A few thoughts on the project of political-economic institution design.

I guess you can think of a spectrum of ‘large-scale’ political transformations – those that make changes within an existing institutional framework (say, increasing the budget for a specific program, or reducing it for another); and those that transform the institutional framework itself. It’s a spectrum because it’s sort of unclear at what point tweaks within an institutional framework turn into transformations of the relevant institutions – one person’s transformation is another person’s tweak. But still – one of the things that people do, in politics, is propose changes to institutions, large and small. And one of the things political actors do – or try to do – is actually change those institutions.

I guess you can say that a lot of ‘policy’ literature exists on the ‘tweak’ half of the institutional change spectrum (whether tweaks large or small): ‘reformist’ proposals that aspire to modify existing institutions in a way that will better achieve whatever goals. Then there is another tradition – a more ‘revolutionary’ or ‘utopian’ tradition – that aspires to much more dramatic institutional transformation, changing the very category of institutions that structure our political, economic and social worlds.

Both of these approaches have lots of critics, from different bits of the political spectrum. So, for example, there is a prominent critique of ‘planning’, coming primarily from the right, but also from some bits of left, which comes in different shades. One such shade is a cluster of critiques of Soviet-style central planning, which argue that central planning: has a tendency towards authoritarianism; is inefficient; tends to serve the interests of an elite of planners rather than the broader population they purportedly serve; tends to make bad planning decisions due to the myopia associated with elite class fractions; tends to make bad planning decisions due to the intrinsic difficulty or impossibility of any, even an idealised, planner mastering the complexities of a complex society; etc. etc.

This category of critique often involves critique of a specific form of planning – centralised command and control economic planning – and many such critiques only really apply to planning in this sense. However, the broad critique of ‘planning’ can also extend to a critique of much weaker forms of planning than Soviet-style command and control economies. These categories of argument are often levelled against even fairly moderate social-democratic or left-liberal policies, for example. Moreover, various critiques of ‘planning’ can in principle apply to any effort to design political-economic institutions that will better the lives shaped by those institutions. From the perspective of this quite capacious critique of planning, institution-design as such is hubristic in its conviction that the institution designers know enough to design institutions that will improve people’s lives.

Perhaps it helps here to separate out different forms of liberal, conservative, and radical critiques of ‘planning’. One critique, for example – call it the Hayekian critique – emphasises that individuals know better than planners what their own needs and desires are, and that the goal of political-economic institution design should therefore be to facilitate the expression and realisation of those needs and desires, rather than to paternalistically or coercively take such decisions out of individuals’ hands. This argument is often made by advocates of market choice, for example, who argue that the market is an institution well-suited to communicating preferences that would otherwise be unobservable or impossible to adequately respond to, within a more centralised system. From this perspective, the goal of the institution-designer is to establish institutions – such as markets – that facilitate this aggregate social communication and responsiveness to human needs or desires. The planner has a role, but it is a ‘meta’ role, in designing, realising, and safeguarding the institutions that can in turn do the heavy lifting of actual resource allocation, etc.

From a more conservative point of view, this form of institution design itself involves excessive planning. Some conservatives argue that such attempts to design institutional frameworks – however decentralised – are hubristically confident that such institutional planning (including the planning involved in the creation and maintenance of markets) results in institutions superior to those that have either evolved slowly over the centuries and millennia, are the underlying essence or core of an immutable human nature, or have been gifted to humanity by a supernatural order. From these perspectives, our goal should be to interfere as little as we can in ‘natural’ institutions, whether that nature is identified with historical stability, transhistorical essence, or divine order. This tension between different forms of conservative (liberal, traditionalist, religious) orientation to institutions has much to do with the tensions in conservative political coalitions.

At the same time, there are a range of critiques of planning that often come from a more leftist, or radical, ideological tradition. There is a class critique of planners as managerialists. There is a broader anarchist tradition that sees planning in general – even in weak forms – as a recipe for domination. There are traditions that aspire to ‘drop out’ of large-scale political-economic institutions altogether, establishing alternative communities where problems of institution-design must be considered at the local level if at all. And there are ‘voluntarist’ traditions that see the desire for planning as an effort to pre-empt the decisions and insights that will be generated in practice, as a component of political struggle or as wisdom forged in the heat of revolution.

One of the phrases that is sometimes cited by (some of) these more radical traditions comes from Marx’s Afterword to the Second German Edition of Capital I. There, responding to critics of the first edition of Capital I, Marx mocks the idea that Capital – an analysis of the dynamics of the capitalist system and of associated ideological perspectives – should also have included a set of blueprints for an alternative future society:

the Paris Revue Positiviste reproaches me in that, on the one hand, I treat economics metaphysically, and on the other hand — imagine! — confine myself to the mere critical analysis of actual facts, instead of writing recipes (Comtist ones?) for the cook-shops of the future.

Marx’s narrow point here is that expecting Capital to provide a blueprint of a future society is to mistake the purpose of the book – but this phrase is often also used (whether in line with Marx’s broader views or not) to express a critique of the idea of preparing ‘recipes’ for the creation of future societies at all.

How seriously should we take such critiques of the project of institution-design – critiques that reproach not a specific institution, but the goal of designing institutions at all? My view is: not seriously enough to actually abandon the project of institution design, but seriously enough to offer a serious set of responses.

Here again I think it’s worth distinguishing different elements of the critique of institution design. The narrow Hayekian critique of planning is, as I said above, not really a critique of institution-design as such, but rather of a particular category of institution: the centrally planned command and control economy. This critique is worth taking very seriously indeed, in my view. The radical or communist left had much of the world’s population across much of the twentieth century as its experimental site, and the project failed, very badly. Of course, this assessment of the 20th century communist project is itself contentious – but it’s my assessment. I think the 21st century left has a responsibility to demonstrate that it has learned the lessons of the 20th century left’s failures and crimes, and has incorporated those lessons into an alternative or at least heavily revised radical project that can be trusted, with good reason, not to make the same mistakes again.

There is also a broader critique of ‘utopian’ leftism, which argues that any effort to radically remake the world is doomed to failure, whether because human nature is intractably flawed, or because unintended consequences inevitably follow from large-scale schemes to change the world. Again, I think these critiques are worth taking seriously. If we want to persuade people that the world can be remade in dramatic ways – and if we then want to actually achieve that remaking of the world – I think we have a responsibility to demonstrate that we’ve thought through the ways in which such transformative projects are likely to fail. Projects that are grounded, for example, in the idea that transformations in society will also transform human interpersonal relations in such a way that kindness and solidarity will prevail where previously all was strife, need to reckon with the charnel house of history, and that fact that utopian project after utopian project has run into the ground of human propensities to cruelty, pettiness, self-interest, etc. etc. Similarly, projects that have grand transformative goals with vague, handwavy mechanisms for achieving those goals can perfectly reasonably be approached with some scepticism, in my view. Plenty of ambitious plans for a better world turn to ashes or worse when confronted with the practical problems of putting ideals into practice. But this is an argument for institution-design, rather than against it. One of the ways we can try to evaluate the credibility of a political project is by evaluating the institutions that are proposed to achieve its goals. Just as ‘reformist’ policy wonks aim to assess the likely impact of tax measures or changes to the healthcare system, using the tools of political-economic and policy analysis, so more radical thinkers should make similar cases to similar ends, in my view.

What about some of the other radical arguments against institution-design – the arguments that to prepare “recipes for the cook-shops of the future” is to betray the radical nature of the radical project – that radical political outcomes should be chosen by the people, and informed by the revolutionary struggle, rather than devised in advance by sub-academic leftist intellectuals?

Here again I think we should take seriously – but not too seriously – this critique of institution design. It is certainly true that history is contingent, the future unpredictable, and that any effort to remake the world that dogmatically adheres to a single solution is likely to be undone by that solution’s poor fit for the exigencies of the historical moment in which it is attempted. Political actors must be responsive to circumstance, and this in itself rules out the rigidity associated with any ‘one-size-fits-all’ approach to institution design. Similarly, we should be appropriately modest about the knowledge and wisdom we possess, relative to the knowledge and wisdom possessed by the actors who will ultimately be responsible for attempting to realise our political goals. Political struggle gives insight and experience that may well call forth better judgements than those we can form now. Relatedly, our preferences may change – we should not assume that we know what future political actors will value, even if we are those future political actors, and we should therefore consider the possibility that institutions designed to realise our preferences, will confound the preferences of those who have to inhabit them. All this is worth bearing in mind – and it all gives some weight to the idea that institutions are better forged ‘in practice’ than derived from pre-planned ‘designs’.

And yet these insights can only take us so far, in my view. In particular, these insights point, I think, not to the rejection of the project of institution design, but rather to a degree of humility in its pursuit. We should be aware that one size does not fit all. We should be aware that the political actors responsible for attempting to realise our dreams may know more, and better, than we do. But we should also bear in mind that one of the ways in which those political actors may be better equipped than we are, is that they have the benefit of our ideas, including our institution-design proposals.

In this respect, I think the “recipes for the cook-shops of the future” metaphor works well. Those in the future cook-shops may choose to follow any given recipe or not – but they will be better equipped if they have a broad set of debates and proposals ready to hand. One of the tasks of radicals is to work through political ideas in debate and analysis now, such that those debates and their conclusions are available as a resource for others. This understanding of the project of institution design does not grant excessive wisdom or power to the institution designer – but it also means that political actors are not stranded without intellectual resources at the moment when fateful decisions must be made. Keynes’s famous remark – that

Practical men who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back.

– applies not just to heads of state but also to revolutionaries (and reformists). Better that the intellectual resources on which political actors draw are the result of careful thought and pluralist debate now, than are derived from “voices in the air” distilled from who knows what unacknowledged sources. People making decisions about the shape of our political-economic world are typically doing so under conditions of enormous stress – bad decisions are likely, and everything we can do to make those decisions better – and better informed – is desirable.

There is of course a huge amount more to be said about the project of institution design – what it should consist in; how it should be pursued – but the goal of this post is not to get into those debates, but rather to respond to some common objections to the project as a whole. Enough for now.

Very brief reading notes on a paper by Benoit Godin, ‘National Innovation System: the System Approach in Historical Perspective’. The basic goal of Godin’s paper is to argue that many of the core concepts of the National Innovation Systems literature – as articulated by Freeman, Lundvall, Nelson and others, from the late 1980s onwards – were already present in publications put out by the OECD in the 1970s. In these OECD publications, Godin argues, the ‘research system’ was composed of four sectors – government, university, industry, and nonprofit – and embedded within a broader economic and international environment. Analysis of the research system focused on five relationships: between economic sectors; between basic and applied research; those determined by policy itself; between the research system and the broader economic environment; and those associated with international cooperation.

This research system framework therefore already incorporated many of the elements of the later National Innovation Systems approach. Godin argues that there are two big differences between the research system and the NIS approaches. First, for the research system approach, government was regarded as having “prime responsibility in the performance of the system”. For the later NIS approach, “it would rather be the role of government as facilitator that was emphasised”. Second, the research system approach focused on the research system as a whole, whereas the NIS approach privileges the firm as the key component of the system. Both of these shifts (I would argue) can be seen as representative of the shift towards neoliberal economic governance and theory.

Some quick notes on Mirowski’s ‘Science-Mart: Privatizing American Science’. This is a wide-ranging semi-popular book about neoliberal governance of US science, with different chapters addressing different elements of the topic. These include:

– a very critical survey of the economics of science;
– periodisation of twentieth and twenty-first century US science governance into three regimes: the ‘captains of erudition’ regime in which the modern research laboratory developed; the ‘cold war’ regime in which the state greatly increased both its funding and its control of scientific production; and the ‘neoliberal’ regime characterised by privatisation of the research process and greater ‘enclosure’ of scientific inputs and outputs in intellectual property law;
– a discussion of material transfer agreements and the constraints they place on researchers;
– a critique of biotech – and, more broadly, commercialised science – as a ‘Ponzi scheme’ in which very few companies are, in fact, commercially viable;
– an argument that the quality of scientific research outputs is declining as a result of the neoliberalisation of science;
– a discussion of a range of different ways in which the neoliberal regime produces ignorance, rather than knowledge (such as the ghostwriting of apparently independent research papers by employees of pharmaceutical companies, for example).

All up the book is a concerted attack on ‘neoliberal science’, and connects to Mirowski’s critiques of other dimensions of neoliberal economic governance, in other works.

My take, fwiw: some of the book provides a good entry into important issues in the political economy of science, and Mirowski’s periodisation seems like a useful way to carve up both the political and the intellectual history of US science governance. Mirowski’s discussion of the deliberate creation of systematic bias in the scientific literature is good as far as it goes – though I’d recommend Ben Goldacre’s ‘Bad Pharma’ as a popular work focussed specifically on this issue. However, I think Mirowski’s book as a whole should be approached with some caution.

It’s possible I have the wrong end of the stick, but it seems to me that Mirowski’s critique of biotech as a ‘Ponzi scheme’ is based on a misunderstanding: in a speculative industry many companies can fail because the investment gambles they take do not pay off in the creation of a marketable product. This fact enables fraudsters to make money off the industry, because a straight-up fraud is from a distance indistinguishable from a bad but rational bet – so significant segments of a speculative industry based on product innovation will, typically, be actual scams. Nevertheless, provided the few success stories are profitable enough, the industry as a whole can be fulfilling the capitalist social function of profit generation just fine – and the rent-seeking associated with intellectual property monopolies over medical goods means that successful medical innovations are indeed often extremely profitable.

Mirowski also seems to me to sometimes be unreliable as a summariser of the intellectual figures (mostly economists) that he discusses. Mirowski is critical of economists who advocate for neoliberal policies (privatisation, expanded intellectual property rights, etc.); but he is also critical of economists who oppose these policies, on the grounds that – as economists – they are tacitly supporting the same policies regardless, by virtue of their use of ‘neoclassical’ economic theory. So, for example, Paul David (an advocate of open science, who engages heavily with intellectual resources outside economics, and who has also developed models of scientific research dynamics that do not make use of the ‘rational actor’ approaches Mirowski elsewhere criticises) is nevertheless for Mirowski as much a participant in the neoliberalisation of science as those advocating neoliberal policies, by virtue of him using game theoretic and other ‘neoclassical’ modelling tools. Social scientists can of course be criticised for tacit implications of their approaches which contradict their stated policy goals. But Mirowski’s broad brush dismissal of economics of science as a whole seems excessive, to me.

At some point maybe I’ll write something on Mirowski’s criticisms of neoliberalism more broadly – my thoughts on this issue don’t feel quite nailed down enough, yet – but I wanted to put up these very brief notes on Science-Mart now, before it all goes down the memory hole.

Ok – this is a literal ‘notes to self’ post, in that I’m going to use it to record my reading notes on Danny Nicol’s ‘The Constitutional Protection of Capitalism’. Nicol is a professor of public law at the University of Westminster. The book is, if I have the right end of the stick, an argument that the UK’s participation in a range of international treaties and governance institutions has transformed the British constitution in far-reaching ways. Specifically, the relevant international treaties and law have ‘hard wired’ neoliberal policies into the British constitution, in a way that is heavily constraining of parliament’s democratic policy-making powers.

I’m reading the book because it seems to be the most-cited work by advocates of ‘Lexit’ (that is: left-wing Brexit) – and as I said in my last post, I think the Lexit position in general is under-represented in UK policy debates. The main goal of the post is just to make summary notes, but I’ll no doubt opine, as I go – I’ll try to be clear about what’s summary of Nicol and what’s my own opinion. I give myself permission in advance to read huge swathes of text without writing them up, or the book is never going to get finished. Likewise, this isn’t really the reading I ought to be doing, so I give myself permission to go months between updates here. I guess I’ll note updates here:

20/1/2018 (1) – pages 1-5.
20/1/2018 (2) – pages 6-11.
22/1/2018 (1) – pages 12-22.
22/1/2018 (2) – pages 23-31.
22/1/2018 (3) – pages 32-37.
23/1/2018 – pages 38-46
28/1/2018 – pages 47-81.
10/3/2018 – finished the book and wrote up a summary (at the end of the post below), but still lots of note-taking to do for the later substantive chapters.

Ok, here goes.

Chapter 1 – Transnational Regimes and the Constitution

Nicol starts with the basic thesis:

there has been a constitutional ‘transnationalisation’ that has introduced a far more severe ideological bias into the constitution than has hitherto existed, certainly since the ending of the veto power of the House of Lords in 1911; this in turn has seriously compromised British democracy… In particular, the free choice of economic policies – on such matters as state aid, public procurement, state regulation and, above all, the choice between markets and public sector monopoly – has increasingly been rendered constitutionally impermissible. Only the strength of neoliberal consensus amongst the present generation of politicians has served to conceal this democratic diminution. (1)

Nicol then moves on to defining neoliberalism. Following David Harvey, Nicol suggests that there are two definitions of neoliberalism. First, a utopian theory – “a model of social relations in which government regulation and social welfare guarantees are reduced in order to foster the play of market forces driven by private enterprises pursuing profit maximisation” (3 – he’s quoting Harvey). Second, “a political project designed to restore the power of economic elites” (3).

Again following Harvey, Nicol argues that the second definition is the most important one, and the first definition is typically just ideological cover for the second. Nicol quotes Antinori:

laissez-faire is a myth, and the question is never between government regulation of the economy and no government regulation: the question is always what type of government regulation. (4)

For what it’s worth, I think this is mostly right as far as it goes, but not quite right all up. It is definitely the case that neoliberalism is in significant part a class-driven political project – but that’s true for economic governance systems in basically every class society. It’s also definitely the case that neoliberal ideology serves as ‘cover’ for political-economic actions that conflict with their ideological warrant – but this is also very common, and it doesn’t necessarily mean that the ideology is contentless, but rather that it is partial. The fact that neoliberal practice doesn’t match neoliberal principles means that we need a better definition of neoliberalism as a bundle of economic practices than the ideological one offered by many of its advocates. But that definition should (in my view) pick out neoliberalism as a historically distinctive set of beliefs and practices within which and through which class power operates, rather than reduce the elements of neoliberalism that escape its ideological framing to straightforward elite class interests. I’m not really prepared to try to offer an alternative account of neoliberalism that achieves that, so these gripes are basically just vapourware – but let this serve as a marker of mild disagreement.

Having outlined these two conceptions of neoliberalism, Nicol then distinguishes between neoliberals who really believe the ideology (“free market principle neoliberals”) and neoliberals who are really only interested in the class interests of the elite (“class interest neoliberals”). Again, I’d argue that this distinction is a bit simplistic – though I guess you could counter-argue that analytic frames should be as simple as they can be while still serving their analytic function, which this probably does.

Still, the shortcomings of this analytic frame are clear on page 5, where Nicol writes:

Neoliberalism, as defined above, has in fact usually been the dominant governmental doctrine in Britain since the birth of capitalism itself. (5)

This is not true in any useful sense, in my view – it’s just conflating neoliberalism with economic liberalism in general. Probably doesn’t hugely matter for the analysis of the book, but again not quite right in my opinion.

In the next section, Nicol argues that constitutional law – which has traditionally focused on the nation-state as the locus of the constitution – would benefit from understanding international governance institutions as de facto determining elements of the British constitution. He writes a bit about the power of transnational corporations, but his focus is not corporations but transnational institutions – the WTO, the EU, and the ECHR.

perhaps we have reached the point at which, in ever wider fields, the most important element of Britain’s constitution (and indeed, the constitutions of other countries) is no longer Parliamentary sovereignty but rather transnational regulation. (8)

[As an aside, there may be a story to be told here about how British constitutional law has traditionally been able to regard the nation-state as sovereign because Britain was an imperial power that exerted legal force over other nations, rather than the reverse – and as Britain has declined to third-tier power status this has changed.]

Anyway, Nicol argues that the expansion of transnational influence over nation-states’ constitutions has been achieved via two mechanisms: “the scope of transnational regulation has expanded” (5) and “certain international law regimes have become more effective” (6).

Now Nicol asks: “What brought about this constitutional transformation?” (12)

He periodises (I think accurately enough) post-war transnational economic ‘constitutional’ history into two stages: from 1945 through the 1970s there was “an intensification of institutionalisation” (GATT, the EEC), but “these organisations were characterised by the toleration of a variety of capitalisms and had relatively weak enforcement processes”. From the 1980s a neoliberal consensus emerged, with corresponding changes in “transnational constitutionalism” which bound states much more tightly to a neoliberal policy framework. (12)

Nicol locates globalisation at the heart of this process. Following Held et al., he distinguishes three different concepts of globalisation: hyperglobalist, sceptical and transformationist. Hyperglobalists, for Nicol, think that the nation state is basically obsolete; sceptics think that globalisation is basically a myth; transformationism is the ‘goldilocks’ option that argues globalisation is real but unclear in its future direction and potentials. For transformationists:

the powers of the state are not necessarily diminished by globalisation; rather, states are being reconstituted and restructured in response to a more interconnected world. (13)

Nicol adopts this ‘transformationist’ perspective. In Nicol’s narrative, from the 1980s a range of world leaders gained power who adhered to neoliberal ideological tenets; these leaders implemented neoliberal policy not just at the national level, but also at the transnational, binding national states’ democratic decision-making within a neoliberal policy framework. Nicol argues that this is not a conspiratorial perspective:

when neoliberal leaders were called upon to make constitutional choices, they naturally enough opted for constitutional arrangements that benefited the attainment and retention of their own favoured policies. (18)

Nicol draws on Hirschl to argue that three categories of elite were influential in this process: political elites (trying to achieve their policy goals), economic elites (trying to promote their interests), and judicial elites (trying to increase their power relative to democratic decision-making). Nicol argues that political elites are the most influential of the three. These constitutional transformations, Nicol argues, have, moreover, been concealed by political consensus.

the transnational constitution can be perceived as a kind of insurance policy guaranteeing the preservation of a particular variety of capitalism. Its object is to lock in place a system of privatisation and commercial liberty, so that things will not change very much when new governments are elected. Thus the new constitutional law serves to guard against the possibility that future governments might abandon the creed of private enterprise. (19)

Along the same lines:

The real purpose of transnational constitutionalism is to ensure the stability of policy in the event of today’s neoliberals being succeeded by politicians of a different ilk. Was the insurance policy really necessary? It is in the nature of insurance policies to guard against eventualities that are unlikely but nonetheless possible. Perhaps the strength of neoliberal ideological hegemony is such that neoliberalism does not really require constitutional protection. But one never knows.(20)

Now Nicol turns to questions of democracy and legitimacy. Nicol suggests (perhaps not entirely convincingly) that his book is not concerned with the question of whether neoliberal institutions are ‘just’ or ‘unjust’ – rather, its normative import is focussed on the question of their relation to democracy.

Thus the book will question whether the constitutional constraints ushered in by legal globalisation make Britain more or less democratic. (21-2)

Nicol will suggest that:

Britain’s pre-globalisation constitution offered a superior degree of democracy than is available under today’s more globalised arrangements. (22)

Nicol focuses on three attributes of democracy: “contestability, ideological neutrality, and accountability. Assessed on this basis, it can be argued that Britain’s pre-globalisation constitution offered a superior degree of democracy than is available under today’s more globalised arrangements.” (22)
Taking these attributes of democracy in turn:

Contestability:

Contestability means that since people disagree about everything, there can be no universal or self-evident truths that can be enshrined as supreme law. Accordingly, everything that government does needs to be democratically contestable. This should be the case irrespective of the issue involved. Thus, policies and decisions should be contestable regardless of whether they involve basic liberal political rights, the fundamentals of economic policy or social rights. There is no principled basis on which these different aspects of policy can be disentangled from each other… The bottom line is that there can be no entrenchment of favoured policies, since entrenchment would cocoon such policies from the full rigour of contestability… There should therefore be no division between ‘ordinary’ politics and ‘constitutional’ politics. Moreover, the constitution should guarantee the permanence of contestability. All in all, therefore, the democratic constitution should not privilege substantive outcomes but should represent the structure for reaching collective decisions in a democratic way. (22)

Ideological neutrality:

The idea here is that the political sphere is a space where differing ideological perspectives contest for policy influence, and that the goal of a constitution is to mediate that contestation in a neutral manner:

the constitution’s enduring ideological commitment must be to democracy itself, thereby permitting the country to be drawn in whichever political ideology reflects the will of the political community. Such a constitution should be preferred over one with an inbuilt bias in favour of one substantive political creed at the expense of others, since this would detract unacceptably from the power of people to determine their own future.(23)

Accountability:

The need for power-holders to compete for re-election is what makes them responsive to the public. Thus the idea of democratic accountability – that it is possible to replace political office-holders through elections – is one that has great resonance. It is fundamentally important to us that those who rule in our name are in the end answerable to us…. Whilst the language of accountability has expanded in recent years to embrace weaker forms of public dialogue not involving the possibility of sanction, there surely need to be compelling reasons of principle (such as the independence of the judiciary) to justify a weakening of accountability in the case of those who wield very substantial government power. (23)

Nicol divides the British constitution, conceptually, into “internal” and “transnational” aspects, and argues that the internal dimension of the constitution gives expression to these three principles (“however imperfectly”) while “the transnationalisation of the constitution has fatally compromised our constitution’s adherence to these three attributes” (24). In the next three subsections Nicol will therefore look at each of these attributes in relation to the internal and transnational dimensions of the British constitution, as he defines it. Going through these categories again, then:

The British model and contestability:

Nicol argues that because of parliamentary sovereignty, the British constitution has a high degree of contestability.

Dicey famously defined parliamentary sovereignty as meaning that parliament enjoys ‘the right to make or unmake any law whatever; and, further, that no person or body is recognised by the law of England as having the right to override or set aside the legislation of Parliament.’ (24)

Now,

This traditional view of parliamentary sovereignty whereby Parliament cannot be bound in any way whatsoever is to be contrasted with the so-called ‘new view’ of ‘self-embracing sovereignty’ whereby, although Parliament cannot bind itself as to the substance of future legislation, it can bind itself as to the manner and form by which future legislation is to be enacted.(27)

British participation in transnational governance institutions like the WTO and the EU obviously, in Nicol’s eyes, binds parliament in this way, reducing contestability.

The British model and relative ideological neutrality:

Nicol quotes Jack Straw’s expression of this principle: “the constitution doesn’t belong to any one party and should not be used as a partisan tool.” (31)

Nicol makes the same basic argument here as in earlier sections:

the internal constitution operates in a way that shows a reasonable, if imperfect, degree of ideological neutrality. By contrast, the transnational constitution – with its rigid ethos of ‘capitalism first, democracy second’ – limits us to one particular ideology, so that even if it were to become discredited, we would be stuck with it. (32)

Nicol contrasts this element of the British constitution with the US constitution, whose framers “had a definite substantive ideological agenda.” (32-3):

The transnational constitution resembles the American more than the British model, insofar as it is widely perceived as being tied to a particular substantive ideology based on its own particular vision of the good life, namely market liberalism. (34)

The British model and accountability

This is quite a load-bearing section. Nicol argues that transnational constitutional institutions reduce democratic accountability in two ways (I’m reversing Nicol’s order of presentation here):

First, they transfer power from democratically-elected elites to non-democratically elected elites:

On this reading, there is less difference than might be supposed between, say, the European Court of Human Rights, the panels of the WTO, the European Commission and the European Central Bank. All are unaccountable bodies to which government power has been transferred. (36)

Second, they disperse democratic accountability mechanisms across different processes, which can potentially conflict, resulting (in Nicol’s view) in a de facto reduction in accountability:

It is tempting to assume that more institutions and more elections mean more accountability, but this is not the case. A surfeit of institutional checks and balances can be inimical to accountability. In a piece entitled ‘A Plethora of Parliaments?’ Harlowe has drawn attention to the way in which a superfluity of accountability mechanisms tends to reduce the centrality of any one of those mechanisms, with the consequence that a democratic deficit is brought about by a ‘democratic surplus’ or fragmentation of power. (35)

[As an aside, I have substantial disagreements with the arguments Nicol makes in these sections, but I’ll postpone discussion of those until I’ve at least finished the chapter.]

In the next section, Nicol argues that current transnational economic institutions can usefully be seen as efforts to realise the vision of constitutional government outline by Hayek in his ‘The Constitution of Liberty’. My main takeaway from this section is that I badly need to finally get around to reading ‘The Constitution of Liberty’. In my version of Nicol’s summary, though, Hayek is in favour of strict constitutional limits on government action, in a way that constrains (what is in Hayek’s eyes) coercive state power. Since for Hayek the state is the major threat to political freedom, constitutional restrictions on state power preserve freedom, while granting states sufficient ability to enforce the rule of law, etc. Specifically, on Nicol’s account:

Hayek therefore canvassed a supranational form of government that would prevent states from regaining unfettered sovereignty in the economic sphere by being able to veto their economic policy measures. (39).

For Nicol, transnational institutions like the WTO and the EU can reasonably be seen as partial realisations of this Hayekian ambition.

Now Nicol moves on to more recent neoliberal international relations theorists, some of whom I have read. He summarises Keohane, Macedo and Moravcsik’s ‘Democracy-Enhancing Multilateralism’. These theorists are making the case that transnational institutions do not diminish democracy but rather enhance it. First they offer three ‘conventional’ arguments, then some new ones.

The three ‘conventional’ arguments are that:

– Transnational institutions are directly accountable to their member states and thus indirectly to the publics who elect the representatives of those states.

– Powers democratically delegated to transnational institutions could also be democratically rescinded.

– Even if democracy is reduced by delegation of powers to transnational entities, the ends justify the means.

Keohane, Macedo and Moravcsik add to these arguments the claim that transnational institutions “actually improve the functioning of domestic democracy” (40). The argument here is that:

whilst popular elections are essential to democracy, democratic systems above all required constitutional rules and institutions to constrain the power of governments and temporary majorities…. Competing public institutions and a system of checks and balances, including politically independent courts and agencies with specialised expertise, can help ensure that policy choices are defended against robust criticism and that errors are identified and corrected…. They insist that transnational decision-making helps to achieve this sort of democracy in three ways: by combatting special interests, by protecting rights and by fostering robust public deliberation. (40-1)

As Nicol says, this approach – “a Madisonian conception of ‘deliberative democracy’ based on the American model of constitutionalism” (42) – is clearly incompatible with Nicol’s characterisation of the democratic principles informing British constitutionalism.

Nicol goes through each of Keohane et al.’s three Madisonian sub-arguments in turn, and presents counter-arguments. I may return to these in a later post, but I think the basic lines of the debate are clear enough already here for summary purposes. Finally in this subsection, Nicol briefly summarises Habermas’s ‘The Postnational Constellation’, and rather curtly dismisses it:

Habermas openly favours reducing the importance accorded to votes and accountability and increasing the weight given to ‘the procedural demands of communicative and decision-making processes’. But he admits that the transnational edifice he is seeking to construct would depend on whether a cosmopolitan consciousness would arise on the part of national electorates. It will be readily apparent that Habermas’ hopes for democratic revival depend not only on the materialisation of this elusive consciousness but, much more importantly, on redefining democracy out of all definition. (43)

In my own view this is unfair to Habermas, for whom I have a lot of time, whatever his shortcomings – but again this is not the place for working through these complicated issues.

Next up, Nicol discusses the argument that market mechanisms are themselves a sort of democratic decision-making, if you squint a bit – the argument (in my own rephrasing, using Hirschman’s terms) that market exit is a superior substitute for democratic voice. Nicol doesn’t have much time for this position, and neither do I, so I’ll move on. He then discusses France a bit, to say that different countries under the same transnational institutions must be analysed differently, but that this is not a comparative work. Then he sums up, and we’re done with Chapter One.

In terms of own thoughts – I’ve made some comments as I went, above, but I also have some quite large disagreements that I don’t want to get into here in any depth. I’ll probably write up a separate blog post on some of these issues, once I’m done with the read-through. To summarise very briefly: although, like Nicol, I have a range of criticisms of Hayek, I am at base much more sympathetic to liberal constitutionalism than Nicol is in this book. I think Nicol is being much too blasé here about the risks associated with reducing institutional checks and balances on a democratically-mandated executive. It’s clear from the framing of Nicol’s book that his core objection to the transnational institutions he’s discussing is the way they bake neoliberal economic policy into legal constitutions. I think that is an appropriate thing to object to. But the actually argument Nicol makes, in this chapter, is much stronger than this position: Nicol objects to any politically substantive constitutional constraint on a democratically elected political decision-making body. In my view, this position provides no legitimate method to constrain a democratically-mandated state from riding roughshod over the rights of at the very least a large minority of its citizens. The liberal principle that there are human rights which cannot legitimately be disregarded by state power, even if that power has received a democratic mandate at the ballot box, is a good one that we should fight both to preserve and to more fully realise, in my view. Nicol’s constitutional theory does not give us any mechanism to do either.

I want to quickly note a couple of specific ‘tension points’, then move on. On page 23, Nicol suggests that an independent judiciary is sufficiently important as to warrant a weakening of the general principle of accountability. I agree with this point – but it’s unclear why this logic could not in principle apply to other independent elements of the state apparatus (such as some substantive elements of the constitution). Nicol’s position is therefore a bit more ad hoc than it might appear at first pass, in my view.

Finally, on page 43, Nicol criticises Habermas for his (as Nicol sees it) unrealistic idea that European citizens’ sensibilities can be transformed in a more cosmopolitan direction. Nicol might be right in his suggestion that this is an unrealistically utopian hope, on Habermas’s part – but if Nicol is right about this – if, that is, we should in fact be more pessimistic about the possibilities for shifts in public sensibilities – then this could, against Nicol, be seen as an argument for caution around constitutionally unconstrained power for any given democratically elected government.

Put differently: the thing about Habermas, which I think is insufficiently appreciated, at least by many of his critics, is that his core project – the bedrock motive for the entire apparatus – is anti-fascism. Habermas is, for fathomable historical reasons, intensely interested in establishing a governance system and broader polity in which fascism cannot succeed. When Habermas wants constitutional constraints on an executive such that state power cannot be wielded without limit, and such that those constraints on state power themselves cannot easily be undone, the perspective informing these goals is that of somebody who grew up in Nazi Germany. These liberal political principles can of course also be used for other ends – such as the constitutional enforcement of a neoliberal economic framework – but Habermas’s basic rationale for the value of institutions of this kind should in my view be taken very seriously.

From my point of view, then, Nicol errs in making a general argument against substantive constitutional constraints on any and all political action, when his true target is – or should be – substantive constitutional enforcement of neoliberal economic policy. I’ll probably blog more about all this in another post – but this concludes my notes on chapter one.

Chapter 2 – The World Trade Organisation and the sanctity of private enterprise

Ok. Chapter one dealt with the theoretical and normative perspective of the book – the next three chapters deal with the substance. From the table of contents I gather that chapter two is focussed on the WTO, chapter three on the EU, and chapter four on the ECHR. Start with the WTO then. I’m going to try to take notes much more sparingly on this chapter than the last.

In Nicol’s words, chapter two is about:

the question of whether the World Trade Organisation (WTO) gives constitutional protection to the private sector. (47)

Nicol starts with a brief history of the establishment of GATT, post-WWII, and the development of the WTO out of GATT. The most important innovation of GATT, Nicol argues, was the ‘most favoured nation’ (MFN) rule:

The MFN rule requires states to extend to every GATT country the most favourable trade treatment accorded to any country, the most favoured nation.(56)

GATT also “permits a customs union to be treated as if it were a single contracting party” (57). For this reason, European nations could, in 1957, establish a common European customs union, and thereby maintain differential treatment of European and non-European trading partners.

When Britain joined the Community in 1973, therefore, there was a transfer of authority for trade relations from Whitehall and Westminster to the EEC Commission and Council. Thus trade policy to a considerable extent ceased to be a matter of British politics. (57)

The primary goal of the WTO, on Nicol’s account, was to have more effective enforcement machinery than GATT. The WTO Disputes Settlement Understanding (DSU) was more legalistic and binding than the previous GATT process. Moreover, because the WTO was founded at a point when neoliberalism was in the ascendent, its ‘constitutional’ role gave more weight to private enterprise. In Nicol’s words:

The fundamental difference between the DSU procedure and its predecessor lies in the inability of states to veto the judicial process at its various stages. Previously, crucial decisions – to establish a panel, to adopt its report, to authorise the remedy of suspension of concessions – had to be taken by consensus, which meant that losing states could in effect veto unfavourable decisions. Under the WTO regime, by contrast, the procedure progresses through these stages automatically unless there is a consensus against doing so. In practice this makes the adoption of all three stages automatic.(62)

Moreover, the private sector plays a major role in WTO decision-making:

Both the European Commission and the US Trade Representative rely on industry initially to kickstart litigation by drawing attention to obstacles to free trade, and then to sustain that litigation, by providing convincing factual information and legal argument (64)

In Nicol’s view:

Private companies have thereby been accorded a privileged institutionalised position from which to challenge the legislation and policies of states. (64)

So, Nicole argues that the WTO gives private companies a central role in de facto constitution-formation, and moreover has stronger enforcement mechanisms than GATT. In addition to these innovations, the WTO also expanded its remit, relative to GATT, bringing not just trade in goods but also services within the ambit of transnational constitutional constraints:

If the great institutional achievement of the WTO is dispute settlement, then its great substantive breakthrough is the General Agreement on Trade is Services (GATS). (70)

The institution design of the WTO, Nicol argues, has a ‘ratchet effect’, whereby members can commit themselves to greater liberalisation but cannot easily undo those commitments:

As in the case of GATT, the cardinal principle is that a WTO Member is never able to reduce its general level of liberalisation. (72)

This applies, Nicole argues, to public procurement…

The GPA… obliges government entities to provide, on request from any unsuccessful tenderer, relevant information as to why its tender was not selected, as well as the identity of the successful tenderer. The challenge procedure represents a profound development in terms of effectiveness of remedies for breaches of an international agreement. (77)

… and subsidies:

The WTO Agreements include a Subsidies and Countervailing Measures (SCM Agreement) … Under the SCM Agreement, only two types of subsidies are prohibited per se – export subsidies and import substitution subsidies. The vast majority of subsidies, by contrast, are ‘actionable’: they can be challenged if they cause adverse effects to the interests of another WTO Member. Such adverse effects may consist of injury to the Member’s domestic industry; nullification of GATT benefits; or serious prejudice to the interests of another Member.(78)

In sum:

Negotiating the schedules to the various agreements essentially involves a series of one-way-only, once-and-for-all decisions: states can elect to ‘ratchet up’ their commitment to market access and therefore privatisation, but there is no scope for negotiating in the opposite direction, in favour of extending public sector provision. The WTO can thus be seen as a ‘commitment device’ in which states hold themselves to their initial preferences by tying the hands of government for the future. It has created a rule-oriented landscape, fashioned to reduce ‘risk premium’ for private enterprise. (80)

These notes are brief and don’t adequately summarise the relevant WTO rules and enforcement mechanisms – but I’ll leave things here for now, and move on to chapter three.

Summary

Ok, I’ve finished reading his but am badly behind on my note-taking. Just to quickly summarise my ‘take’:

1) The book makes an strong case that transnational institutions (particularly the WTO and the EU) are significantly constraining on British democratic decision-making in economic policy, in a way that effectively writes elements of ‘neoliberal’ policy into the UK ‘constitution’ (in the sense of placing these elements of economic policy beyond the reach of parliament).

2) It makes in my opinion a less strong case that this is also true of the European Court of Human Rights (Nicol’s argument about the ECHR is largely – though not exclusively – that it is vulnerable to being pushing in this direction in the future).

3) Nicol argues that this is an unacceptable ‘democratic deficit’ – that parliament should be sovereign, or at least much more sovereign than it is now.

4) For my political tastes, Nicol makes this latter case too strongly. Nicol is broadly sceptical of constitutionalism, because he sees constitutionalism as undemocratic. He is of course right about this, in the sense that constitutionalism places areas of policy outside the (easy) reach of democratic decision-making, but I think he is wrong to suggest that this is always bad. Obviously these matters can be debated, but I myself have very little problem with core human rights being protected by a judicial apparatus that is difficult for democratic processes to override.

5) The strength of Nicol’s position, in my view, is in his argument that too much substantive economic policy has been shifted into this sphere of transnational legal decision-making. Nicol’s book seems to me to make this case very well indeed – if I get round to writing up the later chapters in more detail I’ll summarise some of the examples Nicol gives.

6) As with a lot of ‘Lexit’ arguments, Nicol seems to underestimate the extent to which transnational constraints on local economic sovereignty have been a feature of the capitalist world-system for much of its history. The reason they haven’t been a feature of British law for much of that history is that Britain was the dominant capitalist power for a long period, and has only recently again been on the receiving end of transnational constraints on sovereignty rather than the imposer of them.

7) Related to this last point, the book doesn’t really have an adequate sense of the difference between different forms of capitalist ‘laissez faire’, identifying (wrongly, imo) neoliberalism (a specific form of recent economic governance) with laissez-faire in general. This isn’t a huge issue, it’s just another example of the book’s perhaps too narrow historical perspective.

8) Again for my political tastes, the book is also excessively sceptical of forms of economic governance beyond national democratic processes. Nicol’s argument in the conclusion is that national (and, secondarily, sub-national) sovereignty is the only realistic form of democratic governance – there’s a case to be made for that, but it’s in my view a somewhat pessimistic case. The book’s political-normative standpoint is intrinsically a non-internationalist one.

9) Nevetheless, with all these hedges and criticisms, the core case of the book is made very strongly indeed, in my view. I don’t have the knowledge to independently assess Nicol’s discussion of ECJ legal decisions, and so on, but it’s hard to think, having read the whole thing, that he doesn’t have a point about transnational constraints on left wing democratic policy-making. I think defenders of the EU really need to accept the merit of this basic position, and defend these institutions on the grounds that their benefits outweigh their costs, rather than deny the existence of the costs altogether (as seems to be the current favoured stance among EU advocates in the UK).

Some very preliminary, scattered, and basic notes.

One of the dichotomies that structures a lot of work in economics is that between coercion and freely made decisions. There’s a lot to unpack here and the following is very crude, but ‘ideal typically’, a lot of economic theory draws a distinction between state action – which can be coercive, due to the state’s monopoly on the legitimate use of force within the state’s geographical boundaries – and freely made decisions, such as contract formation, market exchange, or collective action within civil society. Obviously the market, or contracts, are structured by ‘rules of the game’ that are themselves coercively enforced by the state – so the market and the contract are not untarnished, as it were, by coercive force. Moreover, economists are obviously aware that the state is not always and everywhere coercive. Nevertheless, this dichotomy does, in my view, inform a lot of economic analysis, in some sense.

There are at least two things to unpack from this picture. First, the dichotomy between coercive and free economic relationships; and second the way this dichotomy maps onto the distinction between the state, on the one hand, and the market and civil society, on the other. Both of these ideas are, of course, flawed. W/r/t the latter: obviously coercion can operate in market and civil society contexts, and not merely via the actions of the state and its representatives. Moreover, coercion need not be violent: for example, those likely to starve if they lose their jobs are extremely vulnerable to employer demands – these employers wield a high level of power over these employees, regardless of the formal free contracting of the employment relation. These kinds of unfreedom within market and civil society relationships also indicate the flaw in the first dichotomy discussed above: that coercion versus freedom is not, in fact, a dichotomy. On the contrary, the boundary between free interactions and coercive ones is, potentially, fuzzy. Economists are happy, in many contexts, to talk about ‘bargaining power’. It is, however, innate in the concept of bargaining power, that bargaining power is power. If one participant in an interaction has enough power relative to the other, we may reasonably start to doubt the extent to which the interaction’s outcome is a freely agreed bargain, and wonder whether language associated with coercive relationships may begin to become more appropriate.

Perhaps, then, it makes sense to think of freedom not as an on-off switch, but as a spectrum: we can all be more or less free, in different dimensions of our lives, or in different social and economic interactions. This framing avoids, of course, complexities around varied senses of freedom (some of which I’ve discussed in earlier posts on this blog), and questions over the extent to which freedom can usefully be quantified, or at least represented ordinally, on any kind of spectrum. Even this crude ‘linear spectrum’ model of freedom would seem, however, to be an advance on the binary model of freedom and coercion that seems tacit in a lot of economic theory.

In my view economics as a discipline needs to better get to grips with this. Economics is not unused to making normative judgements – around welfare or utility outcomes, etc. But these evaluations often seem naive (or, from a more cynical perspective, apologistic) around questions of freedom and coercion. Bringing such problems into the apparatus of formal economics of course threatens to take economics into a terrain that is traditionally reserved for moral philosophy. I think a good case could be made, however, that a lot of economics is already in fact occupying this terrain – it is simply (too often) doing so naively and unknowingly.

International Trade

April 15, 2016

Recent discussions of international trade – specifically around the UK steel industry, and Bernie Sanders’ recent trade proposals – made me want to articulate some extremely basic points about international trade. I’m going to distinguish three different arguments about international trade, painted here with the broadest of possible brush strokes.

1) The traditional liberal gains-from-trade argument. Efficiency gains from the division of labour, and from comparative advantage, mean that international trade can produce greater overall social wealth and welfare than the same resources would generate if nation states did not trade. In this respect, international trade brings benefits to everyone.

2) The third-worldist critique of international trade. From this perspective, international trade is a mechanism for extracting wealth from the world’s poorest and least powerful nations, and channeling that wealth to the world’s richest and most powerful nations. This is the case in both the historical colonial domination of the periphery by the core, and contemporary neo-colonial relationships. In this respect, international trade benefits the core at the expense of the periphery.

3) The labour-aristocracy critique of international trade. From this perspective, international trade weakens the bargaining power of labour in the core, by outsourcing jobs and production to the periphery. In this respect, international trade brings benefits to countries in the periphery, at the expense of workers in the core.

All three of these arguments are common. In my opinion, all of them capture important dimensions of the international trade. That is to say, in my opinion, it’s a mistake to deny any of the following: 1) international trade can bring aggregate economic benefits via specialisation and the division of labour; 2) international trade can extract the resources of the periphery to the benefit of the core; 3) international trade can outsource production and diminish workers’ bargaining power in the core, to the benefit of the periphery.

The question, then, in my opinion, is where and when these different elements of international trade occur. This is clearly a complicated empirical question – and much more complicated than the above typology suggests. Still, I think that debates over international trade would benefit if all parties made the specific case for their emphasis, among these three perspectives – and for the consequences of their preferred policies on all three of the dimensions listed above.

What Did Marx Get Wrong?

January 9, 2015

There are lots of criticisms commonly directed at Marx. Most of these I think are misplaced; two of them I think are correct. This list is obviously not exhaustive, but here, very briefly, are some of those common criticisms. (In line with my new blogging practice, I’m not even aiming to argue for these positions here – this is just what I think…):

Criticism: Marx has a teleological stagist view of history.
My view: No he doesn’t.

Criticism: Marx’s labour theory of value is untenable.
My view: Marx doesn’t hold the labour theory of value.

Criticism: Marx’s humanist philosophical anthropology paints too rosy a view of human nature.
My view: Marx doesn’t have a humanist philosophical anthropology.

Criticism: Marx’s narrow economism has no space for agency.
My view: Marx is not narrowly economistic.

Criticism: Marx is too optimistic about the possibilities of technology.
My view: Marx is right to be optimistic about the possibilities of technology.

Criticism: Marx is too optimistic about the possibilities of central planning.
My view: I agree with this criticism.

Criticism: Marx’s attempt to provide blueprints for future institutions is dogmatic and utopian.
My view: Marx doesn’t provide such blueprints.

Criticism: Marx ought to provide blueprints for future institutions.
My view: I agree with this criticism.

~~

All that is by way of saying, I see two central flaws in Marx’s work. First – he is too optimistic about the possibilities of central planning. His position is – as always – more nuanced than a quick summary suggests, but at base Marx thinks that bringing the uncoordinated and indirectly coordinated actions of the complex system of capitalism under some kind of centrally planned control is the way to eliminate the irrational and coercive aspects of that system. Marx is far too incautious about the concentrations of power that accompany such central planning – he doesn’t give nearly enough attention to the abuses of power and the exploitative dynamics that are likely to result from such massive concentration of political and economic power.

That said, Marx doesn’t spend much time writing about the shape of the more centrally planned society he’d like to see because, second: Marx is of the view that the shape of future society will basically be worked out ‘in practice’ – that it is not the job of intellectuals or political activists to provide ‘recipes for the cook-shops of the future’. I disagree with this too. Institutional change comes about because people change those institutions, and they change institutions by thinking about what institutions they’d like better. I believe there’s no reason why such thought can’t take place ahead of time – and I believe it’s better that a lot of such thought take place ahead of time, so that people aren’t having to do that thinking at short notice in incredibly stressful circumstances with catastrophic consequences of poor judgement calls.

So – those are the main areas where I disagree with Marx.

In other news, I have a new comment policy. (It basically just says that I’m going to stop responding to comments, because it takes me forever – like months and months – and really what good is that to anyone.)