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Wednesday, 26 November 2014

Brute Force Attack

Malcolm Rifkind may not appear to have much in common with fiancé-of-the-moment Benedict Cumberbatch, but they have both contributed to the debate on surveillance this week. There should be no surprise that the Intelligence and Security Committee, chaired by Rifkind, should have decided in its Report on the intelligence relating to the murder of Fusilier Lee Rigby that the "intelligence community" were blameless while taking the opportunity to criticise Internet companies' inadequate support for state surveillance. This might look like crude deflection, but the spooks are clearly playing a double game in which Rifkind and his fellow stooges (Hazel Blears, Robin Butler, Mark Field et al) are taking the role of the bad cop. The good cop is sympathetic to the Internet companies' plight and is keen to find a solution.

The committee's conclusion is that our boys in the shadows, whose job it is to monitor threats and who were well aware of Lee Rigby's killers, did not fail in their duties. Facebook, which is a commercial operation that monitors its users' data only to the extent that it can monetise it, did fail in its duties to alert the state when one of the suspects posted a comment boasting of his desire to kill a soldier. The committee even went so far as to accuse it of providing a "safe haven for terrorists", echoing the intemperate words of the head of GCHQ recently. If you substitute the word "trolls" for "terrorists" you'd be more accurate, but that's not going to garner the headlines. The committee obviously feels that Facebook should be capable of discriminating between the threats of potential terrorists and the somewhat larger crowd of muppets who routinely threaten murder and rape against people they slightly dislike.

The focus on Facebook's "negligence" not only continues the power struggle between state and business over the control of personal data, but it conveniently deflects attention from the secret services' modus operandi, which often requires it to allow crimes to be committed in order to advance intelligence-gathering. While there is no evidence the spooks knew Lee Rigby was going to be murdered, let alone that they would have countenanced it, they clearly knew the killers were active in radical Islamist circles and were happy to keep half an eye on them as low-value targets. They were a lot more aware of the potential threat than Facebook, so the committee's conclusion is perverse.

The agencies' aversion to rounding up all suspects, as the tabloids would urge, is practical, not the product of a keen respect for human rights. The justification for this approach is central to The Intelligence Game, which tells the now famous story of Alan Turing, played by Benedict Cumberbatch, and the breaking of the Enigma code. In order to prevent the Germans realising the boffins at Bletchley Park had cracked it, the Brits had to exploit the intel in such a way as to not arouse suspicions. Dramatically, this is shown as accepting the sacrifice of one of the code-breakers' brothers on an Atlantic convoy. Reality has here been compressed to the point of implausibility - plotting the courses of U-boats would have been done by naval intel analysts not code-breakers - but the essential truth remains: the secret services rarely foil plots because that is not their job.


The film is a highly conventional mixture of tropes: autistic genius, team bonding, the vulnerability of sexuality, plucky gel, Rattigan-like public school pathos etc. Much of the plot is factually incorrect and often nonsensical - e.g. the anachronistic use of Tipp-Ex and the casual security at Bletchley Park. What is significant is that we never see the enemy, other than in the form of newsreel interludes. Insofar as there are baddies on stage, they are the dunderheaded military (Charles Dance, clearly having a laugh) and the cynical face of MI6, played by Mark Strong who also featured in the 2011 adaptation of Tinker Tailor Soldier Spy. What the new film shares with the work of John le Carré (such as the recent adaptation of A Most Wanted Man) is the focus on deception and betrayal on "our side", which is prompted by decisions on the value of information and its carriers.

While much of this is a metaphor for Britain's diminished postwar status (particularly in respect of the US) and the tensions of class (John Cairncross, the Soviet mole in The Imitation Game, is most definitely below the salt), it also reflects the ethical dilemma of the agencies. Lying and sacrificing the innocent are seen as evils; sometimes necessary, sometimes not, but always a matter for judgement. Where le Carré is now outdated is in embodying information as people, i.e. informants, double-agents etc. Human intel is still important, but the core work is data analysis: Turing's legacy. Despite its title, the committee's report is not about the unwitting sacrifice of one soldier's life, but about the sacrifice of communications privacy for everyone.

The key recommendation (page 146 of the report) is the following: "We note that several of the companies ascribed their failure to review suspicious content to the volume of material on their systems. Whilst there may be practical difficulties involved, the companies should accept they have a responsibility to notify the relevant authorities when an automatic trigger indicating terrorism is activated and allow the authorities, whether US or UK, to take the next step. We further note that several of the companies attributed the lack of monitoring to the need to protect their users' privacy. However, where there is a possibility that a terrorist atrocity is being planned, that argument should not be allowed to prevail".

An "automatic trigger" would be words (and conceivably images) or associations (likes, friends etc) considered of interest by the agencies. As this would be constantly changing, and as there would be a lot of false positives (i.e. probably over 99%), it would be impractical to expect the Internet companies to keep on top of this and manage it as an exceptional process. This is the point being helpfully made by the "good cop". As some analysis would be retrospective, rather than real-time, it would also make more sense for GCHQ to simply syphon off the data and analyse it in parallel, much as the Brits transcribed every coded German message in WW2. Over time, this parallel dataset would expand to the point where it became easier to simply mirror the original rather that attempt any selection - i.e. the automatic trigger is all-encompassing. But there is an emerging problem.

According to MI5 testimony to the committee, "one of the effects of the Snowden disclosures has been to accelerate the use of default encryption by the internet companies… which was coming anyway, but I think that’s why I’m underlining the word 'accelerate' ...". The Internet companies know they have to introduce encryption to stay in business. While most users won't shift provider if they can help it, the "winner takes all" nature of the online market (i.e. one dominant social network, one search provider, one smartphone microblogger etc) means that incumbents are highly vulnerable to new entrants. If you go out of fashion online, you can be commercially dead in a matter of months. For a new entrant to the market, encryption could be enough of a USP to build momentum. The incumbents need to mitigate that risk, just as Facebook mitigated Instagram (by buying it) and Apple mitigated Spotify (by buying Beats).

What the agencies want is to circumvent the encryption. They know they cannot backdoor the encryption itself (because, duh, maths), just as Turing realised that Enigma could not be decoded by human cleverness (the crossword-solving angle). What it took was a brute-force attack. At Bletchley Park, this meant building a mechanical program that could work through billions of combinations, much as modern cracker programs work through billions of hash values to decrypt stolen passwords. Given the volume of data and the number of different keys (i.e. one per user), this is simply not going to be feasible on a mass scale if full, end-to-end encryption is widely implemented.

But is full encryption really coming? The user's data will still be open, not only to whoever they are communicating with (i.e. privacy of choice) but more broadly to the Internet companies themselves. After all, their business model is based on targeted advertising, which ideally means "reading" all the data, and a move to a fully secure, ad-free, paid-for service would be commercial suicide. The question then is whether the companies will continue to provide the agencies with largely unhindered access to the data, which is a PR issue rather a technical one.

Most secrecy is circumvented via social engineering, e.g. tricking people into revealing passwords, or tricking them into thinking they are not being surveilled. Unless you utilise an independent, end-to-end encryption tool, you will remain dependent on the Internet companies' interpretation of privacy, and that isn't going to be an interpretation that will jeopardise the revenue they earn from the users' data assets. The report by Malcom Rifkind and company is part of the ongoing campaign by the state to insist that business continues to provide the security agencies with a "cut" of these valuable assets. It's a different form of brute force attack in which a dead soldier is used to batter down a door.

Friday, 21 November 2014

Driving Me Crazy

As if driverless cars weren't exciting enough, we are now told they could be a target for hackers intent on causing chaos. This was spun by some media outlets as the promise of terrorism, which shows that the government line that uncontrolled Internet access is a threat to society has been successfully internalised. According to the UK-based Institution of Engineering and Technology, "If we have the hacker community start to target vehicles, we can imagine a fair amount of chaos". Why only a "fair amount"? Let your imagination run wild. I'm thinking remote-controlled carjacking, like a mashup of Grand Theft Auto and Police, Camera Action!.

Most of the press coverage has focused on the equation of hacking with disruption (and not in the business-bollix sense of that word): "Unfortunately living in the world today people do try to tamper with technology". The phrase "living in the world today" is grammatically redundant but it helps suggest that there is a happier, purer realm where this sort of bad behaviour does not occur. What this patronising twaddle ignores is that most technological progress is the result of hacking and tampering, i.e. experimentation and repurposing. For example, the Internet is the result of various academics repurposing spare computer time and network bandwidth.

It is significant that the car-hacker meme should prove popular in Britain. To be hackable, a driverless car must support two-way communication with a surrounding infrastructure - i.e. it has to be capable of taking instruction. As the name suggests, a fully-autonomous car (which is what many American advocates want) would not be controllable in this way, in which case hacking would require physical intervention (the digital equivalent of hotwiring). The IET, which is a pro-infrastructure lobby, reckon: "There are clear safety benefits in getting vehicles to drive optimally and at a particular speed while interacting with the infrastructure. We're moving towards co-operative systems. The first trial will happen in the UK in January. Vehicles and traffic lights will be talking to each other – that's the first step." Presumably the second step will be for GCHQ to listen in on the conversation.

There was also ample evidence of the IET's dubious understanding of technology in its comments on the software that driverless cars will use: "Recent reports analysing software show that 98% of applications have serious defects and in many cases there were 10-15 defects per application ... If ultimately you want to use autonomous vehicles, we need to make sure they don't have a defect". That headline figure relates to all software, not to critical packages whose failure might imperil life. It's also worth pointing out that "defect" is a broad term that covers more than just bugs. It includes trivial feature deficiencies and cosmetic preferences. In terms of hacking, an exploitable vulnerability (which is what you need to worry about) could be the result of a bug, but it's more likely to be the result of bad design (e.g. an open backdoor) that isn't classed as a defect. The IET are advocating state regulation of the software. This is not a bad approach per se, but it raises questions about which state agencies will be involved.

Some media picked up on the research finding reported by the IET that in a mixed environment manual car drivers ended up copying driverless cars, leaving shorter braking distances and thus causing more accidents. Again, this has a particular ideological resonance in respect of the relationship of the individual and the infrastructure: we must protect you from yourself. This backs up my own theory that driverless cars will only happen as a result of government diktat and strict segregation, because the chief benefits, such as increased road capacity and fewer accidents, can only arrive when automated cars are mandatory and the non-automated outlawed within a particular area, which almost certainly means high value city centres.

Transport policy is rich in hyperbole because of its emblematic associations with progress (railways, jet packs) and personal autonomy (the freedom of the road). In the US this encourages preemptive "libertarian" attacks on federal regulation ("say no to Obamacar"). In the UK we get the man from the ministry annex warning about cyber-carjacking and trying to persuade us that what we need is a virtual chauffeur under the control of the state. To get a better idea of what the reality of driverless cars might look like, it's worth employing three traditional memes that the British media regularly recycle, which tell us a lot about national attitudes to transport policy.

1. The US hates pedestrians --- According to Ben Okri, "There are cities in America where you can’t get anywhere if you don’t have a car". This myth is the flipside of the British habit of regarding pavements as a human right, to the point of treating dogshit as a political totem. Of course, it didn't stop us building plenty of new towns and exurban estates without pavements over the last 50 years, just like the US did. I spent my teenage years in Washington, near Sunderland, where desire paths crisscrossed the "highway" verges (pavements? what luxury!). In fact, the two countries (and developed nations generally) are very similar in terms of urban transport policy, which has been increasingly pro-pedestrian since the emergence of New Urbanism in the 90s.

Walking is a class issue. During the postwar era in the US, getting about on foot came to be seen as the recourse of the poor. I recall walking in car-friendly (but getaboutable) Houston in the late 80s and noting that my fellow pedestrians were mainly Latino maids knocking off from a shift at the hotel I was staying in. In the UK, we cultivated that attitude to an extent (the middle-class signifier of the driving coat and open-back gloves, like car-keys at a swingers' party, was big in the 70s), but still retained a residual respect for walking as a democratic practice, which probably reflected the UK's greater and longer-established urbanism and the less extensive "white flight" of the 60s and 70s. The "US hates pedestrians" meme was a self-congratulatory boast on our part.

As the suburbs have lost their sheen and inner-cities have been gentrified, walking has been reclaimed by the middle classes (the recuperation of psychogeography and the dérive in the 1980s was an intellectual outrider of this tendency). Together with the vogue for cycling, this has significantly increased transport costs because of the need to provide multiple routes and segregation in built-up areas. The response has been a trend towards shared spaces, which is why driverless cars are often pictured as non-threatening golf-buggies, pootling along as they carefully avoid cyclists and pedestrians.

2. Traffic speed in central London is no faster today than in the Victorian era --- This curio is often taken as evidence that we're technologically stagnating and might as well still be using horse-drawn carriages. In fact, it has long been known that the average traffic speed in urban areas is determined by the minimum that people will tolerate, not by technology, and that this speed is 9mph (roughly three times normal walking speed and double "hurrying" speed). This is self-regulating. When congestion increases and the speed drops lower, people avoid travelling and congestion eases. If congestion decreases to the point where the average speed exceeds 9mph, this attracts more traffic and congestion increases.

Even if we had jet packs, we'd still be travelling in town at 9mph (which means we'll need to wait for anti-gravity suits as jet propulsion is shit at low speeds). Given that driverless cars can most easily be introduced in city centres, this suggests that vehicles designed to be optimal at around 9mph will be the order of the day. They will be able to go faster, but I suspect they'll max out at 20mph as a reassurance to pedestrians and cyclists. It is also doubtful that car capacity will increase significantly, because of mixed use constraints, so city centres will remain as they are today, areas that are dominated by the cars of the rich.

3. We're a small island --- This is a flexible meme that is deployed in a variety of arguments, from limiting housebuilding to reducing immigration. We are in fact the ninth largest island on Earth. Most of the larger ones are covered in ice (Greenland, Baffin Island), impenetrable mountain-ranges (New Guinea, Borneo), or highlands unsuitable to dense habitation (Madagascar). There are essentially two large "sweet spot" islands that combine rich agricultural soil, easily-accessible resources and proximity to trade routes: Great Britain and Honshu, Japan's main island. The most habitable bit of the former is England, suggesting that Cecil Rhodes' remark about life's lottery has a material basis even if it is an objectionable sentiment.

The unthinking acceptance of this meme is largely a result of city-dwellers (and particularly Londoners) feeling cramped and the residents of small towns in England not getting out enough. A theoretical selling point for driverless cars is that they can allow for an increase in effective road capacity (though I doubt this will happen in practice). In other words, the acceptance of autonomous vehicles can be presented as an alternative to additional road building or widening. Though this is largely spurious, it is an effective way of selling driverless cars that simultaneously encourages the belief that they are particularly suited to congested urban areas.

What I think the collective lens of these memes shows is that driverless cars will initially be little more than a futuristic version of the sedan chair. Found largely in city centres, employed mainly by the well-off, and possessing the properties of a limousine: quiet, smooth, and with a built-in screen and minibar. The malicious hacking threat is not that a terrorist might try and turn you into a suicide ram-raider, crashing into the Downing Street gates at 20mph, but that you might be inundated with video-spam.

Sunday, 16 November 2014

The Political Economy of Thomas Piketty

The American economist Paul Samuelson said of J M Keynes's General Theory: "When finally mastered, its analysis is found to be obvious and at the same time new. In short, it is a work of genius." Thomas Piketty's Capital in the Twenty-First Century is a lot easier to master, and the jury is out on the genius-call, but it shares an obvious-yet-new flavour with the Englishman's magnum opus. That inequality fell after the First World War and began to rise again once the rapid reconstruction after the Second ran out of steam in the 1970s is hardly news, but Piketty provides compelling evidence that growing inequality (not stable, let alone falling) is the default state of capitalism, outside of wars and depressions, and that the twenty-first century marks a return to levels of inequality not seen since the start of the twentieth.


The received wisdom of early reviews of the English edition was that the book offered riches in its historical analysis but that its prescription, specifically a progressive annual tax on wealth, was politically unfeasible. I suspect that judgement will prove to be superficial and that the book's lasting legacy may turn out to be its methodological challenge to neoclassical economics on the one hand, and the impetus it gives to institutional reform on the other. Whether either amounts to much will have to be seen. Ultimately, Piketty's political role has been to irrefutably prove that the emperor is stark-bollock naked, rather than open our eyes to a hitherto hidden truth.

Piketty and the canon


Though neoclassical economics makes a fetish of maths, it is is ultimately (like all economics) a species of moral philosophy that makes normative claims. There are three of particular note: that once an economy develops, market forces will lead to a progressive decline in inequality (aka the Kuznets Curve); that the share of national income between capital and labour is constant over time, ruling out any theory of exploitation of one by the other; and that income inequality accurately and proportionately reflects marginal productivity, i.e. just desserts for different labour contributions. Piketty's analysis of historical data contradicts all three claims: after declining over the middle years of the twentieth century, inequality has been increasing since the 1980s; the share of national income going to capital at the expense of labour has also increased; and, outside the exceptional period of 1914-75, the returns to capital have exceeded growth (i.e. productivity).

Piketty concludes "There is no natural, spontaneous process to prevent destabilizing, inegalitarian forces from prevailing permanently". In saying this, he also distinguishes himself from both the pessimists of classical economics, such as Malthus, who envisaged over-population being controlled by famine, and the optimists, such as Smith and Say, who assumed a natural harmony. It is the "destabilising" insights of Ricardo and Marx, in respect of scarcity and accumulation, that Piketty thinks are more relevant to the modern world, though he disagrees with their apocalyptic prognoses, which he ascribes to historical ignorance of the declining importance of land and the increasing impact of technology.

The "inegalitarian forces" he identifies are social, specifically the privileged position of those who receive a return on capital. Consequently, like Keynes before him, Piketty identifies the rentier as the "enemy of democracy". To diminish the rentier we must "take a serious interest in money, its measurement, the facts surrounding it, and its history". He concludes: "Those who have a lot of [money] never fail to defend their interests. Refusing to deal with numbers rarely serves the interests of the least well-off". But his prescriptions, like those of Keynes, are essentially managerialist and institutional - progressive taxation by the state and inter-state cooperation - rather than the democracy of workers' control. This is then essentially a social democratic manifesto. It shows how far the Overton Window has shifted over the last 30 years that an appeal for social justice and democracy should be considered radical.

A touch of class


Though he has simplified the maths that neoclassical economists have routinely used as a veil, Piketty has not entirely removed that veil, hence class is generally obscured by reference to percentiles and deciles. Despite the focus on inequality, and his insistence that economics is properly a subdiscipline of the social sciences, this is not a work of sociology. Indeed, his widely admired use of the fictions of Balzac and Austen, among others, allows him to distance his analysis from the lived reality of the modern world.

That said, Piketty is not wholly oblivious to class. His empirical approach, showing that the growth of "supermanager" incomes is a specific Anglo-Saxon phenomenon and not tied to economic performance, is key to his case that marginal productivity does not explain inequality. He is also aware of the politics, more so than many of his critics on the left concede, noting that this growth correlates with the ideologically-driven decision to lower top rates of income tax in the UK and US in the 1980s, but he doesn't tease out the implication of this in terms of power, namely that any future wealth tax might be discounted through further gross increases in supermanager pay.

I suspect the marginal role given to class and power reflects Piketty's belief that the state is incapable of doing the heavy lifting of advancing greater equality through social investment any more, in large part because it lacks the opportunity and impetus provided by war and reconstruction. In this regard his political analysis is sharp to the point of cynicism. In sceptically answering the question Do educational institutions foster social mobility?, he notes (in reference to the founding of France's Sciences Po after the Paris Commune) that "the upper classes instinctively abandoned idleness and invented meritocracy lest universal suffrage deprive them of everything they owned". Allowing for the anachronistic "meritocracy", that is a sentence that would have not looked out of place in the notebooks of Gramsci.

The long march through the institutions


Piketty's book has little to say about the institutional legacy of Bretton Woods, namely the IMF and World Bank, which emphasises his concern with distribution rather than production and his focus on the developed world. But he is voluble on the European Union, believing that without supra-national coordination at the regional level, taxes on capital cannot be effectively implemented in the age of globalisation. Contrasting the more coercive control of capital in China, he makes the case for a tax as being consistent with European traditions: "The capital tax is the liberal form of capital control and is better suited to Europe's comparative advantage". Similarly, he emphasises the USA's pioneering record in introducing taxes on wealth and high marginal rates of income tax in the twentieth century, implying that the current political aversion to taxation is purely ideological, rather than a permanent cultural feature of the country.

Faced with the flaws of the Euro  (a "stateless currency" with essentially arbitrary rules on debt and deficits), Piketty proposes the creation of a budgetary parliament, distinct from the current European Parliament and made up of deputies from the various national parliaments in the Eurozone, that could provide a democratic mandate to pool public debt and collectively manage fiscal and monetary policy. He is firmly on the side of more union: "if we are to regain control of capitalism, we must bet everything on democracy - and in Europe, democracy on a European scale". This provides a potentially popular justification for greater union, far superior to the technocratic case advanced by the political elite.

His argument also gives European politicians retrospective wiggle-room, suggesting that their inadequate response to growing inequality since 1980 is the result of design errors (the ECB's narrow anti-inflation brief) and structural constraints (the lack of fiscal union and democratic oversight), which have prevented an EU-wide wealth tax being considered feasible, rather than deliberate policy. In encouraging the EU to move beyond gestures like a financial transaction tax, and by focusing on inequality of outcome, he is testing its commitment both to socially fair taxation and to democratic accountability.

_____________

Piketty is an empiricist, not an idealist, which ironically makes him more Anglo-Saxon than Continental in his method, despite nods to la longue durée and cultural theory. He observes phenomena, such as r > g, but offers no explanation as to why these arise. For example, why is r (the rate of return to capital) higher than g (the rate of growth)? He focuses on distribution rather than production, hence his work is not a critique of capital in the sense that Marx employed that word, but of simple wealth. Consequently he has little to say about class power, monopolies, or economic imperialism, which leads some critics to conclude that he has not really diverged from the neoclassical tradition: "By, in effect, objectifying capital, considering it apart from the social relationship embedded within it, he marks himself well within the economic mainstream".

This is true, but what Piketty has valuably done is show that the claims of economic theory can be proven or disproven through historical data, which actually places him closer in methodological terms to Marx than the marginalists. Piketty is a reformer, not a revolutionary. He sees no alternative to capital as the motor of the economy, but he is clear that left to its own devices, capitalism will undermine itself through growing inequality. His prescription is institutionalised democracy, but at a time when a corporate tax-avoidance facilitator has been made President of the European Commission, and we have yet to see a single UK-based banker face criminal charges for either negligence or theft, this looks like a big ask.

Wednesday, 12 November 2014

Everybody Wants to Be a Cat

I've commented frequently this year on the reception given to Tomas Piketty's Capital in the Twenty-First Century as a political phenomenon, marvelling at the desperation of various establishment hacks trying to shoot it down, the sight of orthodox economists terrified by exposure to historical data, and the dawning realisation that a wealth tax may not be Utopian after all. Having finally got round to reading it (unlike many commentators and even some reviewers), I thought an interpretation that focused on the text, rather than the economics, might make a pleasant change. There are three parts to this: Piketty's use of literary and cinematic references, his relationship to the historiography of the French Revolution, and some linguistic and structural features of the work. I'm also going to do a separate post looking at Piketty in the context of political economy.

Economist reads novel, watches film


One of the tropes of the Piketty review industry has been the claim that the book "drips with literary references", in the words of Larry Summers, which just proves that economists need to get out more. There aren't that many. The examples culled from Austen and Balzac are cute, though they make fairly obvious points about the longevity of wealth in eras of low inflation, the social strategy of marriage as a route to upward mobility for men as well as women in the early 19th century, and the importance of inheritance in maintaining concentrations of wealth. In fact, there are as many cinematic references as literary ones, from Titanic to The Magnificent Ambersons, which the more snobbish reviewers have presumably considered less noteworthy than asides about Henry James.

The use of non-contemporaneous films to illustrate early twentienth century levels of wealth may be an elaborate joke on Piketty's part, parodying both the French love-hate relationship with American popular culture and America's suspicion of European cultural theory. The use of Disney's The Aristocats, in which anthropomorphic moggies are set to inherit a belle epoque fortune, certainly made me laugh, and you don't usually find many jokes in a book on political economy. Indeed The Aristocats, rather than Père Goriot or Mansfield Park, may be the key meta-text in Piketty's work, not least because the insurrection of the democratic alley cats leads to a chunk of Madame Adelaide's fortune being invested in a home for strays. That the machinations of the scheming butler are initially confounded by two hounds, named Napoleon and Lafayette, is also not without significance.


I think the fundamental point of these historical asides, and his admiration for the French records on capital instituted by the Revolution, is Piketty's belief that a progressive tax on wealth is unfinished business from 1789, which he refers to as "the bourgeois revolution par excellence". The book's epigraph comes from the Revolutionary Declaration of the Rights of Man and Citizen: "Social Distinctions can be based only on common utility". Insofar as the book's title is a gesture to Marx, the content is essentially "contre Marx" in its treatment of capital and the sidestepping of the materialist conception of history, and as such is an attempt to recover the democratic and pragmatic impulses of the Revolution and its "constructivist" approach to institutions.

The revolutionary tradition


Piketty mentions his admiration for the historian Francois Furet and specifically his pioneering work in "serial" or quantitative history, i.e. using extensive datasets to trace historical trends. But he also sees Furet's career as a warning of what happens when you abandon the patient analysis of data and commit, as the historian famously did in the 1970s, to a polemical focus on political culture. Furet sought to trace the totalitarian legacy of the Revolution and the Terror through to the twentieth century, which brought him into sharp conflict with orthodox Marxists and historians of the Annales school, as much for his neglect of data and his relegation of class and the material base as for his anticommunism.

Piketty is sympathetic to Furet's anti-totalitarian stance, but he regrets the older man's abandonment of serial history and, I suspect, feels that the democratic credentials of the Revolution have been obscured by the prominence given to the totalitarian inheritance. Furet was part of a wider fashion in the 1980s and 90s that sought a "post-ideological" historiography of 1789, focusing on intellectual fashions and cultural phenomena rather than economics and class. This was obviously influenced by a neoliberal ideology that sought to place the market and property beyond dispute (the "end of history" etc). Outside of France, this influenced historians like Simon Schama, who claimed in Citizens (1989) that "the Revolution gave birth to a new kind of political community sustained more by rhetorical adrenaline than organized institutions".

What I think Piketty is suggesting is that Schama's view was actually a reflection of contemporary political weaknesses that have continued down to today, and that the rhetorical adrenaline of progressives, such as the "we are the 99%" slogan, which itself originated in the earlier analytical work of Piketty and Emmaneal Saez, is insufficient. What is needed is first data and then the reform of the institutions, i.e. democratic governance. In fact, he elsewhere explicitly ties the quality of democratic institutions to their data-aggregation strengths, thereby reviving a tradition that dates back to Condorcet on the eve of the Revolution: "political institutions have a constructive role to play in order to allow for an efficient aggregation of all the socially-useful information that is dispersed among individuals". In other words, the Occupy movement's aversion to concrete demands let Wall Street and The City off the hook. In recommending a progressive annual tax on wealth, no matter how "Utopian", Piketty is avoiding the same mistake.

Les mots et les choses


Some of the book's language echoes that of a lecture, with formulations such as "which I will address later", the repeated use of "concretely" (announcing the shift from theory to practice), and regular previews of coming chapters. That said, the book reads well and Piketty has taken care to explain technical points clearly without resorting to the patronising parables of Freakonomics and its ilk. Breaking the chapters down into 2-3 page sections makes it easier on the reader and to an extent mimics the bite-sized (but chewy) model of the blog post. This is an unashamedly popular work, in keeping with its emphasis on democracy.

Of more significance in terms of policy is his reference to the need for a "financial cadaster", that is a comprehensive register of wealth (and not just property, as was traditionally the case) as the basis for effective taxation. There is an echo here of the "Cadastre perpetuel" of the revolutionary and proto-communist Gracchus Babeuf, though Piketty instead references the similar proposals of the experimental chemist and tax-farmer, Antoine Lavoisier, which indicates a preference for the technocratic traditions of the Enlightenment. Both ended up on the Guillotine, Lavoisier during the Terror and Babeuf during the Directory. Piketty's point is that public knowledge of private citizens' wealth should be seen as a feature of liberal democracy rather than the totalitarian state.

Piketty's provision of his technical appendix and supporting data online is a smart move that undoubtedly helped buttress the book's case, as much as it provided limited ammo for some critics, such as the FT's Chris Giles. There is a whiff of big data zeitgesit about this, though the format and structure of the data is quite traditional. Perhaps its true role is exemplary, encouraging the idea that data on wealth (the cadaster) should be routinely published. Piketty is well aware of the challenges of tracking wealth during the current era of globalisation, institutional tax avoidance and (largely) non-existent capital controls, but he clearly hopes that one mechanism of globalisation, the Internet, may help to promote transparency.

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Piketty ends his chapter on 'The Question of the Public Debt' with these words: "If democracy is someday to regain control of capitalism, it must start by recognizing that the concrete institutions in which democracy and capitalism are embodied need to be reinvented again and again". This is a call to arms that can appeal equally to democratic socialists and managerialist neoliberals, particularly in the post-2008 era when democratic institutions have proved both their worth (the prevention of immediate social breakdown following the credit-crunch) and their limitations (the swing to austerity and the Eurozone crisis). The widespread scepticism about his proposal for a wealth tax springs not just from an aversion to the restraint of capital, but from an ideological pessimism about institutional capability in the era of globalisation. Piketty is suggesting that we need to recover the bravery and optimism of 1789.

Saturday, 8 November 2014

The Deadzone

The rumour of backbench discontent with Ed Miliband confirms that the general election campaign is underway, however it also tells us something about the nature of the media. With the possible exception of psychopathic dictators, all leaders face internal dissent and doubts about their ability. That's the nature of politics, whether in Westminster or the workplace. What gives this disgruntlement prominence is less a sudden shift in mood so much as creeping boredom. One of the unintended consequences of a fixed-term parliament, or more precisely of the 6-month long demobilisation it gives rise to, is the drying-up of substantive political news. We are in the deadzone, the phoney war. The media has yet to adjust to this new environment.

With the annual party conferences out of the way, the current agenda is being set by external events (the EU surcharge), pratfalls (Theresa May's recruitment and filing problems), the unavoidable bumps in the road that are byelections (now receiving far more coverage than in the past), and post-election policy promises that are barely coherent let alone credible (such as yoking the Universal Credit unicorn to immigration control). The political media is a beast that needs to be fed. If it can't get its meat and two veg, it will make do with prawn crackers, which explains the indulgence of UKIP. Thursday's Newsnight report on the supposed Labour plot saw Laura Kuenssberg squirming with glee at the prospect, while Allegra Stratton read unattributed quotes off her iPad on Hampstead Heath to make them sound more authoritative. Regardless of institutional bias, this was just rubbish journalism: sexed-up and with nowhere to go.

The ostensible trigger for the "Bonfire Night plot" was an editorial in the New Statesman, which shows that Jason Cowley is doing his job in trying to raise the magazine's profile while knowing full well there is plenty of time to fall in line behind Labour before polling day. Rubbish journalism again, but commercially astute. The "attack" recycled the usual ad hominen tropes: "Miliband is very much an old-style Hampstead socialist. He doesn’t really understand the lower middle class or material aspiration. He doesn’t understand Essex Man or Woman. ... Most damaging, I think, is that he seldom seems optimistic about the country he wishes to lead. ... Reflecting many years afterwards on Labour’s landslide victory in 1945, Clement Attlee said: 'We were looking towards the future. The Tories were looking towards the past.' ... None of this would matter were Miliband in manner and approach not so much the product of this narrow background." To us civilians, there is no rational explanation for the existence of Dan Hodges other than to make people like Cowley look reasonable in comparison.


The obvious irony is that the famously taciturn Attlee was considered even more uninspiring and lacking in empathy than the current Labour leader, and while he had the advantage of some "real world" experience in local government and the army, his background was very much that of an "old-style Hampstead socialist", despite living up the road in Stanmore: public school and Oxford, a qualified barrister, one-time secretary to Beatrice Webb, LSE lecturer. The fact is that most Labour leaders since the 1930s have tended to be either academics or lawyers, and have been semi-permanent politicians from an early age. It is lazy to imagine that this makes them incapable of understanding "the lower middle class or material aspiration". Beneath the bonhomie, there is a social and philosophical chasm between David Cameron and Essex Man vaster than any that exists between Ed Miliband and the inhabitants of Middle England.

Cowley's substantive criticism was, well, weird: "there exists a gulf between the radicalism of his rhetoric and the low-toned incrementalism of his policies". Call me picky, but I can't see how "one nation" or "responsible capitalism" qualify as radical rhetoric. That said, talking tough and then delivering modest policies is par for the political course, so I'm not convinced that there is anything particularly noteworthy about Miliband's sweet nothings. If anything, his "rhetorical gulf" looks rather narrow. Labour supporters are understandably exasperated at this criticism, both because a change in leader is improbable this side of the general election and because it serves to divert the focus from bread and butter issues such as the standard of living and economic security. They need to get used to it.

The implicit criticism being made by the media is that Labour, like all the other parties, has yet to publish its manifesto. Internal critics who demand an "articulate vision" blithely ignore the political dynamics. Six months ahead of an election is too early to launch key policies, as opposed to gestural bromides, both because their novelty will pall and because too much exposure will leave them vulnerable to critical erosion. A successful campaign requires momentum, and that means starting at the right time. The Autumn Statement in November and the budget in March are the key calendar events, so none of the parties will publish their manifestos before early April, which means another 5 months of bugger-all. It also means that UKIP face a battering if they publish an honest manifesto (i.e. a bonkers one), so expect them to try and sidestep this with "we have only one policy: a referendum now!".

This lack of policy targets has left the anti-Labour media scraping the barrel. The Telegraph has resorted to tempting Griff Rhys-Jones into an early run-through of the traditional "Pete Murray", while recycling the last general election campaign to keep their hand in: "The party’s problem is that it is still run by the same people who crashed the economy into the wall just four years ago. ... They fail to see that a far greater impediment is the ineradicable memory of what the last government did to the country." You can sense the desperation in the choice of the word "ineradicable". The famously Miliband-friendly Daily Mail have inevitably joined the fun, but I sense that they are holding their fire until they think they can get off a kill-shot and pay the Labour leader back for Leveson. Think of it as a dramatic weight-loss diet ahead of their big moment on the red carpet.

The danger of fixed-term parliaments is that the media's appetite for novelty makes it vulnerable to opportunistic insurgents and policies made on the hoof during the phoney war. Boris Johnson's decision to publish his fanboy biography of Winston Churchill seems well-timed.