They don’t call it the dismal science for nothing. If economics is a study of scarce resources, maybe this is not so surprising. And if the macroeconomic weather is persistently heavy, maybe it’s also not so surprising to find economists sitting under a cloud of gloom.
To judge by his new book, Ryan Avent, a senior columnist at The Economist, fits this description. The book is written in the upbeat and accessible style of his employer. But it has its eyes fixed firmly on an approaching storm. Emotionally vulnerable readers may even come out the other end of it saying things like “Oh, what’s the point?” or, more simply, “fuck it” with only a general sense of what “it” actually is.
For all that, The Wealth of Humans is a provocative and timely study, which raises questions fundamental to the future. Not least the haunting suggestion throughout the book is that the global economy, powered by digital technology, is nurturing – or has nurtured – political trouble. Britain’s vote to leave the European Union, and the election of Donald Trump in the US, might be seen as two early symptoms of a searching change to the liberal order of things. Many are already arguing as much.
The broad shape of Avent’s thesis follows an historical parallel. The nineteenth century saw unprecedented economic growth powered by a combination of free trade and new technology. But, like today, this new vitality, which brought extraordinary wealth in some areas, also created inequalities and social displacement, and forced a new political settlement. In particular, it led to a consensus about the role of the state, and the nature of public policy. It saw the development of labour unions (and a Labour party), temperance movements, campaigns for political enfranchisement, as well as turbulent new ideologies: socialism, fascism and anarchism.
The long-term answer in many developed western countries was a form of social democracy. This continues to condition much of what we mean when we talk about politics and policy: education, healthcare, welfare or social insurance, spending on public infrastructure.
So just as the industrial revolution galvanised new political movements and ways of thinking, so the impact of the digital revolution on the economy is drawing the battle lines for a new conflict. Avent’s key insight is that this will turn on a question rooted in a glut of economic labour: who belongs?
The digital sphere generates this glut – one meaning of the wealth of humans – in three main ways: automation, globalisation, and by boosting the productivity of highly skilled workers. As technology and software become cleverer, they will offer a cheaper and more efficient alternative to many tasks currently carried out by people. Such tasks range from taxi driving to reportage. The same new generation of technologies has also spurred the forces of globalised wealth creation, and brought significant growth in employment to developing countries. But this has been at the expense of the developed world, and, to date, has often compromised middle-earning workers in the manufacturing sector (though Avent suggests it will be felt increasingly among the professions). The power of technical know-how also means that ever-smaller groups of elite, educated professionals can leverage their privileged position. Investors, lecturers, doctors, lawyers – all can marshal smart machines to do more with less, placing a higher premium on the competition around their skill set.
In this picture, the now familiar story of extreme inequality between the wealth of the one per cent, and those on stagnant median incomes does not look quite so extraordinary.
With an abundance of labour and the heightened efficiencies of globalised technology, more people are competing for less work, which increases the numbers who lose out. So who belongs? Who will share in the plentiful fruits harvested by the new technology? And how will societies frame the interests of their increasingly divided members?
Faced with this three-pronged assault, it feels natural to cast about for something to parry it away. To rival the competition and release untapped funds of productivity, governments have often reached for two words: education and skills. Education policy germinates from this sort of logic. The late nineteenth century saw the birth of campaigns for compulsory education, which, in the UK, came to fruition in the 1880 act of parliament. This pattern continued into the twentieth century with rising numbers of university graduates. The percentage of graduates has now increased to 40 per cent.
Mercenary, utilitarian and entirely reductive as this way of thinking about education might be, it helped to move workers from relatively low-skilled jobs, to more highly skilled and highly productive positions. It was good for the economy. And, even now, much of the rhetoric about the value of education to the taxpayer still turns on the billions it contributes at the national level.
But Avent argues that traditional education policy is an analogue mechanism ill-suited to the digital age. It simply won’t work. It won’t work for two main reasons: populations are about as educated as they can be, and technological efficiencies have limited the availability of skilled positions while increasing access to skilled workers. (It’s no wonder that insignificant arts graduates will feel more and more obsolete with each turn of the page.)
Completing a degree is still, for now, a passport to higher earning, but the real returns go to those with postgraduate qualifications, particularly in the sciences, economics or finance. In the US, only about 10 per cent have a postgraduate degree. Is it completely unrelated to discover that the total share of national income which the top 10 per cent of earners takes has increased since 1980 from a third to a half? Is the value of education increasingly accruing to only a small fraction of the population?
The effect on productivity is no more cheering. Larger numbers of displaced workers are now competing for low-skilled positions, which drives down their wages. It also, perversely, reduces the incentive for companies to invest in new technologies, if it is cheaper for them to employ people. We can see the outline of a deep structural rut.
And just when you think it can’t get any worse, even areas which have traditionally provided a home for abundant labour might be about to downsize. Public services, such as education and healthcare, Avent describes as “low-productivity sponges”. They have operated in basically the same way for decades and made negligible efficiencies. Teachers teach the same numbers of children, but their salaries have to increase to remain competitive with industry. If they don’t manage to do more with less, this makes them more costly, but it also means that they employ more people. Across the Atlantic, employment in education and healthcare has doubled since 1990.
But digital technology may also work its revolutionary power to wring out these sponges. In the case of higher education, as universities charge higher fees and prospective students start to question the value of a three-year programme of study, new technology may look for a new market to corner. Already we have seen the growth of massive open online courses or MOOCs. These digital programmes are cheaper to run, and allow small numbers of lecturers to oversee many more students all around the world. Again the highest echelon draw down the benefits. The technology will allow the very best academics to design courses which can reach much larger student communities, dramatically altering the role of campus lecturers and freezing out teaching assistants.
If the modern economy is a creature, it begins to look and feel like the dystopian invention of a science fiction writer. We see some sort of dematerialised pulsating orb with fibre-optic tentacles wrapped in a labyrinthine mesh around the globe. Like a lot of sci fi, or even many currents of thought in the modern world, this feels peculiarly gnostic or dualistic. The humdrum world of the average worker can only just discern the fragmentary splinters of exalted light at the centre of the globalised system.
This dematerialised and rarefied character of ultimate value is a leitmotif of the book. Technology has changed things dramatically since the nineteenth century. We have witnessed a journey from “capital” to “social capital”. At one time, the assets which made a firm productive had hard edges: machinery, buildings and so on. In the twenty-first century a firm’s most precious asset is “the behavioural patterns which live in our heads”. Now, more than ever, ideas matter above things.
The technology company Apple is a prime example. It’s success is rooted in an ethos of design. The company does not make new technologies. It applies innovative ideas to existing technologies, then outsources their manufacture. The premium is on the idea or the flow of information: the design, the linkage between key insights which will lead to a product everyone wants. The same is true across companies in different sectors. Buzzfeed’s unique value is the working culture it has fostered among all its employees, which correlates the articles it produces with a data-driven advertising strategy. In car manufacturing, as the assembly line has come to rely more and more on automated processes, the real reward goes to the engineers and consultants who design the software which lies behind them.
And if value now lies in a culture of shared information and behavioural patterns, this culture needs the right sort of environment to incubate. It needs the buzzing metropolitan centres of the world. Big international cities, like London, New York and San Francisco, provide sleek and concentrated networks which support hyper-productive professionals, but also the infrastructure on which the pulse of ideas and information depend. Investors, tech engineers, journalists, lawyers and accountants form hives of professional activity which reinforce their shared productive capacity. Small wonder that such cities become homes for the superrich, and cultures for “assortive mating”. The digital economy might very well be fashioning the illusion of a Nietzschean race of ubermensch, or a secular supreme cast corralled from the unwashed world of ordinary knuckleheads. Is this “them and us” world any less divisive and socially snobby than the artificial hierarchies of court and class? (Indeed, some readings of distributed power in the middle ages imply that we are a lot more elitist than earlier cultures.)
I maybe reducing Avent’s argument to a simplistic parody, but in general terms, he seems to be saying that digital technology makes it possible for a small world of elite professionals to do more, making larger numbers of skilled workers surplus to requirements. But, as he makes plain, this situation supervenes the political order because it erodes the purpose and dignity most people derive from work. A pivotal question arises early on:
“If we can’t offer our children meaning and identity in work, how do we channel their energies towards healthy alternatives, rather than ideological extremism, or social nihilism?”
If the election of Donald Trump is anything to go by, we seem to be plumping for fast-food nihilism rather than the healthy option. And if our situation parallels the outworking of breakneck capitalism in the nineteenth century, then Trump should be understood as part of an incipient pattern, which, in the long run, could be much more feral and internecine. Steered and scrubbed down by Marine Le Pen, Le Front National has been on the rise for many years in France. Even if the two-round electoral system makes it unlikely, the party could steal a march to victory at next year’s presidential election. Other names from the European populist right are also waxing while mixing words like “freedom” with nationalist and anti-immigrant rhetoric: Viktor Orbán in Hungary, Geert Wilders in the Netherlands, and Austria has just narrowly avoided Norbert Hofer.
Britain has seen a far-left candidate, rooted in a grassroots movement, wrestle control of the Labour Party from doyens of the centre-left. And, in a move which shares in the same disdain for metro-management, Scotland has rediscovered old-school social democratic values in the Scottish Nationalist Party. Movements like Syriza in Greece are more extreme. But, like all such movements on the left and right of the spectrum, they fashion their political fortune from the failures of the established system. The Five Star Movement in Italy self-proclaims this subversive stance more boisterously than many, and, with the momentum from Brexit and Trump, has successfully subverted Matteo Renzi’s referendum on constitutional reform.
So if the rest of the book’s analysis is right, for a great many people, we are not providing meaning and identity in work, and the first stirrings of ideological extremism are in play. In this context it is interesting to see how Avent develops the concept of social capital. The widest sense in which we apply “the behavioural patterns which live in our heads” is the loose confederation of identity inside the culture and politics of nations. A shared understanding about “the good life” ultimately governs how far a country flourishes and how far it flounders. If the emerging, and widening, cracks in the edifice of the liberal political order say anything fundamental, it must be that this sort of shared understanding is in some way disintegrating (if it ever really existed as anything other than a vertical imposition).
Seen in this way Brexit looks like a paradox. Many voted to leave because they wanted to restore parliamentary sovereignty to the country. They saw that membership of the European Union was corrupting the software on which the British way of life has run. They feared loss of control – over governance and especially immigration – and with it a loss of identity. And yet the liberal political culture of Britain, which has become something like a consensus among the governing class since Thatcher, shares the same basic assumptions of the European project: free trade. This suggests that Brexit is not restoring a shared narrative about the good life and national identity. Instead, it disguises a country with no clear shared values, whose “social capital” is hampered by deep divisions.
So perhaps there is another question which envelopes “who belongs?”, and that is: “what is the good life?” Between them, these questions sweat in the febrile political atmosphere of the present, and, to date, have generally prompted a stand-off between populist myth-making (straying occasionally into dog-whistle nationalism) versus a kind of supercilious and complacent liberal elitism. Trump’s mantra to ‘Make America Great Again’ is a direct appeal to a white working-class sense of national identity. The rhetoric, tone and values of the leave campaign were similar. As a slogan, ‘Take Back Control’ is not a million miles from ‘Make Britain Great Again’.
If the countries of the modern digital economy are divided between an internationalist elite to whom the benefits largely flow, and populations which modern technology only recognises as more and more superfluous, aren’t these different narratives just the rationalisations of each faction? If we step back from both, and consider them snaked around the armature of the economic structure Avent describes, do they not simply reveal or restate the problem?
One way or the other, The Wealth of Humans, clearly shows from where the current political climate has come, and hints at where it might be going. Just as the industrial revolution forced a political answer in the form of social democracy, something similar might be necessary for the digital revolution. Hence the titular allusion to Adam Smith with the emphasis on rediscovering our humanity. If technology creates a surplus of labour, some degree of wealth distribution will be necessary to prevent demagogic subversion of democratic values and an altogether frightening political conflagration. Deeper still, this situation is basically telling us that our interests are more closely aligned than we could ever recognise from the current levels of inequality. The politics of the digital economy should force us to think beyond the narrow cliques of identity to see that the fortunes of everyone are related. We have more in common – our humanity – than we don’t.
This argument, to my mind, prompts two key questions: does wealth redistribution genuinely recognise our common humanity? And is the digital revolution quite as analogous to the industrial revolution as the book indicates? My (poorly informed) hunch is that the answer to both questions is “no”.
The parts of the UK left behind by the economic competition of the industrial revolution are fairly obvious: large parts of Scotland, the North East, areas of the North West and South Wales. Anecdotes are dangerous, but they can also be quite telling. One side of my family hails from Glossop in Derbyshire. Glossop was, in the nineteenth century, a thrusting centre of industry, but under the pressure of competition from Japan and India, many of its textile mills closed in the 1930s. The same level of industry has never really returned, and some areas suffer from entrenched deprivation. In an example of public social management, the late sixties saw an overspill housing estate created in Gamesley, an area that was once a village on the edge of Glossop. The initiative relocated residents from one of the deprived areas of Manchester. The Gamesley estate in the early noughties was one of the most socially deprived political wards in the country, with high rates of unemployment, and among the highest rates of lung cancer.
It would be possible to find similar stories across the country, from Glasgow to Merthyr Tydfil. Only a matter of weeks ago someone told me about a family in Hartlepool which had seen unemployment across three generations. These are areas that may rely heavily on the helping hand of the state, but does supporting this way of life really get to grips with the dignity of human beings?
The problem with redistribution is that it starts from the same narrow view of life as the rampant capitalism it often challenges. Simply giving people money might allow them to subsist without going under, but it fails to understand that people exist to do more than subsist. The best and most economically productive workers are in their jobs not just because they need to put bread on the table, but because it satisfies something in the development of their character. Their work runs seamlessly into how they relate to people, the way they socialise, how they think, their values, and so on. In my experience, where someone makes a purely utilitarian calculation, even if it is to do a very well-paid, prestigious job, it often has a way of not quite working out. I suspect it doesn’t work out because the person has forcefully pursued one factor – earning money – to the exclusion of all the others. The same logic works in reverse: giving someone money to support a life of limited leisure is every bit as socially nihilistic and destructive.
The fight against discrimination is one of the key chapters in the book of liberal causes. Rightly so. To see someone as black or female or gay before the many other qualities which comprise their character is a kind of moral blindness. But a view of social democracy which turns on the redistribution of wealth for the benefit of those left behind could be seen as simply another form of discrimination. In its eyes, money is the arbiter of value, the principal way in which to make sense of people and their complex motivations. It implies a purpose to human nature which relies on a calculable level of income to support a calculable level of private interest. If the economy deserts the capacity of workers to achieve this through employment, then its productive parts should foot the bill or risk the political consequences. Or so it goes. One way or the other, ordinary “human beings” sound an awful lot like drones. And this unveils the point that redistribution is really complicit with the idea of capitalism. It “buys off” people to support a system which subordinates productive labour – the natural energies and aptitudes of people – to the sui generis pursuit of money abstracted from material things.
But this could be exactly the sense in which the digital age shepherds a rethink about the “human” character of wealth. The sort of problems Avent describes may yet force a new political settlement, founded on a different way of thinking about people, or the way the economy and people fit together. Mark Twain said that history never repeats itself but it rhymes. You sense that drawing the parallel with the industrial revolution is a search for this rhythm. But maybe there is something different about the nature of digital technology, which makes a renaissance of wealth redistribution look more like an unlikely repetition.
In a separate article on this site, I speculated about how technology has, in many areas, already made life more transactional: shopping online, buying car insurance, even sex. This is, at the mundane level, the world that The Wealth of Humans describes. Shopping online, or even self-checkouts, significantly reduces the need for the same number of feet on the ground. In a grander sense, Avent describes the dramatic impact that driverless cars would have by replacing taxi, bus, and lorry drivers. This is the sort of logic which iterates through different sectors of the economy, with the cold and cautionary fury of a programming loop.
But the overriding metaphor in my article was food. Following the insight of the River Cafe’s Ruth Rogers, I suggested that food yields more value (more taste and a richer experience) where we adapt to it, rather than the other way around. It offers more taste where we grow it according to the natural rhythms of the seasons, rather than reshape it to suit the whims of our appetite at any given moment. So if we can learn anything from food – and it seems cheerless to think we can’t – then anything we can value might work in the same way. Not least, people. Allow them to develop their natural potential, and they too will return a richer palette of flavours.
To date, a lot of technology has been applied to do the same kind of things in more efficient ways. But what are the new kinds of things? What parts of the world have previously been left in shadow and undeveloped? If political populism is the warped response to these cultural lacunae, then this should tell us that quite a lot has gone overlooked. And this sort of political and economic alienation has engendered a visceral dissatisfaction with the status quo. Technology should be useful in this situation. Digital technology in particular. Its essence is to broker new relationships between different hubs of information. That ought to mean it’s a powerful way of releasing the productive potential of people and places which have previously not had the opportunity (or weren’t even aware of opportunities). It should prove a powerful means of fostering the sort of strong communities of civil association on which creative, professional and economic activity depends.
But that, in itself, assumes some level of political change. It’s a standard joke that if you socialise two economists you get an argument. So a market economy intermeshed with the complex social and cultural structures of civil society, and which brings the productivity of labour into closer alignment with capital, is hardly an uncontroversial view (or even, as far as I know, a mainstream one). Still, the idea of “civil economy” has seen a renaissance in the last few years.
Most recently, John Milbank and Adrian Pabst, in the Politics of Virtue, have argued that labour, rather than capital, is the most dynamic dimension of the economy, and that productive labour ultimately rests on the classical notion of virtue. “Virtue” recognises that people are idiosyncratic. They are different, with different characters and potential. Each, in their own way, can make a constructive contribution to their society – including economically – if this potential is allowed to develop. But “character” is so nuanced that the “parts” of it which play an active role in the economy are indistinguishable from the many other sides of a life: friendships, family, culture, even the deepest sense of who that person is. Just as at the macroeconomic level capitalism subordinates labour, so for the individual it subordinates all the many and varied things which make them human to their role within a money-making contract (and ironically makes them less productive). Family, society, socially minded values, culture, and religion are all demoted to a private space. In theory this makes public life nihilistic, but places it in a state of permanent tension between the natural interests and desires burgeoning from human difference, and the adamantine and repressive logic of the capitalist machine. It’s hardly surprising to find that liberal capitalism is concurrent with the rise and rise of loneliness, moral relativism, a culture of kitsch mass entertainment, and secularism. It’s also not surprising to find that this sort of popular culture has created the political space for someone like Donald Trump.
The effect, then, is a society crippled by the logic of its own artifice. Avent suggests that the adult populations of many western societies are as educated as they can be. No doubt some would take strong exception to this claim. But, as a conclusion, it makes a certain kind of sense inside his argument. It presupposes that the level of productive labour in the economy has equalled – or exceeded – the limited resources it can capture. But to step back from this logic and look at the history of knowledge and education, the claim is simply absurd. Knowledge is growing all the time. It’s even a fair bet to say it will never stop growing. Inside a single generation, Milbank and Pabst, for example, owe a huge intellectual debt to the thought of the moral philosopher, Alasdair Macintyre. How much more intricate and expansive is the history of knowledge if we trace it all the way back to Pythagoras and Homer? It’s simple: if there are undiscovered thoughts, facts, and findings, then there are also undiscovered economic opportunities. Resources are only as scarce, and education is only as limited, as the boxed logic in which they are wrapped. It’s an indictment of education policy since the nineteenth century that its covert interest has been, in the main, to supply employers with employees. This view is written all over current higher education policy. Sadly, it just produces automaton-like calculations and graduates without the one key skill education should instil in them: an ability to think. If education, like large numbers of people, looks redundant this shows an entrenched lack of moral imagination. Education should invent employers not form part of their supply chain.
The words technology and innovation often go together. And “undiscovered potential” is almost risible as a limited description of the world digital technology is unleashing. What does technology do? In a very general sense it harnesses masses of data that was previously not available. This data can be applied to as many scenarios and problems as you can think of: medical science, speculative physics, crime, travel, public accountability, the profile and breakdown of society, even the spread of viruses. It allows us to “see” things which are out there in a way they have not been seen before. A simple example from my world is books. The internet allows me to discover new volumes and trace the links between my areas of interest in ways that would have previously been curtailed by the time, will and resources available. If I absorb that information, it should mean that I start to think, and so behave, in new ways. It’s only a short leap from that kind of change to new economic activity. As much as anything else, the heuristic character of digital technologies could allow us to see the breadth of cultural experiences. It could reveal the eclectic character of people.
If technology is fuelling political disaffection, then this maybe because we think about it and apply it too narrowly, and only use it to do things we have been doing since the nineteenth century (drive cars, buy food, book holidays, pay tax). Still, it may also be fuelling disaffection in a slightly different way. It may be storing up a fund of frustrated potential, which is constrained by the mechanics of the current political economy. One way to read the new wave of political populism is as a levy of human energies which is in the process of breaking. Trump disdained traditional media and threw his lot in with the tantrum politics of social media. The Five Star Movement likewise have made new media and peer-to-peer communities part of its bottom-up way of operating. Technology is, in both cases, finding new points of connection. Communities which range from anyone who lives outside the home counties and is a bit sceptical about the BBC, to white supremacists and terrorists, can organise themselves and build confidence in their grievances. This might, in many ways, look less than salutary, but it’s a horror story we should confront and understand rather than ignore. Indeed, this may not be a matter of choice.
Confronting this situation with a policy of redistribution amounts to an attempt at containing it or holding it at bay. It’s a sticking-plaster solution. And if the politics of virtue is right, then it will come unstuck under the pressure of human nature. A different kind of politics might be emerging, but it doesn’t have to fit the precedent of reactionary extremes or the sterile bureaucracies of planned economies. Avent makes the point that much of what we now think of as the business of government, came from the late nineteenth century’s attempt to grapple with the social problems of the free market. The digital age may present an opportunity to conceive the nature and purpose of government differently.
A better way for governments to get to grips with the challenges of political populism might be to understand and harness the untapped creativity of people. This is statecraft in a classic Aristotelian sense. The job of government is a little like an artistic director putting on a work of theatre, rather than an administrator allocating funds or delivering services. The job of government is to understand the heterogeneous complexion of the body politic, and bring it to life. Politics is an art. It begins by discerning the innate beauty of human nature. Legislation, investment, education, research and innovation, infrastructure, or areas of public policy not yet imagined – all should set their sights on this spectacle.
Milbank and Pabst put it clearly:
“The key question in contemporary Western politics is whether the main aim of government should be to increase people’s freedom of market choice … or whether its main aim should be to seek to encourage human flourishing ….”
If Avent’s argument is right, then the first option will, in a trophy marriage to modern technology, leave many of us redundant. But, in the second option, technology is a natural ally.
Horror stories often say as much about an age as anything else. In the nineteenth century, Mary Shelley’s Frankenstein summed up the romantic reaction to industrialisation: nature perverted by mechanical science. In the twenty-first century, for me, David Lynch’s Mulholland Drive speaks for the zeitgeist. It is a solipsism of paranoid, egocentric illusions, with only the faintest sense of where the “real” world lies. In our world, ultimate value is abstracted into a financialised ether, and leaves behind it only a hollow echo between the walls of a shopping mall.