More on The Origins of Polical Order

Mark Kingwell, a University of Toronto political theorist, reviewed in Francis Fukuyam's The Origins of Political Order in the August 2011 edition of Harper's. I went to this review specifically looking for a left-leaning rebuttal, and I found one, but it wasn't exactly what I expected. The Tomist: Francis Fukuyama's infinite regression says plenty with which I can't agree, but also has some interesting insights.

Kingwell pulls a quote out of Origins that's underlined in my copy:

"Entrenched interest groups tend to accumulate in any society over time, which aggregate into rent-seeking coalitions in order to defend their narrow privileges."

The book gives the reader an appreciation for the constant erosion of political institutions by forces of narrow self-interest and short-term expedience, illuminating not just the origins of political order but its decay and decline as well.

Kingwell hits on a favorite theme of mine, the inseparability of politics and economics, calling it a "strange blind spot" in Fukuyama's thinking. In Kingwell's well-placed words:

"The central occlusion concerns the relation of politics and economics. [...] One reason political commentators consistently fail to understand the social order is that they enjoy the habitual exercise of concept-separation: driving a conceptual wedge between politics and markets, between democracy and capitalism."

Kingwell wonders, as many readers will, about the transformation of the author of The End of History and former neocon into the Fukuyama who wrote The Origins of Political Order. It seems to me, without having read the earlier work, that we get a more cautious and nuanced take on the subject from the newer book. I remember rolling my eyes at the title of Fukuyama's earlier work and the soon-to-be-short-lived triumphalism of the Washington consensus back in the 90's, even while supporting principles like free markets and free trade.

Remind me never to argue with Kingwell, lest I be pummeled with rhetorical zingers like this one: "Fukuyama's conclusion only gradually seeps through the masonry of his prose." Ouch. But, I found Fukuyama quite clear and readable, if not particularly florid.

Fukuyama, avoiding polemics, sets out to abstract factors of development away from specific political agendas. Ideology is shown as a tool for legitimating or delegitimating rulers and institutions, but no particular doctrine is espoused over another. Rather, the keys to a functional society and good governance are defined in technocratic terms of a strong state, rule of law and accountability.

Kingwell seems to resent this analytical detachment, calling Fukuyama's neutrality a "wearying evenness", as if inflammatory partisan ranting was in short supply. This is a baffling criticism. A muscular clash of "big ideas" might be more satisfying on some level but, that ignores the question of why the world is full of people quite enamored of big ideas about freedom, justice and equality whose governments conspicuously fail to practice anything of the sort.

The "turtles all the way down" story is a sticking point for Kingwell, who sites "unjustified force", "the violent structure of the founding act" as the ugly first cause down at the bottom of the chain of causation. That it may be, but the turtles story illustrates a completely different and equally interesting point. Like evolution, political development is not a deterministic process but a contingent one. If you could "rewind the tape" and run the experiment again, the results would likely be different. That this property is shared by complex systems as diverse as evolving organisms and systems of political economy is worth pondering. Perhaps, other emergent properties common to complex systems manifest themselves in political economy.

Whether it's mistrust in a reformed neocon or just academic cat-fighting, Kingwell doesn't like Fukuyama's book. As funny as they sometimes are, Kingwell's objections miss the central point that Fukuyama offers a framework for thinking systematically about politics and development, laying out several case studies for the reader to practice on and generalize from. The fact that he does this even handedly is to be commended.

The Origins of Political Order

I'm reading Francis Fukuyama's latest book, The Origins of Political Order, an ambitious survey of the development of political institutions and centers of power across civilizations. Sitting as we are, at a juncture between ascendent East and declining West, it's a good time to look back and extract some basic principles governing the rise and fall of civilizations.

Fukuyama starts off with instinctive human nature, the social and political baggage our species carries from our not-too-distant primate past. Primitive humans and other apes live in communities with definite social structure. But, up until recently, it was thought that primitive man was solitary. This view was held by enlightenment philosophers Thomas Hobbes and John Locke, originators of the theory of the social contract, and the idea of natural human rights, respectively. It's a bit discomfiting to consider that inaccurate ideas about the isolation of man in a state of nature strongly influence the American founding father's views on individualism.

In the time period covered by the book, up to the French Revolution, societies are mainly agrarian and structured into classes - a ruling nobility, land owning aristocracy, and peasantry. From this largely hereditary state, the middle class begins to emerge and modern states coalesce.

Fukuyama's three crucial characteristics of the modern state are a strong state, rule of law, and accountability. States successfully implementing all three of these institutions are generally free, prosperous, and stable. Fukuyama calls the process of reaching this happy balance getting to denmark.

Given these institutions and social classes, Fukuyama seeks to derive a theory of political development and decay - not a fully predictive theory, but a contingent theory, like evolution, dependent on historical accidents and circumstances.

Capable, accountable, rule-bound governments emerge when a delicate balance is struck between the classes / power centers. Absent this balance, various pathologies result in the form of dominance of one class or a coalition of classes against the others. Political systems rise, but they also decay. The rats always find a way in. "Over time, elites are able to protect their positions by gaming the political system [...] transmitting these advantages to their children through favored access to elite institutions"

The book builds its argument by surveying the history of political development in several countries. As a conscious effort to avoid Eurocentrism, China's early development of meritocratic bureaucracy is examined first. India, the Middle East, Europe and Russia follow. In each region, driven by agriculture, religion and warfare, political systems rise and fall striking different balances of power, always attended by the persistent reassertion of rent-seeking elites.

The Chinese state, which achieved a powerful state and meritocratic bureaucracy in Qin and Han dynasties around 200 BC, never succeeds in subordinating the state to rule of law. India develops rule of law and accountability, but with a weak central state. The Middle East gains and looses rule of law and accountability. In Russia, the rulers dominate unchecked by either law or any notion of accountability. The French monarchy was beholden to its aristocracy by debt, resulting in a weak central state and widespread corruption.

England is first to achieve all three ingredients. With the Magna Carta in 1215, the aristocracy obligated the monarchy to recognize their rights. Over time these rights came to apply increasingly widely across society, particularly to the rising middle class.

NO Freeman shall be taken or imprisoned, or be disseised of his Freehold, or Liberties, or free Customs, or be outlawed, or exiled, or any other wise destroyed; nor will We not pass upon him, nor condemn him, but by lawful judgment of his Peers, or by the Law of the land.

I might have been put off if I had known that the author was, at one time, associated with the neoconservative movement and had previously declared the "end of history". That would have been a shame. The Origins of Political Order is a fascinating read. The book is carefully constructed to avoid pushing ideological buttons, and makes its case largely independent of partisan politics. England and Denmark are held up as successful examples. The historical development proceeds from Chinese history first. I don't know my history well enough to evaluate the individual examples, but the framework for thinking about political development and centers of power seems to have a lot of value.

The planned second volume picks the story up in the modern age after the industrial revolution. Applying the same framework to the modern world is complicated by the post-colonial legacy, greatly increased communication, and globalization, along with entirely new actors such as corporations. It should be even more interesting than the first volume.

Reviews and commentary

On it's release, in April of 2011, the book generated lot of commentary, including write-ups in a slew of major newspapers, plus a bunch of blogs linked below. The author appears on several interview shows and podcasts. I'm going to hold off on all of this until after I finish the book, to give myself time to think about it.

• NY Times Francis Fukuyama’s Theory of the State
• Also from the NY Times: From ‘End of History’ Author, a Look at the Beginning and Middle
• Washington Post
• The Economist Theories of history: The good, the great and the gelded
• the Guardian
• Financial Times
• WSJ From Dynasty to Democracy Nations did not find stability, or sustained prosperity, until they became accountable to their citizens
• Slate

Interviews, audio and video

• Carnegie Council
• BookTV: Francis Fukuyama, The Origins of Political Order
• The Free Library Podcast
• New Books in History
• KQED forum
• NPR
• Francis Fukuyama & Jared Diamond

Other links

• Daniel Lende in PLOS Neuroanthropology Blog
• Fukuyama and Kuran
• Three Visions Of How The World Works
• China v America: The end of the end of history
• The Tomist: Francis Fukuyama's infinite regression in Harper's

The Slacker Economy

Recently, there's been a spate of articles about the virtues of slack, in this time of unemployment. CNN asks Are jobs obsolete? Thanks to automation and technology, the basic needs of society can be met using the productivity of a fraction of the population. So, the question becomes, what do the rest of us do?

So far, the answer seems to be the service economy, along with increasingly esoteric definitions of work and more frivolous things to spend money on. But, that runs out of steam, eventually. Most of us have too much to eat and all our time is spent working or consuming distracting amusements.

But, what if we're not driven to accumulate ever more marginally useful stuff, but rather reach a point where enough is enough. What, then, is the source of growth? In Work for post-materialists, the author confesses to being a “threshold earner”, as described by Tyler Cowen in The Inequality That Matters.

A threshold earner is someone who seeks to earn a certain amount of money and no more. [...] That person simply wants to “get by” in terms of absolute earning power in order to experience other gains in the form of leisure—whether spending time with friends and family, walking in the woods and so on.

In the old days, before I was a respectable family man, I used to work consulting gigs. That business attracts some sleazy characters, but that's another rant for another time. Anyway, for a stretch of a few years, I managed to get summers off. I prefer to think of myself as a gentleman hacker, but I guess that's another word for threshold earner.

[New York Times]

This phenomenon has a generational aspect to it. In The Experience Economy, David Brooks tells the tale of Sam, a hardworking American, born in 1900, who ran a business making brakes and his post-materialist grandson, Jared.

Sam’s grandson, Jared, was born in 1978. Jared wasn’t really drawn to the brake-systems business, which was withering in America. He works at a company that organizes conferences. He brings together fascinating speakers for lifelong learning. He writes a blog on modern art and takes his family on vacations that are more daring and exciting than any Sam experienced. Jared lives a much more intellectually diverse life than Sam. He loves Facebook, YouTube, Wikipedia and his iPhone apps. But many of these things are produced outside the conventional monetized economy. Most of the products are produced by people working for free. They cost nothing to consume.

But, while Jared is traipsing around the Burning Man festival in nothing but lime green body paint, someone has to do the dirty work. Soldiering, mining, cleaning hotel rooms, making car parts. Thinking about how we get some unfortunate people to do those unpleasant things in a world of overflowing plenty might not make you feel too good.

[Burning Man, Jim Urquhart/Reuters, Boston Globe]

Technology plays a role in generating high productivity in the first place, not to mention exaggerating inequality in the process, but also in providing cheap mostly-harmless virtual goods for us to consume. In 1996, William Gibson wrote The Net Is a Waste of Time. But, I've often had a different thought. The purpose of the internet is to absorb the excess productivity of mankind.

There's a lot to be said about the nature of work in the networked age: globalized, distributed, bursty. And thinking to be done about worthy purposes for all those liberated brain cycles, Clay Shirky's Cognitive Surplus. But, we'll leave those for later. In the meantime, I hope you're enjoying my non-remunerative contribution to the post-materialist slacker geek-fest gift economy that is the internet.

Who rules America?

An Investment Manager's View on the Top 1% contains a bunch of interesting factoids, mostly on what separates the working rich, the bottom half of the top 1% from the more elite fractions of the wealth distribution.

Since the majority of those in this group actually earned their money from professions and smaller businesses, they generally don't participate in the benefits big money enjoys. Those in the 99th to 99.5th percentile lack access to power.

...the American dream of striking it rich is merely a well-marketed fantasy that keeps the bottom 99.5% hoping for better and prevents social and political instability. The odds of getting into that top 0.5% are very slim and the door is kept firmly shut by those within it.

The picture is clear; entry into the top 0.5% and, particularly, the top 0.1% is usually the result of some association with the financial industry and its creations. I find it questionable as to whether the majority in this group actually adds value or simply diverts value from the US economy and business into its pockets and the pockets of the uber-wealthy who hire them. They are, of course, doing nothing illegal.

Wall Street created the investment products that produced gross economic imbalances and the 2008 credit crisis. It wasn't the hard-working 99.5%. Average people could only destroy themselves financially, not the economic system. There's plenty of blame to go around, but the collapse was primarily due to the failure of complex mortgage derivatives, CDS credit swaps, cheap Fed money, lax regulation, compromised ratings agencies, government involvement in the mortgage market, the end of the Glass-Steagall Act in 1999, and insufficient bank capital. Only Wall Street could put the economy at risk and it had an excellent reason to do so: profit. It made huge profits in the build-up to the credit crisis and huge profits when it sold itself as "too big to fail" and received massive government and Federal Reserve bailouts. Most of the serious economic damage the U.S. is struggling with today was done by the top 0.1% and they benefited greatly from it.

This comes from a blog called Who rules America? in support of a book of same name, by G. William Domhoff, a sociologist at UC Santa Cruz. Interestingly, the link was posted on Hacker News. A comment referenced the theory of control-fraud, developed by William K. Black, author of The Best Way to Rob a Bank is to Own One.

White-collar criminology findings falsify several neo-classical economic theories. This paper discusses the predictive failures of the efficient markets hypothesis, the efficient contracts hypothesis and the law & economics theory of corporate law. The paper argues that neo-classical economists' reliance on these flawed models leads them to recommend policies that optimize a criminogenic environment for control fraud.

...which just goes to prove the point that you can't separate economics from politics. Susceptibility to corruption is a huge factor in the success or failure of economic systems, or more accurately systems of political economy.

Making the patent system even worse

The economist explains the state of the US patent system like this:

At a time when our future affluence depends so heavily on innovation, we have drifted toward a patent regime that not only fails to fulfill its justifying function, to incentivise innovation, but actively impedes innovation. We rarely directly confront the effects of this immense waste of resources and brainpower and the attendant retardation of the pace of discovery, but it affect us all the same. It makes us all poorer and helps keep us stuck in the great stagnation.

Congress is in the process of passing a "first-to-file system". It's hard to see this as anything but a gift to big corporations. Writing in Foreign Policy, Clyde Prestowitz calls the Americans Invent act, "...a bill likely to cut the heart out of our innovative, entrepreneurial culture...". Even the pro-patent group American Innovators for patent reform says,

American Innovators for Patent Reform is opposed to the America Invents Act and we urge the House of Representatives to draft an entirely new law that truly addresses what needs to be reformed. The America Invents Act was crafted by lobbyists for the large corporations that are notorious infringers of patents!

...and...

Canada made the switch to first-to-file in 1989, and a 2009 study from researchers at Canada’s McGill University’s Department of Economics found that the change “failed to stimulate Canadian R&D efforts” and “skewed the ownership structure of patented inventions towards large corporations, away from independent inventors and small businesses.

It looks like the US patent system is about to become even more screwed up.

Nice work as usual, congress.

BTW, Mimi & Eunice is a work of genius

More links

• The America Invents Act: First to File versus First to Invent? - Podcast

The Deficit Is Worse Than We Think

In a WSJ op-ed, Lawrence Lindsey, a former Federal Reserve governor and assistant to President George W. Bush for economic policy, gives three reasons why The Deficit Is Worse Than We Think

• Interest expense
• Anemic growth
• Health care costs

At present, the average cost of Treasury borrowing is 2.5%. The average over the last two decades was 5.7%. Should we ramp up to the higher number, annual interest expenses would be roughly $420 billion higher in 2014 and $700 billion higher in 2020. Normal interest rates would raise debt-service costs by $4.9 trillion over 10 years, dwarfing the savings from any currently contemplated budget deal. [...] The Fed will increasingly have to factor in the effects of any rate hike on the fiscal position of the Treasury.

The PROTECT IP Act

The Protect IP Act (full text) enables the government and copyright holders to compel DNS providers, ISPs, search engines and advertisers to censor sites hosting copyright or trademark infringements. They're going to make linking to pirated material a crime.

Media companies want this because it's easier to go after the intermediaries, rather than the infringers, especially those outside the US. It's not that different from the Great Firewall of China.

This is the second attempt, the previous incarnation COICA having been introduced in September of last year. Senator Ron Wyden (D-Oregon), held up that legislation and is trying to do the same again. Cheers to Ron Wyden.

Larry Downes provides an excellent summary of the "full-scale war between content distributors and everyone else" in his Law of Disruption blog, including the property seizure tactics of the Department of Homeland Security's Immigration and Customers Enforcement division, a name straight out of Orwell.

The media industries, everyone agrees, are in the fight of their lives. These businesses rely for profitability on the controlled distribution of information goods whose individual copies have a marginal cost that keeps getting closer to zero.

The EFF has a couple articles on the PROTECT IP act and a petition.

One commenter asked, "Why is the attorney general wasting precious tax dollars enforcing corporate plutocracy?"

The real question

A lot changes when the costs of production and distribution are approaching zero. The question we should be asking is this: What still has value?

• The creation itself - the skill, insight and artistic judgement necessary to make movies, music, or writing that doesn't suck.
• The ability to sift through mountains of dreck to find the good stuff. The value of the filter goes way up in the new environment.
• The community? A viable place to discuss. I'm pretty sure that the difference between Quora and You-Tube comments has value.

Legislating without a clear idea of what's valuable in the new environment will lead to useless and harmful laws that burden legitimate service providers while only slightly inconveniencing pirates - something like requiring every new car to come with a trunk full of horseshoes to protect the blacksmiths.