Wednesday, December 23, 2009

The Era of Permanent Discontent

Thanks to Juan Cole for writing up the Top-10 "worst things about the wretched period" of the 2000s - for me the Top-10 signs of decline.  Yes, it was a truly bad start to the new millennium for which we have many dumbass electorates and self-serving elites to thank.  The decades' leaders replaced negotiation with belligerence wherever they found it convenient to them - really, with Iraq, whenever it felt right.  The same goes with finance now and the end - Cole's top 1% who reaped 2/3rds of the gains of the 2000s are getting a free pass from the Obama admin to do as they like.  The same goes with the environment, where the failure of Copenhagen to produce targets and timetables in an utterly quantified management culture that responds only to these will mean the reinflation of fossil fuel use - oil sands, clean coal, the whole 9 yards.

The decade began the Era of Permanent Discontent.  There were mass protests and opposition to policies like the Iraq war that political and business leaders systematically ignored.  Individuals like Dick Cheney were more openly contemptuous of public opinion than others, but it's hard to think of a national or state-level leader who has recently opposed his or her small inner circle or the Ring of Lobbyists - on any issue in order to back a majority view.

Continuing the cycle, obvious rejection of popular positions then produce further protests and widening gap between leaders and the vast majority they claim to lead.  Polling data picked it up: rulers implemented positions accepted by a minority of the public, and this is happening again with the health care "reform," where a "clear marjority" wants a public option (October 2009, December 2009), and where political leaders don't, and so there won't be one. In Europe they call this "post-democracy." In California, it is called minority rule, and a UC professor George Lakoff has started an initiative to end the Proposition 13-based supermajority rule for budgeting and taxes.  This is a great idea. But it needs to confront an electorate that has no experience with or trust in real majority rule.

The twin of permanent discontent is Permanent War.  Bush's "war that will go on for years" has become Obama's Afghanistan escalation and similar rhetoric of standing, dispersed dangers to global security.  Apparently no American executive can govern without Cold War-style insistence that the country is in grave danger from all over.  The benefits to the military and industry are obvious, and so are the benefits to executive authority.  Obama's Wars now involve escalating the drone attacks and secret military incursions into Pakistan that echo the Nixon-Kissinger incursions into Laos and Cambodia that hardened and widened the Vietnam war that they too claimed to be winding down.  In the context of majority demands for public health care, better infrastructure, cheaper higher education, green technology, more and better jobs, war has an important role to play.  The function of war i to make all popular things impossible.

It's worth nothing that finance has come to play a similar spoiling role. Its absorption of somewhere between $17 and 24 trillion has already killed off any new New Deal for the states and their outmoded intrastructures and social systems (the US ranks 12th to 16th in the social distribution of its own core technologies, broadband access).  Finance is increasingly acknowledged to invest largely in unproductive assets, so it's not like we need its domination over the economy because they are about to give back to society - give back new industries, high productivity growth, better living for all.

But the financial sector is good for the political executive function. It concentrates wealth and concentrates the power that goes with it.  Wall Street's importance magnifies Washington's importance, and the leaders of each get enormous personal benefit from the acute stratification of their sector, where all meaningful decisions are made at the top.  The concentration of finance into a few banks that are too big to fail is also good for the military, which operates on the same principle.  Having a superconcentrated financial sector run by insiders has long stabilized corrupt, crony-ridden governments in places like South Korea and Japan. It provides the same function in the United States.

The epoch battle now shaping up is between innovation and control.  Concentration and hierarchy are good for control and bad for innovation.  You can't spread broadband across income groups if you can't distribute and share because your broadband industry is a plutonomy of interlocking monopolists.  But most of our innovation industries, starting with IT, have become oligarchies built up around monopoly rents, and the innovation economist David Mowery has pointed out that software developed with market shares of 80 percent at home and 65% abroad (p 14).  Innovation depended on acquiring monopoly control in the post-war market environment - and on large amounts of military funding.

Where are the forces of innovation that can do without this kind of control?  Mostly lodged in our permanent discontent.  My hope - and fear - is that they will remain dormant until they enter into open revolt against the control-focused governance that now pervades every corner of politics and the economy.

In 1009, Egypt's Fatimid caliph al-Hakim leveled Jerusalem's Church of the Holy Sepulchre to the ground. He then "hacked the church's foundations down to bedrock."  The church was rebuilt in 1048, but it's initial destruction became the cornerstone of the crusade preaching of the Catholic Church. His successor would rebuild the church ing 1048, but Hakim's rash act stirs demands in Europe for a Christian crusade to recover the Holy Land from the "infidels." In 1096, the First Crusade would leave Europe for the Holy Land with more than 30,000 men, and would crystallize the anti-Islamic hostilities and salvific-warrior mentalities that seek to control our destiny today, a thousand years down the road.

1 comment:

Gerry Barnett said...

Thought provoking commentary, Chris. I would add that in the opposition of innovation and control, in some ways it is really about innovation within the control of the status quo, and innovation that falls outside of that control and challenges it. That is, the status quo, to keep its power, also needs some change. Marx had this part of the critique right, but it doesn't have to require an evil capitalist middle class. Schumpeter can be read to propose the same thing in "creative destruction". The aim for those in power, however, is to somehow contain this destruction, this change, with the same infrastructure as the one they already control. Perhaps then the interest in both regulation and financial markets. Regulation raises the bar for independent development. Control of financial markets allows access to a share of anything new as that new thing seeks capital to mount an attack on some aspect of the status quo. "You may attack us with something new if we make more money from your success than we would otherwise."

One other point. There are some arguments from social network theory and from technology marketing that fragmented markets tend, past a critical mass of conservative buyers, to pick winners as a way of managing risk. A dominant technology company is available to maintain a product and answer for its warranties. A dominant technology company will produce updates compatible with its core product, minimizing the need to transition from one product to another. A dominant technology company produces network externalities--easier access to people already trained in the technology, interoperability across implementations, and the like. The argument goes, at some point, cumulative individual choices impel one company toward monopoly status. A second company may smartly come along for the ride as the loyal opposition, and we get a duopoloy such as Coke and Pepsi.

The point about all this is that for technology arising in systems, one can get to many of these same effects through standards and common platforms--that is majority rule--rather than via monopoly selection. That is a broadly capable market will choose standard platforms to maximize shared opportunity while a broadly dependent one will pick a monopoly winner to minimize risk. The monopoly winners of course find this quite acceptable, and will ascribe their dominance to superior business practices and adopt defensive measures to preserve their position.

The threat to all this is local practice that cannot be regulated or bought out. That, to my mind, is the starting point of anything new that might offer a counterpoint to the present dominant positions of the alliance between capitalism and what I think of as technology feudalism.