act being to allow white emigrants from the UK to the dominions to retain British citizenship, but it had the effect of confirming the right of "colonials" to settle in Britain. In a repeat of the decades leading up to the 1905 act, growing public concern over "coloured" immigration, which was fanned by the press and the far-right in the 1950s, led to the Commonwealth Immigration Act of 1962. Though this was developed in the context of the disappearance of empire and the assumption of ever closer ties with Europe, the inherent discrimination in the treatment of white versus non-white Commonwealth citizens led Hugh Gaitskell, the then leader of the Labour opposition, to describe it as "cruel and brutal anti-colour legislation". Subsequent acts in 1968 and 1971, under Labour and Conservative governments respectively, further tightened restrictions on immigration in a way that was clearly discriminatory, notably against East African Asians.

I'm not going to detail immigration policy from the 1970s onwards because you've probably got the picture by now. Despite the usual "firm but fair" guff and periodic claims that technology will make it seamless, the pattern is one of immigration policy evolving in response to press-led panics about the "problems" posed by particular groups, from criminality through pressure on public services to Sharia law. The political response to these periodic panics has tended to oscillate between endorsement ("swamping") and cant ("legitimate concerns"). The latter reflects not so much cowardice as a pragmatic recognition that there are few votes in a principled pro-immigration stance and that a hostile environment is usually more bark than bite. What is notable about the Tory-led administrations from 2010 onwards is the extent to which immigration officials have been encouraged to bite hard. This probably owes more to media pressure and the related issue of the EU than it does to the personal prejudices of either Theresa May or Amber Rudd, though their diligence should not go unremarked.

Despite the groundwork laid in the 90s over "bogus" asylum-seekers and the Islamophobia of the 00s, the single biggest contributor to the contemporary hostile environment for immigration was the EU referendum result, and (despite the media manipulation and David Cameron's cowardice) it is the British public who have to take responsibility for that. Hostility, sometimes rebranded as "toughness", has been a defining feature of government since the Thatcher years, highlighting the degree to which commitment and belief has prospered at the expense of scepticism and tolerance in the political milieu. This applies as much to New Labour as the Tories, with the penchant for technocratic solutions and evidence-based policy failing to obscure class and race prejudice. The dissenting left is not immune to the same hegemonic pressure - the mandatory "passion" of neoliberal self-actualisation - but it is noticeable how supposed "ideologues" such as Corbyn and McDonnell are routinely hauled over the coals by the media for expressing doubt or suggesting that certain topics would repay investigation and research rather than a rush to judgement.

This hostility obviously spreads much further than just immigration, including the beasting of the disabled, the systematic dissuasion of welfare claimants, and the relentless chivvying of the unemployed. The two-child cap on benefits has extended this hostility to the very act of social reproduction, which should remind us that the British state in the democratic epoch has only once deviated from the sociopathic attitude of the Edwardian era. The 1945-79 period increasingly looks anomalous not just in its economics but in its social generosity (its "socialism", if you will). The present issue isn't the prejudices of a particular politician but a normative assumption that the chief role of government is the disciplining of society in the service of an abstract ideal of market exchange, rather than the promotion of freedoms (from want, disease, ignorance etc) that will aid individual flourishing. While Tory ministers try and avoid blame for their callous actions, the Liberal Democrat worthies of the coalition years artlessly admit the truth: that looking after the vulnerable is on a par with taking a stand against plastic bags.


That the Windrush scandal should have broken the surface in a week marked by both the Commonwealth summit and the BBC's airing of a three-part documentary on Stephen Lawrence's murder is not coincidental. The adoption of the Lawrence family's cause by The Daily Mail obviously owed something to the lucky coincidence of Neville Lawrence doing plastering work at Paul Dacre's home, but it also owed much to the evident "respectability" of Doreen and Neville Lawrence. The wider sympathy for the "Windrush Generation", with the Mail to the fore, has much to do with their age and a nostalgia for the Commonwealth as reimagined through the lens of The Crown (were a victim of the Border Agency to suggest that the UK should become a republic, they would immediately lose all sympathy). But for this very reason, the liberal attempt to equate the travails of the Windrush OAPs with EU citizens post-Brexit is likely to fail. For Middle England, there is no equivalence between a lifelong tax-paying West Indian in Peckham and a 40-year old Dutch academic in Oxford, let alone a 20-year old Polish labourer in Spalding.

Regrettable though it may be, David Goodhart echoes popular opinion in his insistence that the only effective policy towards illegal immigration is one that is explicitly hostile. This is because "illegals" have been successfully othered by the media and opportunistic politicians over the years, to the point where attitudes such as "deport first, appeal later" have been normalised as common sense. The error that people make is in assuming that an environment of hostility will only apply to illegal immigrants, which misunderstands that illegality is a matter of degree (and fine judgement, in many cases) and that the environment, like a fishing net, must be cast across the whole of society if it is to be effective (Goodhart now advocates ID cards for all). What politicians like Theresa May and apologists like Goodhart fail to appreciate is that a hostile environment will thereby corrode society as a whole. With its rejection of Europe and its condescending attitude towards the Commonwealth - mixing the delusional pretensions of an imperial revival with grudging consideration for its members' concerns - the UK is fast-developing a global reputation as a hostile territory for reasons that go far beyond immigration.

Saturday, 14 April 2018

Rivers of Cant

One reason for the strong reaction to the news that BBC Radio 4 will broadcast a reading of Enoch Powell's 1968 "Rivers of Blood" speech tonight is the common belief in the power of political rhetoric. A cynic might suggest that some of the excitement arises because Powell's fifty year-old words are a cut above the contemporary norm in terms of quality (the emphasis on his classical allusions in many reports certainly supports the idea that nostalgia for a higher tone is at work), but I think this claim cannot stand up to scrutiny when you consider the actual speech, which is a farrago of dubious anecdotes and prophecies of a race war in which the foaming Tiber is actually less notable than that old standby of neighbourly intimidation, shit shoved through a letterbox. The chief accusation by those who deplore the BBC's decision is that Powell's speech was, and still is, inflammatory. The emphasis on the power of words misses that Powell's wider significance, and the specific importance of this one speech, is to be found more in the realm of political ideas than political language.

Enoch Powell wasn't a thoroughgoing racist so much as an equal opportunities misanthrope. As a clever, lower middle class provincial, who was impressed in his youth by Nietzsche and never quite lost the chip on his shoulder, he had a low opinion of most people in practice. This explains why he idealised people in his politics to the point of inventing representative types, such as the constituents quoted in his speech who may or may not have been real. Though he was rigorous in justifying his often maverick positions on topics such as unilateral nuclear disarmament and reform of the House of Lords (he was in favour of the first but not the second), there is little doubt that his public persona was as much showman as don. His speeches, like his resignations and departures from one party to another, were performances in which the ostensible objective - to influence government policy - often seemed secondary to his vanity. While not without humour, his claim as an Ulster Unionist MP in 1975 that "until the Conservative Party has worked its passage a very long way it will not be rejoining me" was a fair reflection of his solipsism.

Powell's influence was significant, not because he was a particularly effective minister (though he was certainly not incompetent), or an insightful thinker, but because he articulated three key ideas that would come to dominate British politics. The first of these was his idealisation of the free market. Long before Margaret Thatcher came to power and monetarism entered the mainstream, Powell was a member of the Mont Pelerin Society, the incubator of neoliberalism, who advocated privatisation against the grain in the 1960s and was contemptuous of the old school establishment that dominated industry and the City of London. The second key idea was the primacy of national sovereignty, which would not only lead to his antipathy towards the EEC and later the EU, but which convinced him as early as the 1940s that the US posed a greater threat to British interests than the Soviet Union. It also led him to abandon his early imperialism, reject the Commonwealth and advocate a separatist and defensive attitude towards national identity that would inform both his antipathy towards immigration and his later role as an Ulster Unionist MP.

The third idea, which was also the central argument of the 1968 speech, was that the true victims of immigration policy were the natives: "The discrimination and the deprivation, the sense of alarm and of resentment, lies not with the immigrant population but with those among whom they have come and are still coming". Powell saw this not as some unfortunate accident but as the consequence of at least neglect and quite possibly conspiracy: "For reasons which they could not comprehend, and in pursuance of a decision by default, on which they were never consulted, they found themselves made strangers in their own country". In effect, Powell was helping to conjure up the modern idea of the white working class as not merely under threat but disenfranchised by a metropolitan elite. This would immediately provide a paradigm for the explicitly racist politics of the National Front and later the BNP, but the lasting influence was on the politicians and commentators who condemned his speech at the time but later found it convenient to employ his populist idealisation of a beleaguered and misunderstood people. His true heirs were not Nigel Farage and UKIP but the wider group of politicians and media outriders who have normalised the cant of "legitimate concerns" and the myth of political correctness (the nominal target of Powell's speech was the Race Relations Bill, which for many PC-phobes was when the rot set in).


Powell's speech has been regularly disinterred for examination over the years, usually in order to prove that his prophecies were ill-founded, but this half-century occasion has got peoples' backs up not just because an actor will read the words in an impersonation of their author (the original speech was only partly recorded by TV) but because of the tone of giddy excitement adopted by Amol Rajan, the BBC's Media Editor, in promoting the broadcast. This could be excused as Rajan's background in newspapers coming to the fore when a more sober tone was called for, but it also highlights the BBC's institutional drift as the demands of the market (to entertain) increasingly overpower the demands of public service broadcasting (to inform). The programme will obviously not be a celebration of the speech, but it is another stage in the partial rehabilitation of Powell that started in the late-80s when his views chimed with the growing euroscepticism of the Conservative Party and which arguably achieved vindication in the EU referendum. The emerging consensus appears to be that while he might have been wrong about the prospects for integration and tolerance, he was right about the importance of sovereignty.

The conflict between market and society visible in the BBC's calculation was, of course, at the heart of Powell's own worldview. He famously said that "all political lives, unless they are cut off in midstream at some happy juncture, end in failure". One explanation for his own relative failure as a politician is that he appreciated that the market and society could not be naturally reconciled and so the latter had to be buttressed by appeals to blood and soil if not religion. He was an identitarian avant la lettre, which ironically made this High Tory one of the most American of British politicians. His belief in an idealised national identity was nowhere more obvious than in Northern Ireland. Where most people saw a sectarian conflict rooted in historic discrimination, Powell saw "a part of the United Kingdom [that] has been under attack from an external enemy assisted by detachments operating inside". The idea that the Republic was waging a proxy war was absurd, and Powell wisely avoided articulating the implication of his own logic, that nationalists should be expelled as hostile aliens, but traces of this cockeyed belief can still be seen in the DUP's claim that the negotiations with the EU27 over the Irish border are part of a nefarious Dublin plot.

If Brexit is Powell's chief legacy, then this is less in respect of the anxieties over immigration that fuelled the referendum vote than in the popular delusions of sovereignty that were probably decisive. The chief disservice of the Radio 4 broadcast is that it perpetuates the idea that Powell was defined by his xenophobia. The 1968 speech certainly marked a pivot in his career, and he would never successfully shake off the accusation that he was ultimately a racist, despite his frequent denials, but a more realistic view is that his antipathy to immigration was just one more manifestation of his idealisation of an organic, national identity and thus ultimately a defence of sovereignty. Given his history, I have little doubt that were he alive today, Powell would be appalled at the reality of "taking back control". As a British Prime Minister bypasses Parliament to launch missile attacks in Syria, in support of a US President who will probably repay the favour in time by imposing disfavourable trade terms on the UK, there is more than a touch of irony in the BBC broadcasting a programme that will seek to marginalise Powell's influence by admiring "how far we've come" in respect of race relations.

Monday, 9 April 2018

That Centrist Party

There has been much mirth at The Observer's attempt to midwife a new centrist party. Emphasising its rich backers and full-time staff, not to mention its anodyne policy platform "that borrows ideas from both left and right", was guaranteed to prompt derision. Tellingly, the party has no actual name as yet, Project One Movement being little more than a placeholder, which makes you wonder what those full-time staff are up to (they didn't even reserve the Twitter handle, which led to the inevitable parody account). Blue-sky-thinking their policy framework doesn't appear to have been a priority, though perhaps they've appreciated the risks in being too specific in a LibDem hostages-to-fortune sort of way and would prefer something a lot more aspirational, or at least bullet-pointy. Even Andrew Rawnsley was forced to admit that the project stands little chance of getting off the ground, not just because of the duopolistic structure of British politics but because there is no British Macron waiting in the wings (no, not even David Miliband) and no conjunction of forces that would see both the Labour and Conservative parties simultaneously marginalised.

The calls for a new centre party have supposedly been driven by two developments: the acceptance of Brexit by both Labour and the Conservatives and the former's leftward shift under Jeremy Corbyn. In fact, neither is a convincing explanation for the need for a new party. There is no evidence that the popular mood has changed enough to guarantee a remain victory in a second referendum, and Labour's current position on the ideological spectrum is roughly "Harold Wilson" in historical terms. The Liberal Democrats provide a home for unreconciled remainers, while the historic lesson of the SDP and New Labour is that pushing the party to the right from within has a better chance of success than striking out on your own. All the evidence suggests that the calls for a new centrist formation are essentially a belated continuation of the anti-Corbyn coup that failed in 2016 (the idea that Tory remainers will break ranks is for the birds). Ironically, there is a sense that what the Labour right is trying to do is mimic the success of Momentum in influencing the direction of the party, but without the grubby necessity of building popular support.

Instead the focus is on winning the media, a task made easier by the Labour right's willingness to allow their criticisms of Corbyn to be exploited by the Tories, as in the antisemitism row. Among other things, this has reminded us that the antipathy towards Leveson 2 extended well beyond the Conservative Party. This should hardly come as a surprise, given the number of Labour MPs who take the Murdoch shilling and the resistance Ed Miliband faced on press reform during his own tenure as party leader, but it's worth reminding ourselves that while the scope of Leveson 2 was to be the corrupt relationship of the press and the police, it was expected to reveal a triangular relationship involving politicians as well. The favourable press coverage of Corbyn's critics is not just a congruence of interests but a sensible investment to safeguard against any future press regulation. As ever, the agenda set by the press is happily reflected by the BBC and ITN, both of whom have long considered the Labour left to be beyond the pale.


The claim by Stephen Bush that the space for a centrist party exists more on the right than the left is sociologically plausible, but the emergence of a new formation in that space is politically improbable. The pro-remain, liberal wing of the Conservative Party is far smaller and more isolated at Westminster than the Labour right, but just as unlikely to split. They may enjoy greater support among the wider population, but that support isn't clamouring for a new political vehicle, to judge by the failure of the LibDems to rebuild their numbers. The authoritarian leavers that formed the bedrock of UKIP's support have either drifted away or switched to the Conservatives. Though they are out of sympathy with the free market fundamentalism of the Tory ultras, which paradoxically means they will have as much of a restraining effect on Brexit as the ex-remainers like Theresa May, they are sufficiently in tune with the new authoritarianism (e.g. the "hostile environment" for immigrants), to not feel the need to take their votes elsewhere. I suspect Bush's contrarian view is partly an attempt to obfuscate that the centrist initiative is wholly about Labour's internal dynamics.

One reason why a new centrist party would struggle to get off the ground (and why the abortive attempts to date have barely got beyond the flipchart stage) is the difficulty it would have in coming up with a coherent set of policies. The problem is that while neoliberalism has achieved superstructural hegemony - i.e. among the media, politicians and business - it has failed to embed itself socially beyond the vapid nostrums of personal striving and gym membership. Most people are still suspicious of the market, believe in national control (from migration to railways), and think that government can and should reduce inequality, even while they respect private property, entrepreneurialism and the quid pro quo of rights and responsibilities. A centrist pitch to this majority is perfectly feasible, but only if it drops the overt enthusiasm for neoliberalism and globalisation (Macron's current problems owe much to the French electorate wanting a centrist President more than an authoritarian neoliberal). But if it does that it will struggle to distinguish itself from Labour and the Conservatives, both of whom are engaged in moderating neoliberalism in their different ways. In the current conjunction, a centre party would be obliged to double-down on neoliberalism, but that would make it unpopular.

This helps explain why much of the support for a new centre party has focused on foreign policy. This is more than just an opportunistic stick with which to beat Corbyn, it is a displacement activity to avoid talking about the social order and economic power. We have a reached a point where the "sensibles" are making increasingly loud calls for military intervention to topple the Assad regime in Syria: "We should all have been making the case, for years, to support and create an international military effort to remove him from power". Not only does this repeat the mistakes of Iraq and Libya, but it sits uneasily with centrist lamentations that Brexit might jeopardise peace in Northern Ireland. On the one hand, we should risk exacerbating a civil war because we are offended by chemical weapons; on the other, we should do nothing that risks reviving an inter-communal conflict that was inflamed by putting British boots on the ground nearly 50 years ago. The problem of centrist incoherence won't go away, and for that reason the chances of a viable centre party being launched are practically nil.

Wednesday, 4 April 2018

The Delusion of Personal Data

The focus on the billions wiped off Facebook's share price recently, following the revelations around the Cambridge Analytica "data breach", has had the unfortunate effect of reinforcing the popular belief that personal data is a valuable asset. Given that the share price has simply fallen back to where it was 10 months ago, and that Facebook's user growth has been slowing of late (and has even declined in the US), an alternative interpretation is that the market is adjusting by better pricing-in the risk of future user desertion. As its mature user population is ageing and its user growth is now biased towards less valuable regions of the globe, I would have expected this adjustment to happen anyway. In other words, what matters for Facebook's future earnings potential is still its user demographics and the extent of engagement (as that is what matters to advertisers) rather than the quantity or quality of the data that it has managed to collect. While tech-boosters and politicians have been swept up in the promise of Big Data and AI, the data-centric model has yet to really impinge on a stock market that has largely stuck with the user-centric model of the 1990s when it comes to valuing the platform capitalists.

In the early days of the commercial Web, when monetisation was still a conundrum, micropayments were seen by many as the future. You would be charged a fraction of a penny for each page you viewed, the assumption being that you would be discerning in your consumption (the predictions were made long before increased bandwidth and smartphones enabled a tidal wave of promiscuous browsing). Back in 1998, Jakob Neilsen justified micropayments by reference to the equivalent cost of labour. His argument was that the charge would be negligible compared to the value of the user's time, even if the latter was heavily discounted for non-working hours. In the event, micropayments never took off as a way of compensating content-providers, largely because the low (and falling) cost of production meant that there would always be a surfeit of amateurs producing free stuff (the "fame vs fortune" problem noted by Clay Shirky and others). Niche providers, from porn to business intelligence, have had limited success with subscription paywalls, but this clearly was never going to be a generally-applicable model. What was significant about Nielsen's thinking was the suggestive association with time, which helped shift the focus away from "King Content" to the contribution of the user and thus the production of personal data.

As it became clear that what was actually driving the Internet economy was user data and its leverage for advertising, the conceptualisation of personal data as an asset came to the fore. This produced two quite different interpretations. The dominant one is propertarian, or democratic capitalist. In this scheme, each individual would retain ownership of their data and receive a dividend from advertisers for its use. The sums involved would be laughably small at the individual level (though some have seen it as another nudge towards a basic income), but would ensure that the value of the Internet was not monopolised by companies such as Facebook and Alphabet, while the behaviour of abusive advertisers could be kept in check by the discipline of a property-owning democracy. Jaron Lanier is perhaps the leading proponent of this approach, which he outlined in his book, Who Owns the Future? As a number of critics have pointed out, the democratic element of this is weak (essentially it means forgoing payment in order to boycott certain advertisers), while the operation of the necessary infrastructure (a micropayments system orders of magnitude more complex than Neilsen's model) would place more power in the hands of unelected technologists and would be a dream come true for the surveillance state.

The second conceptual approach is a social democratic one in which personal data is aggregated and held in trust, with commercial users charged for access to it and pro-social organisations given discounted or even free access if they can show public benefit. This would be simpler to implement in terms of the financial transactions, though it would entail a significant bureaucracy for licensing and wouldn't easily accommodate novel or unconventional uses of the data. Evgeny Morozov is one of its leading advocates in the media. This approach prefers to see society's data as a collective, natural resource (which chimes with the "data is the new oil" trope) hence the status quo is described negatively as "extractivism", triggering echoes of anticolonialism as much as nationalisation in the proposed solution. If Lanier is guilty of reimagining the autonomous homesteader of Locke, Morozov is guilty of reimagining the sovereign of Hobbes, albeit in the context of a "truly decentralised, emancipatory politics, whereby the institutions of the state (from the national to the municipal level) will be deployed to recognise, create, and foster the creation of social rights to data". The bureaucratic risks of this are as obvious as the surveillance concerns, not least in the inevitable tension that will arise between centralisation and decentralisation.


Where Morozov does have a point is in his criticisms of Lanier and other propertarians for their attempts to subdivide a social value that is meaningless when disaggregated: "one cannot simply take the total revenue of these companies and divide it by the number of individual users to figure out what each of us is due". He also recognises that the production of personal data already depends on publicly-funded infrastructure, not just in the historic sense of the role of schools and hospitals in social reproduction, but in the more immediate and growing role of the state in providing the facilities for the individual creation and capture of data: "a lot of the data that we generate, when we walk down a tax-funded city street equipped with tax-funded smart street lights, is perhaps better conceptualised as data to which we might have social and collective use rights as citizens, but not necessarily individual ownership rights as producers or consumers". For all that, Morozov suffers from the same fundamental belief as Lanier, namely that personal data is a valuable resource (essentially surplus labour) that is being alienated from its producers. But this is a form of vulgar Marxism, not to mention a banal use of the term "exploitation", that confuses what we are obliged to do by necessity with what we choose to do for entertainment or self-actualisation.

The idea that personal data is an asset, and therefore the chief question concerns its ownership, is little advance on the older idea that we users are commodities: "If you're not paying for it, you're the product". The problem is that both of these ideas are suffused with liberal ideology, imagining personal data as an extension of the person and therefore of the highest value. In fact, at the level of the individual, personal data is commercially worthless. I should stress that by "personal data" here I mean attributes and preferences (who I claim to be, what I claim to like). Transactional data (what I actually bought) and network data (who I actually know) are obviously valuable, to both private and state actors, but they are data relationships that I cannot exclusively own, so they are not properly "personal". Personal data is also worthless for many public benefit applications because the individual tells us little about the public at large. It is only in aggregate that data has value, essentially because the randomness of personality is lost in the crowd. However, even this observation can lead us astray if we then assume that value is cumulative: the more data we have, the more valuable the dataset becomes. In reality, value derives from the processability of the data. The promise of the singularity is not that ever more data will provide the raw material for a superior AI but that such an intelligence may eventually transcend the need for more data.

Processability means that the capital value of data is bound up in the structures and logic that translate it into a usable resource: data + intellectual property = capital. When we conceptualise data as an asset, either at the individual or collective level, we elide questions about the creation and ownership of that IP. Despite the heroic inventor myth, Mark Zuckerberg is responsible for only a tiny fraction of Facebook's codebase, but he gets the lion's share of its profits. This is because he owns the largest share of the company's IP, which means that he owns the surplus labour arising from the cognitive production of thousands of Facebook (and WhatsApp) software engineers. He also has no intention of ceding control over the data, any more than he intends to allow minority shareholders a meaningful say: "One of the things that I feel really lucky that we have is this company structure where, at the end of the day, it’s a controlled company. We are not at the whims of short-term shareholders. We can really design these products and decisions with what is going to be in the best interest of the community over time." Substitute "company" for "community" in that last sentence and this is straightforward paternalistic capitalism.

Contrary to the hopes of the liberal press, Facebook and the other platform capitalists are not too worried about attempts by the state to regulate the use of personal data. Most regulatory initiatives to date have taken the route of consumer protection, i.e. obliging data-handlers to observe certain proprieties, which has proven to be weak in practice (consider the difficulty of the UK Information Commissioner's Office in gaining a warrant to investigate Cambridge Analytica). More recently there has been a shift towards framing personal data in terms of property rights, particularly notable in the approach adopted by the EU in the General Data Protection Regulation, which comes into force this May. This will probably be more effective in regulating technology companies, but it won't pose a threat to the model of platform capitalism. Morozov's idea would be more of a threat, simply because it enables unavoidable taxation, though the vagueness of his ideas about how this would work in practice, not to mention the modest nature of contemporary European social democracy, suggest that a capital-friendly compromise is likely. Until we address the intellectual property rights of the platform capitalists, we're looking in the wrong place.

Sunday, 1 April 2018

Is Capitalism Redundant?

The economist John Kay thinks the concept of capitalism is redundant: "I wish we would stop using the word Capitalism. It is a 19th-century term, derived from 19th-century economic philosophy. But today people who would run a mile from any suggestion that they had Marxist sympathies freely use the terminology of that era". That's the opening of his post, so it conforms to the tradition of a buttonholing plea combined with a dubious assertion (the "Why, oh why!" beloved of tabloid columnists), but he does then present a reasonable argument: "The concept of capitalism is inherently confrontational. Capital and labour were struggling for larger shares of the same cake. But 21st-century business – and I insist on talking about business rather than capitalism – is inclusive by its very nature. That nature necessarily entails partnership – partnership between employees and managers, customers and suppliers. The position of investors in that partnership is inherently peripheral and precarious". This sets up a rhetorical opposition between confrontation and partnership, albeit the former is more of an ongoing tension than a moment of crisis and the latter is often at arms-length. You could just as easily talk of competition and cooperation, but there are ideological reasons to avoid that choice of words.

As Michael Roberts notes in reply, confrontation requires a particular conjunction: "The most intense periods of struggle appear to be when the labour movement is reasonably strong in incomes and organisation but when the profitability of capital has started to fall, according to Marx’s law of profitability. Then the battle over the share of the surplus and wages rises. Historically, in the UK that was from 1910 just before and just after WW1; and in the 1970s. Such objective conditions have so far not arisen again". In other words, the absence of confrontation does not indicate an absence of distinct classes with contrary economic interests and therefore the system that we call capitalism. If the latter has meaning, it isn't in the narrow sense of a surplus of financial wealth but in the social relations that the unequal distribution of that wealth gives rise to. Kay insists that modern business is characterised by partnership, but his definition is so all-encompassing and multivalent (managers, employees, customers, suppliers) as to be functionally meaningless and it obscures real asymmetries of power in economic relationships.


The issue I have with Kay's claim is his emphasis on "archetypal" business forms, which he uses to persuade us that the economic system has changed from one mode to another and can therefore no longer be adequately described as capitalist. As he describes it, the term capitalism has a limited historical life, starting towards the end of the 18th century (some historians have placed its birth as early as the 15th century) and becoming redundant by the time of Marx's death. In this scheme, the true capitalists were owner-proprietors who created family firms, such as Richard Arkwright and Samuel and William Lloyd. This form reached its zenith towards the end of the 19th century, most spectacularly in the "robber barons" of the US, after which it was overtaken by the placid charms of the new business model of joint-stock companies. In the 20th century, the archetypal companies in Kay's scheme were General Motors, Du Pont and ICI, who were characterised by their employment of professional managers reporting to multiple, diverse shareholders. By the end of the century, the private investor, who may have taken an active interest in the company's management, had largely been marginalised by institutional investors, who didn't, a process that Kay refers to as the "outsourcing" of investment management.

The increasing distance between the owners of capital and their investments - now mediated by unit trusts and pension funds for the many, and private equity and wealth management for the few - together with the complexity of long supply chains that span the globe, has created a new mode of business exemplified by companies like Apple. In Kay's view, "Apple is, essentially, a structure of relationships, with assemblers, suppliers, customers, employees – Apple exemplifies the source of competitive advantage, based on architecture, which I described in my book Foundations of Corporate Success". The fact that he is puffing his book does not invalidate this characterisation of Apple. More to the point, the structure of the market for business books requires that your thesis either finds a commonality that simplifies and thus explains the corporate world or isolates some "best practice" that can potentially be emulated by other established companies or market-entrants. A book that suggested business forms were multifarious and that success was unpredictable would not sell, even though that would be an accurate reflection of reality.


What Kay says about leading companies obviously isn't untrue, but it is partial when discussing a general economic system (or even just the system of commodity production). The point about Arkwright's Derwent Valley mill or Ford's Dearborn plant is that they were exceptional as units of production, and this was reflected in the companies' unusual corporate forms as much as in the atypical experience of their workers. Just as the majority of labour across the 19th century was employed in either small-scale manufacture or services (not agriculture, as is often erroneously assumed), so in the 20th century only a fraction would experience the large-scale, corporate environment of an ICI or a General Motors. Today even fewer will work for an Apple or a Google. It should also be stressed that while precarious employment has grown in developed economies, it remains a mode that affects a minority of workers (elsewhere in the world, it is much more common). The humdrum reality is that most people in countries like the UK or US work in the services sector for either SMEs, whose employment and production practices would be fundamentally familiar to Richard Arkwright, or for unsexy corporates that despite decades of outsourcing and "flexibilization" are anything but the "hollow corporations" envisaged in the 80s and 90s.

The gulf between the reality of the economic system as experienced by most people and the characteristics of "new economy" headliners is starkest in Kay's assessment of their financing: "They’re generally strongly cash generative and have no need of external capital at all. The purpose of the listing is to enable early-stage investors to make realisations and to persuade employees, many of whom will be shareholders in the company, that there is value in their holdings". Clearly, many businesses still need external capital, which is why we have capital markets. The IPO is a one-off and the capital gains potential for future workers will be much more modest than that enjoyed by the founders or first-cohort employees, which might suggest that the 21st century corporation will have a much shorter lifespan than that of the 20th century. A more likely outcome is that it will simply transform into something that looks a lot more like the corporation of the late 20th century, a process that is already apparent in the growing regulatory burden being placed on companies like Facebook, in the reshoring committed to by manufacturers like Apple, and in the growing physical footprint of disintermediaries like Amazon.


What Kay identifies as a new form may simply be a juvenile phase. It is worth remembering that when we look back at former "archetypes", what we usually imagine is a mature form: Ford in the 1930s, General Motors in the 1960s, Microsoft in the 1990s. The stereotype of "corporate man" and the expectation of "a job for life" only arose relatively late in the 20th century as a result of decades of socioeconomic stability - les trentes glorieuses. It wasn't baked in from the beginning. This doesn't mean that companies like Apple and Google will end up looking like Du Pont and Toyota, but that the mature form of the new technology businesses won't be as disconnected from society as the current model suggests. Or perhaps I should say, the current aspiration, because the employee and capital-lite corporation epitomised by the likes of Apple (at least in its public image) is clearly idealised, in the same way that Germany's Mittelstand and Japan's quality management focus were long idealised as examples of socially-embedded and technocratic capitalism in the 60s and 70s respectively. If nothing else, those two ideals show how supple supplier relationships and the formalisation of corporate intelligence long predate Silicon Valley.

What I think John Kay is really talking about is not capitalism per se but models of ownership, and his essential claim is that ownership has been effectively socialised ("Businesses are and always have been social organisations") in the transition from the owner-proprietors of Arkwright's day to the multi-faceted relationships of the modern corporation: "Modern business is inclusive or it is nothing. The greatest challenge we face is to stop them being turned into nothing by people who suffer from misconceptions about their nature and who undertake rent-seeking activities either on their own behalf, which damage the internal cohesiveness of the business, or through their misuse of the political process, which ultimately damages the external legitimacy of these businesses". The problem is that "inclusive" here is no more meaningful than "stakeholder" was in the 1990s. Ultimately, some people benefit more from a particular ownership model than others and that inequity gives rise to conflicting interests and thus the class "confrontation" that Kay decries. His characterisation of the threats to the model includes the private rent-seeker, but his emphasis on politics indicates that his real target is state intervention.


Elsewhere, Matt Breunig asks whether Singapore, a socioeconomic model often promoted by free market advocates, is actually more of a poster-boy for socialism: "the state owns a huge amount of the means of production. In fact, depending on how you count it, the Singaporean government probably owns more capital than any other developed country in the world after Norway".  Breunig's aim is to separate the question of ownership from that of market structure: "The case of Singapore is more than just a funny gotcha to use against right-wingers. It actually raises an interesting question about what it is people care about when it comes to 'capitalism' and 'socialism'. Is capitalism primarily about markets or private ownership? Relatedly, is socialism primarily about ending markets or promoting collective ownership? Often these things are bundled together, but they are logically and practically separable." In reply, Scott Sumner says that while Singapore actually owns a lot of businesses (not to mention public housing and infrastructure), it doesn't favour them or otherwise interfere in their running, thereby suggesting that what matters is the structure of the market more than the corporate form: "if a government does not protect its state-owned firm from competition, and does not subsidize the firm, then there's really no problem with government ownership. You still have a free market."

Sumner's underlying concern arises when the wrong people are in charge of the government: "Free market economists like myself tend to be opposed to government ownership. That's not because there's anything inherently wrong with government ownership per se, but rather because governments that own companies tend to also do other bad things, like erect barriers to entry or subsidize production". This is similar to Kay's point about "misuse of the political process". While many right-libertarians would claim that such misuse is inevitable, being an inevitable consequence of government ("all power corrupts" etc), the weaker case that Kay and Sumner put forward implies that the problem is bad actors - i.e. the wrong politicians get elected. Whereas libertarians seek to limit the scope of the state but not necessarily its political colour (though doing the one inescapably affects the other), liberals are more concerned with limiting the range of legitimate political actors while not constraining the potential power of the state (i.e. a pragmatic acceptance of the necessity for intervention, even if it is theorised as "exceptional"). To put it another way, you can either have the nightwatchman state or capitalist government in perpetuity. In answer to John Kay's orignial plea, once an idea becomes hegemonic, you no longer have to name that idea.