Whimsley

Here Comes Everybody

Here Comes Everybody: The Power of Organizing Without Organizations, Clay Shirky, Penguin, 2008.

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"We are living", says Clay Shirky, "in the middle of a remarkable increase in our ability to share, to cooperate with one another, and to take collective action, all outside the framework of traditional institutions and organizations" [p. 20]. Digital technologies are now part of our social fabric, and all "the phones and computers, the e-mail and instant messages, and the webpages are manifestations of a more fundamental shift. We now have communications tools that are flexible enough to match our social capabilities and we are witnessing the rise of new ways of coordinating action that take advantage of the change" [20].

Here Comes Everybody is an accessible and challenging introduction to these changes - to the many ways every Shem, Shaun and Issy can now share, collaborate, and act together. It combines some great stories with non-technical introductions to some of the key ideas (a little game theory, a little network theory, a few power laws) and is well worth reading -- but it should be read with caution.

The reason for this mixed verdict is the dual nature of the book itself. Here Comes Everybody has two voices. One (let's call him 'Shirky') is a perceptive and creative interpreter of the ways that digital technology is changing society. I like and respect Shirky. He is blunt and provocative enough to cut through the mess of questions that come up when tackling something as far-reaching as the Internet, while being even-handed and reserved enough to respect the complexity of his subject. Here is Shirky on the erosion of journalism and photography:

There is never going to be a moment when we as a society ask ourselves, "Do we want this? Do we want the changes that the new flood of production and access and spread of information is going to bring about?" It has already happened; in many ways, the rise of group-forming networks is best viewed not as an invention but as an event, a thing that has happened in the world that can't be undone. As with the printing press, the loss of professional control will be bad for many of society's core institutions, but it's happening anyway. [p73]

I've struggled with this message for a few days because I don't like its determinism, but he has convinced me. Shirky separates what is happening from what is desirable (not that everything digital is undesirable) and that's an important separation to make if we are to be at all clear-headed.

Shirky is not a techno-inevitabilist in a broad sense. Nuclear power, for example, "is a technology that society can, for the moment, make a decision about" [299]. As with driving a car, we "have a good deal of control over both the route and the speed with which nuclear power progresses, including the option to simply pull over" [299]. But when it comes to digital technologies we are steering a kayak: "We are being pushed rapidly down a route largely determined by the technological environment... Our principal challenge is not to decide where we want to go but rather to stay upright as we go there." [300]

The other voice (let's call him 'Clay') is a techno-enthusiast and an inveterate story-teller. When Clay looks at the Internet he sees no reason for worry - he sees freedom and unlimited potential. It's "the largest increase in expressive capability in the history of the human race" [106], bringing with it a world in which, when "people care enough, they can come together and accomplish things of a scope and longevity that were previously impossible; they can do big things for love." [142] Shirky may warn that there are losses from social changes, but Clay is breezily dismissive: "The spread of cheap and widely available creative tools is sad for people in the advertising business in the same way that movable type was sad for scribes -- the loss from this kind of change is real but limited and is accompanied by a generally beneficial social change." [209] This is the logic of The Lottery - the short story in which one person is stoned so that others can be better off.

I blame Clay and his enthusiasms for the two major flaws of this book.

The first is a fallacy of composition. Clay looks at the Internet and sees lots of groups forming (and things are easy to see on the Internet because even our most casual utterances get stored on someone's servers for posterity to investigate) and he concludes that the world is alight with a new groupiness, the likes of which we have never seen. From time to time Shirky pipes up to remind his alter ego that this is not enough, that "treating the internet as some sort of separate space... was part of the problem" [194]. "The internet augments real-world social life rather than providing an alternative to it" [196]. One implication of Shirky's caution is that, to evaluate the state of groups in our world, we also have to look at how our use of the Internet may have displaced other forms of group building. But while Shirky knows all about Bowling Alone, Clay is too busy running off to tell us a story about Meetup.com to take a really close look at how those positives and negatives are adding up.

While Clay is telling us all about the use of digital technology to spark innovative forms of protest in Belarus, which is a fascinating story, we really need Shirky to ask why, with all these group-forming tools at our disposal and despite the documented disillusionment with the war in Iraq, there is so little coherent protest happening compared to previous wars? Is it really the case that society now is becoming, thanks to the internet, more democratic, more collaborative, and more cooperative than before? I am not convinced. Clay is in danger of making the same mistakes that William Greider made in One World, Ready or Not, and which Paul Krugman demolishes - of finding lots of examples of groups and inferring that the world must have more groups in it than it used to - but that logic is flawed.

Now Shirky is far too well-informed to fall into this kind of trap. Shirky recognizes that, just as removal of a bottleneck at one point in a highway may prompt a new bottleneck to form a few miles down the road, so the "removal of technological limits has exposed a second set of social ones" [91]. But Clay's enthusiasms mean that the book is unbalanced, and this second set of limits never really gets investigated closely. Clay the enthusiast wins out over Shirky the dispassionate observer. If you are going to argue that groups are forming as never before, and if you are going to use minor events like angry airline passengers protesting about being trapped on runways to claim that "Consumers now talk back to businesses and speak out to the general public, and they can do so en masse and in coordinate ways" [179] then you really have to think about consumer activity before digital technology. Here is "talking back to business" with a vengeance:

August [1800] - Notwithstanding that the last day of this month was a Sunday, it was marked as the commencement of a serious riot. A great increase in the price of provisions, more especially of bread, had roused the vindictive spirit of the poorer classes to an almost ungovernable pitch. They began late in the evening, by breaking the windows of a baker in Millstone Lane, and in the morning proceeded, with an increase of numbers and renewed impetuosity, to treat others of the same trade in the same unwelcome manner. Granaries were broken into at the canal wharfs, and it was really distressing to see with what famine-impelled eagerness many a mother bore away corn in her apron to feed her offspring. [link]

Do consumers have a stronger voice now than in the past? I don't know, but I do know that a story or two about American Airlines passengers is not going to convince me. If Clay wants to tell us about a student group using Facebook to protest about British Bank HSBC's cancellation of interest-free loans then perhaps he should think about the longstanding student boycott of Barclays Bank during the 1970's and 1980's that contributed to the end of apartheid. But he doesn't, and that's disappointing.

The second flaw - also a common one - is a reluctance to follow the money. Between them, Clay and Shirky convince me that the Internet marks a change; that a society with an Internet is different from a society without one. Also, they convince me that the Internet is not a single model of sharing/collaboration/collective action; it's many models. So let's talk about these models, about which ones have legitimacy and longevity and which don't. To do so requires Shirky to take the broad brush that Clay is using and to start to make smaller, more detailed points.

Perhaps we no longer need books telling us that the Internet is a big thing. It is time to treat that fact, as Shirky sometimes does, as the starting point for a discussion rather than the conclusion. The questions then become ones of what kind of structures will form and persist in the online world, and if you are going to talk about these questions then you have to address the economics of the problem.

Money matters.

People's willingness to contribute to Wikipedia, Shirky points out, is tied to the non-profit status of Wikipedia. A threat from Spanish participants to start an alternative version convinced founder Jimmy Wales to "formally forgo any future commerical plans for Wikipedia, and to move the site from Wikipedia.com to Wikipedia.org, in keeping with its nonprofit status. Similarly, he decided to adopt the GNU Free Documentation License for Wikipedia's content [which] assured contributors that their contributions would remain frerely available" [274]. There is an ongoing tension between contributors to sites and the "owners" of those sites that is visible on MySpace (see Billy Bragg's efforts to gain musicians rights over their content), on Facebook (the failed "Beacon" program as one example) and even Google and the line it walks with advertising content on its search results. Contributor-driven movie database IMDB was taken over by Amazon, but Amazon does not put its name on the pages of the site - does it fear that people would not contribute so freely if they realized they were just making Jeff Bezos even richer? The book ends with a story by Clay about a successful revolt by participants at digg.com - but once again, a story is not enough to support the thesis he is trying to make. 

There are many issues of democracy, ownership, privacy and control that, depending on how they are resolved, will influence our chances of staying upright as we get carried along by this technological flood. Clay Shirky shows in this book that he has many insights that we can use, but to really help steer this kayak we need more Shirky and less Clay.

The Anarchist in the Library

The Anarchist in the Library, Siva Vaidhyanathan, Basic Books 2004.

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Siva Vaidhyanathan (see here and here) sees the central problem of the Internet and of society as a whole, as the tension between decentralization/freedom/anarchy and centralization/control/oligarchy.

The great challenge in the new century is to mediate between two divergent trends -- anarchy and oligarchy. In the war between distribution and concentration of information, the issues and conflicts seem intractable. [xvii]

In the world of the Internet, at least in the years leading up to 2004 when the book was published, these poles of anarchy and oligarchy manifest themselves technologically. Anarchy is the "ideology of peer-to-peer systems" such as the file-sharing and media-sharing networks that have followed Napster; it is characterized by a fluid, decentralized architecture in which "all the 'thinking'.. happens at the end point" and in which there is "no discernible command-and-control system" [17]. On the other side, digital rights management is the technology of oligarchy, imposing controls on what you can and cannot do with the software and media that you buy (or, increasingly, license). I don't usually buy the technology-determines-behaviour line, but his discussion of what it means for a technology to "have an ideology" is the best I've read, and is well illustrated by the distinction between technologies that operate on the basis of protocols (handshakes, conventions) and those that work on the basis of controls.

When I first picked up this book (from my library) I assumed that the author was another techno-utopian and that he is firmly on the side of freedom and anarchy over control and oligarchy (as who but the most unromantic of us could not be)? Not unreasonable, given chapter titles like Hacking the Currency and The Peer-to-Peer Revolution and the Future of Music, but wrong. In fact, although his heart is with the anarchists, Siva Vaidhyanathan is best described as a librarian. Not as in somebody who works in a library, but as in someone who is a fan of libraries:

Librarians should be our heroes. The library is not just functionally important to communities all over the world; it embodies Enlightenment values in the best sense. A library is a temple devoted to the antielitist notion that knowledge should be cheap if not free -- doors should be open. Supporting libraries -- monetarily, spiritually, intellectually, and legally -- is one of the best things we can do for the life we hope to build for the rest of the century. [Page 119]

Libraries seem anachronistic -- if they did not already exist, they could not be created now (in North America anyway) -- and yet they are among the most popular of institutions. People make jokes (deserved or not) about the service of the post office, the inflexibility of government, and the so on, but no one (well, apart from Seinfeld) pokes fun at libraries. Even some libertarians, who see any path laid by the state as a road to serfdom, love libraries. Our local libraries are always busy, and after a bad patch some time ago appear to be thriving with their mix of Internet access, DVD and CD rentals and, of course, loads of books. The popularity of the library surely comes from its nature as patron-focused but not commercial (no "consumers" here) and state sponsored but not monopolistic. It is populist and yet highbrow.

In the end Vaidhyanathan takes a dialectical stance and rejects both anarchy and oligarchy in favour of the library - a civic, noncommercial, open and public model. I didn't see this coming until well into the book, which after the first couple of chapters is more a set of essays around a common topic than a sequential argument. I thought he was heading towards one more simplistic agenda ("information wants to be free" anyone?) but he pulls himself back from the brink and ends up writing [185] "The heart of my argument in this book is a call for modesty and patience" and this:

The urge to break heads, to do the bidding of oligarchy by any means necessary is intimately linked to specters of anarchy. The urge towards anarchy depends on oligarchic abuses. Each creates the conditions that allow the other to thrive. The question for us in the twenty--first century should not be choosing anarchy or oligarchy by constructing and maintaining systems that discourage both. Anarchy is a reaction, not a vision or solution that can produce the best society and the best human future.  [187]

One of the reasons he pulls back is a debate with Randy Cohen of the New York Times, which he describes with admirable honesty [63].

"The history of popular culture is a continuous struggle on the artists' part not to get robbed... it seems to me that what MP3 [digital music] does is democratize the ability to rip off an artist," Cohen wrote to me. "And what's particularly galling is that you not only want to do it, you want to be praised as a social progressive when you do."
He got me. That's my schtick. By the guiding principles Cohen deployed in our peer-to-peer debate, I had no escape. He considered copyright to be an artists' right and concern; I consider the chief player in the copyright system to be the corporation.

The artists' struggle continues. The commercial oligarchs do whatever they can to avoid paying artists, as the Hollywood writers' strike showed and as recent press about royalty awards not being passed on to artists makes clear. But the free-use techno-anarchists exploit artists too. Greatest Living Englishman Billy Bragg writes in the New York Times about how he advised Michael Birch, the founder of social networking site Bebo.com, on how to handle artistic content on the site (via Nicholas Carr). Bragg was angry that while artists contributed to the site, Michael Birch sold it to AOL for $850million and the artists got nothing. Here is part of his op-ed:

He was hoping to expand his business by hosting music and wanted my advice on how to construct an artist-centered environment where musicians could post original songs without fear of losing control over their work. Following our talks, Mr. Birch told the press that he wanted Bebo to be a site that worked for artists and held their interests first and foremost.

In our discussions, we largely ignored the elephant in the room: the issue of whether he ought to consider paying some kind of royalties to the artists. After all, wasn’t he using their music to draw members — and advertising — to his business? Social-networking sites like Bebo argue that they have no money to distribute — their value is their membership. Well, last week Michael Birch realized the value of his membership. I’m sure he’ll be rewarding those technicians and accountants who helped him achieve this success. Perhaps he should also consider the contribution of his artists.

The musicians who posted their work on Bebo.com are no different from investors in a start-up enterprise. Their investment is the content provided for free while the site has no liquid assets. Now that the business has reaped huge benefits, surely they deserve a dividend...

If young musicians are to have a chance of enjoying a fruitful career, then we need to establish the principle of artists’ rights throughout the Internet — and we need to do it now.

Instead of cheering for one side or the other, Vidhyanathan's book foresees and acknowledges both these problems. And problems they are. He does not offer clear or simple solutions, but he points us thoughtfully in the right direction, and that's a very valuable contribution. So I definitely recommend the book, even though I wish it were a bit less scattered than it is (and that it had a better index). It's an exploration, not a recipe for the future, and has the rough edges that come with that territory, but there is a lot of food for thought in the pages.

The Anarchist in the Library, written in 2004, is already a bit outdated. Not the author's fault of course, but it is already odd to read a book about the Internet that has no mention of Wikipedia and no index entry for Google. These recent developments have changed the nature of the Internet. Peer to peer networks are still around, but I don't think they are the defining feature of the Internet. If we think of music we think of iTunes, not Napster; if we think of books we think of Amazon; if we think of social networks we think of Facebook and MySpace. None of these are peer-to-peer: they are centralized technologies built on the basis of controls, not protocols. Software architecture is often described as a stack, and while the low-level plumbing of the Internet remains a peer to peer protocol, the higher levels of the stack are "platforms" or client-server models of request and response. The techno-capitalist digirati have moved happily onto such platforms, and the centralization of ownership that they carry with them. In the era of utility computing, peer-to-peer networks appear to be on the wane.

There is one other place in which I think Vaidhyanathan gets it wrong. He underestimates the role of information asymmetries and transaction costs. He says that "Major record labels perform four basic tasks: production, distribution, price fixing, and gatekeeping" [48]. But there is a fifth, which is promotion. Simply putting a record on the Internet is hardly more effective than playing your music on your front lawn - the problems of finding something no one knows exists are far greater than he credits. One major function of libraries, after all, is to match readers and books ("Every reader his/her book" in one of Ranganathan's five laws of library science -- thanks John). When Vaidhyanathan tells a journalist that African musicians don't need record companies because "The artists can do it all themselves for less than $10,000" he is naive. Billy Bragg's friends on Bebo did the same, and it got them nowhere. Others have proclaimed this line before - for example Chris Anderson in my least favourite book talks about the band Birdmonster who eschewed labels

Label were calling with deals, but Birdmonster turned the offers down. As [lead singer Peter] Arcuni put it, “We’re not anti-label in principle, but the numbers (risk vs. reward) didn’t add up.”

A music label exists primarily to fulfill four functions: 1) talent scouting; 2) financing (the advances bands get to pay for their studio time is like seed capital invested by a venture capitalist); 3) distribution; 4) marketing.

From Birdmonster’s perspective, they didn’t need that.

Well, apparently they do now. The problem is that so much of culture is governed by asymmetric information, information cascades, and network effects. You don't know what a book is going to be like until you buy it, so simply knowledge of the existence of a book is insufficient - you need recommendations and reliable ones at that. I've gone on about this in various ways here and here and here. His neglect of these forces is one of the reasons I thought he was heading down the techno-utopian path, but as I say he ends up, thankfully, rejecting the "California Ideology" [155] in favour of something less catchy, less simple, but more hopeful.

The Big Switch

The Big Switch, by Nicholas Carr, is published by W.W.Norton, January 2008. Quotes and page numbers are from an advance copy.

Unlike most technology commentators Nicholas Carr knows that if you want to predict what's happening next, you've got to follow the money. And he does so very well, which makes this book (and his weblog) recommended reading for anyone interested in where  technology is taking us.

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Google is everywhere in The Big Switch and the reason is simple: cost.

No corporate computing system, not even the ones operated by very large businesses, can match the efficiency, speed and flexibility of Google's system. One analyst [Martin Reynolds of the Gartner Group: see here ] estimates that Google can carry out a computing task for one tenth of what it would cost a typical company.

That means, if you are a company and you have a computing task to be done that Google already does, you can save a bunch of money and you can now start outsource your CPU cycles just as you previously outsourced other tasks. And that means that the computing landscape will get shaken up. Not in a matter of months, but over the next decade or so. It's amazing how quickly we get used to a landscape and many of us are now so accustomed to PC's and the basic layout of corporate computing systems that they seem almost natural. But Carr warns us that this is going to change and, as if to confirm his claims, last week Sun Microsystems, supplier of many of the computers that make up corporate data centres, announced that by 2015 it won't have a single data centre.  Information Technology is not sacrosanct.

Google's cost advantage comes partly from a built-in inefficiency of corporate computing: capacity underutilization. Many applications demand their own servers, and those servers must be able to handle the peak load that the application will experience even if that peak load happens only rarely. As a result most corporate computers, most of the time, do nothing except consume electricity and produce heat. This inefficiency was unavoidable until recently, but now high-speed Internet availability makes it possible for companies that have the resources (Google and a few others) to build warehouses full of servers that look like power stations (see Google's The Dalles centre in Oregon, below, with two football-stadium-sized buildings full of perhaps 60,000 servers). And then they can supply CPU cycles over the Internet just like electrical utilities supply electricity. The demand on Google's CPU cycles is smoothed out, being balanced among many consumers in different timezones with different needs, and that only helps their efficiency. It's what Carr calls utility computing.

The first half of The Big Switch is given over to convincing us that utility computing is the wave of the future, and the second half of the book explores the implications - many of them disturbing - of this switch. The good news is that both are thought-provoking and open up a lot of questions. The less good news is that to cover all this ground Carr has to skim and, at 250 pages, this short book can't delve very deeply into any of the questions.

The argument for the switch to utility computing is made by drawing an analogy between the history of electricity supply and the history of computing. A century ago factories generated their own electricity and many of the fears that people have of outsourcing computing were faced by the nascent electrical industry. Would companies trust their lifeblood to an external source? Can they the get guarantees they need to go over to this new model? History shows that they did, and quickly. Will computing go the same way? Carr says yes.

I broadly agree (in the long run) but there are reasons to think the Big Switch may be less than complete. First, there is an intermediate solutuion that companies are already adopting, which is "virtualization software" that allows them to run many "virtual computers" on a smaller number of real computers, so making better use of the real CPU cycles. The technology is booming and the savings are huge. And while this may still be more expensive than the full-fledged utility model, to the extent that many software packages are customized for individual companies (not so much word processors and so on as the ERP systems that many companies run their business on) a utility model may not be applicable. Whether the benefits of custom applications will win out over the cheapness of commodity software is open to debate. Second, while electricity is a relatively simple thing, computing is complex. Carr only scratches the surface of what forms utility computing will take. Will companies and consumers pay bills for complete applications (the salesforce.com model), for storage (Amazon's S3, for example), for virtual computers on which they can install their own applications (now also starting to be offered by Amazon), or what? And third, from the consumer side, the flip side of the unused CPU cycles efficiency argument is that we may be prepared to pay for a computer to run the latest games and then, well, the marginal cost of using those CPU cycles is very low.  In fact, they are starting to be used (Seti @home and others) by central applications - rented back (or donated back) to others. It is clear that the utility model is making ground in the consumer space (how much of our time do we spend in the browser) but the reasons are, I think, different from the electricity analogy Carr pursues.

But this is splitting hairs, because the broad trend Carr identifies is surely largely correct, even if it takes a decade or two for the switch to be made. We'll still have a lot of computing cycles happening everywhere, but perhaps it may turn out to be true that the world really does need only five computers. And if there are limitations to the expansion of the megacomputers because of the complexity of computing as a utility, well there are other limits to growth (national ones, legislative ones) that electrical utilities have always faced that don't constrain Google, Amazon and our other suppliers.

So that's part one. Part two is a welcome counterweight to the techno-utopian fluff put out by some prominent commentators. Carr covers the centralization of control (how mass participation ends up with just a few people getting loads o' cash), what he calls "the great unbundling" - the change from buying whole albums/newspapers to viewing individual stories and how that may affect production - and the darker side of the web: spam, identity theft, loss of privacy, and so on. Of these, the best chapter is on unbundling because it's just not clear to me how or why that phenomenon will work itself out. The argument is that (to take newspapers as an example) when advertizers sell by the click and when content cannot be sold for its own sake, newspapers lose the ability to fund such expensive endeavours as investigative reporting and foreign news desks. Cross-subsidization of different parts of a newspaper, Carr argues, is the only way that quality content has managed to keep being produced, and once that model goes then so does the quality.

There's a lot of possibile futures here, and I wish Carr's book was twice as long so he could explore some of them more seriously. In the end, the book is a survey more than a deep investigation, but it is a survey that asks the right questions and we could use more books like this to chart, and perhaps help alter the course, of technological change and its many social impacts.

Independent Bookstores in the UK

I didn't mean to write about things like book sales and so on, but one thing leads to another, so here I am.

The Guardian has an article about the shape of the UK book market and the surprising health of independent bookstores. Here is a graph based on numbers taken from the article (and taken, in turn, from the consumer research group Books Marketing). Click it to see it bigger.

It shows that from 2003 to 2006 the big winners are the supermarkets and the online retailers - the twin jaws of the digital vice. No surprises there.

It also shows that the big losers are the chain bookstores (Waterstones in particular) and the direct mail book clubs. Again, no surprises.

The green line is the independent bookstores.  They are still bigger (for a few years anyway) than online retailers and have actually improved their share from 15.6 to 15.9% of the market.

There are some other statistical nuggets in the article. See if you can make sense of these:

Figures vary for the growth of book sales in Britain, but each source points to at least small but steady growth. The Publishers Association says that 459m books were sold in the UK in 2005, slightly fewer than in 2004, but ahead of the three previous years. Nielsen Bookscan, which only counts books sold at retail level (not including sales to schools for example), says that 225m books were sold last year in Britain with a value of £1.7bn. Nielsen draws a straight line of gains from 2001 when its records show 163m books sold with a value of £1.2bn. Waterstone's reckons the market is growing at a more sedate 2% a year...
If not exactly thriving, the independent book store is not in as dire straits as many fear. According to the Booksellers Association, a trade group for retailers, the number of independents has fallen from 1,700 in 2000 to 1,400 today. But that figure now appears to have stabilised. There are an increasing number of small publishers targeting the independents...
"Publishers are falling over backwards to sell to supermarkets at very large discounts," he says. "The focus on celebrity memoirs and potential bestsellers is relentless and the proportion of book sales by authors in the top 50 is going up and up. The middle band of authors is finding life increasingly tough. The spread has diminished and that trend will continue in the short term at least as competition gets more intense. It is having a substantial impact on what is published."

Infotopia

Cass Sunstein is a University of Chicago Law Professor whose book, Infotopia, I got to read on a recent trip. The subtitle is How Many Minds Produce Knowledge and it's all about mechanisms - particularly Internet-driven mechanisms - for combining the insights of many people to produce, as he says, knowledge. It's a good, thought-provoking book and I recommend it.

Here's something I had to struggle with: Sunstein is a big proponent of using prediction markets to make some kinds of decision, and he is very doubtful about the merits of deliberation: sticking people in a room and talking things out to come to a decision.

My first reaction is that I feel deliberation should be workable, and my first reaction to markets is suspicion - enhanced by the fact that Sunstein comes from the University of Chicago, where the very right-wing Economics and Law movement came from. I don't know Sunstein's politics, but it's clear from the book that his heart is in the right place. He believes in the importance of marginalized people whose opinions and knowledge are too often overlooked, and in the contributions they can make. So is there a case for markets in the situations he's talking about, in the aggregation of knowledge?

Let's think about my hostility to markets.

Those of a libertarian right-wing outlook see the source of social problems as hierarchy, centralization, planning, bureaucracy, socialism, and the state. Socialists see the source of social problems as the concentration of wealth, privilege, and ownership in the hands of the few.

The dispute spills over into the realm of the mechanisms we look to as bulwarks against oppression.
Those of us on the left, believing in the ability of wealth to divide and conquer, look to collective action as protection against private ownership of property. It's the old story - hang together or hang separately. Co-operatives, co-operation, unions, solidarity.

Those on the right see collective institutions as bearing the seeds of oppression and coercive suppression of individual liberty.  They look to individualistic mechanisms such as property rights and markets as protection. Free exchange respects individual autonomy and liberty - but those of us on the left see the potential for exploitation, the rule of money, and marginalization of those without the price of entrance into the market.

An economic way of phrasing this is that both sides see principal-agent problems as a root cause of oppression. The potential for moral hazard is there in both collective organizations and in any organization with market power: the temptation to oppress, to deceive, to lie, to mislead are all present. Failures of information (asymmetric information among others) and problems of transaction costs are ubiquitous.

In all this, it's worth reflecting on what is central and what is secondary. What matters, after all, is liberty, equality, fraternity (and sorority as well). The questions of markets, voting, democracy, deliberation, are instrumental questions. To some extent we can separate them from the primary problem. My suspicion of and distrust of markets comes from a belief in the alienating effect and excluding effects of turning things that matter into commodities to be bought and sold - particularly in highly unequal societies.

So when it comes to using markets as a deliberation mechanism - including markets using virtual money - then my suspicions may not be relevant. Yes, the proponents of these instruments hark back to Hayek - whose politics I shy from -  and his The Use of Knowledge in Society. Does this mean I must object to the use of, say, prediction markets  to gain information? A clear-sighted view must say no.

Perhaps, at the same time, it would do me good to question the use of deliberation as a means of making decisions and pooling information. Feminists have long maintained, after all, that marginal groups get excluded from such discussions in a statistical manner, if not an absolute one.

Reading Infotopia was a great way for me to address these unasked questions because Sunstein himself presents the strengths and weaknesses of both sides of his argument. He may be a lawyer, but he's not in court here, arguing for his client at all costs. The book has a balanced, open-minded approach that is a refreshing change from Some Other Book I've been reading lately. (Or maybe he knows that readers respond to indications of open-mindedness, and he's just a more skilled proponent of his own point of view? Whatever, it works). His equivocation and insistence on making distinctions is welcome. It prompts questions in the reader, rather than diverting the reader past the problems.

So I recommend this book. It'll make you wonder what's happening when you are next with a group of people trying to talk your way to a decision. And it makes me want to look at some prediction market software for use at the workplace.

It does have limitations. The big one is that it's really just a starter.  It could do with going a lot further in addressing the uses and limits of the tools he investigates. Markets, for example, seem suited only to questions that have numerical answers (price) or binary answers - but he doesn't mention this limitation or what follows from it. He doesn't distinguish cases where membership in a group is open from where it is closed, or compulsory participation versus voluntary. He briefly mentions a hybrid technique called Delphi, with a mixture of deliberation and voting, but only briefly. There is little about referenda, demand-revealing or otherwise, and little about other forms of voting or methods for achieving consensus in an inclusive fashion. Finally, he does not address the question of learning. Discussion, after all, is not just about decision-making but is also about learning, while markets separate the two. So the reader is left with a lot of open questions at the end of the book. But these would have turned it into a much bigger book too, and right now it's good and short and thought provoking, which is plenty.

Sea Squirt

Best sentences of the day:

The juvenile sea squirt wanders through the sea searching for a suitable rock or hunk of coral to cling to and make its home for life. For this task, it has a rudimentary nervous system. When it finds its spot and takes root, it doesn't need its brain anymore, so it eats it! (It's rather like getting tenure.)

Daniel C. Dennett, Consciousness Explained, p. 177.

Why Globalization Works: Notes Part II

Finally finishing my notes on Martin Wolf’s book. I was not very impressed by the first third of the book, but the remainder is much better, although it does have some big flaws. In fact, the book would be a better one if Wolf had limited it to Part III (chapters 9 to 13) in which he tackles the arguments of what used to be called the anti-globalization movement. These chapters deal with the economic issues as Wolf sees them: inequality, trade, the role of corporations, the role of the state and the WTO, and finance.

So let’s deal with the good things first.

Wolf’s book is an argument against the “critics of globalization”, or “new millennium collectivists” (henceforth the Cs of G). And Wolf is, to be fair, faced with a problem because the movement (which hardly seems to be one any more, unfortunately never having recovered from the massive kick in the gut it received on 9/11, but that’s another story) is just that – a movement. As a result it is, like most political movements, a mish-mash of people with conflicting ideas and beliefs, united only in their opposition to corporate-led globalization, and this makes it difficult to argue against. (Strangely, Wolf seems to think this lack of analytic rigour is indicative of woolly thinking on the part of everyone in that movement, rather than the unavoidable messiness of active coalition politics.)

Wolf tackles the problem by reducing the concerns of the Cs of G to a set of economic issues (see chapter list above) and splits each of those into a set of separate arguments, and then tackles each one in turn. This structure in itself is useful no matter what side you are on, as it brings some organization to the muddle of overlapping issues that are gathered under the heading of globalization. The end result is worth reading even if you disagree, especially because some books on the economic end of the Cs of G have been so sloppy (hello there Jerry Mander and Edward Goldsmith, whose “The Case Against the Global Economy” is a prime example).

Wolf makes a strong case on some issues (eg, he makes a good case that nation states still have a lot of power, despite what some claim), on other issues he puts out some arguments and facts that make you think (about inequality, for example) and highlights shoddy arguments (such as comparing the sales figures of the biggest multinationals to the GNP of nations). On other issues he is open minded enough to conclude that the picture is muddy, so for example he acknowledges that Naomi Klein has a point about export processing zones (p 241), that Dani Rodrik has some good things to say about the process of economic growth (p 204) and that Oxfam has some good things to say also about the traps that export-oriented countries have fond themselves in (p 204). He does have his prejudices though: for example, when it comes to so-called infant industry protection you can see his distaste at such an anti-free-trade strategy in his writing, and he is more damning of them than many others are, without really making the case. About the only prominent economic issue the book misses is the privatization of knowledge happening by the extension of intellectual property under the WTO TRIPS agreement, even though this is a major issue for many Cs of G. It's an odd omission.

On the down side, Wolf really fails to see beyond the strictly economic side of many concerns. He dismisses Klein’s No Logo, saying that “analytically, No Logo adds nothing to the debate about globalization”. I disagree with him actually, but regardless, books can be important for reasons other than analytical contributions. Upton Sinclair’s The Jungle added nothing analytically to the debate over working conditions in Chicago meat-packing plants, but it was the most important and influential statement about the scandal anyway. Similarly, No Logo was important because Klein identified and distilled into a single, thorough book, the concerns of a heterogenous and disparate movement, and did so with brilliant timing. The book came out a month or two after the Seattle protests, which was the first time most people realized anything was happening, but Klein had been working on No Logo for four years by then. She was ahead of the game, and by being so she defined the terms of the debate. A counter-argument four years on is beside the point. And with an economist’s blinkers, Wolf completely ignores or dismisses as unimportant the cultural portions of Klein’s book: the intrusion of advertising and commercialism into all aspects of life, the erosion of public spaces (physical and otherwise), and so on.

Child labour and sweatshop labour are other issues where Wolf does not see a  problem. Wolf can see only one question of importance: is the wage paid by MNCs higher than that people would receive in their absence? If it is higher, then MNCs are to be applauded rather than derided. But there is another side to the story and it is to do with responsibility, proximity and culpability. If oppression is taking place on the other side of the world and has nothing to do with us, then there is little point to being angry. But if our neighbours become involved in oppression, then there is a chance that we can do something about it. The fact we can influence them makes action worthwhile even in the case that our neighbours’ oppression is slightly milder than the original. This seems an elementary ethical point, but Wolf and other economists (Paul Krugman for one) just don't get it, instead dismissing this as some kind of moral queasiness rather than the practical concern that it is. Is this a result of his trade as a commentator or a cause of it? I don't know, but Wolf seems to have little idea of how social movements work or why they arise.

But despite that, most of us could usefully read more books that we disagree with, and this is a useful book for the anti-globalizer to read. It is not what its fans claim (“a devastating intellectual critique”) but it is a thorough and well-informed (comments on Naomi Klein and other occasional lapses aside) look at the economic issues. Just skip Chapters 1 to 8.

Online bookstores

I see the book is now getting listed on some online book stores. A most unprofessional "yayy!"

Link: Amazon.com: No-one Makes You Shop at Wal-mart: The Deception of Individual Choice.
Link: Amazon.co.uk: No-One Makes You Shop at Wal-Mart: The Deception of Individual Choice: Books.
Link: chapters.indigo.ca: No-one Makes You Shop At Wal-mart: The Deception Of Individual Choice.

Why Globalization Works: Notes Part 1

This is part one of some notes taken while reading Why Globalization Works by Martin Wolf, and it covers parts I and II of the book. I’m reading it because it is a well-respected book putting the case in favour of globalization, a project I am in general opposed to (at least the way globalization is usually defined).  It is a “brilliant book” (Lawrence Summers, President, Harvard University), a “devastating intellectual critique of the opponents of globalization” (Mervyn King, Governor of the Bank of England), and “a definitive analysis” (Kenneth Rogoff, Harvard University). Whether I’ll get around to part two of these notes is open to question.

                                                                                          * * *

Every academic discipline has its own way of putting itself at the centre of the world. Chemists point out that everything around us and inside us is made of chemicals. Physicists say that cosmology asks the only questions worth answering. Literary theorists say that there is nothing outside the text, and the interpreters of texts (ie themselves) are therefore the ones who bring meaning to the world. The economists’ version of this conceit is to claim that markets are responsible for all the good in the world. It is a conceit that Martin Wolf indulges in the early chapters of Why Globalization Works, and it shapes his argument in the rest of the book, so it is worth inspecting.

Wolf overreaches when setting out his claims, both in terms of what a market is and in terms of its centrality in the story of human progress.

For most of us, the market is that part of the capitalist system that involves commercial exchange. Such a definition involves two limitations. First, it defines “the market” in the sense that we usually use it, as part of capitalism: people have had markets for thousands of years, and yet when Adam Smith wrote about the wealth of nations it was not these markets that he was writing about. Second, it emphasizes that modern capitalist societies are many faceted, and some of these facets --- political democracy, the modern state, scientific research, and portions of culture, are nevertheless largely outside “the market”.

Wolf traces the origins of market-based wealth production back before the industrial revolution and the founding of capitalism, to a thousand years ago. He claims that we are living in “the millennium of the market” (p. 43) and as evidence of this points to the fact that population and economic growth started well before 1800. Yet correlation is not causation, and the existence (p 41) of commercial activity in China during the Sung dynasty (960 – 1279) does not demonstrate that markets have driven progress. Perhaps this is splitting hairs – the book is about the modern age after all – but I don’t think so. Wolf is setting the stage for an argument that an expansion of global markets is what we need, and if the stage is built on rickety foundations that argument cannot hold. There is little in his argument about “the millennium of the market” that is convincing.

The second way in which Wolf overreaches is of more immediately obvious importance. In talking about the role of the state in liberal democracies, Wolf conflates several meanings of “markets”. As I said above, to observer that we live in a capitalist society does not mean that all elements of our society are capitalist. We also live in a scientific society, a technological society, a cultural society, a welfare-state society and a hierarchical society – do these aspects of the world have a part to play too? What Wolf does in his discussion of market economies is to move back and forward between a narrow meaning of markets (capitalist exchange) and a broader meaning (the entire society of which it is a part), and the result is confusion.

This confusion is most obvious when Wolf discusses opposition to the market (pages 54 to 55). Wolf claims that “The market economy does not merely support its critics, it embraces them”. Here he is defining the market economy broadly enough to include those who oppose the actions of markets, and goes on to assert that markets breed freedom. Yet to look at the history of freedom in western Europe is to see a continual struggle to broaden franchises to include non-property owners, women, people of colour, and so on that was carried out by opponents of the property-owning classes, who would have been quite happy to keep things as they were. The growth of freedoms and rights within the workplace are also the result of countless years of cumulative struggle and pressure from workers. To simply say that “market economies” provide freedoms is insufficient, because Wolf is about to argue that we need to enlarge the scope of private industry, restrict the role of government, and (between the lines) remove bargaining levers that workers and the disenfranchised may have. The modern liberal democracy is the result of a continual pulling and pushing of many forces, of which the market is only one. Its future shape will be determined by the balance of power between all parts of society, not by the market alone. By presenting liberal democracies as “market economies”, as many economists do, Wolf underplays importance of those other forces.

Wolf’s portrayal of history has other lacunae. Repeatedly he defines one of the important roles of the state as providing security of property rights, so that long-term contracts can be made with assurance. Yet historically the role of the state at some crucial points in history has been to redistribute property. The enclosure movement in the early 19^th century was an example of property rules being redefined, people being expelled from what was previously thought of as their property, in order for the land-owning classes to gain more land. This is not “security of property”. The same is apparently happening in modern-day China.

Meanwhile, his view of the market portion of the economy is rose-tinted. He is casual about many market failures (pervasive asymmetric information problems are noted, but “Happily, there are solutions” – p 47). He sees innovation as a function located entirely within the private sphere: “innovation rather than price competition is the central feature of the market process” (p 51), “Innovation then does not come from outside the market. it is hard-wired into capitalism” . In considering these claims it is worth reflecting that some of the biggest innovations of recent years have come from national and international government actions taking place outside the market. The development of the Internet, surely one of the major technological innovations of the last 50 years, is one such: the networking mechanisms, the programming languages, and the web browsers on which it is built were developed largely in the labs of DARPA and the NCSA in the US, CERN in Europe, and AT&T (during the years in which it was a monopoly) in the US. The market may have helped to bring the fruits of the developments to consumers, but it did not make the big innovations. Yet such activities took place within market economies, and so Wolf attributes them to the market.

It is hardly surprising that he concludes that governments need only provide some assurances that business as usual can take place, and the entrepreneurs will innovate. Looking at the post-Soviet economies, one could also argue that if entrepreneurs are to innovate rather than to plunder the resources of their society, they must be prompted, cajoled, bribed, and funded by the state in order to do so.

One final gripe. In these early chapters Wolf lets his lack of respect for anti-globalization arguments come to the fore, and it doesn’t help his case. He dismisses the protestors as “spoiled children” (p 10). He quotes (p55) a passage from Naomi Klein’s No Logo (one that was also quoted in The Economist’s review of the book) as evidence that she indulges in “paranoid fantasies”. The quote in question starts in mid sentence, and the implied meaning is directly opposed to the actual meaning in Klein’s book, as she pointed out to The Economist when it first published the quotation. Elsewhere (p 11) he quotes a banner from a protest march “replace capitalism with something nicer” as an example of something that is not “the route to a tolerable future” --- as if a banner ever captures deep or subtle thoughts. Banners may be simple, but arguing against banners in a 400 page book is also. This is not honest argument.

In short, while setting up his argument for the remainder of the book, Martin Wolf paints a picture of the world that is undeniably broad-ranging and widely read, but which remains shallow and distorted. The positive qualities of innovation and freedom that he associates with markets are mainly qualities of modern liberal democracies as a whole, and are qualities with many diverse sources. The early chapters of his book are a statement of his point of view, and interesting as such, but they are not even handed and they are not convincing.

 

Update: Part II is now posted.