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John Q

For quite a while now, I’ve been making the argument that, in an information economy, the relationship between investment, production and profit, central to capitalism, no longer works. Here’s an early statement from my Giblin lecture in 2005.

to the extent that innovation and productive growth arise from
activities that are pursued primarily on the basis non-economic motives, the link
between incentives and outcomes is weakened. This in turn undermines the
reationale for policies aimed at sharpening incentives and ensuring that everyone
engaged in the production of goods and services is exposed to the incentives15
generated by a competitive market. Such policies represent the core program of
‘economic rationalism’, the set of ideas that dominated Australian public policy in
the 1980s and 1990s.

I recently reviewed two books by Jonathan Haskel and Stian Westlake. Their 2017 book, Capitalism without Capital presented a relatively optimistic view of a market economy in which “intangible capital” plays a central role. But their followup Restarting the Future: How to Fix the Intangible Economy, is much bleaker

“When we think about the state of the economy today, it is hard not to think, it wasn’t supposed to be like this,”

My assessment was that

The real intangible here is likely to be monopoly power, generated either by intellectual property laws or control over platforms.

My conclusion

Haskel and Westlake discuss traditional spheres of government activity — the defence-related R&D that gave us the internet, for example — but they don’t consider whether governments should become active investors in intangible capital.

The possibilities are full of promise, but also potential pitfalls. Governments could expand the informational role of public media services like the ABC, reversing the cuts of recent decades. They could systematically strive to make information of all kinds available in an easily searchable form, bypassing advertising-driven search engines like Google. And they could provide platforms for social media on a common-carrier basis, requiring easy interconnection and discouraging the use of “algorithms” (a misnomer) to keep people inside a “walled garden.”

It’s easy to point to the problems that would arise if these possibilities were pursued in a world where trust in governments is low. But these are the kinds of arguments that need to be made when the existing economic model is failing so clearly.

Despite the limited scope of the reforms they consider, Haskel and Westlake’s work tackles fundamental questions considered by few other writers. Restarting the Future is essential reading for anyone interested in the future of capitalism, or in the possibility of a post-capitalist future. •

AI is coming for bullsh*t jobs

by John Q on October 8, 2022

There’s been a lot of excitement about Artificial Intelligence (AI) lately, much of focused on long-standing “big questions” like “is AI really intelligent” (short answer, no)

I don’t have an answer to that, so I’ll stick to the easier questions like “will a robot take my job”. I’ve argued before that this isn’t a good way to think about the issue. New technology has been changing the way we work for centuries, and will continue to do so. But for particular jobs being transformed by technological change, it is certainly relevant.

One area that’s moved ahead very rapidly is the generation of human-like text. The cutting edge here is a program called GPT-3, launched in 2020, which can produce impressive looking philosophical discussions. The underlying research has already been commercialised with products like Jasper, which has the much more prosaic (literally!) goal of producing advertising copy, blog posts and so on.

Jasper clearly won’t pass a Turing test if you ask for anything complex, but it is very good for its intended purpose: turning out text that looks as if a human wrote it. This has big implications for a large category of jobs, notably including many that the late David Graeber called “bullsh*t jobs”.

As an example, a fair bit of the content of a typical newspaper consists of press releases that have been lightly edited and perhaps spiced up a bit. With Jasper, the time taken for this task goes from an hour or so to a few minutes. For that matter, the press release itself can be generated from a few prompts in a similarly short time.

As with previous tech advances, that’s not likely to create mass unemployment any time soon. But it will mean that this kind of routine copywriting will be done much faster, by writers who have the skills to give programs like Jasper the right prompts, and then to touch up the final output. And this will extend to lots of admin jobs that have previously been immune from technical change.

Lots of middle management jobs, for example, involve writing memos and reports justifying one corporate decision or another. After you read a few, they all seem the same. AI can distil the essence well enough to mimic the style. After that, it’s just a matter of fitting the verbiage around the desired conclusion.

Over the fold, a few examples.

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Back in 2011, I wrote a post arguing that

self-defense (including collective self-defense) is justified only to the extent of restoring the status quo ante bellum. That is, having defeated an aggressor, a country is not justified in seizing territory, unilaterally exacting reparations or imposing a new government on its opponent. Conversely, and regardless of the alleged starting point, countries not directly involved should never recognise a forcibly imposed transfer of territory or similar attempt to achieve advantages through war.

What does this claim mean in the context of the war in Ukraine? In my view, it means that the Ukrainian government and its international supporters should seek a ceasefire in which Russia withdraws its forces to their positions of 23 February, without conceding any Russian claims regarding annexations or (if they still operate after the sham referendums) the Luhansk and Donetsk separatist republics.

It is already evident that the Russian army can’t hope to secure a better outcome than this. Judging by hostile leaks and popular opposition, lots of Russians, including in the military have recognised this, even if Putin hasn’t. But, on current indications, it will take a long time before the Ukrainians can recover all the territory currently occupied since the invasion. An early Russian withdrawal would liberate tens of thousands of people from a brutal occupation, as well as preventing vast loss of life on both sides (bearing in mind that the Russian army will increasingly be made up of conscripts, including Ukrainians). And more of the aid flowing to Ukraine could be used for rebuilding, rather than expended in fighting.

A ceasefire wouldn’t imply that Zelensky was going back on the pledge to recover all the territory of Ukraine, including Crimea. The Ukrainian position would be the same as it was before the invasion. But it was clear then that the areas under occupation couldn’t be recovered by force and that is probably still true, particularly as regards Crimea.

An obvious question is whether a ceasefire would give the Russians the chance to rebuild for another attack. In my view, the opposite is more likely. By next year, Russian energy exports to the EU will have ceased, and Russia’s technical capacity will have degraded further through the effects of sanctions and the flight of skilled workers. Meanwhile, Ukraine will have the chance to train its enlarged army, and reorient its economy towards the EU.

Of course, wars change things and an exact return to the status quo ante bellum is impossible. The dead are still dead, the crimes committed during the war will not be absolved, the aggressor can rarely be made to pay full reparation, and so on. Both sides will be worse off than if the war never happened.

I’d be interested in thoughts. However, anyone thinking putting forward a pro-Putin, or anti-anti-Putin position should stay quiet. No comment of this kind will be published, and the commenter will be permanently banned. If you’re in doubt, that probably means you shouldn’t comment.

Why Australia needs an elected President

by John Q on September 13, 2022

Here’s a piece from my Substack blog. Although the references are Australian, much of the argument is relevant to all the realms of the British King, including Britain

With the death of Queen Elizabeth, the issue of an Australian republic has naturally arisen. The immediately following question is whether we should support a ‘minimal’ republic, as similar as possible to our current system, or replace the Governor-General with an elected President.

The starting point for both monarchists and supporters of a minimal republic is the claim that ‘the existing system has worked well’. This is incorrect in two crucial respects.
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“Republican” as an identity

by John Q on September 5, 2022

Like John H, I was struck by Ross Douthat’s latest piece in the New York Times, but, unlike John, I wasn’t much interested in engaging with the argument, such as it was. Rather, I took at as providing insight into the extent to which being a Republican is central to Douthat’s identity, over-riding any concerns about democracy, justice and so on.

In this respect, Douthat is similar to the great majority of the “good Republicans” implicitly distinguished from the MAGA fascists in Biden’s recent speech (and also in Hillary Clinton’s reference to the “basket of deplorables”). Just as Douthat is the archetypal intellectual in this respect, Susan Collins is the archetypal politician. They want to be seen as decent and caring, but in the end, they are Republicans first and foremost. And it is the Douthats and Collinses who will, in all likelihood, destroy American democracy.

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The end of the Bitcoin monster?

by John Q on August 29, 2022

For a few years now, I and others been banging on about the environmental cost of Bitcoin, and similar cryptocurrencies. This cost from the electricity wasted on the pointless calculations used to ‘mine’ Bitcoins, under the ‘proof of work’ protocol used to ensure the validity of entries in the Bitcoin blockchain. The cost is huge, about the same as the energy use of a medium size country.

For almost as long, we’ve been promised an alternative ‘proof of stake’, in which the integrity of the blockchain would be protected by participants putting up some of their cryptocurrency as a ‘stake’ (more details here). But like nuclear fusion, proof of stale always seemed just over the horizon.

Now, it seems, it may be going to happen. Bitcoin’s biggest rival, Ethereum, has been testing a proof-of-stake blockchain for some time, in parallel with its existing proof-of-work chain. On 15 September, it is planned, the two will be merged in an event creatively called The Merge, and future operation will be proof-of-stake.

If this succeeds, the electricity consumption of Ethereum will be reduced by around 99 per cent. That will make it, in the words of Douglas Adams, mostly harmless. That doesn’t change the fact that, like cryptocurrencies in general, Ethereum is also pretty much useless. Its most notable function is as the basis for pricing non-fungible tokens (NFTs), digital certificates asserting ownership of an image (which anyone else can duplicate, but not own). That’s frivolous but no worse than collecting baseball cards or postage stamps (remember them?).

The big payoff from successful proof-of-stake is that it provides a way to kill the Bitcoin monster once and for all. Rather than banning Bitcoin, all that’s necessary is to ban proof-of-work. If Bitcoin made the transition to proof-of-stake, well and good. If not, no problem. Either way, its disastrous drain on world energy would be over.

All history is presentism

by John Q on August 23, 2022

Earlier this year, I wrote a piece in defense of presentism, discovering just before I posted, that the same title had been used (also this year) by David Armitage, Professor of History at Harvard.

It was good to know that I wasn’t alone, but as Armitage made clear, “presentism” has been “a term of abuse conventionally deployed to describe an interpretation of history that is biased towards and coloured by present-day concerns, preoccupations and values”. A fairly standard version of the critique was given by Lynn Hunt, then President of the American Historical Association, in 2002 [1]

It seems however, that things are changing fast. A couple of weeks ago, James Sweet, Hunt’s successor as AHA President, wrote a more or less routine denunciation of presentism , which unsurprisingly picked on the 1619 Project as Exhibit A (for balance, the article also criticised the misuse of historical evidence by Justices Thomas and Alito). This produced a hostile response which forced Sweet to attach an apology to his piece.

The negative response to Sweet’s article reflects in part the intensity of the debate around racism in the US and about the 1619 Project in particular. But it also attracted more fundamental critiques, like this one from Kevin Gannon who concludes “all history is presentism”. As Gannon observes,

the very act of selecting a topic, arranging evidence , and presenting one interpretation of all that as more legitimate than the others—this scholarly ritual is absolutely shaped by the concerns of our present. That it even exists is because of “the concerns of the present.”

As I mentioned, exactly this point was made long ago by critics of “value-free economics”. Hopefully, value-free history will soon join value-free economics in the dustbin of intellectual history. At a minimum, we should see the end of the lazy use of “presentism” as a pejorative.

fn1. This orthodoxy is commonly traced back to Herbert Butterfield’s critique of the Whig Interpretation of History, but I’ve seen some suggestions that this is a misreading.

All or nothing

by John Q on August 11, 2022

I was going to do some more work on this post, but it’s being overtaken by events, so here it is

Among the many things to be depressed about at the moment, the impending end of US democracy is near the top of my list. The recent Republican primaries brought that one step closer. It’s now clear that unless they are stopped Republican officials in most states are ready to overturn any election result they do not like.

A necessary though not sufficient condition stop the Republicans is retaining Democratic control of the US Congress at the midterm elections in November with a margin sufficient to end a filibuster in the Senate, and pass voting rights legislation preventing state officials from overturning elections or returning bogus electors in a presidential election.

There are two broad strategies being urged on the Democrats. The first pushed by commentators including David Shor and Ruy Teixera is to win back the ‘white working class’, that is, white voters with low education, particularly in rural areas. Some but not all ‘white working class’ voters are wage workers with low income and wealth . However a large portion are relatively well off retirees. The central idea for Shor and Teixera is to soft pedal cultural issues and focus on promising economic benefits from moderately progressive, but not radical economic policies.

Whatever the merits of this approach in general, it’s a recipe for failure this time around. The incumbent party usually loses ground in midterm elections unless the economy is doing spectacularly well. That’s not the perception are the average voter, concerned more about inflation and shortages than about unemployment. A pitch to centrist voters might limit democratic losses but is highly unlikely to secure the victory that is needed.

The alternative is to make the election a referendum on the Republican Party, including Trump, the insurrection, the Supreme Court, and Christian nationalism. The starting results of the abortion referendum in Kansas suggest that if the election can be framed in these terms, the Democrats had a strong chance of winning and of forming a coalition that can win again in 2024. A big success would also split the Republicans, potentially emboldening business conservatives to break with the current Trumpist majority.

Mobilising single-issue pro-choice voters is part of the strategy. But, as far as possible, the aim should be to present the attack on abortion rights as part of a comprehensive package of opposition to freedom and democracy. One part of that is rejecting any suggestion of moving on beyond the insurrection. Trump and everyone involved should be prosecuted, making it impossible for the rightwing media to bury the issue as they have done. Christian nationalism should be used in the same way as the right used spurious ideas like ‘neo-Marxism’ and ‘critical race theory’ to attack liberals and centrist Dems alike.

I’ll be interested in thoughts on this, but not in any commentary to the effect that Democrats and Republicans are the same. Anyone who wants to express this view is welcome to take it here. https://commons.wikimedia.org/wiki/File:Ernst_Thaelmann_Berlin.JPEG

Mental health and mental fitness

by John Q on August 2, 2022

Until now, I’ve always thought about mental health as the absence of mental illness, much as I have typically thought about the absence of physical illness. In both cases, health is the default state or unmarked category.

But as I have gone through the Covid pandemic, and become more pessimistic about the state of the world, I have reached the view that a better analogy is with physical fitness. That is, something that requires sustained effort to achieve and maintain, and is rarely fully achieved.

In particular while I have previously thought about depression as a mental illness, it’s difficult now to distinguish it from ordinary sadness. My congenital optimism now seems more like delusion. Maintaining mental balance is now hard work.

Not surprisingly, I’m not the first to come up with this idea. Searching for “mental fitness” produces lots of hits, mostly fairly recent. The majority are boosterish, introducing and promoting the idea, rather than acknowledging the difficulties associated with it. Nevertheless, I’m hoping to get some useful suggestions. I’d be interested in readers thoughts.

PS: illustrating one of the difficulties of maintaining physical fitness, I came off my bike the other day and broke my wrist. So I’m attempting to blog by dictation. It’s a challenging mental exercise

Conferences, Covid, Climate

by John Q on July 28, 2022

As borders reopen and Covid-related restrictions are relaxed, lots of academics are celebrating the return of in-person conferences. I’m not one of them. Although I miss a lot of aspects of conferences, I’ve tried to avoid indoor meetings since the pandemic began, and there’s no reason to change that yet. And with the climate disaster getting worse all the time, I want to minimise, or at least reduce, air travel.
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The Kosovo precedent

by John Q on July 22, 2022

In the early days of the Ukraine invasion, one of the main lines pushed by Putin’s defenders was that the expansion of NATO posed a threat to Russia and that Ukraine was about to join. This didn’t stand up to even momentary scrutiny. The Baltic States had been members since 2004 without doing anything to threaten Russia.

And while Ukraine’s constitution included a goal of joining NATO, Zelenskiy was describing this as a ‘remote dream’ even before the invasion took place, and clearly indicated willingness to abandon the idea in return for peace.

But there is an important sense in which NATO shares responsibility for this disaster. The US intervention in Kosovo, including the bombing of Belgrade, was undertaken by NATO, to avoid the need to get the support of the UN Security Council, where Russia had a veto. This was a substantial breach of international law, followed by a much bigger breach in the invasion of Iraq.

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When I first found out that the UK Treasury proposes to issue Non-Fungible Tokens (NFTs) as part of a general push to make Britain a world centre for crypto-currency, I assumed that this was a Boris Johnson stunt. The obvious model is El Salvador, where Johnson-style demagogue Nayib Bukele has made Bitcoin legal tender, with results ranging from disappointing to disastrous depending on who you read.

It turns out, however, that the source of the push is Rishi Sunak, until recently Chancellor of the Exchequer and now the favourite to become Prime Minister when Johnson leaves office. I don’t know anything about Sunak, but assumed on the basis of his job title that he would be a believer in “sound money”, hostile to, or at least sceptical of dodgy innovations like crypto.

I’m not fully on top of the issue yet, and would welcome clarifications from anyone better informed. It appears that Sunak is at least as confused as I am, and is pushing different, contradictory proposals.

The first to emerge, in 2021, was the idea of a central bank digital currency (CBDC). Such a development, would, in my view be kryptonite for crypto as it now exists, providing all the supposed benefits with none of the energy waste, scams and volatility we now observe. A CBDC would have radical implications which are still being discussed. In particularit, in effect, allow households and businesses to bank directly with the central bank, rather than holding digital deposits in existing banks. If successful enough, it could amount to nationalisation of the banking sector.

Unsurprisingly, banks and their advocates hate this idea. Here’s a critique from the Cato Institute, pointing to the likelihood that a CBDC would “give the central bank and the politicians that set its mandate the tools to much more easily manipulate economic activity.” https://www.cato.org/commentary/why-sunak-should-think-twice-about-central-bank-digital-currency pointing

It looks as if the predictable opposition of the UK financial sector has killed off the CBDC idea. Instead, Sunak has been pushing proposals to put the UK at the centre of the existing crypto market. Strikingly, it’s the dodgiest forms of crypto (NFTs and “stablecoins”), that are being pushed hardest.

As I’ve argued in the past, the fact that something as provably valueless as Bitcoin is now an accepted part of the financial system is evidence that any claims about the efficiency of financial markets are indefensible. The same can now be said about the idea that the UK Conservative party stands for sound economic management.

Following up my initial response to Lane Kenworthy, I decided to approach the question from a different direction and ask “Would we be better off without corporations?”. That is, I’d like to consider a society in which all large enterprises were publicly owned. To be clear, I’m talking about corporations in the ordinary sense of the term, with large numbers of shareholders and employees, not about the (relatively recent) use of company structures to produce tax benefits and limited liability for small businesses. There would still be room for owner-operated private businesses, worker-controlled co-operatives, partnerships and perhaps some other forms of business I haven’t thought about.

I won’t get into disputes about whether this would constitute socialism, except to say that it would be radically different from any version of capitalism we’ve seen so far.I’m also going to reverse the burden of proof implicit in Kenworthy’s approach. I start from the assumption that the expansion of corporate power under the neoliberal (or market liberal) policy package of privatisation, financialisation and deunionisation that has prevailed since the 1970s has been bad for most of us.

Given that neoliberalism is a term that’s often used loosely, I’ll try to be more specific about the adverse effects that can be tied specifically to the resurgence of corporate power.

The most obvious is the growth in inequality that has coincided with the rise of neoliberalism and corporate power. Virtually every aspect of neoliberal policy reform from increasing capital mobility to union-busting to flattening of tax scales has contributed to increased inequality. Moreover, they all reinforce each other.
?So, if we can do without for-profit corporations without incurring significant economic costs, we should.

I started looking at this on a sector-by-sector basis but then realised I would need to write a whole book in reply. So, over the fold, some disorganized thoughts
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Would Democratic Socialism be Better?

by John Q on July 5, 2022

(Reposted, as I previously forgot to open comments)

I’ve just received a copy of Lane Kenworthy’s latest back Would Democratic Socialism be Better (Shorter LK: “capitalism, and particularly social democratic capitalism, is better
than many democratic socialists seem to think”).

The book is a follow-up to his Social Democratic Capitalism, which made the case that the USA would be better off moving to a Nordic model of social democracy.

I’m hoping to make a longer response soon, but I thought I’d begin by summing up the argument as I see it, and the reasons I’m unconvinced.

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For a while now I’ve been arguing the political crises in the developed world can be understood as the breakdown of a two (dominant) party system in which power alternated between hard (Thatcher) and soft (Clinton) versions of neoliberalism (or market liberalism), with two sides drawing respectively on the votes of the racist/authoritarian right (Trumpists) and the disaffected left (environmentalists, socialists/social democrats etc) who had nowhere else to go, even if they were entirely unsympathetic to the market-liberal version of capitalism.

As the failures of neoliberalism have become more evident, there’s no longer enough support to maintain two neoliberal parties, so the natural outcome is a three-party system, with Trumpists, neoliberals and a left coalition, all of roughly equal size. In political systems set up for two parties, this creates a lot of instability.

When I looked at this in 2016, it seemed that the biggest losers were soft neoliberal parties, typically nominally socialist or social democratic, which had embraced austerity in the wake of the GFC. Prime examples were PASOK (which gave its name to the process of Pasokification), the French socialists under Hollande and the Dutch Labour party. More recently, though, hard neoliberal parties have also been replaced by the Trumpist right (as in France) or simply swallowed by Trumpism, as in the paradigm case of the US Republicans.

Following recent elections in France and Australia, I thought I’d take another look
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