The Samovar

There are lots of interesting political things going on at the moment that I don’t have time to write about. In the UK, the government has lost, and probably had stolen, a copy of the records of 25m people (everyone in a family with a child aged 16 or under). There was also a very interesting looking report into the shooting of Jean Charles de Menezes that I may yet write about if I get the chance.

Here in Paris meanwhile, the transport unions and the students of many universities (not mine) are on strike. The issue for the transport workers is the regimes speciaux whereby transport workers have to work 2.5 years less than other workers before they can retire (37.5 instead of 40).

Much of the discussion seems to revolve around the fact that this measure was introduced because the labour involved used to be much more onerous, but is no longer thanks to mechanisation. Personally, I think that’s not really the point. Sure, if society were organised along rational lines in the public interest, there would be no justification for it. But, that’s not the society we live in. We live in a capitalist, class based society in which different groups fight to keep what they have. The wealthier classes fight a quieter battle, by appealing directly to governments and media, or by moving their capital overseas. The poorer classes don’t have this access or any capital to move, so they use strikes. To be against strike actions to retain or gain privileges is in effect just siding with the wealthy.

It might be said though that the competition here is between the transport workers and other workers, not between transport workers and the rich. But, that’s where the principle of solidarity comes in. The idea is that other workers support the transport workers when they are fighting their battle, and in turn the transport workers support those workers when they fight theirs.

The rail strike is apparently costing €400m /day, and the regimes speciaux cost €5bn/year (government figures), so 12.5 strike days is equivalent to 1 year of regimes speciaux. A reasonable compromise suggests itself. Why does the government not offer a pay rise of a total amount say €2-3bn/year. They would then be saving €2-3bn/year (which means losing the equivalent of 5-7.5 strike days compared to the situation if they could get rid of the regimes speciaux completely), and the transport workers would probably go for it, because for most people earnings now count for much more than earnings some 20 years down the line. I suspect the answer is that this isn’t really about saving €5bn/year at all, but really a strategy to weaken and divide the unions.

The pictures are of the manifestation that was going down my road today (some 300-700,000 people apparently).

George Monbiot is a writer for whom I have an awful lot of respect. In his latest article (via ukwatch), there is lots to agree with. But, assuming he means what he says, he has some fundamental views that I find quite odd.

Like Dr Ridley, I am a biological determinist: I believe that much of our behaviour is governed by our evolutionary history. I accept the evidence he puts forward, but draw completely different conclusions. Ridley believes that modern humans are destined to behave well if left to their own devices; I believe that they are likely to behave badly. If you belong to a small group of intelligent hominids, all of whom are well-known to each other, you will be rewarded for cooperation and generosity within the group. (Though this does not stop your group from attacking or exploiting another). If, on the other hand, you can switch communities at will, travel freely, buy in one country and sell in another, hire strangers then fire them, you will gain more from acting only in your own interest. You’ll have an even stronger incentive to act against the common good if you run a bank whose lending and borrowing are so complex that hardly anyone can understand what is happening.

Dr Ridley and I have the same view of human nature: we are inherently selfish. But the question is whether or not this nature is subject to the conditions that prevailed during our evolutionary history. I believe that they have changed: we can no longer be scrutinised and held to account by a small community. We need governments to fill the regulatory role vacated when our tiny clans dissolved.

…

Wherever modern humans, living outside the narrow social mores of the clan, are allowed to pursue their genetic interests without constraint, they will hurt other people. They will grab other people’s resources, they will dump their waste in other people’s habitats, they will cheat, lie, steal and kill. And if they have power and weapons, no one will be able to stop them except those with more power and better weapons. Our genetic inheritance makes us smart enough to see that when the old society breaks down, we should appease those who are more powerful than ourselves, and exploit those who are less powerful. The survival strategies which once ensured cooperation among equals now ensure subservience to those who have broken the social contract.

The democratic challenge, which becomes ever more complex as the scale of human interactions increases, is to mimic the governance system of the small hominid troop. We need a state that rewards us for cooperating and punishes us for cheating and stealing. At the same time we must ensure that the state is also treated like a member of the hominid clan and punished when it acts against the common good. Human welfare, just as it was a million years ago, is guaranteed only by mutual scrutiny and regulation.

First of all, the idea of the evolutionary psychology of the “small hominid troop” is a scientific paradigm for which there is scant evidence. Basing fundamental political ideas on such a weak hypothesis is surely not sensible. Fortunately, I don’t think his ideas really do depend on this apparent justification.

The more significant point is his view of the role of the state.  Monbiot believes that “modern humans … if left to their own devices … are likely to behave badly” and therefore “We need a state that rewards us for cooperating and punishes us for cheating and stealing.” This view would seem to rule out the possibility of an anarchist sort of socialism, and mandates a more authoritarian, traditional big-state socialism. For this reason, I think it’s worth looking at an alternative explanation of the observed bad behaviour that Monbiot wants to eliminate, and an alternative remedy.

My view is that most people are mostly good. In order to believe things that are unpleasant, or behave in vile ways towards each other, people have to be pushed into it by social pressures. The reason that people do believe unpleasant things and do behave in vile ways towards each other in great numbers is that there are social pressures pushing them towards it.

One of the things about modern capitalist societies is the way they systematically hide information about the external costs of our actions. An example: it is very difficult to purchase ethical or green products. Information about the exploitation involved in producing products, or the amount of carbon emitted in the production of products, is enormously difficult to estimate. Modern capitalism hides all information except for one thing: the price. Not knowing anything else about the products, of course consumers will just buy the cheapest thing available. This has knock on effects that are very damaging. But the problem here is not that people are mean and don’t care about those knock on effects, but that they don’t have reliable information about them.

That’s one way that a capitalist society creates an apparently callous and uncaring world, and it exemplifies many of the others. For example, a company is owned by shareholders, separate from its management. The management of the company reasons thus: if the shareholders all sell their shares, the company will collapse and I’ll be out of a job, therefore I must do all I can to make the profits of the company as large as possible. The shareholders meanwhile have a choice of companies to invest their money in. Since their individual actions typically won’t affect the fortunes of a whole company, the only question that concerns them is where to put their money to maximise profitability. Note that they can’t even choose to put money into a slightly less profitable but more ethical venture, they have to go for one that pursues profit above all else. If they invest in a company that doesn’t do so, they have to assume that the other shareholders probably won’t, the share price will plummet anyway, the company will go bust, and by doggedly keeping shares in it they’ve neither saved the company nor made any money. (This is just The Prisoner’s Dilemma.) The structural arrangement of the system causes all the individuals involved to behave in seemingly cold and callous ways by separating individuals and groups, and making price and profit the only signal they communicate with.

Those are two key mechanisms of capitalism which contribute to this sort of behaviour, but they also have knock on effects. Those people who are better at having this sort of cold, callous view of the world will do better in a capitalist society than those who don’t. Because of the structural requirements of capitalist companies, these psycopathic / sociopathic individuals will tend to be promoted to the top jobs. Again, this is not because we like this sort of person, or that we want them to be our bosses or leaders, but that the way our society is structured, hiding all information other than price information, pushes them towards the top.

I could continue documenting this sort of thing at enormous length, but the key point is that the structural pressures in a capitalist society all emphasise price and profit, and de-emphasise everything else in life. With all these different sorts of pressures, all reinforcing themselves and feeding back on themselves, of course we end up with a society that seems cold and callous. But, returning to Monbiot, this is not because people are cold and callous.

So, if I’m right about human nature and Monbiot is wrong, an equal and free society is possible. If we can build a society in which the pressures are social rather than financial, we wouldn’t need state coercion to make people behave well. The anarchist ideal is to build such a society, but not by the right-wing libertarian or free-marketeer route of just doing away with government regulation. That government regulation grew along with capitalism as a way of mitigating its most antisocial effects, and getting rid of it without addressing the basic structure of society would make things considerably worse. The anarchist route is a change in the form of society, away from capitalism, either gradually or through a revolution, and an eventual end to state power (or at least, a minimisation of it).

Michael Albert’s participatory economics describes an alternative way to organise a society along these lines. It’s not the only one possible, but it is interesting and important because it incorporates an analysis along similar lines in a fundamental way.

Postscript: While I’m at it, the Marxist notion of the ‘withering away of the state’ is in fact an anarchist one, first posed by William Godwin in his Enquiry Concerning Political Justice (1793, 25 years before Marx was born, available in full online here and here), my emphasis:

In proportion as weakness and ignorance shall diminish, the basis of government will also decay. This however is an event which ought not to be contemplated with alarm. A catastrophe of this description would be the true euthanasia of government. If the annihilation of blind confidence and implicit opinion can at any time be effected, there will necessarily succeed in their place an unforced concurrence of all in promoting the general welfare. But, whatever may be the event in this respect, and the future history of political societies, we shall do well to remember this characteristic of government, and apply it as the universal touchstone of the institution itself. As in the commencement of the present Book we found government indebted for its existence to the errors and perverseness of a few, so it now appears that it can no otherwise be perpetuated than by the infantine and uninstructed confidence of the many. It may be to a certain degree doubtful whether the human species will ever be emancipated from their present subjection and pupillage, but let it not be forgotten that this is their condition. The recollection will be salutary to individuals, and may ultimately be productive of benefit to all.

I was amazed to discover that the WordPress domain capitalismsucks hasn’t been taken. So I grabbed it. Now - what to do with it?

I talked briefly about Michael Moore’s film Sicko in a previous entry. Since then I’ve come across two articles (here and here) talking about how elements of the American system will be coming to the UK. I have a question about the second one though. John McDonnell, writing about the Labour party conference, states:

While warm words of praise were bestowed on the NHS and public servants, outside in the real world we learned that in order to save the budgets of some primary care trusts, Bupa was to vet whether patients should or should not receive the treatment recommended by their consultants. Bupa will be paid from the savings made by preventing operations.

Anyone got a reference for this? Sounds like exactly the sort of perverse incentive scheme that Moore highlighted in Sicko.

Insurance. Not the most exciting of blog subjects, although that hasn’t stopped Michael Moore’s film Sicko from making $24m in the US alone. It is a subject that fascinates me though, for the simple reason that I don’t understand why people get insurance most of the time.

The nature of insurance is that on average you lose money by having it. It’s essentially just a gamble, and the bookie always weighs the odds against you. Now, there is a real reason to have insurance, which is in the case where you can’t afford the cost if the unlikely thing happens. Insuring your house against being burnt down is a good example of this. Most people can’t afford to rebuild their house from scratch if it gets burnt down.

The other end of the spectrum struck me when I bought a mobile phone a while ago. The salesman tried to persuade me to get insurance for it. Now, the insurance was £20 for one year, which on the face of it seems a fairly minimal cost for the satisfaction of knowing that if your phone is stolen you will get a nice new one. However, the phone only cost me £60, so for it to be worth my while getting that insurance, I’d have to have a 1/3 chance or more of losing that phone during the next year. Obviously a bad gamble. I didn’t get the insurance, and 5 years later the phone is still in my possession. Score £100 for me.

That mobile phone salesman made me realise that insurance is almost never worth having, because the consequences of a loss rarely justify the amount you end up spending on all the different forms of insurance. Take cars for instance. Now, you are legally obliged to have third party insurance, but anything beyond that is a total scam. If your car is stolen, you can buy a cheap replacement for a few hundred pounds. It won’t be flashy, but it will be functional. A few hundred pounds is often less than a single year’s insurance. Comprehensive insurance is even more of a scam, because you either have to have an enormous excess (which means you end up paying for most of the repairs yourself anyway), or you pay enormously high premiums. It gets more complicated, but the basic facts don’t change once you get into the arcanae of no claims bonuses, insuring your no claims bonuses, and the fact that even having insured your no claims bonuses making a claim will affect your premiums anyway. These points struck home with me when an old car of mine was stolen, and I realised (too late) that claiming for it was going to end up costing me more in increased premiums over the next few years than the amount they were paying out - by quite a lot.

So when is it worth having? Well, it’s worth having if you really can’t cover the costs of something going wrong: i.e. basically house insurance (but possibly not contents insurance), and, in the US, medical insurance. That brings me neatly on to my next point. I just saw Sicko the other day (recommended), and one of the points it makes very well is that US medical insurers will do anything they can to avoid paying out. In the event of an expensive claim (exactly the sort of claim that justifies having medical insurance in the first place), they will investigate everything about your claim. If you have ever said anything untruthful or inaccurate on an application form or on the phone to them, that will void your claim. If they can manage to persuade a doctor to rule that the treatment is too experimental or not guaranteed to work, they won’t pay out. And to ensure that they can persuade doctors to make these rulings, they pay bonuses to doctors proportionate to how many claims they reject. In other words, even when insurance really does matter (and with medical bills often in the tens or hundreds of thousands of dollars in the US, it really matters) it might end up having been money wasted.

Now, finally I’d like to twist this into a rant about capitalism in general, because, you know, I like to rant about capitalism. It’s my thing.

This story about insurance being essentially a scam, an enormous rip off, and one that disproportionately affects the poorest, is a sort of microcosm of the ruthlessness of capitalism. Because poorer people can’t cover losses as much as richer people, they are more in need of insurance. Perversely, this means that they end up (quite rationally) spending more of their money on insurance than wealthier people.

A more recent development is social sorting, where poor people actually get larger premiums or bills precisely because they are poor. I’ve written about this before, here, here and here. This sort of thing just underlines the fact that the nature of capitalism is that the poor get poorer, and the rich get richer. Now, this has always been true of capitalism, but for a while it was masked. The introduction of the NHS and the welfare state in Britain made capitalism slightly more humane, but it is being undermined, even though the NHS and the welfare state still exist, because of social sorting.

The problem is that as companies know more and more about us, they can extract money from us ever more efficiently. Not only can they do this, but in a competitive market they must do it if they can, because otherwise someone else will. Exploitation of every source of profit isn’t a choice for a capitalist in a competitive free market, it’s a basic necessity. So, assuming that it is profitable for a company to, say, offer cheaper insurance to “intelligent” people, they will all have to start doing it. The logic of capitalism then undermines many of what we think of as social goods. We think it is bad that smart people should be given cheaper insurance than others, because it’s not fair, and also because smart people probably have more money; we think it’s bad that poor people should pay more for the same thing than rich people, but that’s not what’s going to happen because it doesn’t fit in with profit seeking.

Finally, to go back to insurance, the consequence of insurance companies having ever more accurate information about us, and being ever better at evaluating our individual risk levels, is that it becomes self defeating. If you can predict entirely accurately who is going to have a heart attack, then there cannot be medical insurance against having heart attacks. Someone who isn’t going to have one won’t pay because he isn’t going to have one, and someone who is going to have one is going to have to pay anyway so why bother giving extra money to the middle man. Insurance companies have to get better and better at predicting this sort of thing to stay profitable, but by doing so they bring about their own demise.

In this situation, the only thing to do is to have national insurance schemes organised by the state. The purpose is not to spread your own risk (you can’t change who you are, or your congenital risk of heart attack for example), but to spread the good and bad fortune of our circumstances out amongst everyone. In other words, in the long term, effective insurance cannot be provided by a capitalist system, and the alternatives available to us are ruthless capitalism which by its internal logic must get more and more ruthless to stay profitable, or some sort of socialism.

If you have got this far, well done, I’m impressed! and I thank you. Please do write a comment, if only to say you made it to the end.

Advertising is one of my perennial bugbears. It does so much harm and gives so little in return. It saps creative talent from society at large, it distorts culture and politics, and perhaps worst of all, it’s unpleasant, noisy and inescapable. Feel free to take me up on any of those points in the comments if you like. Economics arguments about the signalling function of advertising aside, the only good it does is provide a large budget for things like TV, newspapers, web sites, etc. But is this really a good thing? Wouldn’t it be better if these things were paid for by what people wanted to spend money on?

Like a growing number of people, I use the Firefox web browser with the Ad Block  extension to hide adverts on web sites. It makes web browsing a much pleasanter experience, and I highly recommend it to anyone who hasn’t got it already. Since a fairly small number of people are using Firefox, and an even smaller percentage using Ad Block, web sites which rely on advertising revenue have not had much reason to worry about this. A small group of tech savvy people were able to cut out the crap and still enjoy the free content paid for by the 3% of people who actually click on the banner adverts. However, that might be set to change.

The Register has an interesting comment piece on how things might be developing (the article is mostly about the business relationship between Google, which relies on advertising, and Firefox, which is largely funded by Google). Firstly, Firefox itself is becoming much more popular: just recently it was downloaded for the 400 millionth time (which is not to say that 400m different people are running it of course). Ad Block is also growing in popularity, the developers claiming that 2.5m people are using it, and an additional 300-400k per month downloading it. So, it’s beginning to be a serious threat. One web developer, Danny Carlton, wrote a piece of software on his web pages so that if you were running Ad Block, the whole web site would be inaccessible. Of course, this is fairly easily circumvented and there is the potential for a miniature arms race there. The ad blockers are bound to win this race for much the same sort of reasons as attempts to stop people copying music and films with Digital Rights Management (DRM) fail almost before they start.

So the question is: suppose enough people were blocking adverts, what would happen? What people are worried about is that all of these free web pages will have to start charging for access. Indeed so, but that could be a fantastically good thing. With modern web technology, it would be very easy to set up a system of micropayments. You subscribe to a micropayment service where you have an account you can top up just like a mobile phone. When you visit a web site, you pay a tiny fee to view their content. This fee could be the same or less than an advertiser pays to a web site. I don’t know how much that is, but it can’t be an awful lot given that on average only 3% of visits to a website end up with the person clicking the banner ad, and even then only a small proportion of those end up with an individual making a purchase. If the technology was unobtrusive and didn’t invade privacy, this could easily be very successful.

There is a danger though. Web sites might begin to rely on more subliminal forms of advertising and PR, like the ‘advertorial’ (an ‘editorial’ that is paid for) and subtler variants which are no doubt already out there. Like product placement, this is a form of advertising that can’t be blocked. Another short term danger is that the squeeze that this will put on content producers will mean they become much less adventurous with their output, and stick to what they know works (as is perhaps already happening).

One commenter on The Register article had an alternative suggestion: a “Reasonable Advertiser Network”. That is, an index of advertisers which do not use distracting animated or Flash adverts on web pages, but relatively unobtrusive, static images which do not take up too much space on the page. Users could choose not to block these adverts, but only the ‘unreasonable’ ones. That might sound far-fetched, but it has already happened to a certain extent. Part of the commercial success of Google is down to the fact that it has a very unobtrusive and straightforward advertising scheme: certain key words cause a clearly labelled ‘Sponsored Link’ to be included in your search results. You know exactly what the advert is, how it came to be there, and it doesn’t dance around your screen and sing at you.

My preferred solution however is the death of advertising, and there are some signs that it might be coming about anyway. Newspapers are apparently very concerned that advertising revenue is drying up, as are TV stations, etc.

It will be interesting to see how it plays out, and whether or not solutions that are easy to implement on the web (like a micropayment scheme) could be extended to other mediums like TV and news.

Now over to you: how do you feel about advertising on web pages and more generally? Do you use ad blockers? Would you be happy with a micropayment scheme like the one I suggested?

I’ve just finished reading David Schweickart’s book “After Capitalism”, in which he describes his alternative to capitalism, called Economic Democracy. I wasn’t particularly expecting to like this book after reading the debate between him and Michael Albert on the subject of participatory economics (parecon, which I wrote about recently), in which I don’t think he acquitted himself well. It was better than I thought.

Economic Democracy (ED) is a form of market socialism, and so is automatically subject to the problems that markets introduce. There were a couple of other concerns I had. Bear in mind that this is only based on one reading of “After Capitalism”, which is a less rigorous book than his earlier “Against Capitalism” (which I haven’t read).

•  ED still allows for a great deal of inequality. Schweickart talks about, for example, ranges for income between $20,000 and $200,000. This still spans the range poor to rich, even if it’s not very poor to very rich. Pragmatically speaking though, the question for me is: does the relative difficulty in achieving ED compared to a more egalitarian revolutionary idea justify this inequality? ED would require a revolutionary change in society, so would it be that much easier to achieve than, say, parecon, for it to be worth considering given the outcome is still quite unequal?
• Schweickart - although he is a Marxist - doesn’t appear to take class into account. A socially stratified society is not impossible in ED and the level above suggests it is likely. To be fair, to make this criticism of ED rigorous, you would need to demonstrate afresh that class based stratification would occur in ED, because the mechanisms by which it would occur would be somewhat different to those in a capitalist society. Once you have class, is a stable egalitarian society possible? I would argue not. Along these lines, see also my comments on a very different book, Robert Nozick’s “Anarchy, State and Utopia”.
• Schweickart suggests a scenario in which the transition to ED might be made in the USA if an economic crisis happened. Given that a socialist revolution is unlikely to occur in the USA any time soon, it might be worthwhile to consider how it could come about in poorer countries where there were strong (capitalist) outside influences.
• Finally, although he outlines a possible transition from economic crisis to ED assuming that there was a will to implement ED, he doesn’t talk about how you could build a political movement and party that would do so.

The last two criticisms above apply to almost all socialist or anarchist schemes for a better world, but the first two I think are serious and specific to ED.

That all said, I do think this book is well worth a read. Economic Democracy would be undoubtedly be a better system than capitalism, and it’s possible that it would be easier to achieve than more radical schemes like parecon. My fear is that it isn’t radical enough - if we fought for it and achieved it, it might not be a lasting solution and may well share many of capitalism’s problems.