Monday, 12 March 2007

The Trap: Whatever happened to our dreams of freedom? (part 1)

Last night BBC2 showed the first part of The Trap: Whatever happened to our dreams of freedom?, a three part series by Adam Curtis that argues that post-war initiatives that aimed to set mankind free have in fact created new means of entrapment. Curtis was the producer of The Power of Nightmares, an excellent three-part documentary that showed how the neo-conservatives and Al Qaeda both exploited fear of enemies abroad and moral decline at home to dominate the political agenda and promote their own conservative beliefs.

In the first part, subtitled F*** you, buddy!, Curtis discussed how various different branches of scientific thought converged around the paranoia born of the Cold War. My main criticism of the first episode was that it failed to do more than set the scene. It may be that this will lead to fascinating insights in the next two programmes (he has already promised to show how it all led to the culture of “spin”) but the fact remains that the programme did not stand alone, and left too much of the analysis for later episodes.

It began with F. A. Hayek’s warning (available in full or in summary) that governmental efforts to manage the economy would lead not to the tempering of the excesses of capitalism but down a road that led ultimately to enslavement by the state. In fact this was barely touched upon before Curtis had moved on, but before he did so he presented a vary negative view of Hayek’s position, suggesting that his belief in a self-correcting system, in which individuals pursuing self-interest would promote a common good, relied upon the assumption that mankind was essentially selfish and callous.

I will dwell upon that for a moment both because I feel it misrepresented Hayek’s views on liberty, and because it calls into question Curtis’s assessment of other strands of thinking during the programme, about which I have less knowledge and so cannot exercise judgement.. Hayek was quoted as saying that there was no room for altruism in his theory. However, as those who have read Hayek should recognise, his theory does not in fact deny the altruism within people, nor does is suggest that altruism is not a good and worthy thing. Hayek’s concern was that government, with its unique power to coerce individuals, should not attempt to correct the self-regulating mechanism – even for altruistic ends – because ultimately those ends were the ends of fallible (and sometimes selfish) individuals. Instead it should create a sound and predictable legal framework that protected the liberty of individuals, who would then be free to pursue their own interests (even altruistic ones) that would as a by-product benefit mankind. This belief goes back at least as far as Adam Smith’s “invisible hand”.

The programme’s quickly moved on the main point, which was that there were those who thought that mankind could be liberated by rationalising him as an isolated, self-interested and ultimately callous creature (a rather sinister version of the individual at the heart of the Enlightenment). I will attempt to summarise this, though as I only have a limited knowledge of the subject matter I may make some errors – which may be due to my misunderstanding the programme or to its misrepresentation of the facts.

The story begins with the Game Theory logic of the Rand Corporation – promoted by the not-so-beautiful mind of John Nash – which suggested that individuals could never trust one another and so would always prosper if they adopted the most cynical assumptions about one another. Meanwhile, psychiatrist R. D. Laing had proved that much psychiatry was based not on science but a socially-constructed concept of the “normal”, and the role of psychiatry was to force those that were different back into the societal mould. Laing became the father of the anti-psychiatry movement and inspired the Rosenhan Experiment, which suggested that psychiatrists had no idea who was sane and who was not. The result was that psychiatrists were forced to admit that they had no idea what was wrong with the mind, and so the field shifted its attention from focussing on causes (schizophrenia, manic-depression) to symptoms defined by observable phenomena (ADHD, Obsessive-Compulsive Disorder).

Meanwhile, back in economics, Public Choice Theory (outlined in, for example, The Vote Motive) had fatally undermined concepts such as the “public interest” and “public service”, demonstrating that politicians, civil servants and those working for the state were just as self-interested as those in any other walk of life. As Northcote Parkinson and Yes, Minister captured so humorously, everyone in public service was primarily trying to protect and promote their own interests; the “public interest” was just a cover for what was at best individuals’ concept of what was right and wrong, and at worst selfish rent-seeking.

The result of these three revolutions was a belief that the mess that many nations found themselves in by the 1960s and 1970s was caused by the naïve belief that the public good could be promoted by wise men in ivory towers rationalising the process with the disinterested altruism of platonic guardians. Not surprisingly, there were those who wanted to sweep aside this belief, and the entrenched interest groups that it protected. These included a number of right-wing think tanks. Their proposed solution was to exploit the self-interest of public servants to promote more effective outcomes: for example, by giving incentives to them to achieve results.

Sadly, this proved rather less successful in practice that in theory. Robert McNamara’s attempts to run the Vietnam War as a mathematical exercise, calculating exactly how much explosive tonnage needed to be dropped to achieve the cowed submission of the Communists, resulted in failure and resignation; in attempting to achieve body counts that met their targets, self-interested soldiers would kill anything that looked like a Viet Cong fighter, which in a guerrilla war meant just about anyone. Margaret Thatcher’s NHS reforms began the process – so beloved of Gordon Brown – of setting central targets for local hospitals and financially rewarding or penalising them accordingly. It has been an ill-starred venture.

And that is where the programme left off. There was no broad analysis or discussion; no sense of conclusion; and no clear vision of where the rest of the series would take us. We were left dangling in the wind, waiting for Mr. Curtis to explain it all on BBC2 next Sunday at 9pm and the Sunday following.

I have my reservations. Firstly, as I outlined regarding the approach to Hayek, Mr. Curtis’s analysis is not always correct – he is stronger on his psychiatric home-ground than on other topics. Secondly, I fear that his intention is to question much of what has happened in the past thirty years. While there have undoubtedly been colossal failures and terrible errors, there have also been successes and benefits: it is a sign of how much time has elapsed that some are now able to look fondly upon the 1960s and 1970s as though they were some sort of golden age, rather than a wasteland of inflation and unemployment, bubbling revolution and counter-revolution, and abject poverty. If it is Mr. Curtis’s intention to suggest that the positive elements of the revolution of the past thirty years – the deregulation and liberalisation that has led to wealth and freedom beyond the imagination of those living through the Winter of Discontent – have been accompanied by a creeping centralisation and rising state power, then he is correct (and in good journalistic company). But if, as I suspect, he intends to suggest that we would all be better off returning to the age of collectivism and public duty, of trusting citizens and paternalistic administrators, then he is simply swapping a flawed concept of freedom for no freedom at all.

I have separately reviewed part 2 and part 3. Curtis's conclusion and my analysis of it are discussed in a final post.


Kit said...

It must be a very horrible place inside Adam Curtis's head.
By utterly distorting history, economic theory and liberalism to fit his world view he has defeated his own belief in "collectivism and public duty, of trusting citizens and paternalistic administrators". If he cannot be trusted why should we trust others?

Tristan said...

Two things which come to mind:

Firstly the conception that self-interest means callous selfishness is wrong - self interest can be motivation for all sorts of actions seen as altruistic.
I'd go so far as to say that all non-coerced actions are based in self interest, otherwise why would you do them? When you do something because you believe its the right thing to do, you are acting in your self-interest.

Secondly: A good point about the way Thatcher and Blair/Brown misunderstood the idea of incentives. The whole point is they cannot be imposed from the centre. The only way to create effective incentives in public services is to open them up to competition and allow services and those who work for them to be held to account through public choice.

Nick H said...

Hello Tom

If we continue with what has been dubbed neo-liberal economics, will we end up with the type of society that we as Liberals would like?

Neo-economic policies are about governments not interfering with the market and letting the 'invisible hand' to it's job.

As government becomes more sidelined in the face of corporate power and demands, and as corporations continue to buy each other out, will we even have a market, or democracy for that matter? Who, if anyone, will end up owning the corporations, given that corporations can own equities in other corporations?

I guess we will have the illusion of democracy as a sideshow, with increasing irrelevance and decreasing power of our elected representatives. Perhaps the voting public will become less inclined to vote as they feel their votes won't make a difference. We might even see agents of large corporations with government interests at the top of the government, advising and directing the prime minister.

All of these things we can see happening today. Fewer drug companies means less drug market, and more monopoly control over drugs and pricing. Less competition in the field resulting in less R&D. Increasing costs of public works in general as the market is ousted from government spending. Accenture 'consultants' in Downing street.

How far from Liberal Democracy could the end result be?

Tom Papworth said...

That’s a rather bleak diagnosis, Nick. In fact, governments still hold the whip-hand over industry. Just look at how Bolivia and Russia forced petro-chemical companies to renegotiate contracts into which they had sunk billions of dollars; how Argentina defaulted on its debt to foreign banks without any real cost; and how Gordon Brown has arbitrarily seized money from pension funds, oil firms and now airlines. The power is clearly still in the hands of government.

The drugs industry is a case in point. Plenty of governments have flouted pharmaceutical patents and imported copies of drugs at a fraction of the price. It is that, rather than consolidation, that is undermining R&D. A better alternative would be for governments to guarantee to buy certain quantities of drugs in exchange for reducing prices –the Gates Foundation is considering buying billions of doses of anti-HIV drugs to distribute in Africa.

Ultimately, we leave the market alone because it provides us with the best standard of living; where governments meddle, growth is stifled. The market is just the expression of millions of wills, over which government has no jurisdiction. Government’s role is to provide a framework of laws to protect our liberty, so that we cannot be coerced, have our possessions arbitrarily seized or be defrauded. Government’s expansion to interfere in private arrangements between individuals is the new and creeping tyranny against which John Stewart Mill warned.

Nick H said...

Hello Tom

In 'Halfway to Paradise', you eloquently put how you need a form of governance in terms of guaranteeing land rights for people to pull themselves out of poverty

A more abstract notion of property rights are guaranteed by governments in the form of Patents, Trademarks and Copyright.

These guaranteed rights often interfere with private arrangements between individuals and criminalise many things you or I could do. Therefore, if you are in favour of having a market, you can't necessarily be against governments interfering with private arrangements between individuals.

Like you, I believe that markets provide good outcomes for consumers, but I believe so only when they are competitive markets. If a market is not competitive, I call it a monopoly, cartel or similar.

I assume when you talk about interference in arrangements between private individuals, you use that term interchangeably with 'Interference in arrangements between corporations'.

A corporation can extract best value from a market for it's shareholders by exacting monopoly rents. The only directing principal for a functioning corporation is to return value to shareholders. Therefore, if a corporation has an opportunity to monopolise a market and fails to take the opportunity, the directors have failed the shareholders and will likely be replaced by someone who understands what is expected of them, and who will possibly be more efficient in performing their duty to the shareholders.

In summary, A corporation is really as simple as one of Nash's simplified and not so beautiful beings. Instead of being self-interested, it's only interest is to return financial value to the shareholders. Shareholders who may be other corporations.

All this might be used to argue that I don't like corporations. That is not the point of my discourse, it is simply to clarify exactly what a corporation is and to point out that a market requires the sort of intervention normally associated with governments.

This begs the question; If governments don't do things the corporations don't want them to do, and do do things corporations want them to do, is there an equilibrium which will be reached? What will that equilibrium look like?

You can look at an event which politicised me, to imagine what the equilibrium might look like. Microsoft wanted a new set of monopoly rights covering Europe to shut out smaller developers of software. This was pushed through the UK PTO and supported by Tony Blair's government, with Arlene McCarthy as Rapporteur. The thousands of individuals and small enterprises opposing this certainly needed to use public interest arguments, and with support of ELDR and the Greens, the law was derailed.

I posit that there is an equilibrium. I further posit that the equilibrium point will be little swayed by democracy. I further posit the equilibrium will narrow human experience and cast people into very defined roles. I also posit that because the major players in the equilibrium are immortal (Corporations don't die), the equilibrium may last a very long time.

Please, please use your best rhetorical instruments to convince me I am wrong! Perhaps then I can tolerate Tony Blair's grin!

Tom Papworth said...


If you’ve read two of my posts, you count as a fan!

I’m not sure I see how intellectual property rights “interfere with private arrangements between individuals and criminalise many things you or I could do”, unless what we plan to do is steal other people’s IPR. Intellectual property is as precious as any other form and without protecting it we remove most of the incentive for innovation. As I made clear (I hope), governments have to create a legal framework in which our liberties are protected (including out freedom to enjoy that which we have created). Thus I do not deny any role for government – I am a liberal, not an anarchist.

That being said, governments rightly limit IPR because – as you rightly note – they often belong to corporations that can “live” forever. Corporations are indeed amoral and single-minded bodies that aim to turn a profit for their shareholders, which requires them to satisfy their customers. I’m not sure that that proves that governments need to intervene in markets, unless the corporations act illegally.

With regards monopolies, it depends on what causes them. If they are created by government (such as the old monopolies handed out by kings to favourites, or their modern equivalents in energy generation or health care) they are an example of government overstepping its bounds and are undoubtedly harmful. An example of this would be a computer firm lobbying for monopoly rights – an egregious excess of government that has no justification. ELDR were right to oppose this, not as an act of meddling but as a barrier to meddling.

You may be right, of course, that democracy cannot influence “the equilibrium”. If so, we need a strong liberal constitution that protects individuals from governments that may be influenced by rent-seeking lobbyists and special interests.

Nick H said...

Hello Tom

Every exclusive right granted means everyone else can't do the thing that exclusive right grants. Exclusive rights limit everyone.

This is currently a huge issue. A relatively new law, the EU Copyright Directive backs up any technical measure a copyright owner implements, even when ordinarily, the use of the material would be lawful under fair dealing or disabled accessibility provisions.

In effect, copyright owners under these draconian laws can write their own copyright laws into their technical implementation.

There are many things we could do, and probably would want to do, if laws didn't prohibit it. Eg me giving you a copy of the programme.

My point wasn't that governments limit IPR because they belong to corporations which are immortal. In fact, Individuals and their estates enjoy similar treatment to corporations under the PTC laws.

I was trying to make the point that an equilibrium maintained by one or more corporations could potentially last forever, as, unlike human dictators, they don't die.

Dush said...

Just came across your blog after a google search for the title of the show.

I just saw the first two eps, I thought overall the show was solid. As you say, it mis-represented exactly what Hayek says. And doesn't say the important job the Austrian/Chicago boys did sorting out the mess the government caused with our money supply.

However, what I felt it did very well was expose how quasi-'science' and 'objective' mathematical formalism is abused by theorists to further their personal or professional ends. I took the main argument to be that maths in psychiatry is rubbish where postulates are raised to the level of axioms in order to make abstract mathematical models. Indeed the fact that the profession did not look for causes in their actuarial scales is the very definition of a postulate ("A basic assumption that is accepted without proof")

However, I think what was clumsily being driven towards is that this is precisely what is going on with economics and politics in general. Abstract, heavily mathematical economic models are taken as accurate representations of reality, when in reality they have literally dozens of postulates to make the models work.

The purported objectivism that mathematical models give makes a political choice into an apolitical issue, that is determined best by the market. It gives economics the aura of a hard science, which it simply does not deserve and therefore makes political choices seem as if they’re inevitable as special relativity. The best testimony to this truth is that the majority of the US wants a well funded, public healthcare system but the two major parties simply say it’s “politically unfeasible”.

And this is where Hayek theories come into it - they are purely routed in utopic theory. On paper it pretty much looks great, but in reality it results in massive income inequality, over pollution, higher infant mortality, premature death, poor healthcare and less social mobility. Even for the free market itself, Hayek’s views taken to their logical end mean no competition regulation which means large corporations colluding and abusing their dominant position. Collusion of course is something that game theory says is not rationale, yet is empirically plain to see (see DG Competition’s work load on Article 81 abuses).

Perhaps this is my own viewpoint, rather than the shows but I felt it was trying to say that.

Also the question of IP law has come up in the last couple of posts. The pharmaceutical industry is always used as a paradigm example of why corporations must charge high prices and engage in rent seeking behaviour, in order to raise capital to fund R&D. Again, theoretically yes, practically no.

Unfortunately there is little empirical investigation into this but the little of what is written emphatically proves that intellectual property has very little to do with innovation and R&D and everything to do with what classic economic theory says: monopolies abuse their market power to extort abnormal profits. Even more puzzling is, given that marginal costs are so low, why pharmaceutical companies don’t engage in ‘Ramsey pricing’ where you alter price according to the price elasticity of demand.

A good paper on IP actually looking at proof has been written by Dean Baker,

And the government sponsored reported, Integrating Intellectual Property Rights and Development Policy (available at: Philippe Sands, an international lawyer, summarises the report as concluding “that IP rights hardly played any role at all in stimulating research and development into tropical diseases in the developing world".

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