Economic Science Fictions

by Davies, William;

  Following the collapse and partial nationalisation of the United Kingdom’s defence industry, the drastic reform of British armed forces financing under the so-called ‘Apache Option’, as well as the armed forces’ growing focus on operations related to extreme weather events, the military has undergone structural changes that nobody could have foreseen.

  Maybe Laing closing her laptop, story safely filed, was the butterfly-wing flap that caused this perfect storm. Maybe Abiodun closing his. Maybe it was just dumb luck. Maybe it was smart luck.

  But, somehow, these islands – or, we can say, what’s left of them – have emerged as the world leaders in the collective democratic management of common resources. World leaders in innovative, data-driven stakeholder mapping and empowerment technologies and practices. Who would have thought it?

  In these islands – though it is already too late for some, and perhaps too late for everybody – nevertheless, far more than anybody could have expected, now everyone is welcome and fed and safe, and wise and healthy and happy and free.

  Part II: Data as Demos

  In this vignette, I have tried to sketch a collision between five themes. (1) One theme is value. By this word, I mean value as in ‘conceptions of what is ultimately good, proper, or desirable in human life’; value as in ‘data value’ or any potentially true or meaningful piece of information; and value as in economic value, ‘the degree to which objects are desired, particularly, as measured by how much others are willing to give up to get them’.4 As this is a book of economic science fictions, I care most about the last of these. But I’m also interested in how all three relate.

  The intriguing work of Positive Money gave me some inspiration.5 Positive Money is a research and campaigning organisation that is critical of how new money is currently ‘printed’ and allocated.6 A country such as the United Kingdom may have as many wellsprings of fresh money as it decides to have.7 It can also dig those wells wherever it chooses.

  Here’s my own whimsical illustration of that principle. When the Bank of England decides to expand the money supply (which must be done often), they could in theory make the new money materialise in your bank account. Yes, just yours.8 It’s a gift, so do what you like with it. For instance, you could examine all the economic and sociological data available to you, then invest the money wherever it’s most needed, or wherever you think it will earn the best return. Or you could express your moral values by donating it to Macmillan Cancer Support, Womankind Worldwide, Jubilee Debt Campaign, Battersea Dogs and Cats Home or public libraries. Or you could blow it all on chutney. The only rule is that you must spend it or give it away within a certain time limit, so that the money flows through our economy, facilitating and stimulating trade and production.

  Now, this proposal may look a bit frivolous, not to say perilous. After all, you could be anybody. Perhaps you have fabulous intentions, but lack the right information and expertise to implement them. Or perhaps you just have no inclination to pursue the common good. Or perhaps you have a downright terrible notion of what the common good is. Something about over-prioritising chutney, perhaps. Part I imagined two other proposals about how new money should be created: the QED Option and the Apache Option. The two proposals embodied different ideas about how monetary policy should serve the common good, and implied different patterns of democratic accountability.

  None of these proposals is intended seriously, but together they illustrate something important. Money is not created in a spontaneous, natural and inevitable process. Money is created through monetary policy, and, just like fiscal policy (that is, what our government chooses to tax, and to spend on education, housing, healthcare, defence, and so on), monetary policy puts into practice choices about what the common good is, and how best to achieve it. Those choices could be left to a random individual, or left to the system of commercial banks and the people and firms who borrow from them. Or those choices could be made by institutions that have been designed specifically for handling them.

  (2) This takes us to the second theme, which is the commons. By ‘commons’, I mean any finite resource pool that is collectively managed. One way the commons can be related to the first theme, value, is by considering money itself as a kind of commons – especially when it is first created. Over two decades ago Elinor Ostrom identified some principles to aid in the design of a commons. For instance, she argued that there should be graduated sanctions against those who violate rules, and that people affected by rules should generally be able to participate in their interpretation and modification.9 The current system of money creation probably wouldn’t meet too many of Ostrom’s principles. More broadly, conversations about ‘the commons’, or ‘commoning practices’, are often about how to organise society without relying exclusively on markets or government bureaucracies. Of course, markets, bureaucracies and commoning practices come in all shapes and sizes, and there is plenty of blurring and overlap between the three.

  (3) A third theme, closely related, is algocracy. This is a relatively new coinage, and the word may or may not stick around. Basically, it means governance by computer algorithms.10 (In my vignette, in order to bring this idea vividly to life,11 I imagined Laing being effectively fired from her precarious job by an automated decision. At the same moment, the ‘Serious Near-Incidents Proactive Emergency Response System’ misclassifies Abiodun as a terror threat.) An algorithm is really just a set of instructions, like a recipe. But, when it’s computers that do the cooking, the recipes may involve millions of ingredients. Some ingredients may not have obvious roles in the recipe – for instance, lots of miscellaneous data about what you do online, or about your financial transactions or about the people you know and the people they know. The algorithm’s use of those ingredients, to produce a decision or action, can be very opaque to human understanding. In other words, even the people who rely on such data-driven algorithms may not understand exactly how they come to their conclusions. And, when several algorithms interact, the process may grow even more opaque.

  Along with the bureaucracy and the market, an algocratic system can be considered a form of governance. It governs by constraining or enabling various courses of action. If you’ve ever spent time obsessing over the points you’ve earned in some game or app, or anxiously checking an online account to see if something you’ve posted has been liked or shared, then you have a sense of how such algocratic governance often works. Of course, bureaucracies, markets and algocratic systems come in all shapes and sizes, and there is plenty of blurring and overlap between the three.

  If we step back for a second, we can see that the commons and algocracy share some features. Both are looking for an alternative between or beyond markets and bureaucracies, while remaining difficult to disentangle completely from markets and bureaucracies. Furthermore, part of what makes algocracies feel mysterious – part of the ‘opacity that arises from the characteristics of machine learning algorithms’12 – is their capacity to learn through feedback loops; likewise, managing a commons demands a certain kind of self-reflexive dynamism, since, as Thomas Dietz, Elinor Ostrom and Paul Stern tell us, ‘successful commons governance requires that rules evolve’.13 Algocratic systems are masters of something else Ostrom mentions: the graduated sanction. To tell you where to go, algocratic systems can give you a sharp, hard shove, or a gentle nudge. Sometimes they steer you so subtly you barely notice it.

  So what’s the huge difference between a commons and an algocracy? The huge difference is participation. Whereas the concept of the commons feels inherently democratic, the concept of algocracy feels profoundly undemocratic. To participate in a commons, you need to decide what you want, and to convey something about your desires and their legitimacy to others. This may happen in a formal deliberative setting, though it may also happen in the informal grumbles, gossip, revelry and human dramas that swirl around any commons. Either way, to be involved in a commons, you need to make yourself at least somewhat intelligible to other people. And the same is t
rue, to some extent, of a bureaucracy, and even a market.

  An algocratic system carries no such requirement. It regards anything you happen to do as meaningful enough. You just spent 49 minutes looking at YouTube videos about clever crows? You just missed a payment on your car? Great! Algocratic systems don’t want your excuses, just your data. ‘Citizens take on the role of information machines that feed the techno-bureaucratic complex with our data.’14

  The spread of algocratic systems creates uncomfortable challenges for both liberals and conservatives. If algocratic systems do inflict harms, how should those harms be legally construed? What kinds of redress are possible?15 But I’d mainly like to pose a question from a more progressive perspective. Could these very technological developments, the ones that seem to threaten our already battered and threadbare democratic institutions, actually give us the means for renewing them? Might we begin to blend the advantages of the commons with those of algocracy?

  (4) Thus the fourth theme, which both cleaves the commons and algocracy apart, and yet promises to cleave them together, is democracy. I mean democracy in a broad sense. Of course elections and referendums are important democratic institutions, but there are many others. Any space in which a group of people make their own rules for living may be democratically significant. Any institution that provides representation may also be democratically significant: things such as judicial inquiries; mass membership political parties; MP surgeries; public consultations; grassroots campaigns; lobbyist organisations; clicktivism organisations; ombudsman services; unions; employment tribunals; workers’ councils. Institutions that shape public understandings and sentiments are also democratically significant. In Part I, this aspect of democracy is streamlined into a rather simplistic idea of ‘the media’ or ‘the press’. In reality, of course, it’s harder to give definite boundaries to it. It surely includes the social media architectures, which curate what comes to our attention, and the education system, which takes responsibility for teaching deliberative norms and critical thinking. More broadly, it includes all the ways in which we are produced, by our techno-social setting, as citizens and as governable subjects.

  So, how do we weave together commoning and algocracies into the fabric of our democracy? What I can offer for now is some speculative suggestions – almost as speculative as Part I was. One promising avenue, of course, is the idea that newly created money can be spent directly into the economy for the public good.16 The fictional QED Option drew fire for being too centralized and too technocratic, and for emanating a glimmer of totalitarianism. Its fictional defenders might counter that (a) adjusting the rate of growth of the money supply is already something the Bank of England does and (b) allocating public finances is already something the Treasury does. So the QED Option would be legitimate – they could argue – because the Bank of England and the Treasury are legitimate institution within the democracy we already have. Yet those anti-QED criticisms still have bite. Any far-reaching reform of monetary policy asks that we fiercely examine the shortcomings of the democracy we already have, including examining everything that commoning and algocracy could potentially offer it. Furthermore, money already has its own complex representational logic.17 Even if we had complete faith that our democratic institutions are currently fit for purpose, that does not mean that they are prepared to deliver the democratisation of money.

  A second promising avenue is stakeholder theory. Stakeholder theory is tantalising, partly because it offers thinking about representation and empowerment that has evolved somewhat outside democratic theory. ‘New Generation Co-operatives’ that are ‘[v]‌ariably owned by members’ and ‘new “social economy” alliances that cross-cut the co-operative and non-profit sectors’, to use Mitch Diamantopoulos’s terminology,18 are examples of phenomena that are difficult to understand except in terms of the intersection of different kinds of stakeholders with different needs, capacities and expectations. AccountAbility is a private firm that develop guidelines for systematically identifying and engaging with stakeholders. A prominent diagram in its AA1000 Stakeholder Engagement Standard 2015 publication is a kind of endless loop, like an ouroboros – a serpent eating its own tail.19 The diagram shows that, to figure out who your stakeholders are, you have to ask your stakeholders. Algocratic data-gathering techniques don’t break this loop exactly. But they do widen the possibilities for what ‘asking’ might mean. As an outgrowth of corporate social responsibility, however, stakeholder theory is often a violent and unstable compromise between people who really want organisations to be morally accountable for what they do and people who just believe it makes great business sense to identify stakeholders and find out what they’re thinking.20 So as not to get lost in the storm, it may help to adopt as a kind of focus imaginarius, or lodestar, that old Marxist aspiration: ‘From each according to their abilities, to each according to their needs.’21

  A third and final avenue is the blurred edge of the concept of algocracy itself. That is, because any rule-governed process is in principle susceptible to algorithmic specification22 – loosely speaking, everything turns into an algorithm if you squint at it hard enough – many things we are already doing as participants in co-operatives and other democratic institutions,23 as citizens and actors in civil society and as actors in communities of dissent and resistance, may provide clues to democratic algorithmic commoning.24 What are the informal ‘recipes’ we’re following? Can we debug them of their ‘democratic self-destruct mechanism[s]‌’?25 How might they be scaled up, and made more sophisticated, adaptive and robust?26

  (5) This chapter has sketched an encounter between the themes of value, the commons, algocracy and democracy. The last theme has more to do with the very notion of economic science fiction. The theme is complexity and unpredictability, especially on a grand historical scale. I didn’t want the vignette to be a neat illustration of these five themes. I wanted it to be noisy. Partly this is because any radical project with designs on the future plays out in the context of other such projects, often embodying conflicting ‘conceptions of what is ultimately good, proper, or desirable in human life.”27 (As an exercise, it might be worth trying to think through the ramifications of the realisation, and/or attempted realisation, of every single proposal contained in this book, simultaneously). To put it another way, just because a competing project is proved to be inferior in the abstract does not mean it can be ignored as a concrete context for whatever is pursued in its stead. To truly fix our gaze on our collective future demands extraordinary peripheral vision – ‘like an emu, or whatever’ (see above).

  For this reason, I began Part I with an inquiry and subsequent legislation, which – debatably – may have had the opposite effect to that which it intended. Likewise, if the ending of Part I seemed abrupt, nebulous and a little underdetermined (perhaps a little convenient?), then it has come across as I hoped. It’s supposed to be a comedy, after all. And, if the story is messier than five themes I have laid out, and if it seems to express both more and less than those themes – well, all the better.28

  1This is not something the commercial banking sector is terribly happy about. But finance people are clever cookies. By now they have accepted that that’s the way the cookie is crumbling – a different cookie, they hope – and are mostly busy positioning themselves to do well out of the changes. By the way, let’s imagine, in our near future scenario, that the United Kingdom is one of the first – though not the very first – country in which the government has attempted to secure this power from the private sector. For a long time the balance of power has been skewed to the private sector. Even when governments still impose fractional reserve requirements on banks, in the absence of guaranteed convertibility to gold or other commodities these requirements have not actually limited lending. Instead, banks first loan out money, which more or less did not exist until they loaned it out (see footnote 8), and then seek to top up their reserves with loans from other banks and, ultimately, from the central bank. The central
bank has very little wriggle room to refuse such requests, for fear of destabilising the payments system.

  2Quoted in H. R. Nau (2013) Conservative Internationalism: Armed Diplomacy under Jefferson, Polk, Truman, and Reagan. Princeton, NJ: Princeton University Press, p. 183.

  3Technically, it’s a bit more than an ‘article’. But we won’t get into that either.

  4D. Graeber (2001) Toward an Anthropological Theory of Value: The False Coin of Our Own Dreams. New York: Palgrave, pp. 1–2.

  5See www.positivemoney.org. See also A. Jackson & B. Dyson (2013) Modernising Money: Why Our Monetary System Is Broken and How It Can Be Fixed. London: Positive Money.

  6Put simply, the Bank of England tries to influence the money supply by adjusting interest rates. It lowers them to encourage borrowing. ‘Private debts – what has been borrowed – are spent as public currency’: G. Ingham (2014) Whose Money Is It?, openDemocracyUK, 25 February, www.opendemocracy.net/ourkingdom/geoffrey-ingham/whose-money-is-it. See also R. Wray (2012) Modern Monetary Theory: A Primer on Macroeconomics for Sovereign Monetary Systems. Basingstoke, UK: Palgrave Macmillan.

  7This is not true for individual countries in the Eurozone, though it is true for the Eurozone as a whole. ‘There is a “one size fits all” issue when a single interest rate (as set by the central bank) necessarily has to be applied across economic areas with different economic conditions’: M. Sawyer (2013) Money and the State, in J. Pixley & G. Harcourt (eds.) Financial Crises and the Nature of Capitalist Money: Mutual Developments from the Work of Geoffrey Ingham: 162–77. Basingstoke, UK: Palgrave Macmillan, p. 173.

  8A technical point. In practice, things are a bit different when banks create money. When banks create money, they start with a zero, and separate that zero into an asset and a liability. The liability is the bank deposit that the borrower spends, and the asset is the borrower’s promise to repay eventually, with interest. If the borrower defaults on the loan, then the bank may lose money. That’s why the banks won’t lend to just anyone. But, so long as enough borrowers don’t default, the banks make profits, turning ‘zero’ into ‘something’.