March 05, 2014

Putin: King in Russia or Emperor of all the Russias?

Writing about web page http://www.maxkeiser.com/2014/03/liam-halligan-on-bbc-radio-4-idea-of-sanctioning-russia-pretty-mad/

After recent events in Crimea several commentators have asked for more understanding of Russia's position -- among them, for example, my old friend Liam Halligan. This is particularly important because, if we do not understand Russia, we will be unable to predict the consequences of our own actions. Because this will be a long blog, here's the short version:

  • Does Putin want primarily to be King in Russia or Emperor of All the Russias? We don't know, and it will make a big difference.
  • If Putin wants to be King, the result of his invasion of Ukraine will be to consolidate his rule, at least for a while, but any further implications are limited.
  • If Putin wants to be Emperor, a protracted and dangerous international conflict has already begun; only resolute deterrence will avert tragedy.

We need better to understand Russia, but Russia is not easy to understand. Why? The most important reason is that Russia's politics lack transparency and accountability. Consider the following. The Russian invasion was clearly well planned, yet took the world by surprise. It was undertaken despite a near total absence of popular support; according to a VTsIOM poll published on 24 February[correction: link updated, 8 March 2014], only 15 percent of Russians endorsed military intervention in Ukraine, with 73 percent opposed. Although there was no popular enthusiasm for military intervention, Russia's parliamentarians mandated it unanimously. Although there would appear to be clear blue water between the administration and public opinion, the administration's action has met with little or no popular reaction.

Russia, in short, is free of the public agonizing that signals a vibrant democracy. Nothing could show more clearly that Moscow's decisions are made in a secretive, unaccountable way, so that ordinary people expect to have no voice and remain passive.

Two related factors only add to the difficulty we face in trying to interpret Russia's behaviour. One is that the Kremlin understands the value of surprise. The sudden and unexpected character of the Russian action in Crimea deprived Russia's opponents of the chance to react promptly in a calculated way. The result has been confusion and indecision in Kiev and western capitals. While Ukrainian and Western leaders have pondered their best responses, Moscow has consolidated its gains. The result of this is an analyst's paradox. A capacity for unpredictable action is valuable, but can only be maintained by preventing adversaries from understanding how Russia will decide its next move, and therefore from predicting it. Thus, Russia's leaders must continue to behave unpredictably, avoiding any clear or systematic pattern.

A second related factor stems from the fact that, while Russia's action in Crimea was extremely successful in exploiting surprise to achieve a bloodless coup, the bloodless nature of the intervention could not have been predicted. Any panicky self-defence by Ukrainian troops or (say) Tatar civilians would have led to a bloodbath. One must suppose that Putin and his cabinet anticipated this possibility, but discounted it and went ahead regardless. As things turned out, the risk of bloodshed was not realized, but this was just lucky. In other words, Russia's leaders were prepared to take a very substantial risk. A propensity for risky behaviour is characteristic of rulers that have a great deal at stake but also fear that time is running out: the option of wait-and-see has low value for them, or is seen as also highly risky, so they act now despite the risks.

What is at stake for Russia in Ukraine that is of such value? What is Russia's action designed to achieve? Here I see two possibilities, and the opaque, unaccountable nature of Russia's politics makes it hard to discern which is the dominant factor.

I take it for granted that Russia's action in the Crimea was designed to help bring about a lasting change in the balance of forces. I cannot see that any lesser objective would justify invading a sovereign neighbour whose borders are guaranteed by two other nuclear powers (the US and UK, the third being Russia itself). But which hostile forces was the Russian action designed to counter? Does Putin mean to change the balance of forces within Russia or that in the world beyond Russia? Related to this, is Putin content to be King in Russia more or less as it is today, or does he mean to become the new Emperor of All the Russias?

Explanatory note. "All the Russias" means Great Russia (Russia proper) plus Little Russia (the Ukraine) plus White Russia (Belarus). All the Russias would be a smaller territory than the old Russian Empire (which extended to Poland, Finland, the Baltic, the Caucasus, and Central Asia) and also smaller than the Soviet Union (which lost Poland and Finland), but it would reunite all the Slavic nationalities under one authority.

There is a case for thinking that Putin just wants to be King, and his primary objective is to offset potential domestic opposition. Among Russians, his legitimacy rests on a narrative of Russia, weakened by the collapse of the Soviet Union, plundered by domestic and foreign thieves, and encircled by enemies at her borders. When Putin's position at home is weakened by stories of election-stealing or corruption, he portrays his opponents as fraudsters and agents of foreign powers and he deters many critics by putting a few of the more important out of circulation. His narrative has been sustained by the turmoil of Ukraine's unfinished transition from communism and by worsening relations with the West. On this interpretation, Putin's goal in Ukraine has been to stoke international tension for a while and so change the balance of forces domestically, within Russia. He has used the Ukrainian events to teach Russians that Ukraine's movement is not "anti-corruption" or "pro-democracy" or "pro-Europe" but "anti-Russia." And anyone in Russia who campaigns against corruption or vote-rigging is now vulnerable to proscription as anti-Russian.

If it is Putin's strategy to weaken domestic opponents and so shift the domestic balance of forces in his favour, then it is already largely successful. All that is required is for the West to put up a show of resistance, and Putin will have achieved his objective, which is to confirm that Russia is embattled and he is the Russians' only defender. He does not need a war to prove it. He will take no more risks, and he will stop here. It's hard to say how long the effects will last; they might be relatively short lived. As for Crimea, the outcome can be some messy compromise that will poison Ukrainian politics and store up future conflict, which will also serve Putin's domestic purposes.

Alternatively, and much more seriously, Putin's final objective may be to weaken external adversaries, and so to shift the balance of forces in Europe. To do this permanently would mean to redraw frontiers by creating a new Empire of All the Russias with a cordon sanitaire of neutralized states on its borders. A first step is to expose the powerlessness of the EU, to divide Europe from the US, and so to divide NATO. But in this case he has only just begun. He will continue to work to subordinate Ukraine and Belarus in a Eurasian Union, while isolating and neutralizing all Russia's less compliant neighbours, which include Georgia, Poland and the Baltic states. If that is Putin's grand project, it is probably shared by others around him.

If Putin wants to be Emperor, it is hard to see how confrontation can be avoided at some point. If Europe and NATO signal accommodation, for example, and express only token resistance to the Russian action in Crimea, then Putin will drive on towards his ultimate goal by undertaking other adventures, perhaps by going deeper into Ukraine or by setting out to humiliate other neighbours. On the other hand, to the extent that Europe and NATO show unity and put up resistance, Putin's objective will become more distant and, because time is not on his side, he will be willing to take more risks to achieve it. Only resolute deterrence will prevent violence and tragedy.

As I see it the immediate policy implications are limited. In 1994 Britain guaranteed the security of Ukraine's borders. In return, Ukraine gave up its nuclear weapons. Whatever Russia's motivation for breaking its word, we cannot honourably walk away from our own guarantee. There are many steps that Britain, Europe, and NATO should now take, that fall well short of destabilizing military intervention. Most importantly, we should take them together.

It troubles me, however, that we do not know how Russia will respond. If Putin's objective is to affect the domestic balance of forces, nothing much more will follow, except that his regime will be consolidated for a while. If his objective is to redraw Europe's boundaries, then a game has begun with many unpredictable and dangerous moves in store.


February 24, 2014

Kiev, Europe's Dangerous Crossroads

Writing about web page http://www.bbc.co.uk/news/world-europe-26312008

Europe has been at this crossroads before. An ancient multi-national empire creaks dangerously under the strains of modern nationalism and separatism. Its rulers fear the mob, and fast-moving events. It fears especially the example of a neighbouring independent state, once its colony. Above all, it fears the future.

A century ago this was the Austro-Hungarian Empire, where the Hohenzollern dynasty, ruling in Vienna, determined to crush the rising challenge of Serbian nationalism. In planning war on Serbia, the Austrian government knew that Serbia had a powerful ally, Imperial Russia. The Austrians knew they would face strong resistance. They feared their enemies, but they feared the future more. They gambled on war.

Austria was encouraged in its war aims by the rising power of Germany, which expected to take advantage of the resulting conflict to settle accounts with its own rivals and shift the balance decisively in its own favour. This too was a gamble.

Today the ancient, creaking multi-national empire is Russia itself, where the Kremlin looks to events in the neighbouring Ukraine, once ruled from Moscow, with mounting anxiety.

Note what I am not saying. I'm not saying that history repeats itself. It doesn't repeat itself at all, never mind exactly one hundred years later. Over a century the world has changed in too many ways for this to be a nice laboratory experiment with controlled conditions under which similar reagents reliably produce a similar result. All that history can tell us is some of the risks in the situation -- and not all of them, because there is always something latent or new that did not happen before.

But I am saying that Europe is at a dangerous crossroads. A popular uprising has rid Kiev of the corrupt Yanukovych regime. In this moment, 45 million Ukrainians face an unknown future. That's their problem. It's not an easy problem. If it had been easy, former president Yushchenko and former PM Tymoshenko would have solved their first time around, in 2005. They would not have fallen out and Yanukovych would not have been elected president in 2010.

The one thing that Ukrainians cannot change is their location. Russia was, is, and will remain their powerful neighbour. Many Ukrainians speak Russian and feel Russian. Whether the reformers like it or not, they have to take this into account.

The problem for Russia's president Putin begins with the fact that events in Kiev look set to put an end to his dream of uniting Ukraine with Russia and Belarus in a Eurasian Union. Worse than that, Ukraine in this moment embodies an existential threat to his rule. If the people can get rid of Yanukovych, they can get rid of Putin.

The problem for 700 million Europeans in this moment is: What will Russia do now? Does Russia have the will and the capability intervene in Ukraine by whatever means present themselves -- openly or under cover, by inducements, threats, or force? Financial inducements have been tried. Repression from within has been tried. Both have failed. What else can Russia do?

When rulers feel their survival is at stake, the normal restraints and inhibitions can melt away. They may not act rashly or precipitately; they will still calculate and if calculation suggests waiting they will wait. But what enters the calculation and with what weight may change. And pessimism is a dangerous element, because fear of the future may tilt the calculation in favour of taking a gamble on precipitate action today.

If the alternative is to be chased out of the presidential palace, the resort to violence may no longer look so bad. That's what Yanukovych showed us last week. I wonder what Putin is thinking about this morning.


February 06, 2014

A Blast from the Past: The KGB and Counter–Terrorism

Writing about web page http://www.hoover.org/publications/hoover-digest/article/5279

The athletes gathering in Sochi for the Winter Olympics must regret the fact that the threat of terrorism is commanding as much media atttention as the prospects for sporting excellence.

The extent of the terrorist threat to Sochi is a measure of how Russia has changed. The Soviet Union offered little scope for terrorism. Under intense state and party surveillance it was very difficult for non-state actors to spread a message or recruit. It was not obvious what would make an effective target for a terrorist act and the state was fully capable of suppressing any publicity that would normally follow in an open society. Terrorist acts were rare. Nonetheless, a few did take place.

While studying the records of the KGB of Soviet Lithuania (held on microfilm at the Hoover Institution), I came across documentation of such a case. On a Saturday afternoon in January 1977, three bombs were detonated in Moscow, one in a subway train, another in the street, and a third in a food store. The attack came out of the blue: there was no warning and no one claimed responsibility. Seven people were killed and 44 injured. Two days later, on January 10, the Soviet news agency TASS issued an uninformative bulletin that mentioned only the subway blast and concealed the deaths.

The KGB was completely at a loss where to look for the perpetrator, so they looked everywhere -- including Lithuania. The investigation took many months; almost a year passed before arrests were made. I'm not going to tell the story of the investigation here; I've published the main story elsewhere and you can also read a more detailed version in a working paper with footnotes.

The thing that interested me most was what I learned about the career concerns of KGB operatives. It worked like this.

  • If you were Yurii Andropov, the USSR KGB chief in Moscow, you naturally had what Mancur Olson would have called an "encompassing interest" in identifying and catching the culprits as soon as possible.
  • At the next level down, if you were Juozas Petkevičius, the Soviet Lithuania KGB chief in Vilnius, your concerns were more complicated. Your first priority was to ensure that the culprit was not in Lithuania. The culprit had to be somewhere, of course, and the chance that he (or she, but let's be realistic: most terrorists are male) was in Lithuania was very small (1 percent of the Soviet population). Moreover, if the perpetrator was found in Lithuania, Petkevičius could expect a career setback, because this would be someone the local KGB had overlooked or underestimated. One could understand it if Petkevičius had chosen to let sleeping dogs lie. But he couldn't, because then he would face an even worse career risk: that some other branch of the KGB would come into Lithuania and find the terrorist that the locals had overlooked. So Petkevičius did the right thing and mobilized his forces to scour Lithuania for the culprit, if the culprit was to be found there.
  • There were still lower levels, headed by chiefs of KGB city and rural district administrations, and so on down to factory and ward officers, workplace and apartment block informers, and so forth. At each level the KGB staff and agents faced the same conflicting pull as Petkevičius, but the balance changed. By the time you came down to a village or street, the chance that the culprit had chosen to hide out exactly there, as opposed to any other street in the entire Soviet Union, was absolutely infinitesimal. Correspondingly, as you went down the hierarchy, the risk of slacking and the incentive to search weakened and dwindled to zero. The only remaining incentive to search was to please the boss. Therefore, as time went by, Petkevičius became more and more concerned that no one below him was trying hard. And he needed them to try hard, so he pleaded and threatened and bullied.

Why is this interesting? Because we might think of the KGB as a special, elite organization full of dedicated, self-motivated patriots and loyalists. Yet, when push came to shove, in the face of a national emergency, most employees behaved like the staff of any bureaucracy: they responded to career concerns, and not otherwise.

PS If you follow my links to the full story, you'll find that what happened in the end was exactly what Petkevičius must have feared most -- but it happened elsewhere, to another regional KGB boss who was found to have held the terrorist leader in his hands and let him go.


January 16, 2014

Soviet Censorship: A Success Story

Writing about web page http://www.voxeu.org/article/costing-secrecy

Yesterday VOX published a short column that I wrote about Costing Secrecy. The teaser is as follows:

Democracy often seems bureaucratic with high ‘transaction costs’, while autocracies seem to get things done at lower cost. This column discusses historical research that refutes this. It finds empirical support from Soviet archives for a political security/usability tradeoff. Regimes that are secure from public scrutiny tend to be more costly to operate.

A starting point of my column was that communist rule in the Soviet Union gave rise to one of the most secretive systems of government that has ever been devised. I'm always looking out for ways to illustrate this, and I found a new way recently with the help of Google's Ngram Viewer(thanks to Jamie Harrison). The Ngram Viewer searches the Google Books corpus for words and word combinations and shows their changing frequency over time. The chart below shows the result of searching in the Russian corpus for the word "Главлит" (Glavlit).

Glavlit, the Soviet Union's Chief Administration for Affairs of Literature and Art, was created in 1922 to centralize the censorshop of the media. The background is that the Bolsheviks introduced censorship in November 1917 as one of the first acts of the Revolution (the "Decree on the Press"). During the Civil War that followed, they operated censorship through many agencies at many levels. Glavlit pulled it all together into a single, unified agency. The official title of Glavlit changed a few times over the next 70 years. Still, no one ever called it anything but "Glavlit," even in official government and party documents.

My current research is on secrecy. Censorship and secrecy are not the same. But they are closely connected. Enforcing government secrecy was one of the most important functions of censorship. In addition, Glavlit was a government agency, and its working arrangements were entirely secret, so the censorship had to censor the facts of its own operations.

How effective was Soviet censorship? The frequency with which the chief agency of censorship was mentioned in published works offers a simple measure in one dimension. Here it is:

Notes: My guess is that the Google Books Russian corpus must include books published in the Russian language abroad, out of reach of the Soviet censor, as well as within the Soviet Union. For transparency the chart is completely unsmoothed. In the years of the Civil War (1918 to 1920) and World War II (1941 to 1945) fewer books were published, making observations in those years more susceptible to the law of small numbers. You can view and play with the chart here in its home setting.

There is a simple message. The Soviet censorship agency was openly acknowledged and discussed at the time of its establishment and for a few years afterwards. From the mid-1920s it faded rapidly from sight. By 1931, when Stalin was fully in charge, its disappearance was almost total. For more than half a century Glavlit successfully covered its own tracks. Fifty-six years later, in 1987, Gorbachev launched his policy of "glasnost" (openness). Only then did Glavlit gradually come back into uncensored view. Glavlit was finally abolished in 1991.

In short: Soviet censorship worked.


January 08, 2014

Stalin Equals Cromwell: How Putin Sees Russia's Past

Writing about web page http://www.kremlin.ru/news/19859

How is Cromwell so different from Stalin? Can you tell me? There is no difference. From the standpoint of our liberal representatives, from the liberal spectrum of our political establishment, he is a similarly bloody dictator. He was a treacherous guy, and he played an ambivalent role in the history of Great Britain. His memorial stands, and no one is tearing it down.

Russia's President Vladimir Putin does not know the difference between Joseph Stalin and Oliver Cromwell. It is true, as Putin declared (at a four-hour press conference held at the end of last year, on 19 December 2013), that Cromwell was a dictator. It is true, also, that Cromwell's historic achievements were stained with the blood of others. Yet his statue stands in Westminster outside the British Parliament. Putin's implication is clear: Like Cromwell, Stalin is just another national leader from times past, and any nation would be willing to remember him for his place in national history.

What should we take from this? There is a characteristic skew to Putin's view of Russia's past. But this is hardly new. In 2007 Putin had this to say:

As for the problematic pages in our history -- yes, they existed. The same as in the history of any state! Indeed, we have had fewer than some others. And not as terrible for us as in some others. Yes, we had some dreadful pages: let's remember the events that began in 1937, let's not forget them. But there were no less in other states, they've had worse. At least we haven't used atomic weapons on civilians. We haven't flooded thousands of kilometres with chemicals and we haven't dropped seven times more bombs on a small country than were used in the whole Great Patriotic [War, i.e. World War II], as happened in Vietnam, let's say. We've had no other black pages such as Nazism, for example.

You never know what might have happened in the history of other states and peoples! We can't afford to let them make us feel guilty about it -- they should worry about themselves.

In short, Putin does not see much to feel bad about in Soviet public life before 1937. He feels bad about "the events that began in 1937" (when Stalin ordered the execution of 700,000 and the imprisonment of 1.5 million more), but these were no more than would fall into the normal range of bad stuff that might have happened anywhere. I'm not going to go into more detail here on this. Interested readers can go back to the blistering response of Leon Aron, who said it at the time much better than I can.

If "Stalin = Cromwell," what does it matter? One implication might be for Russia's public life, given that Stalin is still politically relevant to Russia in a way that Cromwell is not to the UK. It is three centuries and a half since England's Civil War was concluded and there is no significant Cromwellian party in British public life (other than perhaps in Northern Ireland). Russia today, in contrast, has many active claimants to Stalin's mantle, including a communist party whose leader Gennadii Zyuganov, according to Putin, could be considered as the second figure in Russia's public life. Still, Putin is not calling on Russians to rally under Stalin's banner and return to the peasant-slayer's precepts; far from it.

An alternative implication is the one that matters: Putin wishes Russia's past to be seen as normal. Specifically, a believer in the Russian state and national power, he wishes the history of Russia's state to be seen as continuous and normal. All countries have had their builders of the nation state and its capacity: Cromwell, Napoleon, Bismarck, Ataturk, ... and Stalin. All were forceful modernizers, Putin seems to say, that got their way by imposing sacrifices and crossing the margins of conventional morality. But all deserve their laurels and should have their statues. As for their transgressions, we will not forget to mention "the events that began in 1937," but there's no need to enumerate the mass graves in the birch woods or to detail who killed whom on whose orders.

My guess would be that this view resonates strongly with many Russians today. It's something you can easily lose sight of in Moscow, where most streets and squares lost their Soviet-era appelations and decorations in the early 1990s, and went back to the pre-revolutionary style. But Moscow is not Russia. In many provincial Russian towns the statues of Lenin and other Bolshevik revolutionaries still stand.

A minor detail caught my eye in the reporting of the recent tragic events in Volgograd (formerly Stalingrad): the second (trolleybus) bombing of 30 December took place in the city's Dzerzhinskii district, that is, a part of the city named after Feliks Dzerzhinskii, founder of the Soviet secret police and architect of Red Terror in Russia's civil war. According to Wikipedia, there remain no less than ten Dzerzhinskii districts in Russia's cities and provinces (as well as one in Eastern Ukraine), not to mention the town of Dzerzhinsk, not far from Nizhnii Novgorod. In provincial Russia you can't yet have Stalingrad, despite a campaign to restore Stalin's name to the city, but it's quite normal to have Dzerzhinskii. In Moscow the destruction of Dzerzhinskii's statue was one of the symbolic acts of 1991; recent calls to restore it have evoked polarized opinions.

I thought about this a few months ago when I visited Ekaterinburg. Standing on the edge of Asia, Ekaterinburg is the capital of a province the size of England and Scotland combined, but with less than a tenth of the population. First named after the Empress Catherine the Great, the city was renamed Sverdlovsk in 1924 after the early death of Soviet Russia's first head of state: Yakov Sverdlov. In 1991 the city's pre-revolutionary name was restored, but its hinterland is still called Sverdlov province, and Sverdlov's statue still stands on the main street.

Sverdlov

Photo: Mark Harrison.

Ekaterinburg's streets and squares commemorate many figures from the Bolshevik past from Kuibyshev (architect of the first five year plan) and Malyshev (Stalin's minister of the atomic industry) to Michurin (Stalin's pet anti-Darwinian pseudo-scientist) and Serov (first head of the post-Stalin KGB). Oh, and here's the "Iset" hotel, built in the shape of a hammer and sickle in the 1930s as an apartment block for security officials and their families.

Gorodok chekistov

Photo: Mark Harrison.

People still call it Gorodok chekistov, the little town of the secret policemen. Elsewhere in the town is Ulitsa chekistov, the street of the secret policemen.

Lenin

Photo: Mark Harrison

In Ekaterinburg Lenin's statue stands opposite the town hall, just as Sergo Ordzhonikidze's statue stands in the suburbs outside the head office of Uralmash, the giant Soviet-era engineering factory. Ordzhonikidze was Stalin's minister for heavy industry. (He shot himself in 1937 as a protest when Stalin eliminated his subordinates one by one).

Ordzhonikidze

Photo: Mark Harrison.

In Ekaterinburg some things have changed since Soviet times, not just the city's name. A mile from Sverdlov's statue stands a new shrine to Sverdlov's most famous victims, Tsar Nicholas II and his family, murdered on the spot in July 1918.

Romanovs

Photo: Mark Harrison

In Ekaterinburg, it seems, perpetrators and victims are commemorated with complete impartiality. The martyr Nicholas gets a new statue, while the likely murderer Sverdlov keeps his old one. It's just like London, where Cromwell's statue stands in Westminster, a short walk from that of Charles I, the King whom Cromwell executed, at Charing Cross.

Not quite like London, though. In Ekaterinburg, something is missing. On a highway a few kilometres out of town, a handpainted sign labelled "Memorial" points off the road. (I didn't get a chance to take a picture.) Memorial to whom? The path leads into the birch forests where the Chekists took tens of thousands for night time execution and burial in the years of Stalin's terror. Mass graves have no importance in Putin's nation-building narrative. They can be forgotten, or filed away under the heading of necessary sacrifices and inevitable mistakes.

This is Putin's view of Russia's past. Sverdlov and Tsar Nicholas; Lenin, Stalin; the Chekists; Kuibyshev, Malyshev, Ordzhonikidze. All are figures from history, state leaders in whom Russians should feel equal national pride. Who can tell the difference? No one. As for the ordinary victims, forget them. Anyway, who cares? Only those that wish to dig for dirt among their bones.


January 03, 2014

What is the True Mission of the NSA in a Free Society?

Writing about web page http://www.dnaindia.com/analysis/column-what-is-the-true-mission-of-the-nsa-in-a-free-society-1944437

This item first appeared under the same title on DNA India on 3 January 2014.

In the name of counter-terrorism our phone and Internet communications are today under continual government surveillance. Should we worry about the US National Security Agency and Britain’s GCHQ? Yes: Ordinary people have a right to privacy and few means to resist covert surveillance. The privacy of hundreds of millions of people is at risk. Against that, a relatively small number of ordinary people have secret plans that threaten our security. Compared to the threat, the indiscriminate character of surveillance seems disproportionate.

But the critics of surveillance also need a sense of proportion. Many commentators have suggested that more than privacy is at stake. Our liberty is also at risk, they fear: perhaps we are moving towards a police state. Really? A standard of comparison is needed, one that would be best provided by the historical records of a real totalitarian police state.

The Soviet Union was such a police state. In the Soviet Union under Communist rule, the secret police was the KGB (Committee on State Security). Most KGB records remain under lock and key, because Russia today is governed by an ex-KGB elite that has no interest in letting the world see how the KGB upheld Communist rule. A few of the former Soviet states have made a clean break with the Communist past and have opened up their KGB archives. For the last five years I have been working with records from now-independent Lithuania — held on microfilm at the Hoover Institution in California. These are highly revealing about KGB methods of mass surveillance and intervention.

Soviet society was organized to make surveillance easy. Every citizen had an ID card; everyone’s residence was registered with the police. At work, everyone was employed by the State or by government-controlled “collectives”. At home, everyone was a tenant of the government or some collective. The government and the ruling party ran the press and TV; there were no independent media, no independent access to copying or print services, and absolutely no Facebook or Twitter.

With one State postal and telephone service, any letter or call could be intercepted. The KGB ran a network of informers, which was concentrated on key offices, factories, and colleges where young people gathered. The extent of secrecy and surveillance was never debated in any public forum.

No one could leave the country without permission, and the small numbers allowed in and out were basically limited by the KGB’s capacity to watch them individually or in groups. In the 1970s, for example, Soviet Lithuania sent at least 1,000 visitors abroad each year and received at least 10,000 visitors. Forty years later, freed from Communist rule Lithuania would receive more than one million visitors each year just from the European Union. By the standards of a middle-income country today, Soviet citizens were almost unbelievably isolated. Just as important, the cause of their isolation was the Communist regime’s resolve to keep the citizens under continual observation. The first lesson seems to be that a police state will restrict citizens’ travel and communication to a level that it can observe. As humans we love to move around and be in constant touch with each other through social media. In open societies our intelligence agencies respond to this challenge by gathering our data indiscriminately and hoarding it in vast quantities. But they do not compel us to live or work only where they can watch us, and they do not try to prohibit us from communicating through channels they cannot overhear or from travelling to where they cannot see us. On this criterion we are still far from a police state.

After surveillance comes intervention. Intelligence agencies don’t do surveillance for its own sake; they want information on which they can act. Another important difference between us and them is what the authorities do with the products of surveillance. On the basis of the information it received, the KGB intervened directly in the lives of citizens to nudge their behaviour and limit their choices. Suppose they heard that Ivan Ivanovich was behaving suspiciously or voicing undesirable views. The response, at a minimum, was to call Ivan in for an unpleasant and frightening warning. Ivan’s card would also be marked for the future. No Soviet citizen could be promoted to any management position or allowed to travel to any foreign destination without KGB clearance, and Ivan’s chances of either of these were now greatly reduced.

At the moment we have no clear evidence that any of the NSA’s programmes has impinged on the life of any citizen in this way. Nor is it clear how they might do so, other than in the form of private abuse. Again, we seem to be a long way from the working of a real police state.

Still, is there something to worry about? Absolutely. Just as there is no clear evidence that Western intelligence surveillance is taking us into an Orwellian nightmare, there is also a lack of evidence that it is effective at doing what it is supposed to do: combat terrorism and strategic threats to Western security. Western security establishments look overfunded and undermanaged. Potentially, vast resources are being wasted to promote the careers of security empire builders. That should be of huge concern.

What is the true mission of national security in a free society? Surely it is to protect the democracy that allows us (as voters) to toss out the government, to protect our freedom (as private persons) and to be the people we want to be. A question then is: What do we want to be, or how do we want to live? Intrusive mass surveillance in the hands of a bloated security apparatus seems unlikely to protect democracy or freedom. If we seriously want to protect free speech and free association, we should set limits on surveillance and accept some risk that a few bad people will successfully exploit free speech and free association to do bad things to some of us. It’s a tough one, especially for politicians who do not want another 9/11 on their watch.


December 24, 2013

Why Exactly Did She Give Me That?

Writing about web page http://ideas.repec.org/s/eee/givchp.html

It's sometimes suggested that festivals of giving and receiving challenge the theoretical foundations of mainstream economics. Not so. Christmas is a challenge, but it isn't abstract or theoretical; it's empirical and deeply personal.

How would Christmas be a theoretical challenge to economics? Most economists build their models on rational actors that pursue self-interest. I give you a gift. If my giving benefits you at my own expense, does giving undermine the axioms of the model? Not really. There are many ways to interpret giving in terms of rational choice. Here's a few.

  • Love. I love you, so my utility internalizes yours. If my gift makes you happy, I'm happy too.
  • Commitment. I signal my commitment to you by giving you an expensive gift. If you accept my commitment, we can do things together (like rearing a family) that we couldn't do separately.
  • Competition. I compete for your affection by displaying my surplus resources. By making you a gift more expensive than any my rivals can afford, I can win the contest.
  • Signalling. By selecting particular gifts (or store vouchers), rather than money, we signal particular types of affective relationships. Some gifts are considered romantic, and other utilitarian. When exchanges match, your position in my world is confirmed; when they are discrepant (you give me perfume, I give you a scrubbing brush) it is undermined. Either way, I learn something useful.
  • To create an obligation (as Sheldon says in The Big Bang Theory, "You haven't given me a gift, you've given me an obligation"). I make you a gift, in return for which I will call in a favour at a time of my choosing.

These are a few possible explanations of giving and receving in general. One might also want to explain festivals of giving and receiving when everyone does it together:

  • Herding. I gain utility from doing what everyone else does. If everyone else is giving and receiving, I'm happy to feel part of it by doing the same. (Not everyone is like this; a minority will gain utility from standing aside.)
  • Coordination. It's more fun if we all do it at the same time; also, devoting a few days each year to systematic giving may reduce the chances of anyone being left out of our circles of commitment and obligation by mistake.

In other words, relatively simple extensions of the basic economic model based on rational individual choice can easily support explanations of giving, including festivals of giving and receiving. So the challenge of Christmas is not theoretical; it's not hard to explain the general phenomenon. The challenge is to explain giving in particular: For any specific gift, which is it, of these (or many other) possible explanations that applies?

Christmas is a challenge for everyone, not just for economists. Tomorrow, as you sit amidst the wrapping paper, ask yourself: Now, why exactly did she give me that?

Merry Christmas!


December 06, 2013

Nelson Mandela and Others: Reflections on Hard Choices

Writing about web page http://www.bbc.co.uk/news/world-africa-25249520

Nelson Mandela has died, aged 95. I was 15 when he was sentenced to life imprisonment for carrying out an armed struggle against apartheid. I felt instinctively that apartheid was morally wrong and that oppressed people had a right to struggle against oppression by using the means available to them. If political channels were denied to them, then other channels were justified.

The lead counsel for Mandela's defence was the Afrikaner lawyer Bram Fischer. A secret member of South Africa's underground communist party, Fischer was afterwards arrested and also sentenced to life imprisonment. Unlike Mandela, Fischer died in prison (of cancer).

Nelson Mandela was a source of inspiration. His cause was just. I was moved by his plight when he went to prison and by his leadership when he left it.

Bram Fischer, in contrast, was a source of aspiration. Fischer came from a background of wealth and privilege. Without making any particularly hard choices, he could have remained part of the white South African elite into which he was born. He rejected the easy choice and chose instead the immensely difficult, painful, and eventually killing path of solidarity with the oppressed people around him. His choice was to throw in his lot with the black people of South Africa -- people who had no choice, except to suffer in silence or struggle in secret.

If Fischer was a source of aspiration for me, I must admit right away that I did not take the aspiration very far. I was politically engaged for quite a long time but personally I never had to make any very hard choices. I lived above ground in a liberal democracy, not underground in a police state. All I can say is that remembering Mandela and Fischer helped me to keep in perspective the relatively trivial issues that I faced from time to time.

There were some uncomfortable conflicts within the struggle against apartheid. One was induced by the Cold War. The South African apartheid regime portrayed communism as the ultimate enemy. In turn, the Soviet Union made a major investment in the African National Congress. One result of Soviet support for the ANC was that anti-apartheid campaigners were often reluctant to criticize principles and methods of communist rule that were not dissimilar from those employed by South Africa's apartheid regime.

Both the Soviet Union and South Africa were based on discrimination. In one country, discrimination was by skin colour; in the other it was by social origin and past political action. Both relied on brutal police methods to maintain their power. There were also lots of differences, but in these aspects they were the same. When I would read memoirs of people imprisoned in South Africa, their interrogations, punishments, and systematic abuse, I had cause to reflect on the similar things that I had also found in the memoirs of survivors of the Soviet Union's secret police and labour camps.

I learned only this morning that Fischer toured rural Russia in 1932, at the height of the artificial famine induced by Stalin's policies: "In a letter to his parents during his trip, he noted similarities between the position of Russian farmers that he encountered along the Volga river and South African blacks." Most likely many people knew of these things, either at the time or later, but then found many reasons not to talk about it.

In the polarized world of the Cold War many people had to make hard choices, and many of them made choices that might look regrettable by the standards of a later era. It's sometimes said that a good motivation does not make a bad choice better. I can only agree. But this does not solve any of today's problems: not knowing the far distant consequences of the choices we make today, we still have to make them as best we can. Mandela and Fischer each made their choices as best they could, and there is much to admire in both examples.


November 15, 2013

Which Dead Economist Must I Follow?

Writing about web page http://politicsatwarwick.net/2013/11/13/economics-and-the-crisis-which-dead-economist-must-i-follow/

I contributed recently to the Politics at Warwick blog, which I thank for its hospitality. My post elicited a comment to which I'd like to respond; my response is longer than my original post so I decided to include it here. First I'll put up my original post, dated 13 November 2013. Then I'll quote the comment and respond to it.

How should the economics curriculum respond to the global financial crisis and ensuing recession? Community activists and students have become vocal in this discussion, as recently described by journalist Aditya Chakrabortty and Matthew Watson.

Events have prompted questions about economists’ understanding of financial markets; the same events have generated a deluge of new data. How should economists respond? Economic research has already responded; hundreds of new articles have analysed global imbalances, market efficiency, corporate behaviour, regulation and deregulation, policy rules, the politics and economics of past crises, and the relative fragility of economic and political institutions in history.

The core curriculum has been slower to change. Here are two reasons. The first is that we no longer teach from handwritten notes and a chalkboard; students and teachers demand comprehensive textbooks with instructor manuals, PowerPoint slides, and websites. These take years to develop (and revise). Although slow, change is already visible. Because change is slow, there is more to be done. Change will probably accelerate through initiatives like the CORE (Curriculum Open-access Resources in Economics) project.

A better reason for inertia in the curriculum is our foreknowledge that the full meaning of recent events will take decades to establish – although many people believe that they are already obvious. To illustrate, today we continue to make new findings about the last Great Depression, which began in 1929, although many who lived through the 1930s were so certain of the answers that they were willing to kill and die on that basis.

How should the core curriculum change? A common complaint is that economics is dominated by a single school of “neoliberalism” or “market fundamentalism.” There are calls for more diversity in economics; some students want more access, specifically, to Keynes and Marx.

It is simply untrue that mainstream textbooks reflect principles of market fundamentalism. I can’t think of a principles text that doesn’t follow the initial explanation of market equilibrium with an immediate, detailed discussion of the varied sources of market failure and the regulatory interventions that might follow.

While one may learn from both Keynes and Marx, what is to be gained from taking them outside their historical settings? A Keynesian model focuses on flows (of income and employment) while neglecting stocks (of capital and debt). Yet capital and debt are very important! Keynesian principles are linked to a model of household behaviour (the “marginal propensity to consume”) that half a century of applied research has comprehensively invalidated. A Marxian model simplifies the continuum of capital ownership into a two-class society; additionally it throws out efficiency and substitution, so distribution is all that remains. In the context of today’s mainstream, each of these is now a stagnant, oxygen-starved backwater.

The importance of competing traditions is much overrated. Those that wish to organize the curriculum around them seem to believe that the major decision each economist must make is “Which dead economist must I follow?” and after that her research findings and policy recommendations will follow. This may be a natural reaction to the fact that mainstream economists are often unenthusiastic about policies that gather widespread popular support, for example rigid immigration controls, employment protection, and double taxation of corporate income. It might be easier for the supporters to say “Oh, those economists are all neoliberals who are ignorant of Keynes and Marx” than work patiently back through the evidence that fails to confirm their biases.

“Economics ought to be a magpie discipline,” writes Chakrabortty. But Economics is a magpie discipline. Most non-specialists – and most journalists – think public and private finance are all we do. They are amazed when I describe the sheer diversity of research that is done just in my department (here and here). We suck up topics and data from any time and place; we don’t care what discipline claims to own them. Then they backtrack and say, “Of course, I didn’t mean to criticize you (or Warwick), I meant Friedman (or Chicago).” The fact is there are no clear intellectual boundaries among schools of thought; we should all mingle in the same fluid mainstream, which is broader, deeper, and faster than you think.

Concluding, Chakrabortty reports a lament for the good old days. Tony Lawson recalls the Cambridge economics faculty in the time of Nicky Kaldor and Joan Robinson: “There were big debates and students would study politics, the history of economic thought.” I remember; I was there too, as a student. The big debates were an exercise in identity politics, not economics. Hostile clashes between intolerant armed camps ended in a war of attrition that benefited no one, least of all students. There is a warning here: be careful what you wish for.

On the day that my post appeared, the anonymous blogger Unlearning Economics posted a comment which you can read in full here after scrolling to the bottom. Here's my response, with excerpts from the comment inset.

Unlearning Economics quotes me and comments:

“A Keynesian model focuses on flows (of income and employment) while neglecting stocks (of capital and debt).” First, Keynes didn’t ignore capital or debt at all; that is simply false ... Keynes carried over some silly marginalist concepts like the efficiency of capital (clearly he mentioned capital once or twice).

My response: It is useful to distinguish between “things Keynes wrote about at various times” and “things that are core principles of the Keynesian model.” Of course we could argue about the division, but it seems to me capital and debt belong to the former, not the latter. The point is exemplified by Keynes’s model of consumer behaviour (more below), in which capital and debt play no role, although they were fundamental to other models available at the time. As for the marginal efficiency of capital, Keynes introduced this to rationalize his discussion of investment (a flow), not to understand the behaviour of the capital stock.

Again, Unlearning Economics quotes me and comments:

“Keynesian principles are linked to a model of household behaviour (the “marginal propensity to consume”) that half a century of applied research has comprehensively invalidated.” Which research would this be? “People don’t consume all of their income” is hardly a false statement.

My response: Yes, it's true that “people don’t consume all their income,” but that isn’t the issue. The issue is whether the main thing in consumption is a stable proportion between household consumption and current income at the margin, as Keynes believed. I should add that he not only advanced this idea in theory but also applied it in practice, for example in his writing about how to pay for World War II. Franco Modigliani, Milton Friedman, and others investigated this idea after the war and failed to find it in the data. They did identify a stable relationship between consumption and wealth, or lifetime (or "permanent") income, to which changes in current income make a small or negligible contribution. Because permanent income is uncertain, the future (including expectations of inflation and the real interest rate) are fundamental. Modern new-Keynesian models drop the marginal propensity to consume (and the multiplier) and focus exclusively on intertemporal substitution intended to smooth consumption over time. Which takes me on to our next point.

Unlearning Economics adds:

Second modern post-Keynesian is *all about* stock-flow consistent models ... people like Godley, Keen etc have updated [Keynes’s] work.

My response: Yes, certainly. Here another distinction arises, between Keynes and the post-Keynesians (or Marx and the post-Marxists). Naturally, there is development in the Marxian and Keynesian traditions. I could not dispute that, when a great economist produces an insight that turns out partial or incomplete or defective in some respect, it may be fixable. There is evolution. Evolution has produced neo-Keynesians and post-Keynesians (and Marxists). Evolution is better than stagnation. At some point it generates new species. Every year I help teach a “new-Keynesian” model of the macroeconomy to Warwick undergraduates, and every year I (and I hope they) learn something new. Yet the label “new-Keynesian,” like George Box’s economic models (more below), although useful, is also wrong. Would Keynes recognize it as his? It’s debatable. Does it matter? Only if you want to claim ownership over Keynes’s legacy.

Unlearning Economics quotes me and comments:

“A Marxian model simplifies the continuum of capital ownership into a two-class society; additionally it throws out efficiency and substitution, so distribution is all that remains.” Marx spent a lot of time talking about the difference between financial capital and industrial capital; Lenin updated his work in the context of ‘globalisation’ (imperialism). I also have no idea how you got that Marx “throws out efficiency and substitution”: he continually praised the efficiency of capitalism, and substituting capital for labour is the main driving force behind the tendency of the rate of profit to fall.

My response: I considered proposing that “efficiency of capitalism” belongs to “things Marx wrote about at various times” rather than “things that are core principles of the Marxian model.” On reflection, however, I am not convinced that Marx had a concept of efficiency at all, not in the sense that economists use it today (when you can’t reallocate resources without using more of some input or consuming less of some output). Marx did write a lot about the productiveness of capitalism, but I do not think he was thinking about total factor productivity.

Similarly, I do not think Marx had a concept of substitution in the sense of a choice between alternatives that varies with their relative price. Yes, it’s possible to rewrite Marx’s idea of the organic composition of capital (the constant/variable capital ratio) as capital/labour substitution, but that is not at all how Marx described it. His idea (Capital III, chapter 13) was that over time the ratio of constant and variable capital in value terms will tend to rise, but that seems to be driven by the accumulation of capital, not by relative factor prices. What is described is a process that piles capital up faster than labour; there is no process that allows substitution between them along a frontier. With labour the only source of surplus value, the rate of profit on capital must tend to fall.

Since Unlearning Economics charges me at the outset with “complete ignorance of Keynes and Marx,” I thought I had better come up with a test of Marx’s understanding of substitution. When I teach the subject of economic warfare I put a lot of emphasis on substitution. People who are not mainstream economists (military commanders, for example) often make biased predictions about the effectiveness of blockades and sanctions, and this is because they lack a concept of substitution. They expect a blockade to curtail production and so to cause the rapid downfall of the blockaded economy. In history, the curtailment of trade has generally brought about relative price changes that stimulate substitution and in turn this will make the blockade less effective than expected. So I looked to see how Marx wrote about blockades.

In 1861 the American Civil War led to a blockade of the Southern ports. The Confederacy responded with a cotton embargo; they thought this would trigger such a crisis in Britain’s textile industry that London would have no choice but to intervene on the Confederacy’s behalf. In the autumn of 1861 Marx wrote (in several places including here, for example) predicting that the stratagem would succeed: “England is to be driven to break through the blockade by force, to declare war on the Union, and thus to throw her sword on the scales in favour of the slave-owning states.”

It did not happen. In Britain the price of raw cotton shot up (which Marx could see), and this stimulated a search for alternative supplies, soon found in Egypt and India (which Marx entirely discounted). He had made the characteristic error of someone who does not get substitution.

Back to George Box, who wrote that “all models are wrong, but some are useful.” The models you can find in Keynes and Marx are no different; they are all wrong in the Boxian sense. Are they useful? Sometimes, yes. Marx’s idea of surplus extraction is useful for understanding societies with closed elites and extractive economies, although not modern capitalism. Keynes’s idea of animal spirits gives insight into modern capitalism as a nice corrective to the idea of rational expectations. But, why should I, or you, or anyone confine themselves to the limits of any “wrong” model by declaring that I am a Keynesian or a Marxist? When scholars do that, it surely tells us more about the politics of identity than about their scholarship.

In fact, I fear that the tone of this discussion may exemplify my final point: when social science is polarized into schools of thought, s/he who is not with me is against me and personal rancour is the likely product.


November 08, 2013

Anyway, What's National Security For?

Writing about web page http://isc.independent.gov.uk/files/20131107_ISC_uncorrected_transcript.pdf

Yesterday the House of Commons Intelligence and Security Committee met the chiefs of Britain’s three intelligence agencies. Among other matters, they debated the price we should be willing to pay for national security. I was interested by how this quickly turned into a debate over the meaning of national security itself. There were unexpected differences among legislators and spies; the spies themselves did not speak with one voice. (Here's the uncorrected transcript.)

Hazel Blears, a Labour MP and former local government minister, who is also an ISC committee member, offered up the conventional formula that might be most appealing to an economist:

I wonder if you would agree that in order to have the trust and confidence of the nation, which provides a strong platform for your work, that it is important that we again look at the balance between privacy and security.

She was saying, in other words, that privacy and security are competing objectives of government, and we have to balance them, or trade one against the other. The slope of the "trade-off" is then the price. If we want more security we may end up with less privacy, so the price of security is the amount of privacy foregone. Do we have the right balance? Or, are we paying too much for security in lost privacy? It’s hard to say; we’ll come back to that.

Here’s what was said by Sir Iain Lobban (GCHQ):

I believe a government's first duty is to protect its people. Some ways that it does that I think are necessarily secret. I don't think "secret" means "unaccountable" in any sense, and I think the Foreign Secretary, certainly appointed by an elected government, authorises our operations. There is a Parliamentary Committee which gives us plenty of oversight. There is also the two Commissioners, the Interception of Communications Commissioner, the Intelligence Services Commissioner, who the Chief mentioned earlier.

In these words Lobban said something different from Blears. For him, government has a list of priorities. Security (meaning “to protect its people”) comes first. Everything else comes after. In this perspective there is no balance (or “trade-off”). First, achieve security; privacy comes after. Where it comes (second, third, fourth, etc.) is up to the government and the scrutineers. In case you might think I'm overinterpreting, Lobban went on later to say exactly this:

I don't particularly like talking about the privacy and security balance because I think it is a false choice. I think our job is to provide intelligence around security which enables security in a way which safeguards privacy to the maximum extent possible.

In other words, you can have as much privacy as is left to be had -- after you have ticked security off the list, and security comes first. I don't want to make this sound too bad. Lobban also said other things that, if you believe them (and I have no particular reason not to) are quite reassuring, for example:

[GCHQ] can only look at the content of communications where there are very specific legal thresholds and requirements which have been met. So that is the reality. We don't want to delve into innocent e-mails and phonecalls. I feel I have to say this: I don't employ the type of people who would do. My people are motivated by saving the lives of British forces on the battle field, they are motivated by fighting terrorists/serious criminals, by meeting that foreign intelligence mission as well. If they were asked to snoop, I would not have the workforce. They would leave the building.

Now, here’s the contribution of Andrew Parker (MI5):

I think fundamentally, the raison d'etre of an organisation like MI5 is to protect the sort of country we live in against threats to it. The sort of country we live in is a free society, a democracy, a country where we do prize our individual liberty and privacy. Those values are extremely important to all of the men and women who work in our Agencies, who are members of the public, who live in communities and don't want to live in a surveillance society or a North Korea. They want to live in a country like this. Our job is to keep it that way.

Here Parker took a third line, different from that of either Blears or Lobban. In his view the purpose of security is not to protect persons, or even the people (as Lobban had it) and the price of security is not privacy (as Blears said). Rather, the aim should be to secure “a free society.” Because privacy is one of the characteristics of a free society, he implied, security and privacy are not in conflict; security that infringes on privacy is not security.

To repeat, for Lobban, security and privacy are not in conflict because security comes first. To Parker, security and privacy are not in conflict because privacy is part of a free society and a free society is what must be secured.

Of these three views I have most sympathy, by far, with the third – the "Parker view" that the ultimate mission of national security is to protect the institutions of a free society and democracy. In too many countries the mission of national security has been to protect the incumbent government and repress dissent. Consider the things that distinguish our own society from the settings in which the KGB or Gestapo held sway. Aren’t the most important of these the democracy that allows us (as voters) to toss out the government if we wish and our freedom (as private persons) to be the people we want, say what we believe, and associate with whom we choose?

But this is only the beginning of the problem. Intrusive mass surveillance in the hands of a bloated security apparatus seems unlikely to protect democracy or freedom. If we seriously want to protect free speech and free association, we should uphold limits on surveillance. Inevitably, then, we will incur some risk that a few bad people will successfully exploit free speech and free association to do bad things to some of us. So there is still a trade-off here, but the balance we have to strike as a society is not between security and privacy. It is between two kinds of security: the security of our freedoms and of our physical persons.

Hazel Blears captured this difficult point quite nicely:

You [the intelligence agencies] are currently under some criticism for knowing too much. If there is a terrorist incident, no doubt you will be under criticism for knowing too little. It is a rock and a hard place.

In other words it is questionable whether the mission of national security as safeguarding our way of life, not our persons, is politically viable in the long run, when all the bad (and good) luck has come in. It’s easy to agree beforehand that we should tolerate a few risks. It’s much harder to maintain that after the event, when lives have been lost as a result. At the very least, clear leadership is required. That’s a tough one, especially for politicians and security chiefs who do not want another 9/11 or 7/7 on their watch. In other words freedom carries risks, and may call for a little courage from time to time.


Mark Harrison writes about economics, public policy, and international affairs. He is a Professor of Economics at the University of Warwick. He is also a research fellow of Warwick’s Centre on Competitive Advantage in the Global Economy, the Centre for Russian and East European Studies at the University of Birmingham, and the Hoover Institution on War, Revolution, and Peace at Stanford University.



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