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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.


October 14, 2013

Who's a Marxist Now?

Writing about web page http://www.conservativepartyconference.org.uk/Speeches/2013_George_Osborne.aspx

At the Tory conference George Osborne, Chancellor of the Exchequer, made an interesting point about the views of Ed Milliband, Leader of the Opposition:

For him the global free market equates to a race to the bottom with the gains being shared among a smaller and smaller group of people. That is essentially the argument Karl Marx made in Das Kapital. It is what socialists have always believed.

Osborne’s point made me think about the influence of Marx on modern intellectual life. To many this is something of a puzzle. Isn’t Marxism discredited as a political philosophy? Haven’t the economic policies of Marxist regimes generally failed to provide for “an association, in which the free development of each is the condition for the free development of all” – the words by which Marx once distilled the goal of communism? How many of those that identify with the ideals of socialism today have actually read and followed even one page of the fifty volumes of the Marx-Engels Collected Works?

My answers: Yes, Yes, and Not many. Yet Marxism shows no sign of dying out; it lives on in a variety of political movements and branches of academic and cultural life.

Why’s that? The question is puzzling only if we think of Marx as the the reason why Marxist ideas exist. Of course Marx was the originator of Marxism, but I am quite sure that if Marx had never been born to invent Marxism, some other scribbler would have taken his place. The basic ideas that underlie Marxism pre-existed Marx, and would have existed without his writings, and are continually reborn and propagated among people who know nothing of Marx for a straightforward reason: because such ideas correspond with how most people experience everyday life. Marx’s importance, therefore, was not as the discoverer of these ideas but as the writer that gave them a scholarly form.

What are the experiences to which Marxist economics correspond? Behind the complicated terminology of capital and value and Marx’s elaborate philosophical and historical argumentation of them are four simple ideas:

  • The market is a jungle, a chaotic struggle of each against all, in which the strongest, most ruthless predator wins. Lurking behind every transaction is the chance that someone will rip you off.
  • Of all the possible functions of market prices – accounting, economising, distributive – the only one that matters is distribution. A rise in the price of food or fuel cuts the real income of workers and redistributes it in favour of the producers that employ them.
  • Work is hard and stressful, and the main source of pressure is the employers' drive to make you work harder and longer, in order to save them money or increase their profits.
  • You can’t do anything about this on your own. Idealistic advocacy has no traction without numbers. Everyone should get together and intervene forcibly to bring about radical improvement.

What kind of economics do these four ideas make? They make the economics of everyday lived experience for most of the world’s seven billion people. I’m not talking just about the poor and ignorant. It’s nothing to do with education or position in society. My guess would be that most people in my immediate circle of family and friends that are not trained economists hold, most likely, two or three of the four ideas; I expect that all might hold at least one.

Suppose you decided to give your life to elaborating these four ideas and you spent years working them up into a philosophy of economics: What kind of book would you write? I think you’d end up writing something pretty much like Das Kapital. In other words, Marxism is a philosophization of the economics of lived experience, but it's the economics of lived experience that should really demand our attention.

What kind of economics would lived experience support? It would make, in the words of Frederic Bastiat, the economics of “that which is seen.” It would take into account only the most immediate effects of things. It would leave out the other effects, those that “unfold in succession – they are not seen: it is well for us,” Bastiat went on, “if they are foreseen. Between a good and a bad economist this constitutes the whole difference – the one takes account of the visible effect; the other takes account both of the effects which are seen, and also of those which it is necessary to foresee.”

What’s wrong with the economics of “that which is seen”? By analogy, think of the physics of “that which is seen”: the earth is flat and parallel lines never meet. Or the chemistry of “that which is seen”: burning is the release of phlogiston. I’m not saying that economics is a science like physics or chemistry in all respects. What I’m saying is that Euclidean geometry, the idea of a flat earth, and the theory of phlogiston are perfectly serviceable for making sense of a number of things everyone can see from day to day. It’s true, though, that these ideas miss out badly on other things and this prevents them from being useful in many contexts. For the purposes that are missing, we need more; we need the physics and chemistry of “that which is not seen,” including molecular science, gravity, and relativity.

What is added by the economics of “that which is not seen”?

  • The market creates many opportunities for sellers to abuse buyers, yet the market is not chaos: it enables specialization and competition. The same market economy that often feels like a jungle is the mechanism that has sustained the West’s unprecedented prosperity and is also the hope for sustained progress of the Rest. But this is not seen because it has taken hundreds of years to materialize; life’s too short for it to be seen. (My colleague Omer Moav makes a similar point in a penetrating review, which he showed me recently, of Ariel Rubinstein's Economic Tales.)
  • If something that you consume is in short supply so that the price goes up, you lose in the short term, and this is seen. Beyond this, however, is an unseen process by which all gain. There is adaptation. Responding to the increased cost, we economize on uses, we search for substitutes, and we find or create new sources of supply. The adaptation is not seen because it would require the simultaneous observation of a million small responses.
  • Work is stressful, and a predatory employer can increase the stress for the sake of profit. But that is incomplete. In the Marxian perspective there is only one kind of surplus, called profit, one source of surplus, called labour, and one class of recipients, the capitalist class. In the competitive market economy every transaction gives rise to a surplus on both sides. Day by day, billions of small surpluses accrue to both sides, buyers and sellers, that are party to every transaction. In other words, there are surpluses everywhere and they accrue to everyone; they are not the monopoly of one class. But this, too, is not seen.
  • Everyone getting together to force change does not always make anything better, and this might be the case quite often. This is not seen for two reasons. First, in every case to establish the results of intervention requires the careful construction of a counterfactual (in other words, what would have happened without the intervention) which, to most people, seems intolerably speculative. Second, when intervention has demonstrably not brought about the benefit sought, there is a natural human tendency to shift the responsibility from our own action to the counteraction of those that disagree with us, whom we make into scapegoats.

Whatever things are not seen, it’s hard to know they are there. Understandably, therefore, most people stick to the economics of what they can see for themselves. Most of those don’t think of themselves as Marxists or even socialists. Still, it ensures a reservoir of instinctive sympathy in our society for ideas that are aligned with Marx's and helps to explain his lasting influence. This reservoir is continually refilled from everyday experience. That's why Marxist ideas live on and will often be well received by well educated, well intentioned people.

Full disclosure: In years gone by I considered myself a Marxist and I read a lot of Marx, Engels, Lenin, Stalin, Mao and others. At various times I joined a Capital reading group, and taught the economics of Marx (alongside Smith, Ricardo, List, and Schumpeter), and I even wrote a pamphlet called The Economics of Capitalism; I still have a copy; one day I’ll scan it and put it on line. Somewhere between that time and this, however, I changed my mind for reasons that I wrote down here.


June 12, 2013

Mordor: An Economic History

Writing about web page http://lectures.gaidarfund.ru/articles/1698

When I visited Moscow in April, Ilya Venyavkin of the Gaidar Foundation was kind enough to interview me. The interview has just appeared in Russian on the Gaidar Foundation website. Here I've translated it back to English.

***

Mark Harrison: “When people said they’d prefer a strong leader to democracy, as an economic historian I say: I’ve heard that before somewhere." A professor of economics at the University of Warwick, Mark Harrison recalls his attraction to communist ideas and explains why we need economic historians, and why the USSR reminded him of Tolkien’s Mordor.

  • Gaidar Foundation: Why did you become interested in the Soviet economy?

Mark Harrison: I’m a child of the Cold War - my parents followed events in the Soviet Union closely and felt the fear of nuclear war. At the age of six or seven, I already knew of the Soviet Union as a threat. An incident when I was in school had quite an influence on me: during English class we had to demonstrate correct usage of an idiom, “a household name” (“a person that everyone knows”). When my turn came, I said: “Khrushchev.” Then my problems began. First, the teacher began to ask me why I named Khrushchev and not, for example, Kennedy; then my classmates teased me that I was a communist. At the time I had no idea what that meant, and in the end I decided to find out. A few years later I began studying economics, and one of the reasons I became interested in it was Karl Marx’s Communist Manifesto. I read it and asked my father if what was written there was true. My father said he didn’t know, and then I decided to look into that too.

The end of the 1960s, when I went to university, was a time when youth culture and student movements flourished: we were all revolutionaries and socialists. I studied at Cambridge and we had lectures from Charles Feinstein, one of the leading economic historians of the twentieth century. Charles was born in South Africa and was a member of the Communist Party of South Africa. In his homeland he faced a choice: leave the country or go to jail. He ended up in England and I learned a lot from him. Another of my teachers was Maurice Dobb: he was a member of the British communist party, and he wrote the first serious (although somewhat biased) history of the Soviet economy. All this led me naturally to the idea of studying the Russian economy.

  • GF: And you also became a leftist?

MH: Yes, and I stayed on the left for quite a long time.

  • GF: Were you hoping to find in the USSR a model of a more just social and economic order?

MH: That’s what I hoped, but it’s not what I found. I can describe clearly the impact on me of visiting the USSR in 1972. I brought two thick books: one was the works of Jane Austen, and the other was The Lord of the Rings in three volumes. I read Jane Austen first, and that was great because it was a complete escape from life in the Soviet Union. Then I started to read The Lord of the Rings, and a depression descended on me because I saw something just like the Soviet Union: border guards, barbed wire, a secret police ...

To live in the Soviet Union was both frightening and interesting. As a foreigner I lived a privileged life - we always knew that nothing would happen to us, unless we did something really stupid. We knew we were living in a police state, and we quickly learned the simple rules – for example, always to call only from a phone booth, if possible, and not to tell anyone about one’s plans.

  • GF: Did you come across the secret services during your first visit?

MH: Not directly. But I’ll tell you a story: before going to the USSR (our student trip fell under an intergovernmental agreement), we attended a meeting at the Foreign Office where a diplomat, who was in charge of the meeting, told us:

You are going to Moscow to study and that’s fine. But be careful, because the KGB will be interested in you – they may follow you, see who you are talking to, or even try to compromise you by using alcohol or drugs to put you under pressure. If that happens, come to us and we’ll help you.

Last year, I chanced on a document in the archives of the KGB, dating back to the end of the 1960s. The document says that the British Foreign Office is advising everyone who visits the Soviet Union about the working methods of the KGB. It goes on to detail all the advice that our diplomat gave us. I was reading the paper and I was wondering what they would write at the end – would they say that this was pernicious anti-Soviet propaganda? But in the last paragraph I found the words:

We circulate this information to all operative staff so that they can be aware that our working methods are known.

  • GF: Do you remember exactly when you became disillusioned in the system?

MH: I continued to believe in the possibility of a more just world order and I was attracted by the idea of Euro-communism – the ideas of reform communism that arose in Italy, France and Spain. With many friends I was very excited when Gorbachev came to power. We hoped that he would be able to combine the ideas of socialism and democracy. But this did not happen. That was when I realized that I needed to move on – the stage of my life that began in 1970 came to an end in 1991.

I think it’s a very interesting example of how each new generation came to the Soviet experience with new knowledge and new hope. New knowledge meant an understanding of how terrible everything could be, but there was always the hope that it could all still be put right, and Khrushchev had that, and then the Eurocommunists, and then Gorbachev. Today what I believed then looks completely crazy, but nonetheless I believed it wholeheartedly.

  • GF: How did you react to the rejection of socialist values in the 1990s?

MH: I think that at that point I was already becoming a liberal. I am very grateful for my experience of the 1990s, because I was able to see how a colossal system broke down as production stopped, money lost its value, and law and order stopped working. I understand that the transition period was very difficult, although I don’t accept (as some do) that it was because of this that millions died.

Another issue is the growing nostalgia today in Russian today for the days of Brezhnev or Stalin. But it is very useful to compare this situation with that of Germany: After the fall of the Berlin Wall, all the opinion polls showed that residents of the former East German state were very happy to get rid of self-censorship and constant surveillance by the Stasi. Today, people have had time to forget about what it was like for them, and nostalgia for the GDR is growing.

  • GF: What do you think of Gaidar’s reforms as a scholar?

MH: I’m not sure I have an easy answer. I have a few answers. First, he was a brave man. Secondly, I am not sure that at that moment he had a lot of choice. The state was collapsing and in such a situation it’s not particularly important what policy you choose, or whose advice you listen to, because you have only a very limited ability to influence the situation. The collapse of the Soviet Union had begun under Gorbachev and by 1991 has already gone so far that, it seems to me, the trauma of transition was unavoidable. As you know from my lecture, I’m not one of those who believe that the Soviet Union could have followed China’s path.

The main problem of the transition period in Russia was the oligarchy that emerged from privatization and the loans for shares deal; many people both here and in the West believe that there was dirty dealing. This is the original sin of the Russian reforms, which continues to define the nature of the economic and political system in Russia.

I could imagine a different version of events in which the Russian companes could have been sold off in open international auctions. In this case, the Russian government would have been able to recoup much more money, and then a limited stratum of extremely rich people would not have been created. But that raises another question: could the Russian government at that moment have afforded to sell the most important industrial companies to foreigners?

Now I think a lot about the disastrous consequences of nationalism, and this is another example of how nationalism hinders the government from making the right choices.

  • GF: Was it possible to avoid the collapse of the Soviet Union?

MH: No, I think not. Gorbachev’s decisions were very important. You can quite easily imagine that if Andropov lived a little longer, he would have used repressive methods, and they would most likely have had some effect.

When the miners went on strike in 1989, Gorbachev gave a very clear signal that the old repressive methods would not be applied. It was Gorbachev’s personal decision and everything followed from that. It is easy to imagine how Andropov might have decided otherwise. In that case the Soviet Union would have survived longer, although it would not have become a prosperous state, just there would have been some more time before it collapsed.

  • GF: What issue in the economic history of Russia do you think is most interesting?

MH: There are areas of research that I think are extremely promising. My co-author Andrei Markevich is working currently in one of them – to reconstruct the economic history of pre-revolutionary Russia. The point is that what we know about this period is based on various assumptions with little idea of how they correspond to reality. Now Andrei is building regional statistics, and this should give us a much better idea of how Russian agriculture was organized and how effective were the measures to reform it. I think that in 10 or 15 years we will have very precise answers to these questions.

A second major theme, one that I am engaged in now, it is the question of how the security system worked in the Soviet Union and how it influenced the Soviet economy.

  • GF: What is going on today in economic history as a discipline?

MH: I think economic historians are currently doing two things that are important both for science and for society. [One is that] they are giving much attention to the long-term. My colleagues are working on the national accounts of England and Holland and tracking them back to the eleventh century so that they can make use of a thousand years of data. Tracking and comparing data in the long term, we can think much more clearly about the nature of economic growth. For example, we find that medieval Europe was much richer than many modern countries, and that the conditions for the industrial revolution matured over several centuries. Such studies are extremely important and of significant interest to the public. This, incidentally, is an additional complexity facing economic historians: in contrast to more traditional historians, it’s more difficult for us to tell a compelling story and attract public attention.

Another important task of modern economic history is to tell people about the economy in historical perspective. Today the world and, especially, the Western capitalist countries are going through an economic downturn and people are in a panic because they have not lived through a similar crisis before. But economic historians can say: Look at the Great Depression of the 1930s for other examples of economic crises – what's going on is not new.

This is an important lesson. Currently many people are saying: Look at the disastrous results of democracy and the free market economy, the government should step in. Maybe we need less democracy and more strong leaders! As an economic historian, I say to myself: I’ve heard this before somewhere. In the 1930s it was just the same. Then, it seemed, liberal democracy had failed and many countries turned readily to communism and fascism. This was a real disaster, ending in the Second World War and 50 million deaths. We shouldn’t do it again.

***

Video presentation and transcript of Mark Harrison’s lecture: “Stumbling Bear, Soaring Dragon: Could the Soviet Union have Followed the Chinese Road?”

Mark Harrison’s three must-reads for those that are starting out in economic history:

  • Lizzie Collingham, The Taste of War: World War II and the Battle for Food(Allen Lane, 2011).
  • Jared Diamond, Guns, Germs, and Steel: The Fates of Human Societies (Norton, 1997).
  • Paul Gregory, Terror by Quota: State Security from Lenin to Stalin (an Archival Study) (Yale University Press, 2009).

I am a professor in the Department of Economics at the University of Warwick. I am also a research associate of Warwick’s Centre on Competitive Advantage in the Global Economy, and of the Centre for Russian, European, and Eurasian Studies at the University of Birmingham. My research is on Russian and international economic history; I am interested in economic aspects of bureaucracy, dictatorship, defence, and warfare. My most recent book is One Day We Will Live Without Fear: Everyday Lives Under the Soviet Police State (Hoover Institution Press, 2016).



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