potlatch

Policy Network mutualism report

Policy Network have just published a new essay collection, What Mutualism Means for Labour, containing various pieces, including a modified version of my previous piece for them, Bringing Mutualism Back Into Business. There's a nice piece in today's Guardian, covering the report, and Tessa Jowell's contribution in particular.

Knowing the Unknowable paper

The paper I posted a few months back, 'Knowing the Unknowable', has now been published by Social Epistemology. Email me if you'd like the final pdf version.

lets rate the credit raters

The credit-rating agencies remain pivotal in the world economy, despite their inability or unwillingness to rate credit-worthiness in a credible way in the years running up to 2007. Wolfgang Munchau's chilling op-ed in today's FT warns that the incalculable possibility of France losing its  AAA credit rating means that the ECB is currently in the business of producing another opaque financial product, to rival the murky mortgage-backed CDOs that produced the (first) financial crisis. This pantomime of quantification, resting on techniques of risk analysis whose authority has collapsed, is therefore adding to the uncertainty of the future, rather than alleviating it.

The problem that policy-makers, banks and investors currently face is the absence of any higher perspective, than those which produced this mess in the first place. Nobody takes the credit-rating agencies seriously or respects their pretence to be independent of economic interests, but they have still managed to monopolised the status of being the meta-perspective. So one question that needs asking, surely, is how this epistemological monopoly might be broken.

To return to an old theme, it's worth remembering that a central ambition of neoliberalism is to erradicate, or grossly undermine, the legitimacy of centralised, expert, professional judgement in public life. Markets are a principle instrument for achieving this, but other techniques (such as crowd-sourcing) also serve this ambition. Phillip Mirowski has argued that, until this epistemological feature of neoliberalism is dealt with, we will never move out of our current impasse. But the paradox of neoliberalism is that it requires elites, experts and centralised agencies in order to facilitate its relativist, radically decentralised world view. The decentralisation of economic choice requires powerful states and regulators; the more recent decentralisation of scientific authority requires institutions such as Google and wikipedia. Credit-rating agencies are another case in point. Curiously, the construction of competitive, decentralised spaces of conduct has a habit of erecting unaccountable monopolies to oversee them, as professional football repeatedly demonstrates.

Politicians largely misunderstand the nature of this organised relativism and the role it offers them. They aspire to projecting  'beliefs' and 'values', in order to shape the world around them. They only occasionally grasp their potential to construct economic reality, when they accuse their opponents of 'talking down Britain' or 'talking down the pound' - as if bond traders might suddenly dump billions of pounds worth of government paper, purely because Ed Balls has passed comment on the length of the dole queues in his constituency. Really, if power is ever to be wrestled back to the realm of politics (if that's what we want) a cannier epistemological strategy is required. And the first place to start would be to take on the monopoly of the meta perspective, held by the credit-rating agencies. Their right to issue 'final' judgement on economic reality needs undermining. There are two ways of going about this.

The first is take a meta perspective on their meta perspective: establish a credit rating agency rating agency. Pull together a group of uncompromised economists (it would be fairly self-selecting, arf arf), a team of analysts (paid more than Moodys and S&P analysts) to analyse and evaluate the scientific performance of the agencies over the last ten years, and anticipate their likely veracity over the next five years. Make it 'official' or house it in the OECD. Each credit-rating agency would be awarded a score, from AAA down to 'junk', which could be used by anyone needing to know how much trust to be placed in credit ratings. If Moody's can raise doubts about the credibility of the French state, then the French state should also be permitted to raise similar doubts about the credibility of Moody's, using similar rhetorical and numerical tropes.

The second is to do the opposite: allow neoliberal knowledge relativism to gobble up even its requisite centralised expert authorities. Establish more markets, channelling more evaluations, to allow people to bet on the future accuracy of credit-ratings. Let investors go 'long' and 'short' on particular ratings and particular agencies. Then establish some equivalent of wikileaks, as a direct competitor to the credit-rating agencies. Individuals with some insight, expertise or mere opinion could submit assessments of the credit-worthiness of banks, firms and governments, to be aggregated and published online. The 'wisdom of crowds' would be directly pitted against the 'wisdom of S&P'. This is far closer to the Hayekian vision of neo-liberalism than the current system, in which a couple of unaccountable institutions dictate what counts as a plausible view of the future. Admittedly, it would eventually unleash a post-modern madness of warring perspectives, without any basis on which to believe anything - but perhaps that's a more honest representation of the present situation, than one in which a few statisticians try to put a numerical value on the future of the modern European capitalist state.

These two strategies pull in two opposing directions, with one seeking a higher form of centralised authoritative expertise, and the other seeking to collapse existing ones. But both strategies would eventually highlight the intrinsic uncertainty of the future, and the futility of allowing arbitrary signs and scores to dictate the terms of political decision-making. In a situation where so many experts have been so repeatedly wrong, the only authoritative and truthful perspective left is one which acknowledges this and accepts the stupidity of seeking precision amidst chaos.

mutual activities

Tomorrow I'll be speaking at the Mutuo annual Mutuals Forum, which will see the launch of the 2011 Mutuals Yearbook (available for download). I've written a short introduction, trying to ram home the political significance of this sector in the current economic climate, arguing the following:

The current economic and political imperative is to promote ways of organising finance, risk, public service and enterprise, that are both dynamic and responsible at the same time. For a while, ‘social enterprise’ appeared to offer a third way, between state and market; today, we’re told that it is the ‘Big Society’. Regulators and policy-makers are seeking principles via which to distinguish the ‘socially useful’ parts of the private sector, from those which seek only to inflate private earnings as fast as possible. Mutualism adds much-needed clarity to all of this, by offering well understood, viable organisational structures, that are entirely alien to both Whitehall and the deal-makers in the City.

On the same topic, I'll be speaking at the ippr on 2nd November, at an event 'Corporate Governance Reform: Can alternatives to share holder capitalism drive growth in a new era economy?'. The other speakers are all much more famous than me, so either I'm going up in the world, or they're going down. It's very hard to tell in the current economic climate.

the neoliberal corpse

The question of whether or not 'neoliberalism' is currently alive or dead depends, as David Harvey keeps repeating, on what you mean by neoliberalism. I opt for a definition of neoliberalism that is, I guess, somewhat idealist, in the sense that it focuses on rationalities, ideas and ideals, rather than on interests, money and class. But at least that way it becomes easier to distinguish it from 'capitalism' or 'financialisation'.

Put simply, neoliberalism is an attack on the conscious, collective pursuit of economic outcomes. Against unions, cartels, socialists, professions, bureaucrats and traditions, it offers the haphazard and unconscious emergence of prices and entrepreneurial success. Hayek's definition of liberalism was a form of political blindness, which trusted that unplanned outcomes were a priori superior to planned ones. And I think we can now safely say that this aspect of neoliberalism has now died. Ironically, this may involve politicians getting even more intimate with business than they were previously, as the news about Ministerial-corporate 'buddy' arrangements indicated. Take the following examples.

Firstly, today's headline news is that the British Prime Minister has pledged to get energy costs down, via a 'summit' between the government and the energy suppliers. This - seemingly - represents a loss of faith in the price mechanism, as an honest representation of the value of energy. Or rather, it represents a significant departure from the Thatcherite and Blairite assumption that well-designed regulators were sufficient to serve the public interest. What, it would be interesting to know, is the regulator not doing or unable to do, that politicians are now holding 'summits' with company bosses? Are the energy companies to be asked to do something other than maximise return to shareholders? Who is to decide what this 'other' thing is (Hayek would demand to know)?

Secondly, Treasury officials have worked closely with British banks, to persuade them to take a 'haircut' on Greek government debt. Arguably this remains consistent with the precepts of rational choice economics, in that banks are in a prisoner's dilemma situation, of requiring some third party intervention, to help them agree to take a shared loss. But again, the spectre of the planner, seeking conscious coordination of goals and desires, appears here, rendering it entirely at odds  with the Hayekian view of freedom.

And thirdly there is the rise of behavioural and wellbeing economics, both of which abandon the 'revealed preference' theory of consumer choice, which (in true Hayekian spirit) assumed that individuals could never be 'wrong' about their desires or values. In place of this, the 'nudgers' and the 'happiness' gurus work to help individuals take choices that they will later be glad of, and gradually learn to take again in future. This may be simply an expanded form of neo-classical economics, which costs in longer-term outcomes for health, environment and mind; but it nevertheless assumes some vantage point for the policy-maker that is superior to that of the consumer (at least in the short-term). This, too, would represent the 'road to serfdom', for the notoriously paranoid early neoliberals. Minimum alcohol pricing could be the thin end of a wedge, which turns against the trust in markets to deliver goals that nobody could foresee. Once competition authorities start to permit price-fixing for public ends, a crucial line hass been crossed - for Hayek, the only line that matters.

The fact that bankers continue to pay themselves vast bonuses, or that the interests of government bond-holders are prioritised over those of citizens, might signify to many that 'neoliberalism' has never been more dominant. Giovanni Arrighi argues that capitalist powers experience a belle epoque of finance-driven prosperity, in the twilight decades of their global dominance, which is how the US experienced a splurge of growth from the late 1980s onwards. In a sense we're now witnessing the belle epoque of the belle epoque: particular interests squeezing whatever is left from a system that is effectively finished, including governments. Like a fractious family descending on the possessions of a deceased relative, this situation brings the various parties together face-to-face, to an extent that was never necessary previously.

The representation of neoliberalism as a corporate-government stitch-up (as Colin Crouch's new book seems to propose) makes considerable sense, but it's important to specify what sort of stitch-up. It wasn't a stitch-up of realpolitik or fraternity (save for the sort of Texan mercantilism that George W Bush brought to Washington, with very poor economic consequences), but a stitch-up focused on rules and regulations. It privileged market conditions, prices, competition, not favours or back-scratching; at the very least, it purported to do so. The new wave of summits, meetings and buddy-systems that has emerged, to coordinate corporate, financial and government interests, indicates that we are currently operating without any governing economic policy paradigm at all. In that sense, neoliberalism is over.

the political economy of unhappiness

Continuing from the debate on happiness for OpenDemocracy, I have an article in the current New Left Review, entitled 'The Political Economy of Unhappiness'. This stems from a curiosity I've had for some time, of how it is that economists and statisticians have come to grapple with issues that were once the preserve of Frankfurt School Marxists, namely suffering and the paradoxes of 'progress'. I argue:

As the recent statistical interest in social and economic ‘progress’ suggests, the neo-classical discourse surrounding happiness and unhappiness invariably strays into ethical, then teleological, and then critical terrain. On the one hand this leads to an instrumentalization of critical, ethical and Enlightenment concerns (as the measurement of historical progress would suggest); but on the other, the contradictions and injuries of neo-liberal capitalism start to show up within the very positivist bodies of knowledge that are intended to regulate and sustain it. If the ‘need to lend a voice to suffering is a condition of all truth’, perhaps liberal economics is on the verge of uncovering truths that it never previously imagined.

I might add that this piece is rumoured to be the first ever New Left Review article to cite The Daily Mail.

new gig

As of this week, I've taken up a new job as Academic Director at the Centre for Mutual and Employee-Owned Business in Oxford. That's about all there is to say for the time being. Email me here still. Rumours of a twitter feed remain as yet unverified.