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Tools for thinking: a sociological take on the USS pension dispute

I teach fourth year undergraduates a module called ‘sociology of finance’. It’s a kind of mash-up of the ‘social studies of finance’, economic sociology and a little critical political economy. This semester, I had to explain to students why I was taking part in industrial action over cuts to our pension, and I tried to do using the ideas we worked with in class. If social theories are tools for thinking, as I always tell the students, we should try to use them when we can. That converstion continued on the picket line and grew into a seminar for colleagues. They liked it, and so I recorded a verson to share. The central argument is that the tools of valuation – all those ‘gilts plus’, ‘discount rates’, and ‘prudence’ – offer a space where things happen and political contestations are worked out. In every financial valuation, paraphrasing Greta Krippner, lies a history of contestation and struggle. To move towards an outcome that is satisfactory for everyone, I believe this is where we need to focus our attention; our dispute as as much about the sociology of knowledge as it is old-fashined industrial relations.

Here it is. I hope you find it helpful, informative, and not too partisan. I hope you like it too, and if you do, please pass it on.

How the shadow of slavery still hangs over global finance

[published in The Conversation, 21 August 2020]

Shutterstock.com

Philip Roscoe, University of St Andrews

When the infamous Zong trial began in 1783, it laid bare the toxic relationship between finance and slavery. It was an unusual and distressing insurance claim – concerning a massacre of 133 captives, thrown overboard the Zong slave ship.

The slave trade pioneered a new kind of finance, secured on the bodies of the powerless. Today, the arcane products of high finance, targeting the poor and troubled as profit opportunities for the already-rich, still bear that deep unfairness.

The Gregsons, claimants in the Zong trial, were merchant princes of 18th century Liverpool, a city that had quickly grown to be one of the world’s leading commercial capitals. The grandiose Liverpool Exchange building, opened in 1754, boasted of the city’s commercial success and the source of its money, its friezes decorated with carvings of African heads.

But Liverpool’s wealth also stemmed from its innovations in finance. The great slave merchants were also bankers and insurers, pioneers in what we today call financialisation – they transformed human lives into profit-bearing opportunities.

From the point of view of merchants, the Atlantic trade was slow, unreliable and risky. Ships were threatened by disease, by poor weather, and by the constant threat of insurrection. To speed up the flow of money, merchants began to issue credit notes that could travel swiftly and safely across the ocean.

Slaves would be purchased in Britain’s African colonies and transported to the Americas where they were sold at auction. The merchant’s agent would take the money received and rather than investing it in commodities like sugar or cotton to be sent back to Liverpool, they would send a bill of exchange – a credit note for the sum plus interest – across the Atlantic.

The bill of exchange could be cashed at a discount at one of the many banking houses in the city, or replaced by another, again at a discount, to be dispatched to Africa in payment for more human chattels. Credit flowed swiftly, cleanly and profitably.

Obscenely novel

This evolution of private credit did not originate in Liverpool. It had underpinned the Florentine banking dynasties of the 15th century and gave rise to money as we know it now.

British abolitionist poster of a standard slave ship in the 18th century.
A complex financial system evolved around the trade in enslaved Africans. Everett Collection / Shutterstock

The obscene novelty of the slavers’ banking system was that this financial value was secured on human bodies. The same practices continued on the plantations, where the bodies of slaves were used as collateral on loans allowing the expansion of estates and the acquisition of yet more productive bodies. The slaves were exploited twice: their freedom and labour stolen from them, their captured “economic value” leveraged by cutting edge financial instruments.

The Liverpool merchants also pioneered the use of insurance as a means of guaranteeing the financial value of the their commodities. The slavers had long recognised that the only way to survive the occasional total losses that expeditions incurred was to gather together in syndicates and share the risk.

So when the captain of the Zong realised he was unlikely to land his cargo of sickening and malnourished slaves, he ordered 133 souls to be thrown overboard. The perverse legal logic was that if part of the cargo had to be jettisoned to save the ship, it would be covered by the insurance.

These bodies-as-financial-commodities had only speculative value. Insurance made it real and bankable. This was true in 18th century Liverpool and it remains so in 21st century Wall Street.

Painting by JMW Turner showing abstract ship at sunset with bodies in water.
The Slave Ship by JMW Turner depicts the Zong massacre. Wikimedia

Financialisation today

Financialisation has since taken many forms, but basic elements remain the same. It is based on uneven power relations that capture future individual obligations and make them saleable. The contracts underlying the 2008 credit crisis, for example, turned future mortgage payments into tradeable financial securities with actual present value.

For those issuing the bonds, the profit was risk free. The risk was borne by predominantly poor Americans, whose adverse credit ratings and lack of financial skills made them easy prey for the issuers of mortgages so constructed as to lock them into economic bondage. These people were disproportionately black, Latino or migrant.

Insurance played a part here, solidifying the speculative value of investments to the benefit of traders. And when the bubble finally burst governments stepped in to maintain this system, the US Federal Reserve supporting giant insurer AIG to the tune of US$182 billion (£139 billion) while many people lost their homes.

The credit crisis bailout is eerily reminiscent of another. By the time of abolition slave ownership was so embedded in British society that the government was forced to compensate individual owners for the loss of their capital – it required an enormous loan that taxpayers only finished paying off in 2015.

I’m not saying that bankers today are like slave traders. But I am saying that contemporary finance is still riddled with regimes of dominance and exploitation at work.

Take contemporary philanthrocapitalism, where finance seeks to do good while also benefiting investors. Novel financial instruments position social problems as an opportunity for profit. The bodies of prisoners, for example, become implicated in schemes to prevent recidivism with personal character reform the trigger for investment payouts.

Schemes such as this make social problems the responsibility of individuals and ignore the structural relations of austerity that lie behind them. Finance wins twice, praised for solving the very same problems that it has benefited from creating.

Beware financiers bearing gifts. Student loans, mortgage bonds, social impact bonds, even biodiversity investing – all earning rents from the captured future activities of relatively powerless individuals – bear the shadow of the Atlantic trade.

Philip Roscoe, Reader in Management, University of St Andrews

This article is republished from The Conversation under a Creative Commons license. Read the original article.

What makes a market? Understanding the social connections that underpin markets

I was recently invited to participate in a virtual seminar, ‘Building a market for exchange traded derivatives for recyclables’ (29 July 2020). That’s a fine idea, a financial market inspired solution to many practical problems facing global recycling. The recycling market is dogged by informational problems, with oversupply in some areas and undersupply in the areas where there is meaningful demand. It is dysfunctional, in the words of Rowan University’s Professor Jordan Howell, who organised the seminar. Finance theory tells us that a derivative market might be the answer, offering producers and buyers the possibility to gain some surety as to future prices and plan accordingly. Howell’s colleagues Professors Jordan Moore and Daniel Folkinshteyn shared research showing that derivatives markets tend to improve trading conditions in the underlying commodity market as well. Industry experts shared their stories about starting financial markets and managing risk through derivatives while the audience comprised industry representatives, regulators, and academics from across the United States. I was honoured to speak alongside Commissioner Rostin Behnam of the US Commodity Futures Trading Commission, who set a regulatory vision of innovative markets serving the economy through a robust and fair process of price discovery.

The event was organized by Professor Howell and his colleagues, academics from the Rowan University School of Business in New Jersey, and sponsored by the New Jersey Recycling Enhancement Act Grant Program and the Rowan Centre for Responsible Leadership. Despite the usual technological gremlins, it was a fascinating session.

My talk was titled ‘What makes a market? Understanding the social connections that underpin markets’. I was delighted to be able to say that that many of the findings of my research had already been echoed by earlier speakers, especially Stein Ole Larsen, a Norwegian entrepreneur who has founded NOREXECO, an exchange for pulp and paper.

Continue reading “What makes a market? Understanding the social connections that underpin markets”

‘Creating Economy’ reviewed in Journal of Cultural Economy and The Law Teacher

My book, Creating economy: Enterprise, intellectual property, and the valuation of goods, with Barbara Townley and Nicola Searle receives favourable reviews in Journal of Cultural Economy and The Law Teacher. Rimi Kahn’s review essay in JCE calls the book ‘a timely and lucid analysis of the social and institutional processes through which the translations from text to product take place…an astute and empirically grounded study’. Kahn concludes that the book is ‘vital reading for those interested in the complexities of neoliberal cultural economy’, and that ‘it offers a generative new approach for examining questions of cultural production ownership and value.’ Ruth Soetendorp, writing in The Law Teacher, praises the book’s interest in theorizing intellectual property beyond the confines of the law school, and calls it a source of ‘invaluable insights’ for those interested in using the book as a pedagogic resource.

Creating Economy reviewed in JCEDownload
Creating Economy reviewed in The Law TeacherDownload

Reviewing “Peak: Secrets from The New Science of Expertise”, by Anders Ericsson and Robert Pool

It seems strange to call a book about self-improvement “Peak”. Perhaps the publishers balked at “Uphill Struggle”, though that would have been much more fitting for a tome in which Anders Ericsson – the psychologist behind Malcom Gladwell’s “10,000 hour rule” – and science writer Robert Pool channel the Calvinist spirit to insist that greatness is possible for everyone. So long, that is, as we work at it…

Read the rest on the THE website or download the PDF.

This review appeared in Times Higher Education, 9-15 June 2016

 

The promise and paradise of austerity

Out online, my review of Martijn Konings’ The emotional logic of capitalism (Stanford University Press, 2015). Here’s an extract:

‘Certain questions dog progressive thought: why, in view of the manifest failures of financial capitalism, is its hold on our society stronger than ever? Why, despite the empirical evidence of foreclosures, vacant building lots and food banks are people unable to see the catastrophic consequences of current economic arrangements? How has neoliberalism emerged from calamity ever stronger (Mirowski, 2013)? Why, as Crouch (2011) puts it, will neoliberalism simply not die? With this slim book Martijn Konings, a scholar of political economy at the University of Sydney, sketches out an answer: that progressive understandings of capitalism have neglected its emotional logics – its therapeutic, traumatic-redemptive, even theological qualities – and failed to recognise our emotional investment in money, our belief in the social role of credit as an ordering, regulatory mechanism, and our need for the redemptive promise of austere, well-disciplined economy… ‘

You can read the rest here

Cost-benefits and twitter follows: eleven weeks of good stuff, week 2

So far so good. It’s Sunday morning, the second week of January and I’m sitting down to write the second installment of my 11 weeks (or thereabouts) of good stuff. Each week I’ll take a section from the manifesto published in A Richer Life, and post it on this blog with some additional commentary.

As I review the not-very-inspiring viewer statistics for last week’s effort, here’s a supremely appropriate second extract:

And kick our cost- benefit habit. Efficiency is not the only virtue. A society needs justice, and empathy, with all the obligations that go alongside them. It’s too easy, faced with a difficult political decision, to emphasize benefits over costs and take refuge in ‘trustworthy’ numbers and scientific calculations. But when we examine those numbers, they turn out to be politics in disguise. We need conversation and debate over what is best, and best for whom, not what is cheapest; to open up the black boxes of measurements and metrics so that we can see what these metrics really are, and what they do. Cost-benefit thinking is corrosive in our own lives too. If we act only in anticipation of a return, we will all be the poorer, while a society where all contribute will be a far richer place. So go to that team meeting, even though it really isn’t part of your job. Take your friend/spouse/children to the play/film/concert, even though you’ll hate it; they’ll have fun and you may well find that’s enough.

The world has changed a great deal since the summer of 2014 when I wrote those words. The horrors of last year – Charlie Hebdo, our awakening to the ‘existential threat’ posed by Daesh, the attacks in Paris, and most of all, the refugee crisis in the Mediterranean and Europe – have forced a sudden maturing of political discourse. While economics still has plenty to say on the topic of migration – largely positive, as it happens – it is just one of many competing voices: the Christian left, for example, represented by Giles Fraser here, or the Archbishop of Canterbury’s careful association of British patriotism with welcome: ‘In today’s world, hospitality and love are our most formidable weapons against hatred and extremism’. Equally, there is an understandable fear, driven by the shadow of attacks that weren’t, and the ugly violence that manifested itself in Cologne on New Year’s Eve.

Closer to home, just look at the change in political discourse over flood defences. At the beginning of 2014 the coalition government demanded a great hike – a 60% increase in benefits – for every pound spent on flood defences. Following this winter’s deluge, we see the environment agency advocating a holistic approach to flood prevention, and stating ‘people will always come first’.

In fact, in such a climate, there is something appealing about the cool voice of reason provided by economic analysis – a dispassionate assessment of the long-term costs and benefits of any action. But it’s clear for now that there are bigger questions at stake.

We must be careful to distinguish between efficiency as a means of distinguishing between solutions to rival problems, and competing solutions to the same problem. In the latter instance, cost benefit has a lot to say. The problem comes in the assumption of transferability. An absurd example will illustrate the point: let’s say the cost benefit payoff of dealing with floods is better than that of dealing with refugees. There is an economic argument to say that we should sort out the floods first, whatever the human costs. That may sound crazy, but in debates over global warming, for example, it’s more or less what many economists have said. When an eminent American economist says that it’s unethical to invest in climate change prevention projects of uncertain return, one can’t help seeing a politics that privileges the haves of the developed world over the have-nots of those countries like Bangladesh.

But my book isn’t really about policy. I’m concerned about the corrosive effect that cost benefit calculations have on us as people – as persons. I argue that individually self-interested action, often driven by cost-benefit analysis, is collectively impoverishing. Private vice is not, despite what contemporary neo-Smithians like to say, a recipe for public virtue. Not at all.

Cost-benefit reasoning is a mode of thinking that we slip into very naturally, so naturally in fact that thinkers such as Daniel Dennet have argued it to be the only truly natural way of thinking. We are all its victims. Indeed, as I drag myself to my shed on a Sunday morning to write these words I can’t help noticing that the views of last week’s endeavour could be numbered on fingers and toes. Why on earth should I bother?

When I’ve finished the blog, I’ll announce it on twitter. I’m fascinated by the economics of twitter, and particularly the cost-benefits of following others. Being a twitter dilettante (a twittertante? A dilettwit?) I just drop in now and then to see what’s going on, catch up on the news and so forth. My friend and fellow twitterante @cfhelgesson captures the mood of this social media existence nicely when describes his news feed as being like rain: when he’s thirsty he can cup his hands and take what he wants, and when he’s not it simply passes by.

A diletwit like me can only cope with following a couple of hundred accounts, beyond which there is a ‘diminishing marginal return’ on each additional follow. (CF, more industrious than I, follows over 700. I will ask him how he does it.) Thus I am operating a clear-cost benefit algorithm for managing my twitter follows; the costs in terms of missed tweets and time required imposed by following one more person outweigh the potential benefits in terms of hilarity, news, political acumen, feline cuteness and so forth. It’s one in, one out, pretty much.

How then do people rack up 10,000 follows? Surely the cost of keeping up with each of these additional follows will greatly outweigh any infinitesimal marginal benefit? Unless, of course, the game is different; if a user is only interested in building up his or her own following, then the economics suddenly work out very well. There is no cost in any additional follow because one has no intention of paying any attention to anything they do, nor is there a cost for any additional follower. But if one sees value in a huge following the marginal return on each follower is increasingly large. The whole economy is suddenly upside down. (The same applies, oddly, to the business of being super rich. When one is wealthy enough to start buying yachts, football clubs and politicians, each extra dollar becomes worth a whole lot more than the last one.)

If one follows total strangers in the expectation that some of them will follow you back, then following huge numbers is an efficient and instrumental means of generating value, and ‘building an online platform’ as the marketers like to say. I was followed last week by ‘a self-taught photographer and photoshop artist located in Los Angeles’ who tweets gorgeous head shots and theatrical bon-mots to an audience of 11,000, but follows 9,999. Including me. Enough said.

Presumably, not everyone follows back, and that 9,999 number requires careful curation. 30,000 follows to 10,000 followers might look bad; better to keep it level. So every time I encounter a twitter profile following a four figure number, or more, and a matching level of followers I think ‘Aha!’

I’m sure anyone with any level of sophistication regarding social media figured this out long ago – but on the other hand, if they did, why does the following trick still works at all? (Maybe it doesn’t – maybe there is, across twitter, a diminishing marginal return on following for followers. That would be truly ironic.)

I instinctively dislike this game. There are two ways of approaching twitter. The first is as a community, where one can share jokes and articles, strange gifs and pictures of cats and all the other things that make the Internet go round. The emphasis, though, is on share, because sharing implies receiving and participating as well as giving. It involves a certain degree of empathy in as much as one expects that people may be interested in whatever it is that one has chosen to tweet. It involves treating people as worth something in them themselves.

The second is to treat twitter as a gigantic tool for self-aggrandizement: building an online profile, getting famous, driving business, ultimately cashing in. It involves asking people to pay attention to you – to spend their time, their efforts on you – without any sense that you will pay attention in return. That additional follow, your ten thousandth, is a trick, a con. It is a message sent to someone saying ‘Hey, you’re interesting…’ that means no such thing.

Of course, if cost benefit is your only measure of moral purpose, then such a game is completely legitimate. It’s a cheap and easy way to hoover up followers, and you’d be a fool not to. That’s why cost benefit alone is such a damaging moral standard, because it mandates instrumental and collectively impoverishing courses of action. The twitter following game is a synecdoche for a much bigger discussion: we need ways of talking and thinking that transcend cost benefit in our own private lives as much as our public sphere. If everyone behaved according to the rules of the twitter following game in real life, we really would have some problems.

All of which brings me back to the business of writing this blog. If I were driven by cost benefit alone I would have sat in the warm and read the paper, pausing only to follow a few more hundred total strangers. I certainly wouldn’t have spent a precious Sunday morning hunched in the shed, peering at the screen, tapping out words while my toes go steadily numb.

I’d like it to be read, of course. I’d like the number of readers to exceed the number of my fingers and toes (so if you like it, please pass it on!). But that’s not why I wrote it. I did so because I said that I would, and I have a promise to keep to myself as much as to the invisible Internet. I did so because I know some people –CF, perhaps – will read it, and I hope they will like it. Perhaps it will raise a smile here and there.

And finally, I did so because I consume blogs too, many of them very good, and I want to be a genuine part of that community of writers and thinkers. I don’t expect this blog will make me rich and famous, and I’m not building an online platform; I simply believe that the world is a better place for the collective effort of writing decent prose and sticking it online. Because lots of us think that, it is.

Eleven weeks of good stuff

It’s New Year. The time of December parties, Christmas celebrations, of self-indulgence and sofa-slouching is over. The Hogmanay hangover is easing its vile claws from your frontal lobes. It’s time, as diet gurus and health fads tell us, for the New You; for a booze-free January, a gym subscription, and resolutions that must not be broken in the first few days.

In the spirit of all those thirty-day programmes, I am offering my own contribution to our self-improvement. Eleven weeks of good stuff, or thereabouts.

The epilogue to my book, A Richer Life, contains a Manifesto – suggestions for ways in which we might improve our political discourse, our polity, and our personal lives. Introducing it, I wrote:

‘We are all economists now. Every day we think in terms of cost and benefits, and follow the measure of our own self-interest. In the shops, in politics, even in love, we expect value for money and efficiency, high returns for low risk. Economic reasoning is withering our social and political institutions, and the strategic, instrumental self-advancement that it advocates is corroding our personal relationships.

How can we be different? How should we think, talk and act; what tools should we use and institutions should we build to be better persons? What must we do to live a richer life?

Here are my suggestions. Some are big ideas, and others are things we can each do today. Together, they call for nothing less than an inversion of contemporary political economy: for an economics that is grassroots, not top-down, for trade that is embedded in relationship, and for a world where the claims of capital and property and are not allowed to ride roughshod over the dignity and worth of individuals.’

There are eleven suggestions. Not for any particular literary or aesthetic reason, but simply because I stopped when I had done. Once a week, for the next eleven weeks, I’m going to post each one on my website with some elaboration and comment. I hope they will make you think, and even better, talk. Maybe even act. If you like them, pass them on, tell your friends. If you don’t – fair enough, but I hope you stopped to think why. (If you didn’t, I suggest you listen to Tim Minchin on the virtue of being hard on your opinions).

So here’s point number one.

  1. Let’s cure our obsession with price. We must find a way of speaking about priceless things – the environment, biodiversity, culture, care, relationships, quality of life – that does not depend on price. Putting a price on nature, for example, makes it interchangeable and consumable, an outcome that is neither needed nor intended. Something is priceless, as the philosopher Roger Scruton points out, because we discover its value only through experience and interaction and therefore there is nothing for which it can be meaningfully exchanged. The virtues of a loving relationship are worked out and manifested as we go through life: they defy foreknowledge and transcend price. We must cultivate a political discourse dignified and intelligent enough to recognise the limits of our knowledge and accept the worth of things around us.

Price is often shorthand for knowledge. According to mainstream economic theory, it is the price mechanism that translates our rich and varied preferences into a single currency through which needs can be met. But the logic of the market often takes another step and claims that price is the only way of knowing about something. Virtues which cannot be expressed in price cannot be virtues at all. To say that something is priceless – a work of art, for example – often just means that it is very, very expensive.

Price is all knowing, and that omniscience means that we must be able to see into the future. Possible benefits must be factored into present price, just as the future revenue streams from a new piece of machinery in a factory are factored into its upfront cost. This is how the discourses of contemporary life encourage us to think about the choices we make. A purchase, a leisure activity, a new fitness regime, a new job, a boyfriend or girlfriend – all of these are to be planned as investments and understood in terms of their payoffs.

But Scruton, himself a defender of markets, hits the mark when he says that pricelessness means exactly the reverse: that for whatever reason, we cannot know or understand what these future values may be. The only way to find out is by doing, sometimes putting ourselves at risk in the process. The tendency to price is a tendency to control, a will to power over the uncertainty and chaos that adds depth – delight and despair – to our lives. Who would wish to live like a factory machine?

Accepting the limits of our ability to price things involves a certain humility and requires us to develop other ways of speaking and thinking. There is an argument that putting a price on nature gives it a seat at the table, allowing it to be factored into calculations and decisions. That argument is really an indictment of our own lack of imagination: we have to find other ways of allowing the priceless to speak.

There’s a subtle politics at work in our obsession with price. Prices are numbers and we tend to think of numbers as objective and scientific. But all kinds of mechanisms may be at work in the construction of those numbers. In my book, I talk about the practicalities of finding prices for things that can’t be bought and sold – landscapes and bodily organs, for example – and show how tendentious and political many of these mechanisms are. They are often unfair, too. Once we get into the land of calculation, the person with the biggest calculator always wins; the supermarket’s calculative power and customer data is a hugely powerful tool in shaping our choices. A neoliberal free market enthusiast will argue that the market is the biggest calculator of all. It is, indeed, but not one that is necessarily fair – ability and willingness to pay are not the same thing at all.

Price is a mode of speech available only to those who are able to pay. By taking price as the sole measure of value, we exclude and disenfranchise those who can least afford to be excluded.

Three good reasons to cure our obsession with price.

A well-known brand of cosmetics advertises itself with the slogan ‘because you’re worth it’. These words serve to focus the action of valuing – of worth and deeming worthy – on ourselves, while reducing everything and everyone else to commodities exchangeable in pursuit of our own satisfaction. These For a New Year’s resolution we could try the reverse – ‘because they’re worth it’ – as a justification for any kind of action.

Now that is a slogan I’d like to hear in public life.

The problem with economics, again

A very happy New Year to all – to celebrate, here’s something from the archives. I wrote this for the LSE Politics and Policy blog in the spring of 2014, just after my book had been published. It circulated for a while, and popped up again at the end of the year as one of the blog’s ten most interesting reads from 2014. I’ve seen it on twitter a couple of times since. It hasn’t gone out of date: the year of horrors that was 2015 threw up so many issues about which economics would have something to say, notably the crises over European debt and migration. With typical humility and understatement I chose the title ‘The problem with economics’. So, without further ado, here it is once again:

‘In my recent book, I Spend Therefore I Am, I claim that economics is itself one of the biggest problems we face today. By economics, I don’t just mean something that happens in universities, but a way of thinking based on and institutionalizing certain assumptions: that we are driven primarily by self-interest, organised by competition, and governed by the calculation of future returns over costs. I argue that the logic of the market has even become embedded in our daily, personal interactions. And I suggest that, as the real challenges for our future – such as the distribution of wealth, global welfare and climate change – cannot be usefully discussed, let alone settled, in those terms, economics itself is in need of some attention.

Judging by some of the reviews, I have ruffled a few feathers. I have been accused, even by the more benevolent, of doing economics a disservice, setting it up as a straw man to be knocked down. In one sense this is true. In the UK, at least, university departments of economics are heterodox, interesting places, housing scholars of all hues: Marxist economists, development economists, and labour economists who work happily alongside behavioural economists and financial econometricians. I freely admit this but it’s what happens outside universities that matters, and the diaspora of one particular kind of economic thought, that represented in economic textbooks, PPE degrees, and the business case justification, is almost universal.

Universal it may be, but fit for purpose it is not. It crowds out other values and leads conversation into a cul-de-sac of squabbles over calculation. In February, a major healthcare institute hit the headlines with the suggestion that statins (anti-cholesterol drugs) should be prescribed to the majority of men over 50 and women over 60, on the grounds that it is more cost-effective to flood the nation with drugs than deal with a tsunami of heart-related health care issues. This may be true but it obscures some more pressing questions: should we eat less, eat better, spend more time out of the office, and be subjected to less stress? Is there something fundamentally wrong with the organization of our society of which heart disease is just a side-effect?

The economist’s answer is that we just need better (read more complex) models. But ceding authority to models rob us of the ability to talk about what we should do, or even to recognize that the best we can do is far from good enough. If we object to contested and complex models sitting as unelected legislators in our parliament, then more sophisticated models will simply worsen the situation: more sophistication equals less transparency and less opportunity for the lay-citizen to contest the models’ judgement.

This kind of economics is ever present in our public discourse. It appears when we ask what we should do about higher education or the flooding in the South West. Government officials charged with looking after culture are obsessed by the Treasury’s Green Book and preoccupied by the thought of market failure. The way that we talk tells us what counts and what does not and helps us assign value to certain things. But talk alone is not enough to ensure the dominance of economics in our public and private lives. For that we need economic things: models, tools and organizational architectures. It’s not a metaphorical ploy to suggest that economic artefacts are active legislators in the world around us. The complexities of arriving at a decision in the modern world force us to share the burden of calculation with devices, which become, in the words of the French sociologist Michel Callon, ‘prostheses’ for economic action. These things do. They act in the world and our agency is shared out amongst them.

So, for example, when one adopts the methods of the Green Book, or switches on an investment bank trading screen, one takes up calculative tools in which certain economic assumptions are embedded. The discounted cash flow, central to business case analysis, produces in the world a very particular set of effects with its roots in economic theory – the diminishing value of money (and sometimes persons) in the future. Philosophers may be less than happy with its assumptions (how can one discount a life?) but every day in offices and trading rooms around the globe, the discounted cash flow really does make the world into a place where the future is worth less than the present.

Often, economic devices are naturalised such that we often don’t notice their effects. Let me offer another example. My colleague Shiona Chillas and I have spent some time investigating the mechanics of online dating sites. We have been able to trace the progress of particular economic ideas and methodologies into the construction of dating algorithms and interfaces. When a user enters the site, they form a temporary partnership with the machinery and act in a certain way, to maximise return on their own value. Our findings align neatly with the substantial body of research on the tactics of users on the sites: they become economic, they shop, they maximise dynamic preferences. Some sites analyse previous searches and show you matches according to your ‘revealed preference’. The machine knows you better than you know yourself, so long as you choose a partner as you might a pair of trousers. Under these conditions, it’s impossible to maintain the fiction that a user’s choices are not shaped by the site’s mechanics, when the machinery does so much of the work. Nor is it much of a defence to claim that the school disco was also instrumental. It may have been, but the cybernetic rationality of online dating is something else altogether. We don’t know for sure how much of this cyborg dater spills into the world around us, but I suggest that the prognosis is not benign.

Many will agree that our economized public discourse is lacking. But examples like online dating, healthcare, and the grimy world of Punternet (an online review site for sex workers, promising that better information will lead to ‘less stressful, more enjoyable and mutually respectful visits’) encourage me to push the argument a little bit further. Economic rationality is powerful, and in its thoroughgoing solipsism it drives out other virtues: if we must only care about ourselves, how can we possibly care about others? When we reduce our interpersonal relations to calculations of cost and benefit, disciplined by competition and mediated by the manifold devices of economics in the world – the same discipline that we must focus upon ourselves – then we run the risk of losing something far more precious: our humanity.’

Happy New Year to you all. I hope 2016 brings us all good things.

Review: The Dark Side of Management

Just a quick update: my short review of Gerard Hanlon’s ‘The Dark Side of Management: A Secret History of Management Theory’ newly published in Times Higher Education. Hanlon wants us to rethink the old Frederick Taylor bad/Elton Mayo good divide. Taylor, of course, invented scientific management and worked to increase the efficiency of production by cheapening labour as much as possible, taking the need for skill or judgement from the workers and passing it to a new class of managers. Mayo, on the other hand, is often seen as being on the workers’ side, his interviews and coaching designed to help people identify with their job and become happier in it. For Hanlon, scientific management and the Mayo’s new human relations movement are just two sides of the same coin: it’s all about making more money for capital. The historical material in Hanlon’s book is interesting enough (though Harry Braverman’s seminal 1974 account of Taylorism as the bedrock of the labour process is strangely absent).  But I think there are some more compelling stories about exploitation in the twenty-first century begging to be told. Well, here’s the review if you’re interested.

21 February: Article scan available here OHanlon THE 030115.