Category Archives: economics

democracy, economics, politics, social dynamics

US fascism?

In 1980, Bertram Gross warned that developments in the United States could be leading to a form of fascism. He saw an alliance of big business and big government as the basis for tyranny. How many of his worst fears have come true?

            Gross made his warnings in a long and detailed book titled Friendly Fascism. There had been plenty of left-wing analyses of power structures in the US and elsewhere, but this book was different. Gross had been part of the establishment, working in the administrations of US presidents Franklin D. Roosevelt and Harry Truman. He had played an important role in developing full-employment legislation.

            Gross had seen the exercise of power in the US up close. He was an insider, so his book had more credibility. He was akin to dissidents and whistleblowers, those with inside knowledge who break ranks and reveal what goes on behind carefully constructed screens.

            I read Friendly Fascism in 1982 and took some notes. Recently, while going through my old files, I came across these notes and thought, “Gross had some astute insights back in 1980. I wonder how well they’ve stood up since.” Has the US continued to move in the direction that Gross warned against?

            To find out, I bought a copy of the book and reread it, more carefully this time around. The original 1980 edition was published by M. Evans and Company. The edition I bought was published by Black Rose Books in Montreal.

            On my second reading, I was surprised by the large amount of information and insight offered in Friendly Fascism. It is a comprehensive treatment of a system of rule. Here, I will outline some of Gross’s assessments of power in the US, giving examples of how some of these have foreshadowed subsequent developments, plus examples of predictions that did not pan out. Finally, I offer a few comments about how Gross was able to anticipate so many developments.

Fascism, classic and friendly

By using the term “fascism,” Gross comes up against the many associations people have with the word. Those familiar with history will think of the dictatorial regimes in Italy, Germany and Japan in the 1920s and 1930s that were defeated in World War II.

These regimes were racist, militarist, imperialist and brutal, so “fascism” takes on connotations of these characteristics. Gross carefully lays out his argument that the core of fascism is something different. It is rule by a symbiotic system of big business and big government.

            He refers to fascism in the first half of the 1900s in Italy, Germany and Japan as “classic fascism.” He notes that their racism, militarism and imperialism were nothing new; they simply followed the path of successful capitalist powers. Given this, the WWII allies were a temporary military alliance against the German and Japanese empires, “not an alliance against fascism as such.” (p. 27).

            Gross questions some of the usual accounts of fascism, saying it’s a myth that it was a revolt of the lower middle class, but instead that fascist regimes had supporters from a range of classes, and the lower middle class didn’t hold power. He points out that analysts of classic fascism in terms of an authoritarian personality miss the political economy of capitalism. Finally, he emphasises that brutality is not peculiar to fascism, so calling police brutality “fascist” isn’t a serious analysis.

            Despite Gross’s strictures about the word “fascism,” most readers will find it difficult to completely separate it from mental images of Nazism and Hitler. That is what gives “friendly fascism” a sting.

The Establishment

Gross devotes considerable space to explaining “the Establishment,” the system of rule in the US. To even talk of this is to enter a perspective that clashes with the surface commentary in the media and civics textbooks, which focus on formal structures of representative government and on particular individuals. In the decades prior to the publication of Friendly Fascism, a few political analysts tried to specify the who and how of the US Establishment. Gross draws on the work of authors such as G. William Domhoff, Ferdinand Lundberg and C. Wright Mills. These authors were familiar to me: in the 1970s, I read their books. Gross supplements his analysis using his own experience working within the US Establishment.

            One of Gross’s most intriguing insights is that the Establishment in the US is not monolithic: there’s no central conspiracy. On the contrary, conflicts go on all the time, both jockeying for power and clashes over how best to rule, for example whether to introduce social welfare measures that may limit profits but will pacify discontent. In the media, we can read about divisions among dominant groups concerning investment policy, taxation and various other issues, but seldom do we hear questioning about fundamentals, for example private ownership or processes for citizen participation. The system seems to be in constant turmoil but its basic features do not change. That is the genius of rule by a sort of government-business consortium.

            In this system, the US president is a key node in many networks. Gross notes that the Chief Executive Network — the President and various White House agencies, among others — is analogous to a Communist Party leadership group.

            Gross emphasises that business interests don’t just influence government from the outside; they are part of it. The implementation of policies occurs at lower levels of the Establishment. Those from these lower levels who show loyalty can find a place in the system. He says intellectuals who obtain government or foundation grants become technicians for hire, and are no longer interested in ideas on their own.

            Gross describes the ideology of the Establishment in terms of three beliefs. The first is that Communism and socialism are bad. Anti-communism served to restrain the expansion of the welfare state, and anything aiding the poor and disadvantaged was attacked as creeping socialism. Has this changed since Gross wrote? Not much. In the US, there continues to be scaremongering about socialism, far more extreme than in most other countries. A comprehensive government health insurance system, common in industrialised countries, is called “socialised medicine,” a term intended to stigmatise it.

            The other two beliefs comprising the ideology of the Establishment are that capitalism is good and that capitalism doesn’t exist. These seem contradictory, but only on the surface. The message that capitalism — conceived as free enterprise — is good was promoted by corporate propaganda after World War II, to counter the unflattering public image of corporate greed. This has continued, with “corporate social responsibility” one of the more recent iterations.

            The belief that capitalism doesn’t exist was encouraged by never using the term, instead talking of “the market,” a “mixed economy” or “post-industrialism.” Gross comments that scholars vied with themselves to focus on research methods while ignoring the elephant in the room: the existence of capitalist society.

Some uncanny predictions

On the first page of Friendly Fascism, Gross writes about the future of the US. Rather than moving towards genuine democracy, he saw “… a more probable future: a new despotism creeping slowly across America.” The consequences for citizens would “include chronic inflation, recurring recession, open and hidden unemployment, the poisoning of air, water, soil and bodies, and, more important, the subversion of our constitution. More broadly, consequences include widespread intervention in international politics through economic manipulation, covert action, or military invasion.” Aside from chronic inflation, this seems pretty much how things have turned out.

            Let’s consider some of Gross’s other assessments to see how much they apply to US society decades later. Gross didn’t make predictions but rather noted a logic of capitalism, US-style, that he suggested might play out in various ways, usually not as he wished but as he feared. I call these things predictions to emphasise how prescient his analysis was in so many ways.

  • “Even in its more expansive and successful moments a deep malaise corrodes the atmosphere of every advanced capitalist society” (p. 98). Work, community and family are falling apart. This is a result of job specialisation, consumerism and labour markets. Assessment This process has continued, and indeed is a key feature of US society.
  • For knowledge workers, disciplinary specialisation means ignorance of the bigger picture, enabling service to the Establishment. Assessment In 2000, Jeff Schmidt made a detailed examination of this process in his book Disciplined Minds.

  • Mental breakdown is a result of breakdowns in social relationships. Assessment In 2018, Johann Hari provided a moving account of this process in his book Lost Connections.

  • Businesses are involved in crime and corrupt practices, while police, prosecutors and judges are soft on corporate crime. Assessment This pattern of corruption and lax regulation has continued. A few corporations collapse, like Enron. In others, massive fines for criminal conduct are absorbed by corporations as the cost of doing business, as in the pharmaceutical industry.
  • The authority of major institutions — Congress, business, police, courts — is in decline, as shown by opinion polls. Assessment The decline has continued, as documented and lamented by numerous commentators.

In summary, many of Gross’s assessments of the social impacts of US capitalism seem just as relevant today as when he made them. This suggests he has accurately gauged a relationship between the capitalist system and society that has turned out to be long-lasting. See the appendix for more examples of uncanny predictions.

Some lousy predictions

In a chapter titled “The challenge of a shrinking capitalistic world,” Gross makes several predictions that have not panned out.

  • Communist regimes might expand compared to capitalism. Assessment As we know, the reverse happened. The Soviet Union and Eastern European Communist governments collapsed, while the Chinese economy was transformed into state-managed capitalism.
  • In the 1980s, Communist China could become “a new source of aid to communist movements in many parts of the world.” (p. 124) Assessment What actually happened is that communist movements have been in decline worldwide. The Chinese government, through its belt-and-road initiative, supports development projects, not communist movements.

  • In the 1980s, suggested Gross, Central America and the Caribbean could become socialist. Assessment This didn’t happen. The outcomes were worse, with severe repression in several countries, including genocide in Guatemala.

Gross overestimated the strength of communism and underestimated the dynamism of capitalism, which entered a neoliberal phase in which socialist tendencies were squashed. However, Gross probably would recognise what has been happening in Russia and other successor states following the breakup of the Soviet Union, in which a type of predatory capitalism has taken over that has many characteristics of friendly fascism.

            Gross made accurate predictions when he pointed to the internal logic of capitalist societies, with the breakdown of traditional family and community structures. What he didn’t anticipate was the collapse of the Second World, the state socialist world, which was the major competitor to capitalism.

Exploitation versus welfare

One of the important clashes within the Establishment that Gross recognises is between those who seek short-term profits via the exploitation of workers and those who think that for long-term social stability and sustainable profits, it is necessary to provide social support for disadvantaged groups because otherwise they might become the basis for a challenge to the system. This clash has been apparent since the late 1800s, during which far-sighted rulers introduced unemployment protection and other government measures to provide relief from poverty and misery. In the United States, every measure to protect citizens — a universal pension system (called Social Security), unemployment payments, environmental protection and much more — has been furiously opposed by some sectors of the Establishment, while supported by far-sighted defenders of the system. What is most interesting is how, in the US, the more exploitative tendencies have prevailed so often compared with other comparable societies.

            Gross tells about two episodes in US political history that seem to have been forgotten, episodes with which he was closely involved. After World War II, there was a proposal before Congress to guarantee full employment, with the government providing a job for anyone unable to obtain one in the private sector. Supporters said this would calm social unrest and provide a basis for stable markets and profits.

But opponents didn’t want government intervention and, more importantly, didn’t want to give workers and unions more power. The bill for this initiative was passed, but its provisions were so thoroughly weakened that employment goals were symbolic only. Some 25 years later, there was a similar proposal during the Nixon administration. It was seriously considered but again the bill was weakened to become only symbolic. In both cases, those favouring measures harsh on the most vulnerable prevailed. In both cases, there were capitalists who recognised that pursuing short-term profits can undermine long-term profitability.

The unfolding logic

Gross aimed to reveal a powerful logic in the world’s contending forces.

 “This logic points toward tighter integration of every First World Establishment. In the United States it points toward more concentrated, unscrupulous, repressive, and militaristic control by a Big Business-Big Government partnership that — to preserve the privileges of the ultra-rich, the corporate overseers, and the brass in the military and civilian order — squelches the rights and liberties of other people both at home and abroad. That is friendly fascism.” (p. 161)

As soon as Gross referred to a powerful logic, he was quick to say, yet again, that capitalist leaders have no single plan, and that there are no central planners. This point is crucial, because it is easy to believe that if developments are serving particular interests, then surely someone is behind the scenes manipulating things. The “logic” to which Gross refers is the outcome of contending forces within the Establishment, like the groups pushing for or against welfare measures.

            Gross warned that “the various crises in American society provided opportunities for Establishment leaders to do things that would accelerate — often unintentionally — the tendencies toward a repressive corporate society.” (p. 163) This was two decades before the 9/11 attacks and the launching of the so-called War on Terror.

Hope?

Back in the 1980s, Gross’s assessments might have made some readers feel that friendly fascism had already arrived. Gross said no, it hadn’t. He noted that there was still much democratic openness and opportunity in the US. Government misdeeds continued to be exposed, civil liberties continued to be asserted and workers continued to strike. Gross pointed to citizen activism, especially against nuclear power, conscription and military interventions. We now know that this activism was successful in stopping nuclear power and conscription, and continued in other areas, most notably climate change.

            Gross addressed the perennial question, “What can you do?”, recommending action (rather than resignation), learning from failures, having aspirations, avoiding co-option, being part of a larger movement, and involving people on the inside of the system. He said not to expect quick success but instead to have a realistic schedule, with aspirations high enough to encourage continued action. This is just the sort of advice provided by far-sighted activists, for example Chris Dixon, Another Politics, L. A. Kauffmann, Direct Action, and George Lakey, How We Win.

How could Gross make so many accurate predictions?

Gross didn’t set out to make predictions about the future trajectory of the US political system, as he was more concerned with warning about what might happen. Nevertheless, many of his observations seem to have been borne out, as already noted. What enabled this? Here are my best guesses.

            Gross analysed the core of fascism as being a partnership between big government and big business, saying this did not require the brutality commonly associated with classic fascism. Whatever the label, he identified government-business as a central dynamic of political economy in the US. If this dynamic continued and became stronger, then it’s possible to extrapolate to the future, and this is just what Gross did.

            Another of Gross’s insights is that the US Establishment is not unified but conflictual, with contending pressures. With this insight, Gross identified the strength of the US capitalist system in responding to pressures and threats in a flexible way. This also means that what usually passes for political debate, including between government and business, and which seems to be about the most important issues of the day, operates within assumptions that maintain the system. In other words, Gross saw through the usual cut-and-thrust of everyday politics to a core dynamic that is seldom addressed in media coverage and popular understanding.

            A related insight is that the system needs to maintain its legitimacy and prevent grassroots insurgency. This is done not through central planning but through the clash of priorities within the Establishment as it responds to challenges from below. Gross could see trends, for example the breakdown of community and the use of education and the media to pacify the masses, that have continued ever since.

            Finally, Gross recognised the importance of democratically-minded challengers to the system. He was quite aware that citizen activism would continue to play a crucial role in preventing moves toward a more repressive political system, whether or not it was called fascism.

            As well as making uncanny predictions, Gross also made predictions that did not come true. This is hardly surprising. Who can accurately say what will happen in the next 40 years? What we can learn from Gross’s diagnosis is the importance of identifying key driving forces, not being too distracted by the everyday clash of contending forces, and seeing what can be done.

            What would Gross say about Donald Trump, the rise of right-wing violence and the efforts of anti-fascist activists, notably Antifa? Are these symptoms of a turn to overt fascism or are they a sideshow, with government-business synergy becoming more entrenched? For an analysis of Trumpism as a neofascist political movement, see Anthony DiMaggio’s 2022 book Rising Fascism in America. If Gross were here, perhaps he would say we need to look beyond the surface struggles to the driving forces leading towards friendly fascism.

 

Brian Martin
bmartin@uow.edu.au

I thank Susan Engel, Michael McKinley and Ian Watson for valuable comments.

Appendix: additional uncanny predictions

  • In the 1980s, the “free world” empire could be broken up or, more likely, reconstituted. “Remodeled under pressure, the ‘Free World’ might then, conceivably, be capable of reexpansion, effectively absorbing various communist regimes back into the capitalist world order.” (p. 173). Assessment This pretty much describes what happened with the former Soviet Union and Eastern European communist regimes.
  • The militarism of friendly fascism would be global, science-based, integrating civilian and military elements, and sanitising violence (in contrast with classic fascism’s glorification of violence). Assessment Drone killings are one example of science-based violence that is hidden from the US public, and thus sanitised. On the other hand, the “shock-and-awe” bombings that initiated the 2003 invasion of Iraq are closer to a glorification of violence.
  • The “Radical Right” now seeks change, making the Establishment more authoritarian with themselves part of it. “Today, the momentum of the Radical Right is impressive.” (p. 198) Assessment Since then, its momentum is even more impressive.
  • Ways of maintaining the legitimacy of the Establishment include continual fear-mongering about socialism and communism, extolling the wonders of the market, and remaining silent about corporate power. Those pushing in egalitarian directions need to be dismissed as “levellers” and lower classes seen as inferior and hedonistic. Hierarchy needs to be validated. Assessment Tick.
  • Dangers loom from ozone depletion, the greenhouse effect and lab-produced viruses. Assessment As it turned out, international measures were taken to protect stratospheric ozone, so that danger has mostly been averted. The greenhouse effect refers to what is now commonly called climate change or global warming. In 1980, this was just a blip on the environmental radar. It has now become front and centre. As for lab-produced viruses, the lab-leak theory of the origin of Covid is either correct or could have been correct.
  • Television serves as a pacifying medium. Assessment Since 1980, television has been supplemented by social media and video games, each with addictive capacities.

  • “Almost every component of America’s mammoth school system serves as a training ground in the submission to authoritative rules and procedures.” (p. 277) There is more docility at university and graduate student levels. Assessment Not much seems to have changed. Free schools remain at the margins.
  • Under friendly fascism, the rewards of jobs or welfare are contingent on loyalty and conformism. Assessment This process has been institutionalised through the increase in precarious employment, in the so-called gig economy.
  • Economic inequality will become entrenched. There are incentives for making more money and accumulating wealth but no incentives for promoting equality. Assessment Economic inequality has increased in the US, where it is more extreme than in most affluent societies, with dysfunctional consequences perceptively analysed by Richard Wilkinson and Kate Pickett in their book The Spirit Level.

  • Liberal feminism is not a threat to the system. Getting more women into elite positions can actually strengthen the system.

“No matter which way America goes during the remainder of this century, more women will undoubtedly reach positions of higher prestige and visibility. Whether or not we get a woman president eventually, the time is not far off when there will be a woman Supreme Court justice, women astronauts, and more women as corporation executives, generals, police officers, legislators, politicians, professionals, and middle- and top-level bureaucrats. Such a development is not at all inconsistent with the crystallization of a full-fledged oligarchy. Indeed, it could help. By bringing more women into well-established masculine roles, it could undermine system-transforming tendencies in the women’s liberation movement and maintain, if not strengthen, the manipulatory machismo that seems inherent in many of the tendencies toward friendly fascism.” (p. 327)

Assessment This trajectory has been documented in exquisite detail by Hester Eisenstein in her book Feminism Seduced.

economics, health

The virus and the economy

The coronavirus pandemic highlights fundamental shortcomings in the way the economic system is set up.

What is the best way to respond to covid-19? There is commonly assumed to be a trade-off between lives and the economy: precautions and controls are needed to save lives but they cause damage to the economy.

There’s an unstated assumption in this thinking, namely that “the economy” is vital to people’s wellbeing. This needs to be questioned. It has been long known that the Gross Domestic Product or GDP is not an accurate reflection of people’s wellbeing. GDP is boosted by negatives such as traffic accidents, environmental destruction and ill health.

A deeper problem is that people’s happiness levels are not very sensitive to increases in average income, at least above some basic level. Happiness depends more strongly on things like close personal relationships, having a purpose in life, physical activity, expressing gratitude and helping others. In countries with a high GDP per capita, average happiness levels have been mostly stable for decades despite continuing economic growth.

            Another problem is inequality. GDP per capita might be high but hide inequality: the average income might be rising but mainly to benefit the top 10% or top 1%. The more unequal the distribution of income and wealth in a country, the worse off it is in lots of ways, such as more illness, crime and mental disorders.

The economic system

Pandemic control measures have highlighted the problem of thinking of the economy as a universally beneficial entity that needs to be protected and enhanced. The economic system is better understood as a particular way of organising two things: production and distribution.

First think of the production of goods and services, which involves people, skills and technology. Food production, for example, involves growing and harvesting crops and getting them to consumers. We see the results of production around us all the time: streets, hairdressers, schools and mobile devices.


Do you deserve to own a luxury villa?

The second part of the system is distribution, which refers to who gets what. Some people have palatial homes; others are homeless. Some people have access to expensive entertainment; others do not. The assumption underlying the distribution system is that it is based on merit in some way, so those who contribute the most receive the most. This assumption is deeply flawed.

Suppose you were born with a serious brain impairment and your parents abandon you. It will be pretty difficult for you to learn to read and write, much less obtain a high-level job. Do you deserve less than someone born unimpaired into a wealthy family?


Do you deserve to be homeless?

            You may feel that you’ve worked very hard in your life, so you deserve a good salary. But what about someone who worked just as hard but had a bit of bad luck and ended up in an also-ran category? The difference between a sports star and one who didn’t make the grade may be a matter of a few seconds in a race or being injury-free or getting a lucky break. The difference between a CEO and lower-level manager may be only a matter of who you know or of having just the right style and conformity to rise in the organisational hierarchy. The role of luck in success is often neglected.

The way the economic system distributes goods and services to people depends on a whole range of arbitrary arrangements, including laws on inheritance, occupational barriers, and the sorts of employment that receive compensation. Being a parent is usually unpaid, yet it is vital to the operation of the system.

The coronavirus pandemic has highlighted the arbitrariness of the distribution system. Entire industries, such as tourism and hospitality, have been devastated. The idea that workers get what they deserve is shown up as misguided. It was misguided before, but now this is more obvious.

Universal basic income?

What is the alternative? One option is a guaranteed annual income, also known as a universal basic income or UBI. Everyone, from newborns to the elderly, would receive a regular income, no strings attached. Anything earned would be in addition.

            Many people respond to the idea of a UBI with a series of objections. How will it be paid for? Who will do the undesirable jobs? Won’t lots of people just decide not to work? There’s a body of research and writing addressing such objections. The calculations about how to pay for a UBI have been carried out. If no one wants to do undesirable jobs, then increase wages. There have been experiments showing that when poor people are given cash, nearly all use it “responsibly.”

The objection that people can’t be trusted to use money responsibly is always used against the poor, not the rich. If people can’t be trusted receiving money they didn’t work for, then inheritance should be abolished. After all, someone inheriting a lot of money can’t be trusted to use it responsibly.

The other side of the UBI issue is its benefits. Millions of workers would be liberated — if they so wished — from what David Graeber calls “bullshit jobs.” These are jobs that benefit no one and could be gotten rid of with no loss of productivity.

            Decades ago, J. W. Smith wrote The World’s Wasted Wealth, documenting the massive amount of production in excess of needs in industrial and post-industrial societies. Smith showed that a large percentage of work in many occupations serves only to redistribute wealth to those occupations, with case studies of insurance, law, transport, agriculture, medicine and welfare. Smith also argued that property rights, by being too great, take wealth from the community, with case studies of land, finance capital, intellectual property and communications. His overall conclusion is that organisation of society is highly wasteful and destructive, all to ensure that privileged groups retain their privilege.

            Work is a vital part of many people’s lives. It gives meaning, provides a connection to others and, bullshit jobs aside, provides some satisfaction for contributing to society. There’s evidence that people gladly accept lower pay if their work helps those with the greatest need. Indeed, research shows that helping other people is a powerful way of increasing happiness.

A UBI would also address the curse of the contemporary economy, job insecurity. In the economic approach called neoliberalism, workers are treated as free agents who have to sell themselves to employers, without guarantees of security. This is supposed to boost “the economy” but sacrifices the wellbeing of a large number of the people who are supposed to be served by the economy.

Job insecurity contributes to the spread of the coronavirus when people who have disease symptoms feel they must show up for their jobs to survive. A UBI would reduce the incentive to work while ill and thus save lives.

Industrial and post-industrial societies have an enormous productive capacity, far greater than necessary to provide necessities to every individual and to provide extra support for those who need it the most. Yet these societies are stuck in economic arrangements that assume scarcity, protect and reward the wealthy and stigmatise the poor and marginalised. Logically, it would make much more sense to celebrate abundance and spread it around. In part, this can be done by expanding the commons, those resources that are available to all. In part, it can be done by designing work around the needs of people rather than fitting people into slots in “the economy.”

What level for society?

In their pioneering book The Spirit Level, Richard Wilkinson and Kate Pickett gathered a range of evidence about the links between economic inequality and the quality of life. They found a remarkable consistency in these links: in just about every way, inequality was associated with bad outcomes for people. When societies are more unequal in income and wealth, they are likely to have more crime, shorter life spans, higher prison populations, more mental illness, worse health and poorer educational performance.

           It is important to note that inequality is not the sole causative factor. For example, a range of socio-cultural factors can affect people’s wellbeing.

A decade later, Wilkinson and Pickett wrote another book, The Inner Level, in which they canvass a wide range of research on the ways that inequality affects people’s behaviour and thinking. Inequality, they argue, makes people more status-sensitive, fosters materialism and makes relationships more difficult. Wilkinson and Pickett write,

“The reality is that inequality causes real suffering, regardless of how we choose to label such distress. Greater inequality heightens social threat and status anxiety, evoking feelings of shame which feed into our instincts for withdrawal, submission and subordination: when the social pyramid gets higher and steeper and status insecurity increases, there are widespread psychological costs. Status competition and anxiety increase, people become less friendly, less altruistic and more likely to put others down.” (p. 56).

Wilkinson and Pickett say that inequality leads to pressure to present yourself to others in a flattering light. It leads to more narcissism, more business psychopaths, less empathy and altruism. Yet there is some hope. Studies show that when rich people think about egalitarian values, they become more ethical. Wilkinson and Pickett cite surveys showing most people would prefer their societies to be more equal economically.

Research on inequality suggests that everyone, including the rich, would be better off if societies were more equal, yet the driving forces pushing for ever greater economic inequality seem relentless, at least since the rise of neoliberalism in the 1980s. How to help counter these forces is a great unanswered question. Suffice it to say that groups are doing what they can to raise awareness, promote alternatives and encourage action.

            In this context, the pandemic is a wildcard. It offers an incentive for communities to pull together and make sacrifices to protect those who are most vulnerable. It sends a message that there is more to life than money and status. Indeed, life itself is at stake. Furthermore, pandemic control measures, by requiring greater distancing between people, have highlighted the importance of personal relationships in wellbeing. By forcing some people to slow down, the control measures have the potential to encourage people to reflect on their lives and priorities.

On the other hand, pandemic control measures are having some disastrous effects, increasing the risk of domestic violence and suicide, while enabling governments to justify draconian powers for surveillance and control of movement. It is possible to lapse into despair at the prospect of a terrible choice between control measures of indefinite duration and a continuing health crisis. A more positive agenda comes from looking at the way the pandemic opens the door to greater thinking of ways to improve people’s lives. It does not come from thinking of a choice between covid-19 and “the economy.” The emphasis needs to be on people’s needs, especially those that come from relationships of mutual support, meaningful work and helping others.

Brian Martin
bmartin@uow.edu.au

Thanks to Lyn Carson and Richard Eckersley for helpful comments.

This post was published in Social Medicine and (in Spanish) in Medicina Social in vol. 13, no. 2, May-August 2020.

Brian’s posts and articles about Covid

 

 

 

economics, military, politics

Understanding global conflict

To get a handle on what’s happening in the world, read books like Paul Rogers’ Losing Control.

 

How can you make sense of world affairs? There are so many countries, politicians and power plays. If you follow the news, you hear about developments concerning tariffs, wars, elections and bombings. But how does it all fit together? The news tells mostly about events, with seldom anything much deeper to help put the events into context.

I’ve found that I learn far more by reading a book by a well-informed author, one that provides a framework for understanding. To aid my comprehension, whenever I read a book I take notes on it, including bibliographic details, a summary of the contents and specific points (with page and paragraph numbers) that are relevant to my interests. Sometimes the notes are just half a page; sometimes they are many pages long.

Going through my files recently, I came across my notes about a book by Paul Rogers titled Losing Control: Global Security in the Twenty-first Century. Published in 2000, I read the book two years later, and wrote in my notes that Rogers was remarkably prescient: his analysis seemed to have anticipated world events. In particular, between publication in 2000 and when I read the book, there were the terrorist attacks of 11 September 2001.

Looking at my notes in 2020, I was again impressed with Rogers’ assessments. Losing Control was a useful guide to understanding world affairs. I decided to read the book again, in the process discovering that there had been a second edition in 2002 and a third in 2010. Conveniently, these new editions were the original book with supplementary chapters.

Nuclear war-fighting

Losing Control starts off with a detailed analysis of nuclear politics during the Cold War. This may now seem irrelevant given that the Soviet Union collapsed in 1991 as did concern about nuclear war. Actually, though, it is a useful reminder that, for several decades, that the world was worryingly close to devastation. Furthermore, Rogers goes on to point out that, contrary to the impression you might get from the news, the threat of nuclear war has not disappeared. Governments have been “modernising” their arsenals, namely making them more effective.

Rogers says that the major nuclear weapons states — US, Russia, UK, China, France, Israel, India and Pakistan — have no intention of ever relinquishing their arsenals. Instead, hypocritically, political leaders roar with indignation should some other state seek to acquire nuclear weapons. Just think of the attention given to the possibility of Iraqi, North Korean and Iranian weapons.

During the Cold War, the standard theory concerning nuclear weapons was that they served as a deterrent against attack: US and Soviet nuclear forces, by being poised to destroy each other’s population centres, discouraged initiating an attack. This was called mutually assured destruction. However, unbeknownst to most members of the public, both sides had strategic plans and targeting policies that were based on war-fighting: they hoped to be able to destroy their opponent’s communication and weapons systems in a first strike, thus winning a nuclear war.

            Back in the 1980s, I studied the effects of nuclear war and read about plans for nuclear war-fighting. The information was available but not widely known, with the result that most people did not appreciate how dangerous the so-called strategic balance was in those years. Rogers, in recounting these matters, provides a corrective to mistaken ideas about past and present nuclear threats.

Three drivers

Rogers argued that international conflict over the next two or three decades would be driven by three factors. The first is economic inequality, which is exacerbated by neoliberal economic policies. Inequality is a source of tension: some of the have-nots may want to challenge the dominant order violently; others may seek to migrate to more prosperous regions, triggering tensions over immigration.

            The second factor is environmental constraints. The massive expansion of human activity puts strain on land, water and the air. Resources, especially oil, become bones of contention. The wars in the Persian Gulf are partly resource-related. Rogers was initially writing in 2000, after the first Gulf war in 1991 but before the 2003 invasion of Iraq.

Today the most obvious environmental constraint is climate change. Already in 2000 Rogers identified this as a crucial factor in international conflict. Affluent industrialised countries have generated the most greenhouse gases, yet they want to keep consuming despite the looming dangers. It is at this point that environmental constraints interact with economic inequality.

            The third factor is the commitment by dominant powers to address these issues by attempting to maintain the status quo, if necessary by force. Instead of addressing inequality and environmental constraints, Western governments have tried to subdue challengers, especially those that use force themselves. The context is that groups with relatively little resources and technological expertise have the capacity to wreak havoc in rich developed societies. Putting this another way, industrial societies have developed in ways that make them vulnerable to attack.

Security paradigms

Rogers describes two security paradigms, namely assumptions and ways of thinking that guide action. The first paradigm, which he dubs “old,” is based on attempting to maintain control. This is called “liddism”: the dominant powers attempt to keep a lid on the discontent stimulated by continuing economic inequality and escalating environmental impacts. Rogers’ second paradigm is quite different. Instead of trying to maintain the status quo and keep a lid on discontent, this alternative “new” paradigm involves addressing the roots of conflict: inequality, environmental impacts and military deployments to maintain them.

Rogers gave considerable attention to the 1993 attack on the World Trade Center. A truck filled with explosives was driven into an underground parking station and detonated. However, the plotters had not positioned the location quite right to achieve their goal of bringing down the tower. If they had succeeded, 30,000 people might have been killed. Concerning this possibility, Rogers rhetorically asked “… would it have resulted in any rethinking of security? Probably not. A more likely result would have been a massive and violent military reaction against any groups anywhere in the Middle East that were thought to have had even the slightest connection with the attack.” (p. 118)


Damage from the 1993 World Trade Center bombing

            How’s that for a prediction made in the year 2000? We now know that this is the security trajectory followed after 9/11. There was a declaration of a “war on terror” with no possibility of peace envisioned, the invasion of Afghanistan, the invasion of Iraq, a continuation of neoliberalism and economic inequality and a slow and tepid response to climate change. In contrast, the new-paradigm response to 9/11 would have been to treat the attacks as a criminal matter. It didn’t happen.

The 1993 attack highlighted the interaction of the three factors that Rogers identified. Resource factors, namely the location of cheap and abundant oil in the Gulf region, led to US military involvement in the Gulf, including troops stationed in Saudi Arabia. The quest for control over energy supplies aggravated the perception of inequality, with Western affluent countries seeking control. The attack did not lead to any change in ways of thinking about security.

Learning from Rogers

There is a lot to learn from Losing Control. It contains all sorts of information about international security, from nuclear arsenals to political grievances to neoliberalism. The information is presented in a coherent way, enabling an appreciation of trends and impacts.


Paul Rogers

            More important than the information is the framework that Rogers developed to understand the driving forces underlying the security environment: economic inequality, environmental constraints (especially Gulf oil politics and climate change) and the old security paradigm of trying to maintain control. Grasping these three factors and their interactions provides a remarkably powerful way of understanding geopolitical developments.

Reading and digesting Losing Control offers a way of making sense of the crush of current affairs. You could spend years watching or reading current affairs in the news and still have less idea of what it all means than by spending a few hours reading this book. Alternatively, if you prefer shorter treatments, Rogers writes a regular column for openDemocracy.

This speaks to a more general issue. By acquiring an understanding of patterns and driving forces, it’s possible to make sense of the world far more efficiently and accurately than by taking in one event after another. If you can find the right book or article, one that cuts to the core, you can know far more with far less time and effort.

To find works like Losing Control isn’t easy. If you want to acquire powerful conceptual tools for making sense of the world, the initial challenge is to find lucid, insightful expositions. This can take a bit of effort. Then it’s a matter of spending some time reading history, politics, psychology or whatever fascinates you and of keeping doing this despite the temptations to read the latest headlines and social media commentary.

Postscript

How’s this for a prediction made in 2010, in the third edition of Losing Control, before the emergence of Islamic State?

 “Even if US troops are largely in barracks, they can still be readily represented by al-Qaida propagandists and others as ‘ghost’ occupiers of a major Islamic state. Given the decades-long timescale of the al-Qaida movement’s aims, and the potentially decades-long significance of Persian Gulf oil, the value of Iraq to the al-Qaida movement may be far from over.” (p. 168)

There may be a fourth edition in 2021. Stay tuned.

Brian Martin
bmartin@uow.edu.au

democracy, economics, politics, social dynamics

Trusting people and machines

Trust is fundamental to human activities. How is it changing?

Would you trust Sophia, a robot that is a citizen of Saudi Arabia?

On a day-to-day basis, people put a lot of trust in others. As I walk down a suburban street, I trust that a driver will follow the curve of the road rather than drive straight into me. The driver trusts the engineers who designed the car that it will not explode, at least not on purpose. Buying an aspirin is premised on trusting the chemists and manufacturers that produced the drug.

            When trust is betrayed, it is a major issue. When, last year in Australia, a few needles were discovered in strawberries and other fruit, it was national news. People normally assume that fruit purchased from a shop has not been tampered with.

            Paedophilia in the churches was covered up for decades. When it was finally exposed, it destroyed a lot of trust in church leadership and the church as an institution.

            Scientific knowledge is based on observation, experiment and theorising, but also relies heavily on trust between scientists, who need to rely on each other to report their findings truthfully. This helps explain the enormous condemnation of scientific fraud, when scientists manipulate or fake their results.

            In certain areas, public trust has plummeted in recent decades: trust in public institutions including government, corporations and the mass media. Opinion polls show large declines. In Australia, trust in financial institutions had been dropping due to scandals, and that was before the royal commission revealed widespread corruption. When people can’t trust their financial advisers, what should they do?

Public trust in Greek institutions has plummeted.

            In order to ensure fairness and good practice, governments set up watchdog bodies such as ombudsmen, environmental protection authorities, anti-corruption commissions and auditor-generals. One of the casualties of the banking royal commission has been the credibility of financial watchdogs such as the Australian Securities & Investment Commission (ASIC). Rather than sniffing out bad practice, they were complacent. Whistleblowers reported problems, but ASIC ignored them. The message is that members of the public cannot rely on watchdog bodies to do their job.

Who can you trust?

Rachel Botsman has written an insightful and engaging book titled Who Can You Trust? She argues that in human history there have been three types of trust.

            First was local trust, based on personal experience in small communities. If someone you know helps, or fails to help, in an hour of need, you can anticipate the same thing in the future. Local trust is still relevant today, in families and friendships. People learn who and when to trust through direct experience.

            Next came institutional trust, in churches, militaries, governments, and professions such as medicine and engineering. People trusted those with greater authority to do the right thing. In the 1950s, high percentages of people in countries such as the US said they had a great deal of trust in their political leaders. However, institutional trust has taken a battering in recent decades.

“So why is trust in so many elite institutions collapsing at the same time? There are three key, somewhat overlapping, reasons: inequality of accountability (certain people are being punished for wrongdoing while others get a leave pass); twilight of elites and authority (the digital age is flattening hierarchies and eroding faith in experts and the rich and powerful); and segregated echo chambers (living in our cultural ghettoes and being deaf to other voices).” (p. 42)

            Botsman writes about the rise of a third type of trust: distributed trust. People trust in systems that involve collective inputs, often anonymous.

Distributed trust

Suppose you want to see a recently released film. If you rely on local trust, you ask your friends what they thought of it. If you rely on institutional trust, you see what the producers say about their own film: read the advertisements. Or you can rely on distributed trust. For example, you can look up the Internet Movie Database (IMDb) and see what different film critics have said about the film, see what audience members have said about the film and see the average rating audiences have given the film.

            If you take into account audience ratings from IMDb, you are trusting in two things. First, you’re assuming that audience members have given honest ratings, and that the film’s promoters aren’t gaming the system. Second, you’re assuming that IMDb’s method of collecting and reporting ratings is honest. After all, IMDb might be getting payoffs from movie producers to alter audience ratings.

            Botsman says distributed trust seems to be reliant on technology but, ultimately, human judgement may be required. Of course, people design systems, so it’s necessary to trust the designers. However, after a while, when systems seem to be working, people forget about the designers and trust the technology.

            One of Botsman’s examples is the self-driving car. Developers have put a lot of effort into figuring out what will make passenger/drivers feel safe in such cars. This sounds challenging. It turns out that the main problem is not building trust, because after being in a self-driving car it seems quite safe. The problem is that drivers become too trusting. Botsman thinks her young children will never learn to drive because self-driving cars will become so common.

            Botsman has a fascinating chapters on the darknet, a part of the Internet frequented by buyers and sellers of illegal goods, among other nefarious activities. Suppose you want to buy some illegal drugs. You scroll through the various sellers and select your choice. How can you be sure you’ll receive the drugs you ordered (rather than adulterated goods) or that the seller won’t just run off with your money and not deliver the drugs? Botsman describes the trust-building mechanisms on the darknet. They include a rating service, rather like Amazon’s, and an escrow process: your payment is held by a third party until you’re satisfied with the goods. These darknet trust-enablers aren’t perfect, but they compare favourably with regular services. It turns out that trust is vital even when illegal goods are being bought and sold, and that reliable systems for building and maintaining trust are possible.

            In Sydney, a high-rise apartment building called the Opal Tower had to be evacuated after cracks were found in the construction. Experts debated when it was safe for residents to return to their units. Some commentators blamed the government’s system for checking compliance to building codes. Could trust in builders be improved by learning from the systems used on the darknet?

Blockchain

Botsman’s special interest is in the blockchain. You might have heard about the electronic currency called bitcoin. Used for purchases online, it can provide anonymity, yet embedded in the code is a complete record of every transaction. Furthermore, this record can be made public and inspected by anyone. It’s as if a bank published online every transaction, with amounts and dates, but without identifying who made them.

            Botsman says bitcoin is a sideshow. The real innovation is the blockchain, the record-keeping code that enables reliable transactions without a middleman, such as a bank, taking a cut. It sounds remarkable, but blockchain-based operations have pitfalls. Botsman describes some disasters. When a new currency system was set up, someone found a glitch in the code and drained $60 million from the currency fund, one third of the total. The programmers and founders of the system were called in to intervene, which they did, preventing the extraction of currency.

            Blockchain seems not quite ready to provide a totally reliable trust system, one not reliant on human intervention. But lots of people are working to achieve this goal, as Botsman revealingly describes.

Trust and political systems

For me, the value of Who Can You Trust? is in highlighting the role of trust in contemporary life, especially as trust in institutions declines drastically. It made me think in a different direction: political alternatives.

Rachel Botsman

            The political philosophy of anarchism is based on the idea of self-management: people collectively make the crucial decisions affecting their lives without systems of hierarchy, namely without governments, corporations or other systems of domination. The usual idea is that there are assemblies, for example of workers who decide how to organise their work and what to produce. Assemblies elect delegates for coordination by higher-level groups.

            This model of self-management relies on two types of trust. The assemblies have to be small enough for dialogue in a meeting and thus rely on local trust. The delegate structure parallels distributed trust, as long as the delegates remain bound by their assemblies and acquire no independent power

            Another model is demarchy, which also dispenses with governments and corporations. In a local community, decision-making is carried out by citizens panels, with maybe 12 to 24 members each, whose members are selected randomly from volunteers. There could be panels for transport, manufacturing, art, education and a host of other topics. In essence, all the issues addressed by governments today are divided according to topic and allocated to randomly selected groups of citizens.

            Because they are randomly selected, panel members have no mandate, so their terms are limited. For coordination, experienced panel members would be elected or randomly chosen for higher-level panels.

            Demarchy relies on local trust, especially on the panels, and on distributed trust, namely trust in the system itself. This distributed trust is similar to the trust we have today in the jury system for criminal justice, in which randomly selected citizens deliberate together and make judgements. People trust a randomly selected person, who has no personal stake in the outcome, more than they are likely to trust a lawyer or a politician.

            Botsman’s analysis of trust and technology raises a fascinating option: what would it mean to combine distributed trust based on technology with the local/distributed trust in political systems like anarchism and demarchy?

Brian Martin
bmartin@uow.edu.au

economics

Supply and demand: think again?

Some of the things we learn in economics classes may not be as simple as they seem.

            One of the basics taught in economics classes is that the price of a good is determined by supply and demand. There’s a curve showing how the supply varies with the price and another curve showing how the demand varies with the price. Where the two curves intersect determines the price.

            This seems plausible, but I must admit I never thought deeply about these curves. So I thought I’d try to figure out what the supply curve might look like for product I know something about: printed books.

            What happens to the supply of a book when the price goes up? Well, most books are sold at the same price until they go out of print: the price doesn’t go up at all. Sometimes remaining print copies are “remaindered”: they are sold off to discount booksellers at a rock-bottom price, maybe $1 each, and the discount booksellers mark them up a bit, maybe to $2 or $5, though they are still a bargain compared to the original retail price.

            When the book goes out of print, then it’s usually possible to buy used copies, for example via booksellers who sell through Amazon. If there’s still a demand, then some suppliers jack up the price. On the other hand, if the demand is great enough, the publisher may do another print run, so then the supply is suddenly increased.

            So what does the supply curve look like? Here’s what the textbooks say.

Whoops. The textbook curve doesn’t seem to fit what happens with printed books. Instead of supply increasing as the price increases, the price stays the same and then, if there’s still a demand for the book as supply dwindles, the price goes up.

Ryan on economics

            If this is as confusing to you as it was to me, then read Michael Ryan’s book The Truth about Economics. Ryan was a high tech executive who decided to become a school teacher in Texas and, after having to teach economics, became sceptical about some of the basics. To him, the claims in the standard textbooks used in the US didn’t make sense. So he wrote a book to explain, in simple terms, what’s going on.

            According to Ryan, the supply and demand curves in textbooks like Paul Samuelson’s Economics and Gregory Mankiw’s Principles of Economics simply don’t apply in many situations. The texts say that the curves apply when other things are equal. The trouble is that other things often aren’t equal.

            Even worse, Ryan shows that some of the data provided in the textbooks to show the operation of supply and demand are made up. Rather than using actual data from markets, the numbers in the texts are chosen to give the right answer, namely the answer that agrees with the theory. In other words, the authors work backwards from the theory to generate data that shows that the theory works.

            If your mind goes blank at the sight of a table of numbers or a graph, you will find Ryan’s book challenging. Actually, though, it is easier than most economics texts, not to mention econometrics research papers, because Ryan patiently explains what is going on.

            The Truth about Economics made me think for myself about supply and demand. I already knew about some of the abuses involving pharmaceutical drugs. Some companies exploit their patent-protected monopolies over drugs by raising prices unscrupulously, even though it costs no more to make the drug than before. When patients desperately need the drug, the demand is inelastic: it doesn’t change much even when the price goes up.

            Another example Ryan uses is buying a car. He notes that there are different price ranges. You might be in the market for a low-cost Nissan Versa or a top-of-the-range Porsche. Most buyers only want one car, and want it within a particular price range. The result is a very different sort of supply-and-demand diagram.  

          As well as markets for goods and services, there are also markets for labour. Ryan analyses what US textbooks say and is withering in his criticism. He presents arguments showing why raising the minimum wage makes almost no difference to unemployment rates. Instead, raising the minimum wage benefits workers at the expense of owners and managers. Ryan points to the ideological role of conventional economic theory, at least as presented in US textbooks. He quotes from standard texts to show the authors’ hostility to trade unions. This raises the suspicion that some facets of economics texts are more a glorification of capitalism than a neutral presentation.

            Could it be that generations of students have studiously learned about supply and demand curves and never questioned whether they actually described what happens in real markets? That is what Ryan claims. He presents ideas about groupthink to explain the economics profession’s continued commitment to a model based on questionable assumptions and for which there are so many counterexamples — such as book sales. As for students, Ryan believes most are too young and inexperienced to question textbooks, or they just suppress their rebellious thoughts.


Michael Ryan

            I’m not here to endorse Ryan’s critique. Instead, I recommend it as a way to encourage you to think for yourself about markets.

            Ryan argues that high-school students should be given the option of taking courses in financial literacy, learning the basics of bookkeeping and profit-and-loss statements. Financial literacy, he says, is far more relevant to the lives of students when they are in jobs and perhaps running their own businesses. However, Ryan is excessively optimistic to imagine that, based on his analysis, a movement will arise to introduce financial literacy courses throughout the US.

Learning about economics

You may have no interest in economics, but if you do, what’s the best way to learn about it? I’d say there are three things to look at.

            First are expositions of the dominant neoclassical perspective. Currently in the US the most popular textbook is Gregory Mankiw’s Principles of Economics, so you could start there, but just about any basic text would be fine.

            Second, to avoid simply accepting standard ideas without question, you can also look at critiques. Ryan’s The Truth about Economics is one possibility. Steve Keen’s Debunking Economics is a more advanced analysis.

            Contrary perspectives have been put forward for decades. Ryan quotes from early economists like H. L. Moore, who challenged Alfred Marshall’s dominant ideas about supply and demand. That was in the early 1900s.

            You can dip into the large literature on political economy, which is based on the idea that the economic system cannot be understood separately from the political system. John Kenneth Galbraith in a number of books, for example Economics and the Public Purpose, showed the value judgements built into orthodox economics.

Those with a mathematical bent can appreciate John Blatt’s 1983 book Dynamical Economic Systems in which he showed that the assumption of equilibrium in markets, an assumption that underlies a vast body of econometric theory, is untenable. Blatt also wrote a paper, “The utility of being hanged on the gallows,” that challenged the assumptions underlying utility theory, central to much work in economics.

            Third, it is illuminating to look at alternatives to standard economic theory. For example, you can read about local currencies, which provide a radically different way of thinking about markets.

A more radical alternative is the sharing economy based on an expansion of the commons, with production done collaboratively without pay, as with free software. Then there are models or visions of economic systems that avoid reliance on organised violence. Current market systems do not qualify because the power of the state is required to protect private property. I have found only four models or visions of economic systems that could operate without organised violence: Gandhian economics, anarchism, voluntaryism and demarchy.

            If you’re going to study standard views, critiques and alternatives, what’s the best order to approach them? My suggestion would be to look at all three in tandem, because each throws light on the others.

            It is not surprising that the discipline of economics is, to a considerable extent, a reflection and legitimation of the existing economic system. Challenges are needed to orthodox economic theory as part of challenges to the dominant economic system. That means there is still quite a lot worth investigating, indeed entire realms. Most likely, though, improved theory will depend on economic alternatives becoming a reality.

Brian Martin
bmartin@uow.edu.au