Afghanistan: The Realm of Possibility

Writing about web page http://www.prospectmagazine.co.uk/2009/11/the-price-of-peace/

According to an analyst cited by Simon Tisdall, writing in The Guardian (Dec. 18, 2009), "Corruption goes to the heart of what comprises the Afghan 'state'." Lorenzo Delesgues, director of Integrity Watch, is quoted to the effect that "50 cents in every $1 of foreign aid is lost to corrupt or fraudulent practices" and "up to 90 cents for some USAid programmes."

Peter Galbraith, former United Nations deputy envoy to Afghanistan, criticizing the recent Afghan election as fraudulent, wrote in The Observer (Dec. 20, 2009): "This is a country in which it is impossible to monitor corruption."

In other words, the Afghan state is a loot chain; corruption is everywhere and everything. Sounds bad, doesn't it? But, if that is the reality, it needs to be acknowledged. The question then is: How?

Is it possible to build an Afghan state that is secure, clean, transparent, and accountable, all at the same time? I don't think so. In fact, I think a secure state in Afghanistan today cannot be those other things as well, no matter how desirable is the combination in principle.

More generally, our Afghanistan policy seems to have two objectives. One is to build the capacity of the Afghan state. We have to do this or we will never be able to leave. The other is to build a state that is free of corruption, based on democracy and accountability. My point is that these two goals are in fundamental conflict.

Many will argue that there should be no conflict between building state capacity and clean government. Often they will be right. In many contexts, democracy and state capacity go together. In most of Europe from the seventeenth century onwards, for example, nation states became became increasingly accountable to society, public opinion, political representation, and the courts. Public servants became markedly less venal. The more limits governments accepted on their executive powers at home, the more effective they became in raising taxes and pursuing commercial advantage abroad. So, clean government and state capacity went hand in hand.

To repeat, under the conditions that held in Europe in relatively modern times, there is no contradiction between developing clean government and state capacity. But this is not true in all circumstances.

At a minimum, there must be a public opinion led by middle-class political actors that are interested in holding government to account; in fact, more interested in that than in fighting for a share of the loot chain from governmental corruption and patronage. This is something that has never existed yet in Afghanistan and, while it could exist some day, will be brought into being only very slowly, in the course of decades or centuries, not years or months. To build our foreign and military policy something that not only does not exist, but is outside the realm of possibility, is reckless folly that has already cost the lives of many brave soldiers and innocent civilians.

Without such a public opinion and middle class political elite, the battle against corruption in Afghanistan can have only one end. It will steadily wash away the domestic foundations of the same government that is supposedly our ally, leaving it utterly dependent on external support and, without that support, at the mercy of our deadliest enemies.

If there is a conflict between secure government and clean government, which should come first? In my view there is no question: security must come first. Remember, we are not talking about the security provided by a welfare state or a well stocked freezer. We are talking about the security that comes from not expecting to be killed tomorrow. Human society survived and developed for its first twenty thousand years without clean government. Without security, in contrast, there is no possibility of improvement because all efforts must go into bare survival. Without security, there is only barbarism.

Writing in Prospect Magazine (December 2009), Alex de Waal makes the case better than I can -- so, I recommend that you follow this link and read it. The only viable Afghan government that will secure the lives of its own citizens and the border regions with Pakistan, de Waal writes, will be one based on patronage and revenue sharing. In historical perspective it is a form of government that would once have been called "feudal," which is why I wrote on a previous occasion that what Afghanistan needs is the right kind of feudalism.

Today we would call this form of government venal or corrupt, and it is true that it is not the best kind of social order that has been devised so far, at least from the point of view of advancing human development. But in some contexts it is the best that is attainable. A patronage state is better by far than anarchy or civil war. For Afghanistan and its Pakistan border, these are the real alternatives -- not representative democracy and clean government.

If any form of government can stabilize this troubled region, it will take the form not of a centralized constitutional democracy but of a federated patchwork quilt of baronies based on local rent extraction and rent sharing, in which the barons (whom journalists call "warlords" but there is no real difference between them and the feudal princes of Europe's early middle ages) have found more profit in promoting and taxing trade and interchange than in warfare. Each will keep terrorists and bandits out of their own manors because the latter threaten their revenues, not because they believe in human rights or the rule of law.

In such a society there will be only limited freedom of speech, unequal justice, and routine side payments for normal access to government. Dark things will continue to happen. Bribes and taxes will fund the loot chain. They will go to support the consumption of the barons and to pay off their supporters, as well as to roads and schools. Roads and schools will be built because they promote taxable activity, not because they benefit the whole society. On the whole, however, ordinary people will not be routinely killed in order to spread fear and overturn the established order; the region will cease to spread terror and terrorists across the world. A modicum of prosperity will return. 

It is not much to hope for, but compared with the alternatives it is a worthy goal. Above all, this goal is worthy because it is feasible. We should not spend a drop of our soldiers' blood on any goal that is outside the realm of possibility.

Mark Harrison : 01 Jan 2010 15:27 |  Tags: Afghanistan Politics |  Comments (0) |  Close comments |  Report a problem

The Climate Hold–Up at Copenhagen: $60 trillion is up for grabs

Writing about web page http://news.bbc.co.uk/1/hi/sci/tech/8413156.stm

The world's eyes are on Copenhagen, but there we have a problem. The world faces a deadly risk: the risk that we will boil the planet. There is a small chance the threat will go away, but I'm going to take it as read that, faced with a risk that is potentially catastrophic it is prudent to buy some insurance.

This risk, moreover, is a threat to us all -- rich and poor, young and old, black and white and in between. From a common sense perspective, that should make it easy for us all to agree on concerted action. Shouldn't it?

In a number of Hollywood films that I have seen (and enjoyed), a global calamity looms. The American president takes to the airwaves. He tells the world: "Let us set aside our differences and work together." The world listens. Will Smith saves us. The world applauds. The trouble is: This time, it isn't working.

The movie formula works because, in Hollywood, what is required to save the world is heroic action based on personal commitment, skill, and courage. The resources that support the hero are of interest but they are moral and technological; they do not absorb a significant fraction of even one nation's resources. International bargaining is not required.

Climate change, in contrast, puts the world's resources at risk, and cannot be solved without bringing the world's resources into play. Any solution requires multinational commitment, coordination, and bargaining.

Instead of a bargain, at Copenhagen we seem to observe only an agreement to differ. On November 2, 2009, Rajendra Pachauri, head of IPCC, told The Guardian:

I gave all the world's leaders a very grim view of what the science tells us and that is what should be motivating us all, but I'm afraid I don't see too much evidence of that at the current stage. Science has been moved aside and the space has been filled up with political myopia with every country now trying to protect its own narrow short-term interests. They are afraid to have negotiations go any further because they would have to compromise on those interests.

And yesterday I heard a BBC Radio 4 journalist describe the situation brought about by 190 nations each approaching the Copenhagen bargain with their own "red line" requirements as one of "negative negotiating space."

What's happening? How can that be right? In fact, how can it be rational? When human survival is at stake, what are the national interests that can prevent agreement? Isn't our common interest in conserving our shared planetary home the most fundamental interest that we have?

There exists a traditional explanation as to why climate change is hard to manage. In many ways it is a perfectly good explanation. Some call it the "prisoner's dilemma," while others call it the "tragedy of the commons," but the underlying idea is the same. Cutting carbon emissions requires self-restraint. The benefit of my self-restraint is spread over the entire world, so one six billionth of it comes back to me. The cost falls entirely on me, and so exceeds the benefit in a ratio of billions to one.  That is why it suits each person's (or country's) private interest to let other people (or countries) go first in exercising self-restraint.

If others restrain themselves, I won't need to. If they don't, there's no point in it for me. This simple calculus explains why, even in the presence of scientific certainty, the climate problem will not solve itself.

By coming together at Copenhagen, however, the world's nations have an opportunity to take collective charge of this problem, internalize the spillovers, regulate access to the global commons that is our atmosphere, and coordinate on a first-best solution. An agreement is called for, and should be within reach. Why is it so difficult? We need other models to show why.

There is a certain similarity, as I see it, between the Copenhagen problem and what is sometimes called the "hold-up" problem. In the hold-up problem, two parties have relationship based on a shared asset in which both have a stake. The important thing is that this asset is worth more within the relationship than to the outside world. Inside the relationship the asset creates a surplus that is shared between both parties; without the relationship, the surplus would not exist.

There are many analogues for the hold-up problem, including a business partnership and a marriage partnership. In a marriage the "relationship-specific asset" can be knowledge of each other, shared activities, and even children. In a business partnership it can be a technology or way of doing things that is specific to the partnership and cannot be copied to some other use outside the existing business.

Within the partnership, the relationship-specific asset creates a surplus. How will the surplus be divided? In a relationship that works, there are agreed conventions or even (in a lasting marriage, for example) no strict accounting, just a rough sense of give and take. But there is also scope for exploitation. Each party will abandon the relationship if their share of the surplus is driven below zero; at this point, by definition, they would be better off outside. But this also means that one party can aim to appropriate more of the surplus by threatening a break-up, expecting the other to concede rather than lose everything. Each can hold up the other; that is why it is called the "hold-up" problem. This is what happens when children become hostages in a bad marriage, for example.

At Copenhagen, the relationshipship-specific asset is our atmosphere. What is up for grabs in the bargaining is, potentially, the entirely planetary surplus: the excess of global GDP over its unpriced cost: global carbon emissions times the social cost of carbon. How much is that? In 2008, global GDP was around $60 trillion. Global emissions were around 30 billion tons of CO2, or 8 billions tons of carbon. The social cost of carbon is usually put somewhere around $40 a ton, so the total damage is $320 billion, or around half a percent of global GDP. All the rest, more than 99% of global GDP, is the planetary surplus that we produce by exploiting our relationship-specific asset -- our shared planet. This surplus is what we stand to lose if we boil the planet. It is this surplus, $60 trillion less half a percent, that is up for grabs.

This tells us two things. First, the damage that we do to our home by living in it is currently trivial and should therefore be easily fixable. But the scope for redistribution is almost limitless. Effective bargaining can reallocate our entire planetary GDP.

There is one thing in the hold-up problem that we don't have. That is, we don't have an outside option. In the hold-up problem, the power of the exploiter arises from the threat to leave. No country can leave our planet. Where then does bargaining power come from?

Here we go back to game theory -- not to the prisoner's dilemma but to the game of chicken. In the movie Rebel Without A Cause (1955), two teenagers drive at each other on a narrow road. If one swerves, the one to swerve is a "chicken" and loses face. If neither swerves, both lose their lives. As in the game of climate change there is no outside option that does not involve extinction, but the game is played in the hope that the adversary will back down.

A well known result is that, if the game of chicken has a winner, it is the player that shows the most credible commitment. At Copenhagen the rich, poor, and middle income countries are on course for a three-way pile-up, but it is the richest and poorest that are competing to show the greatest commitment.

The commitment of the richest is made credible by two factors: first, unlike the poor, they expect to afford the costs of adaptation, at least for a while, as temperatures and sea levels rise; second, if they give in to bargaining they have the most to lose -- the lion's share of global GDP. The commitment of the poorest, in contrast, arises precisely from the fact that they cannot adapt. Small rises in sea levels, for example, will overwhelm entire nations. They have nowhere else to go -- but also, being the poorest, they have most to gain, in the shape of the same lion's share of global GDP that the richest would like to keep.

No wonder the richest countries approach Copenhagen reluctantly, with trepidation -- and the poorest go there with a glint in their eye. When the poorest countries demand that global temperature increases are limited to +1.5 degrees, they are effectively requiring that the economies of North America and Western Europe are shut down -- immediately. It's not going to happen, but what do the poorest countries have to lose -- and what is there that they can gain instead?

In the middle are China, India, and most middle income countries. They do not have too much to win or lose from bargaining. They can afford a little adaptation to climate change; ultimately they share the common interest of humanity in mitigation of climate change. But they also have least commitment.

To conclude, what makes climate change intractable at Copenhagen is that 190 countries are playing three games at once. Nested within the tragedy of the commons is a hold-up problem. Negotiating the hold-up takes the form of a game of chicken. Perhaps if we all understand this better, it will become easier to solve ...

And a happy Christmas and a prosperous New Year to all my readers!

P.S. Chicken, of course, is a game for teenagers. The adult response is: "Give me the car keys and go and finish your homework!" Don't you wish someone would say that at Copenhagen?

Mark Harrison : 15 Dec 2009 11:04 |  Tags: Climate-Change Economics Politics |  Comments (4) |  Close comments |  Report a problem

Student Fees: Four Myths and a Certainty

Writing about web page http://news.bbc.co.uk/1/hi/education/8350051.stm

Student fees are in the news again. These are the top-up fees paid by British and EU students to take degree courses at British universities, presently capped at £3,225 a year. They're called "top-ups" because they help to bridge the gap between the public money that goes to universities and the actual cost of degree programmes -- which is considerably more. So, should our universities be allowed to raise their fees? 

The government has announced a review. The lobbies are brushing up their arguments. Everyone has their opinions about the justice or injustice of student fees. As it turns out, fairness and economics are closely connected, but not always in the way that the lobbies think.

• Myth #1: It's unfair if higher fees deter some young people from going to university.

Let's think about the choice that people make when they decide to study at university. There is a benefit and a cost. The cost is the fee, plus the time you have to give up to study. The benefit ... well, there can be a financial benefit if you get a higher paid job as a result, and you probably will: a recent goverment survey put the average lifetime graduate premium at around £150,000. Just as important, there can be non-financial benefits. These include having more time to grow up, geting better networked, having more rounded knowledge of the world, a clearer motivation, and so on.

Just to be clear, I would never argue that money is the only thing that matters. But, along with other factors, money should matter, because higher education costs money and someone has to pay.

Add up the costs on one side, and the benefits on the other, and you should choose to study at university if the benefit exceeds the cost. Of course, not everyone tots it up in two columns and a common currency, like an accountant. Consciously or unconsciously, however, that's what is implied when we say that a young person should reflect on whether going to university is worth it or not.

In anyone's personal calculation the cost element is bound to be the private cost. Young people ask what it will cost them, not what it will cost society. But, as things are, the social cost of a degree course is a lot more than the private cost, which is the fee. The social cost is on average four times the fee, and in some courses more than that.

That has important implications. It is sometimes feared that many potential students will deterred by higher fees. That may not be true, given the size of the benefit compared with the cost -- but suppose it is. It would imply that many young people are currently opting in favour of going to university when the benefit is little greater than the private cost. A small increase in the fee would tip them against this choice. That is why they would be deterred.

Yet any small increase in the present fee will still leave the private cost far below the social cost. In other words, the claim that many young people woud be deterred from choosing university by an increase in the fee, when the fee still falls well short of the social cost, suggests that by going to university these same young people will impose a significant net loss on society.

If young people take up university places that cost more to provide than the benefit, there is a loss. Who will suffer the loss? Well, taxpayers. When money is short for nurseries, hospitals, and the care of old people, it's unfair if the average taxpayer, who is poorer than the families of most potential students, and also poorer than most graduates, should have to pay for something that gives less value than the money they have to give up.

To me this worry that many students will be deterred is not a serious concern. For most students, a degree is an excellent deal -- probably worth as much as a small house. Most would not be deterred by having to pay the social cost. The few that would be deterred, however, should be.

There is one qualification to this argument -- a serious one.

• Myth #2: But what about young people from poorer backgrounds? Isn't it unfair for them?

Potentially, yes; social justice for people who are relatively worse off should be a serious concern. Some young people have the aptitude and motivation to benefit from higher education, but their families are too credit-constrained, or too risk-averse, to support their children through three years of a degree course. I can well understand how a family contemplating the costs of sending a child to university for the first time would worry greatly about whether it would be truly worthwhile. We should definitely be imaginative in working out ways to ensure that candidates from low-income backgrounds are not disadvantaged as a result.

Here's my suggestion.

The government should make available low-interest loans to students from low-income families. The loans should both cover fees and contribute to the living costs of attending university. The repayments ought to be both income contingent and capped to ensure that nothing has to be repaid until the graduate's income reaches a certain level (for example, £15,000), and that repayments cannot exceed some modest proportion of the graduate's income above that level (say, 9%). Finally, after some period (say 25 years), any remaining debt should be cancelled.

The effect of this proposal would be to relax the cash constraint on low-income families and also remove all the risk from debt-based student finance.

Oh. Someone just told me we have that already! How cool is that. In fact, we have it for everyone, not just the ones from low-income families. Hmm. That might be making it too easy for potential students from well-to-do families. I guess that's the price we have to pay for being allowed to help the ones that truly need it.

• Myth #3: If I have to pay higher fees, I'm entitled to expect more for my money.

It sounds only fair, doesn't it? You pay more, so you should get more back. More contact hours, more personal support and guidance, more feedback.

But there's a problem. Think back to the mid-1990s, to the time before fees, when you would have paid nothing. Does that mean that, at that time, university courses cost nothing? Well, no. They probably cost just as much to provide then as they do now.

The only difference was: then, someone else was paying for what you would have got then. Who? Well, the average taxpayer. Who, by the way, was probably earning less than either the parents of most students, or the students themselves after they graduated. That's why the old system of free higher education was socially unjust; it redistributed income from poorer to richer, across both families and generations.

So, if you -- today's and tomorrow's students -- are not entitled to feel more entitled, what should you feel? Yes, there is a sense in which you should feel more demanding. You should expect more for your money. But you should not expect it from your tutors, who are being paid no more than before. You should expect more from yourselves.

What does that mean? There is a message in higher fees for those who want to go to university for no good reason: to avoid making choices, maybe, or to fill in time, or to party. Don't do it. It's not worth it. The bar is being raised. Think twice, for you may not rise above it.

If you have good reason to go to university -- you want to exercise your brain, study something worthwhile, develop your talents, and broaden and deepen your outlook on the world -- then a degree is still an absurdly valuable investment. In return for a few thousand pounds, you will walk away with a lifelong asset.

I already suggested a degree can be worth as much as a house. Most people see it as completely normal to go into debt to buy a house; they call it "getting on the housing ladder." In fact, a degree is worth more than a house because, even if you fall behind with the payments, no one will repossess it.

• Myth #4: Forty years ago I got my degree for nothing, so it's only fair that young people should too.

It's true: I got my own university education at the expense of the average taxpayer. It has been a lifelong benefit to me. Through most of my life, I have been paid considerably more than the average to do a job I love. I couldn't have done this without my degree.

Does that make it right? Does precedent mean that past unfairness can never be stopped? The argument sounds like the average taxpayer, having paid once over to make people like me richer than they are, is condemned to go on paying over and over for ever and ever. I don't think that's a good argument.

If you care about social justice, put taxpayers' money into nursery care and primary and secondary schools, which have far more power to re-engineer society than do universities. It is nurseries and schools that truly enable the talented to rise and make good citizens out of all of us and our children. And let those that will reap the benefit pay for their own university education.

• To go with the four myths, a certainty: raising student fees will not be popular.

According to a recent NUS survey, a majority of those polled was in favour of abolishing student fees; only 12% favoured higher fees.

In some ways that is a strange result. The main beneficiaries of raising student fees will be everyone in the country that pays any sort of tax -- income tax, VAT, excise duties, and the rest: in fact, just about everyone. The main losers will be the future graduate middle class, but their loss will be tiny compared with the gain from graduating with a degree. (There will also be a few that lose because higher fees deny them access to a public resource that they would fail to make good use of. I won't lose sleep over them.)

So, you'd expect the vast majority to favour higher fees. Yet, that's not what we find.

Most likely, two confounding factors are at work. One is organization. There is a well networked lobby of students and middle class parents that like the existing system for siphoning money from poor to rich. In comparison, the average citizen that suffers the loss is poorly organized and poorly networked.

The other confounding factor is the value of gains and losses. Hundreds of thousands of middle class families know they can benefit to the tune of tens of thousands of pounds from no fees or low fees for their children. In contrast, the gain to society from higher fees will be spread more thinly over millions of citizens, none of whom may feel confident of reaping a personal gain -- particularly if they have children that may become students in due course. 

In the words of Raquel Fernandez and Dani Rodrik (in the American Economic Review, 81:5 (1991), pp. 1146-1155), there is "status quo bias." The defenders of minority privilege can have a louder voice than those that prefer moving towards greater justice and transparency for the majority.

In a democracy, however, social justice and transparency will sometimes have their day.

Mark Harrison : 23 Nov 2009 10:30 |  Tags: Economics Politics Universities |  Comments (17) |  Close comments |  Report a problem

Why Do Ordinary People Make Political Donations?

The other night I dined with a colleague who is doing research on what makes people give money to good causes. The good cause in his research was cultural -- a European city opera house. It reminded me of a time when I had to ask the same question, but the good cause was a political one (so, a good cause only because it was one that I happened to believe in). The following story illustrates how different people gave money to the same cause for varying reasons. These differences were exposed when a technological innovation lowered the cost of giving money.

The year was 1977, as near as I can fix it looking back. I was treasurer for the city organization of a revolutionary left wing party. Then as now, communism and revolution were pretty unpopular, so there were few members and little cash. Still, we were not an absolutely negligible force, with a dozen branches across the city and a total membership in the low hundreds. Among those members were a number of esteemed and influential figures in the city's trade unions and other organizations, widely respected for their experience and dedication to the community.

Financially, we operated on a knife edge. The class struggle was expensive. It cost money that went on printing, postage, phone calls, train and bus fares, and the petty cash of meetings and demonstrations. The party itself required upkeep: more mailshots and meetings, the maintenance of a city centre building that was a legacy of more prosperous past times, and a substantial contribution to the party's headquarters in London.

We scraped the money together from various sources. There were membership dues, but these were only weakly enforced since we were always desperate to retain members whatever their circumstances. A considerable proportion of the members were low in income and advanced in years. Among them was vast shared experience, however, of raising money in labour intensive but convivial ways: social events, bring and buy sales, and selling newspapers and raffle tickets. There were others that we visited at home, spending hours chatting and chewing politics over a pot of tea, coming away with small donations and dues. 

Change was forced on us by new demands and new possibilities. The dream of our city party secretary was to be a professional revolutionary. Together we made his dream happen. But there was a price to be paid, and often enough he and his family were the ones that paid it. He spent much of his time raising his own wages. The wage rate was low, and not infrequently it was not paid in full. Meanwhile, the revolution was on hold.

A solution appeared in the form of the standing order. I don't recall whose idea it was; it wasn't mine. But it worked. It began when one or two of the wealthier comrades pledged money on a monthly basis. But they didn't just promise it, and then wait for us to come round and collect it; they signed up for the bank to pay it automatically, every month, direct from their accounts to the party's.

If they could do it, so could others. The idea spread. Soon we had a sheaf of standing orders, all bringing the money in as regular as clockwork. At the top of the range, we still had the original clutch of orders that each brought in £15 or £20 a month, plus a few new ones. Many more that we won over were made out for just £1 or £2 a month -- but because they were many, they counted just as much, or more. I don't remember the total, but this was a lot of money in those days.

The local party's financial situation was transformed. The city secretary's wages were paid, if not in full, then at least in part with greater reliability. He had more time for the revolution. For a while, things hummed.

Politically, the outcome was far from simple. To me, as an economist, what I saw in the standing orders was a pure efficiency gain: a dramatic reduction in the party's internal transaction costs. To raise money, you now had to pay just the fixed cost of one-time persuasion to get that signature on the form. After that, the money flowed without resistance. There was no longer a need for time-consuming social rituals and renewal of vows with our comrades and friends. Under the old system, that had to be done time after time; now, it had to be done just once, and then the standing order did the rest.

What the economist in me saw as a pure gain was felt by others as a direct loss. Why did we not come visiting any more? To these comrades, often retired or unemployed and perhaps at risk of social isolation, the hours that we formerly spent chatting at home with them over a pot of tea were not a cost but a pleasure. In fact, that was the main reason they parted with their pounds. If we didn't visit, they didn't pay. Likewise, they paid up their 50 pences to come to our sales and socials because it was their pleasure to do so, to come together, fraternize, and complain about the buses and the balance of forces in the world.

Others felt a different loss: our new income stream from the standing orders made the time and effort they previously put into those sales and socials, and the skills and experience they brought to bear on these activities, worth less than before. The party's increased financial efficiency literally devalued their contributions. Their enthusiasm wilted. They gave less money and less effort. Somehow, for them, it was all less fun.

There was also a rebalancing of status among the city party's constituent organizations. The standing orders caught on quicker with the younger, more middle-class, single-no-kids, high-salary comrades at the university, where the branch was soon contributing far more than its share to party funds. The branches in the engineering factories and more traditionally working-class, family-minded neighbourhoods lagged behind, and still fell into arrears.

No doubt all this would have mattered less if the financial faultlines had not become entangled with social and political divisions. This is roughly what happened: with considerable variance, the keenest proponents of the financial revolution had a tendency to be more middle class and also more liberal, more attuned to new agendas of what today would be called "equality and diversity," less accepting of traditional, male-dominated, trade union militancy, and quite distinctly less sympathetic with the cause of the Soviet Union.

To the traditionalists, many (but not all) of whom were of the older generation, it must have seemed like we were buying up their party. We were liquidating their networks, their ways of doing things, and their values. And the bank was helping us to do it!

This is how I see it now. People that join political parties have mixed motivations. One motive is to achieve the party's political programme. Another is to mix with comrades who think the same and form solidaristic ties with them. No doubt the balance varies from one person to another, and perhaps also through each person's life course. 

It is easy to suppose, for example, that long term political goals might loom larger on average for younger people that are full of optimism and have many years in front of them, than for older people with less time and lower expectations. Of course, that's just a speculation. All the members were highly selected for being socially and politically deviant, so it must be a case of "Generalize with care!"

Think of party members as of two types. In one type, the political programme is the dominant motive. In the other type, it's the desire for comradeship. In my story, before standing orders came along, the two types of members coexisted in a mutual equilibrium. But standing orders, by dramatically lowering the cost of raising money, destroyed the equilibrium and put the two types of members at odds with each other.

The Type 1 party members saw the standing orders as a pure gain, making the party a more efficient instrument for achieving its programme. The Type 2 members were the party animals. They saw the standing orders as a detriment, because it made the party a less efficient provider of affective ties.

I like the way I've set out this story, but I'm not completely sure that I have it right. For one thing, I might have forgotten stuff. I have probably oversimplified. Specifically, I'm implying that I was one of the pure idealists -- someone who believed in a programme and wanted to work for it as effectively as possible. That might not be true. I also recall that I had a strong personal loyalty to our city secretary, so it might be that I too was motivated by comradeship, but towards a different set of comrades from the more traditionalist party members -- the ones I have called the party animals.

And, of course, I accept that the party animals did have political ideals -- often subtly different from mine, it has to be said. The memory that makes me think I'm onto something, though, is how clearly I recall the sense of loss that many of them expressed that we didn't have to give them hours and hours of time and conversation any more, just to get their 50 pences. If they wanted comradeship now, they had to get out and come looking for it, not have it brought to them on a plate of biscuits.

If I'd understood this then, would I have behaved differently? Maybe, but it would not have changed the outcome. The reason is that our cause was doomed, something I did not know at that time. Nothing was going to change that. But there's another story.

Mark Harrison : 28 Oct 2009 23:04 |  Tags: Altruism Politics |  Comments (0) |  Close comments |  Report a problem

The 2009 Economics Nobels versus Big Government

Writing about web page http://nobelprize.org/nobel_prizes/economics/laureates/2009/press.html

Elinor Ostrom and Oliver Williamson have just shared the 2009 Nobel prize for economics. Unsurprisingly, the first ever award to a woman is attracting much of the media interest. Many journalists are likely to find that an easier topic than the content of their contribution.

Anyway, we'll focus on what Paul Krugman would call the wonkish stuff. What do these two share? According to the prize committee, it is their contribution to "the economic organization of cooperation."

What does that mean? On the BBC news website BBC economics editor Stephanie Flanders is quoted as saying that the judges had rewarded work in areas of economics whose practitioners' "hands were clean" of involvement in the global financial crisis. This is true, sort of. As far as I can see, neither Ostrom nor Williamson have contributed anything to recent asset price bubbles, correlated risk taking by banks, or the psychology of "It's different this time."

But it's more interesting than this. In a year when big government is all the rage, the prize committee has chosen to honour two scholars whose work cautions against big government solutions to economic problems.

I've never read anything by Ostrom; in fact, I'd never heard of her before yesterday. I feel bad about that, but I would feel worse if much more knowledgeable people like Paul Krugman (last year's Nobel laureate) and Steven Levitt (of Freakonomics fame) did not also admit to never having read her work. In order to say anything about it, I am relying partly on the Nobel citation, partly on a short interview she gave to BBC Radio 4 News last night.

Anyway, this is what I have picked up. Ostrom works on the management of common property such as land, water, and fish stocks. Economics 101 tells us that private exploitation will destroy the commons in the absence of government regulation. Ostrom's research is reported to show that there are alternatives in between private exploitation and government regulation. User communities often come up with cooperative management solutions that are less costly or more efficient than either, on their own initiative. It sounds like I should find out more.

In contrast to Ostrom's, I know of Williamson's work. I use it in my research papers, and also in my teaching. In fact, I'll be telling my final year undergraduate students about it next Monday in a lecture on the topic of "Government Failure." (The course is called The Making of Economic Policy, and I give two introductory lectures, one on how markets fail and one on how governments fail.) Williamson comes into the lecture because of his work on what he calls "the impossibility of selective intervention."

The starting point is to imagine the best of all possible worlds. We live in a market economy, and sometimes markets fail. Williamson's work shows, for example, that the very existence of firms is a response to markets not doing everything well. For some purposes it's cheaper to organize exchange within an integrated organization than through markets. Firms are these integrated organizations.

Can an integrated organization fix everything that markets can't fix? The key here is that government intervention is conceptually similar to just having bigger and bigger firms. In fact, twentieth century socialists often thought of the socialist economy as "one big firm." When markets fail, I suppose we'd all like to think the government could step in selectively, just when required and only then, and fix the failure. Then, we could always have the best of everything: market allocation, unless it fails; if the market fails, intervene to correct or replace it. That's selective intervention. Over the last century social democrats and democratic socialists have put forward many different ideas about what exactly needs fixing, but all would have agreed, I think, that selective intervention is the key. Williamson's work suggests, however, that this best of all worlds is out of reach.

Of course, Williamson is a scholar, not an ideologue, so he doesn't reach this conclusion directly. In The Economic Institutions of Capitalism (1985), for example, he asks a related question: what are the true limits on firm size? (Or, why don't we run the economy like one big firm?) He argues that replacing the market with an integrated organization always has unanticipated costs. The market, for example, provides high-powered rewards for success and penalties for failure. Intervention always impairs these incentives. We can define the benefits of intervention in advance, but not the costs. If politicians are allowed to intervention selectively, some interventions will inevitably make things worse.

Why? There are several reasons. One is the cost of good intentions: "Decision makers," Williamson writes, "project a capacity to manage complexity that is repeatedly refuted by events." Another reason is the propensity to micro-manage: Intervention always involves the exercise of power, including the power to divert resources to private goals. A third reason is the effect of "forgiveness" on effort: If a firm is losing out to market competition, there is no appeal against the verdict of customers. Managers and workers know this, so they make inordinate efforts to avoid losses. In a politicized environment, in contrast, sharing and horse-trading are much more important, so loss makers can buy political insurance against failure, or forgiveness. As a result, efforts to avoid failure are less. Finally, loss making activities are more likely to go on making losses. That's because politicization creates scope for lasting alliances based on reciprocity; loss making activities can win subsidies from profits made elsewhere and are not closed down. So, losses persist. 

In short, Ostrom and Williamson point in the same direction. Ostrom is saying that big government may be less necessary than we think. Williamson is saying that, even when necessary, the results of big government will always disappoint.

This is not the same as to say that politicians should never act. If there are always unanticipated costs, there may still be benefits, and the benefits may still outweigh the total costs -- both expected and unexpected. An example is the big-government bail-outs that saved the world economy over the past year. We will be paying the bill for a long time, and the bill will be bigger than anyone thought. The fact is, it had to be done and was worth doing.

The message of the 2009 economics Nobels is not to make a virtue out of what was done from necessity. The return of big government is not a cause for celebration.

Mark Harrison : 13 Oct 2009 09:55 |  Tags: Economics Nobel-Prize Politics |  Comments (1) |  Close comments |  Report a problem

The Essence of Keynes and the Value of Macroeconomics

Writing about web page http://www.guardian.co.uk/books/2009/aug/30/keynes-return-master-robert-skidelsky

Reviewing Keynes: The Return of the Master, by Robert Skidelsky (Allen Lane), in The Observer on August 30, 2009, Paul Krugman remarked that Keynes himself at one time considered the core of his theory to be the rejection of Say's Law (that income is always spent);

Say's Law [Krugman writes] isn't true, because in a monetary economy people can try to accumulate cash rather than real goods. And when everyone is trying to accumulate cash at the same time, which is what happened worldwide after the collapse of Lehman Brothers, the result is an end to demand, which produces a severe recession.

At another time, however, Keynes suggested that the core lay in

uncertainty that cannot be reduced to statistical probabilities, what the former US defence secretary Donald Rumsfeld called "unknown unknowns". This irreducible uncertainty [Keynes argued and Krugman writes] lies behind panics and bouts of exuberance and primarily accounts for the instability of market economies.

Krugman noted that Skidelsky himself has moved closer to the second view.

Observationally, these two views are excellent markers today for positive and negative judgements of the field of modern macroeconomics. Those that emphasize uncertainty as the fundamental problem are likely to excoriate professional economists for the false precision of their mathematical modelling, and their inability to foresee the crash of 2008.

In contrast, those that emphasize the broken relationship between supply and demand as the core insight of Keynes are likely to commend many of the same economists for their prompt reaction to the same financial crisis; they were as good as their word, speedily putting in place the massive fiscal and monetary interventions that have saved us from a repeat of the Great Depression.

In truth and logic, these insights complement each other. If Say's Law held, uncertainty would not matter. Depressions are possible because Say's Law does not hold, but it is unpredictable animal spirits that trigger them. Thus both insights are essential to Keynesian macroeconomics

That being the case, it appears that macroeconomic policy makers did not completely lose sight of what matters most. Macroeconomic theory -- well, that's another story.

Mark Harrison : 23 Sep 2009 20:14 |  Tags: Economics Keynes Recession |  Comments (1) |  Close comments |  Report a problem

Who are the Friends of the Poor? Or, With Friends Like These …

Writing about web page http://www.guardian.co.uk/commentisfree/2009/aug/24/revolution-1989-1979

Recently David Edgar (In the new revolution, progressives fight against, not with the poor, The Guardian, August 25) told a story in which one stage character, the “neoliberal urban middle class,” takes sides against another, “the economically egalitarian, socially traditionalist, rural poor.”

As his story unfolds, it turns out that a century ago the middle class was a friend of the rural poor, but became a victim of unintended consequences. The Russian revolution, Edgar writes,

grew out of an alliance between the progressive intelligentsia and the poor. That alliance was betrayed when Stalin turned on the intelligentsia in the Great Purge of the 1930s, as Mao did in the Cultural Revolution of the late 1960s.

In part because of this betrayal, Edgar narrates, the middle class then turned on its former friend the rural poor or became, at best, indifferent to its plight.

The latest chapter in Edgar's unfinished story continues this story in the world since the end of the Cold War. Progressive thinkers in many countries, we read, from the Middle East through the former Soviet bloc to the UK of "New Labour," have narrowed down their focus to rights and liberties that are real only for themselves -- property rights, freedom of expression and movement -- and have lost interest in affirmative action to raise up the victims of poverty and discrimination.

How will the story end? Time to turn the clock back, Edgar concludes:

Those of us who fervently believe in liberty, secularism, free speech, gay rights, civil liberties, enlightenment values and feminism, but also in social diversity, religious tolerance and economic equality, need to set about dismantling the barriers that people who believe in only some of those things want to erect.

At the heart of this story is a problem. My problem is not the ideals that Edgar promotes, which are laudable, but with what he thinks happened in history. What truly happened in the mid-twentieth century? What really broke the old, altruistic alliance of progressive thinkers with the poor? Where, in fact, do the poor stand today?

The unintended consequences of Edgar's story are right, but the history is “not even wrong.” The events that mattered most involved betrayal not of the middle class but of the poor. These events came years before Stalin's Great Terror or Mao's Cultural Revolution.

To achieve their goals, both Stalin and Mao imposed famine on the rural poor. Neither Stalin nor Mao particularly intended to do this; but it happened -- twice. In 1932 to 1934,  Stalin's policies of forced industrialization and food redistribution killed between five and eight million people -- in far larger numbers than he would ever kill the middle class. Mao repeated this achievement in the aftermath of the Great Leap Forward of 1956 to 1958 on a still larger scale: twenty million or more are thought to have died as a result. Both Stalin and Mao did this with the enthusiastic support of some (but not, of course, most) progressive thinkers, East and West.

For the progressively minded middle class, what happened in history should be far more disturbing than Edgar's fictional plot. The truth is that, in the peacetime years of the last century, educated intellectuals committed to the service of “pro-poor,” affirmative-action politicians helped to kill off as many of the rural poor as a global war.

With friends like these, who needs enemies? The rural poor might be forgiven for thinking twice before renewing such an alliance.

Mark Harrison : 17 Sep 2009 16:56 |  Tags: Economics Politics Stalin |  Comments (0) |  Close comments |  Report a problem

Government and the Fate of MG Rover

Writing about web page http://www.bis.gov.uk/mgrover-report

The demise of MG-Rover in 2005 has many lessons. Most of them, no doubt, are in the official report, just published. 

But the most important political lesson may well be this one.

In 2000, the government tried too hard to keep MG Rover in business. It did not try hard enough to do the right thing.

The right thing would have been to let MG Rover go to the wall.

If a business asset is good only for stripping, it is predictable that the best-looking promises to keep it in business will come from asset strippers.

If MG Rover had gone to the wall in 2000, nearly everyone would be better off today.

• The taxpayer would have saved the £16m cost of the Phoenix inquiry and report.
• BMW would have saved the "dowry" of loans and grants to the Phoenix Four totalling £475m.
• MG Rover's creditors would have saved nearly £1.3 billion of bad debts.
• The MG Rover workers and their community would have saved five years of false hopes and delayed recognition of their true situation.

If the government had done the right thing in 2000, in fact, everyone would be better off today -- except the Phoenix Four.

Mark Harrison : 13 Sep 2009 19:48 |  Tags: Economics Politics |  Comments (0) |  Close comments |  Report a problem

World War II: Hitler and Stalin, Guilt and Responsibility

Writing about web page http://www.reuters.com/article/latestCrisis/idUSL1655337

For Britain, World War II began 70 years ago today. On a personal note, today would also be the 71st wedding anniversary of my mother and father. They married on September 3, 1938; one year later, they heard Neville Chamberlain declare war on Germany. The war didn't stop them from believing in the future; by 1945 they had two baby girls, my older sisters. I'm thinking of them all as I write.

Who was to blame for World War II? This question is not the same as "What was to blame?" World War II had many deep causes. Ultimately, however, the decision for war is a political act, taken by human beings whom we can hold to account for their actions.

So, who was to blame:

• Germany?

In Europe, the guilty men were the leaders of Nazi Germany. Hitler's plan was to build a German Empire in the East, making Germany self-sufficient in food. Hitler intended to conquer, depopulate, and then resettle Russia and Ukraine. This plan, not yet worked in detail, was soon elaborated in parallel with, but somewhat in advance of the much better known plan to exterminate Europe's Jews. Like the "final solution," the Hungerplan was genocidal: it envisaged starving up to 30 million people of the European part of the Soviet Union to death. 

Between Germany and the Soviet Union lay Poland and Czechoslovakia; these states had to be destroyed to clear the path into Russia. The attack on Poland on September 1, 1939, in response to which Britain declared war on September 3, was a necessary step towards Hitler's wider goal. Others contributed to the timing of Hitler's decision and played into his hands in various ways. This is the context in which the behaviour of the British, French, Polish, and Soviet governments should be judged.

• Britain and France?

The worst thing for which the British and French were to blame was the Munich agreement of September 1938. By this agreement Chamberlain and Édouard Daladier, the French prime minister, betrayed Czechoslovakia, their ally, by giving part of it away to Germany. They made themselves accessories before the fact of Hitler's crime. Correctly interpreting this as weakness, in March 1939 Hitler broke the agreement and took the rest of Czechoslovakia.

• Poland?

Although not signatories to the Munich agreement, the Poles also played a small role. First, they refused Soviet offers to send troops to defend Czechoslovakia. They suspected Soviet motives; it was less than twenty years since the Red Army's last invasion. (And history after 1945 strongly suggests that their suspicions would have been correct.) Second, when it became clear that Czechoslovakia was up for grabs they grabbed their own slice, a Polish speaking region on their border. In this small way they became accessories after (not before) the fact of the crime. On the scale of guilt, however, it was very minor. Like the British and French, they acted out of weakness. The best way to understand the Polish leaders at this time is that they were both overplaying and trying vainly to improve their hand in a game they hadn't chosen to enter and couldn't win; it is also true that they were willing to do so at the expense of others.

• The Soviet Union?

The responsibility of the Soviet Union is more complex and wide-ranging. The Soviet government -- in other words Stalin who, by this time, was an unquestioned dictator --did several things, the sum of which was far worse than the Anglo-French collusion with Hitler at Munich. It is important that they all came after the Munich agreement. Until Munich, Stalin hoped to deter Hitler through "collective security" -- an agreement with Britain, France, and their allies Poland and Czechoslovakia, to contain Germany. The Munich agreement told Stalin that this was no longer an option. As his least bad remaining option, Stalin decided to collude with Hitler himself.

To the public, the Molotov-Ribbentrop pact (named after the Soviet and German foreign ministers) of August 1939 was simply an agreement between two countries not to attack each other. This in itself was no crime; Moscow had a similar pact with Tokyo that both sides upheld until August 1945. The crime of the pact was its secret clauses. Infamously, it dismembered Poland, which the Soviet Union had previously offered to defend, carving up that country with Germany, and creating the common Soviet-German border across which Hitler would attack less than two years later.

The pact was Hitler's green light to attack Poland, and determined the timing of today's anniversary. By agreeing to it, Stalin became a co-conspirator in Hitler's decision for war. At the same time it is clear that, even without any secret clauses, Hitler was ready to attack Poland anyway. Thus, Stalin made the Soviet Union an accessory to the crime before and after the fact, but he was not the prime mover in the major crime.

Stalin is directly to blame for many other crimes that followed directly from the Soviet occupation of eastern Poland. The very worst of these was his decision to approve the mass shooting of some twenty thousand Polish officers whom the Red Army had taken prisoner. The officers killed in the Katyn woods were not just professional soldiers; they were the elite of Polish society, politics, and business. The only possible reason for the massacre was that Stalin had determined to prevent the reemergence of an independent Poland.

Just as Stalin gave Hitler permission to attack Poland, other clauses, with some later amendment, gave Stalin Hitler's permission to do what he liked around the Baltic. Thus the Molotov-Ribbentrop pact led directly to the destruction of the independent states of Estonia, Latvia, and Lithuania, and to the "winter war" in which Stalin tried, at huge cost, to adjust the Soviet border with Finland. Like Poland, the three small Baltic republics suffered political and social decapitation through the imprisonment and deportation of their former elites.

The official Soviet justification of these measures -- at least, of those that were admitted -- was that Stalin was manoeuvring defensively from a position of weakness and was therefore, like the British, French, and Poles, not primarily to blame; through the Molotov-Ribbentrop pact, he bought the Soviet Union time to prepare for an eventual war with Germany. On first hearing, this justification sounds a little like what I said about Poland: Stalin was trying to improve his hand in a game he had not chosen to play. I take it half seriously. Stalin feared Hitler, realized that war was almost inevitable, and played for time, although he went on to develop many illusions about the likely timing of war and the margin for avoiding it. The Molotov-Ribbentrop pact did buy time, and he did use the time to prepare.

There are big differences from Poland, however. One is that the Soviet Union was militarily much stronger than Poland and had much more freedom of action. This must undermine Stalin's excuses for behaving badly. Yet Stalin behaved far, far worse than Poland ever did. The annexations, deportations, and mass killings that he authorized did not buy time or friends, and had little or no justification as preparations for war. On the contrary they caused or intensified anti-Russian feeling in the borderlands that persists to this day. The Katyn massacre had nothing to do with defendng against Germany and everything to do with completing the destruction of Polish independence. One thing to remember about Stalin is that it suited him to have tension on his borders, because this played well with the narrative of encirclement that he used to justify his own rule and the repressions that secured it. 

Stalin's decisions had profound effects on the timing of World War II and the course that it followed. But they did not cause the war. The war's trajectory was determined first and foremost by the character and aims of the nationalist socialist dictatorship in Berlin. If Germany had been governed by liberals, socialists, or traditional conservatives in the 1930s, there would not have been a war in the heart of Europe. Without Germany at war, there would still have been an Italian war in North Africa and a Japanese war in China, but neither the Japanese nor the Italians would have been brave enough on their own to start wars against Britain or America in the Mediterranean and the Pacific.

It is true that in 1941 Nazi propagandists tried to justify the German attack on the Soviet Union as a defensive reaction to Soviet preparations for an attack on Germany. This explanation. built on speculation at a time when all the Soviet documents were secret, continues to find traction today in some quarters, but the opening of the Soviet archives has found no more hard evidence for it than there was before.

• Italy? Japan?

Italy was also involved, not only as a signatory at Munich but as an empire-builder around the Mediterrranean. And Japan; don't forget that World War II began in Asia in July 1937 when Japan opened full-scale hostilities against China. Mussolini and the Japanese leaders share the guilt for the war.

• Deeper causes?

When we see several countries bent on the same course, we have to suppose that there might be common factors at work, and these factors might go deeper than any one person's calculations. These deeper factors must include the tensions and imbalances left over from World War I, and the devastating impact of the Great Depression. I've written elsewherethat in the long run the main cost of the Great Depresson was not economic but political, in the way it opened up European politics to dictatorships and aggressive warfare.

Does this reduce the guilt of the individual leaders? I don't think so. A criminal gang that exploits the devastation of a natural disaster to loot and kill is still a gang of criminals.

The idea that World War II had underlying causes is sometimes used to shift the focus away from Germany to Russia. Above, I suggested, "No Nazis -- no World War II." A counter-argument is "No Bolsheviks -- no Nazis." The Soviet Union was a frightening neighbour for both Poland and Germany. Before Hitler came to power, the Bolshevik record of government already included class warfare, mass killings, and concentration camps. Between 1918 and 1924 the Bolsheviks had incited several armed insurrections in Germany. The Red Army had invaded Poland as recently as 1920. This record certainly helped Hitler's racial politics and plans for expansion to play well with the German public. It also undermined any Polish inclination to a common front with the Soviet Union against Germany. 

At the same time, Germany did not attack the Soviet Union to restore democratic government or property rights to the Russians or anyone else. Hitler did not target only communist countries, nor did he spare Poland and Czechoslovakia on the grounds that they did not have Bolshevik regimes. His war in the East was a grab for land and food, regardless of who would be displaced. Saying that Bolshevism was responsible for this has more than a whiff of blaming the victim for the crime. The Bolsheviks should have been held to account for many crimes of their own, but not this one.

• How does Russia see Stalin today?

The major crime was the world war itself. The primary guilt for it belonged to leaders in Berlin, Tokyo, and Rome. The war unfolded through many stages; at various times Hitler won cooperation from London, Paris, Warsaw, and Moscow. Those who colluded with him did so sometimes under duress, sometimes to play for time. In retrospect this might look weak or foolish, but those who did it did so to avoid war, not to cause it.

Sometimes it was worse than that. On occasion, Hitler's allies of convenience worked with him opportunistically, because it suited their other goals. This applied more than anyone to Stalin, who exploited his temporary truce with Hitler between 1939 and 1941 not only to build up defenses but also to weaken or destroy the previously independent states on his borders. In the course of this the Soviet Union committed crimes on its own account, that did not flow from Germany's crimes.

In spirit, my apportioning of responsibilities for World War II may not be that different from the account offered by Vladimir Putin to the Polesat ceremonies marking the anniversary of the German invasion on September 1. For example, Putin condemned the Molotov-Ribbentrop pact -- although only as a "mistake." He also offered a joint Russian-Polish commission to establish the facts of what happened at Katyn, although the facts are already well documented. Apart from that, what Putin said in Poland is not the problem.

The problem with Russia's present-day administration is not what it says abroad, but what it says at home. To the Russian public President Medevev has declared, in remarks that were notably anti-Polish and anti-European, there can be no debate over

who started the war, which country killed people, and which country saved people, millions of people, and which country, ultimately, saved Europe.

And for professional historians in Russia the message of the Presidential decree of May 15 this year, directed against "attempts to falsify history to the detriment of the interests of Russia," is again that on certain matters debate is to be ruled out -- by law if necessary.

The Soviet Union, led by Stalin, did not cause the war, but everything else in Medvedev's formulation is highly debatable. The Soviet Union certainly killed people in very large numbers for purposes that ought to be condemned. For Poland, Katyn was a national tragedy. It is true that the Soviet Union "saved Europe" from German domination, and "saved people, millions of people" from destruction. But Stalin did this primarily to save himself; it is not clear that he deserves their thanks for that.

As for the people that the Soviet Union saved most directly, its own people and the citizens of the countries that the Red Army "liberated," it saved them in order to subjugate them, and it subsequently killed more than a few of them in repressing their freedom and independence.

Stalin's legacy is complex. It is in Russia itself that well-informed debate, free of government pressure and "patriotic" restraints, is most needed. When polled, for example, most Russians approve of the Molotov-Ribbentrop pact but do not know that the Soviet Union invaded eastern Poland under its provisions.

Meanwhile, I'll stop to think for a moment about Roger and Betty Harrison, married under the gathering stormclouds of September 3, 1938, and their war babies.

Mark Harrison : 03 Sep 2009 08:37 |  Tags: History Russia Stalin War |  Comments (12) |  Close comments |  Report a problem

Build Democracy — Very Slowly

Writing about web page http://unama.unmissions.org/LinkClick.aspx?link=Elections+2009%2FElectoral-law-eng.pdf

The people of Afghanistan have just voted in elections based on universal adult suffrage. All adults were entitled to vote, regardless of gender or property. So, that makes Afghanistan a democracy -- right?

By such standards, most democracies are less than a century old. Universal adult suffrage did not come to the U.K. until 1926 -- or to France until after World War II. Until then, they were less democratic than Afghanistan is today -- right?

Hmm.

Here's a problem. If you looked at Britain or France a hundred years ago, you would most likely conclude they were more stable, with more smoothly functioning political systems, and a wider selection of rights and better life chances for nearly everyone, including those not entitled to vote at the time, such as women, than Afghanistan today.

In fact, that could well have been true of England for much (not all) of the last 800 years. Why 800 years? Well, King John signed Magna Charta in 1215. Magna Charta limited the powers of the king over his subjects. It even enshrined their right to revolt against him, if he did not keep to the agreement he had signed. It also legislated discrimination against women and Jews. As soon as he could, John renounced it, plunging the country into civil war. Despite such imperfections, it is a convenient moment from which to date the beginning of England's long march to democracy. It is also a reminder that the full consequences of such events may not be obvious at the time, or for many years after.

To get from Magna Charta to today's parliamentary democracy took many steps. Civil wars curbed royal absolutism, so that the King stepped back from governing. As parliament became more important, the growing value of a seat in parliament led to increased corruption and cronyism. Popular pressure, including the threat of revolt, gradually extended the franchise, making the buying of votes more difficult. Politicians learned to play rules of democracy such as "Lose gracefully; hope to win again next time" and "Win, but don't crush the losers; next time, it could be you." The whole thing took centuries, and of course it is still going on. There were many steps back. So far, at least, we have avoided the trap of "One person, one vote, one time."

The single most important feature of the rise of democracy in the West is how late in the day we came to "free and fair" elections. But if elections came last, what came first? The answer seems to be that the process began with formal limitation of the powers of the government. The starting point, not of democracy itself, but of the process that led to democracy, was the principle that no one is above the law, even the King.

When this principle is not in force, then the government is above the law. In a state governed by laws, the law defines what is a crime, and the courts decide who is guilty on the evidence. Anyone can be tried, high or low, even the government. If the government is above the law, in contrast, the authorities can imprison people first, then decide what they are guilty of. Evidence is not necessary; if appearances matter, the police can always extract a confession. 

In a tidy world, democracies would be those countries that hold elections. Autocracies and dictatorships would be those countries where there are no elections and the government is above the law. But in our untidy world, you can have both at once -- the government above the law, and elections. This tends to happen in two kinds of country. Since they happen to be neighbours, we'll call one Pakistan and the other Afghanistan. The world has many more examples of both.

• In Pakistan there have been elections from time to time when the military is not in power, but the elections don't matter much. This is because the military is in power, even when it appears not be in power. In Pakistan the army controls nuclear weapons, military deployments, and intelligence activities independently of the government. It also has huge economic interests; according to Military Inc.: Inside Pakistan's Military Economy, by Ayesha Siddiqa (Pluto Press, 2007), the army disposes of one third of Pakistan's heavy industries and 6-7 per cent of private sector assets. These economic interests free the army from dependence on the civilian government's budgetary allocations. As a result, the elected government cannot tell the army what to do. In short, elections do not make Pakistan a proper democracy.
• Afghanistan has been a failing state since its monarchy was overthrown. (Pakistan may become one, but not yet.) In Afghanistan there are elections because of external pressure. Because of this pressure, the government depends on the outcome of the elections to continue in office. As a result, the elections really do decide who will govern Afghanistan -- at least this time round. In the short term, the prize of winning is great, because Afghanistan has only a weak constitution. Traditional restraints on central government have been eroded by decades of civil war. Being in power means you can do pretty much what you want, provided you control the territory. In the long term, however, the gain from winning is very uncertain. Maybe it just means being first in the firing line when the Americans withdraw.

What happens when you have elections and the government can do anything it wants, but only in the very short term? Several things: First, it is crucial to win the election. Second, it is crucial to win this time -- not next time, because there may never be another time. Don't settle for the chance to be the loyal opposition; bribe, threaten, do whatever you have to do to bring in the votes. Third, once you win, grab everything you can as quickly as you can. Forget about building the future. There isn't time. This argument is made by Paul Collier in Wars, Guns, and Votes: Democracy in Dangerous Places (The Bodley Head, 2009).

For such a country, elections are not the place where democracy begins. In fact, for any country, they seem to be the finishing touch on the democratic edifice. The foundations include a stable constitution (written or unwritten), and enough checks on the short-term freedom of action of politicians that they have no option but to play for the long term and cooperate in the games of politics and economics. Society benefits most when politicians see their greatest profit from promoting the steady, long-run growth of commerce and public goods such as roads and education. These things must be in place before democracy presents the electorate with real choices, choices that correspond to true social preferences.

Now that I've mentioned preferences, let's dwell on them for a moment. A virtue of democracy is supposed to be that democratic governments are constrained by the preferences of the median voter. It sets the game up in such a way that each party must compete for the middle ground. A government gets elected if it gets 50% of the vote plus 1. If you range the voters from left to right by their tax-and-spend preferences, for example, then the programme that captures the vote of the middle guy plus all the votes to the right (or left) will win. What the voters have to do is inspect their preferences and vote accordingly.

But when the government can do anything it likes, preferences have little traction. For one thing, parties are not bound by their promises. All parties may promise to be "clean" -- but everyone knows that as soon as they take office they will grab what they can, reward their supporters with part of the proceeds and pocket the rest. Instead, voters must set their preferences aside and make their choices strategically. For the most part this likely to mean ethnically or tribally: If the candidate gets in that is from the other group, what will happen to my group, and so to me? Better vote for my guy than their guy, however dirty. If I can, vote twice or three times, and stop the others from voting at all, unless I can trust them to vote my way. Once my guy is in, join the loot chain. Forget getting an education or doing business. And so on.

What really matters in a country like Afghanistan is not that elections have taken place. What matters is that its rulers, not just the government in Kabul but also the warlords and provincial rulers, need to start treating the country like a place with a future, and the citizens of Afghanistan as people who should not be killed, imprisoned, or plundered without legal process. That is what Magna Charta was all about. What Afganistan needs right now is not so much elections as a Magna Charta to which the government in Kabul and the warlords in the provinces all subscribe. This would be a bigger step forward than elections in which people vote on tribal lines, or are too scared to vote at all. The reason is that it would refocus the rulers away from what they can grab immediately from each other and from their citizens to the longer term benefits they can extract from investing in the economy and in simple things like roads and schools. 

I can see some important objections to this line of argument. In fact, I agree with most of them in advance. 

• Aren't you playing into the hands of oppressive dictators and exploitative elites?

Yes, it can do this. The problem in Afghanistan -- but not only there -- is that the alternative to oppressive dictators and exploitative elites right now is not democracy. It is, at best, a reasonably law-governed state in which traditional, unelected rulers see a common interest in promoting education, roads, trade, and tourism because they will get a bigger cut from the profits in the long run. They will protect the property rights of the poor as well as the rich, so that the poor will become less poor and will pay taxes and rents. This is why I wrote a while back that what Afghanistan needs is the right kind of feudalism.

It is a risk, however, that if we don't promote instant democracy ourselves, we may end up colluding with rulers who will never be ready for elections. They will oppose elections, not because society is unprepared, but because they are against elections on principle, because they prefer unaccountable power and wealth. In fact, it is not a risk -- it is a certainty.

• Aren't you undervaluing the thirst for democracy in the Middle East, from Iran to Afghanistan? Haven't these people got a right to decide their own future?

Yes, this is also a risk. Millions of people in countries that don't have democracy want to have a say in their own future. However, it is worth bearing in mind that wanting a say in your own future is not always the same as wanting democracy. Democracy creates losers as well as winners. It's easy to be a democrat when you win.

To have a true thirst for democracy, you have to prefer democracy, even when you lose. In some countries, many people are in favour of democracy only when they win. This is not a reason to be against elections, and generally it should not be up to us to decide whether other countries have elections. Where possible we should leave it to the citizens of those countries to work their processes out, just as the English worked theirs out.

• So where is our ethical foreign policy?

The first ethic of foreign policy should be not to do harm. Often the best way of avoiding harm is to leave a country alone. We couldn't leave Afghanistan alone because people in that country attacked our ally, the United States, on 9/11. Taking that starting point as given, however, we have probably done Afghanistan -- and ourselves -- a lot of harm by having the wrong objectives.

In each country there is a limited number of ways of doing good, and an infinite number of ways of doing harm. There is going to be a different recipe for doing good in every country, and we can't decide what that is on general principles. However, I think we should generally support the rule of law in other countries, provided the government is subject to the law like the citizens, and we should support the people that struggle to see the law observed and make the government accountable to the courts. This is where all rights spring from, including eventually the right to vote.

• You can't mean that every law deserves to be upheld? Some laws are disgusting or oppressive.

I agree. The laws in apartheid South Africa, for example, were obviously unjust and did not place the white government under the same restraints as the black population. The laws deserves our support where it creates checks and balances, limits the powers of the government, and gives the citizens redress against oppressive government behaviour in the courts.

At the same time, even in a law-governed country, the law will not always prescribe all the rights we think should be available in our country. In England, Magna Charta did not treat men and women the same, or Christians and Jews. Despite this, it was an improvement on what existed before, because it put the King under legal restraint, and authorized the use of force against him if he violated that restraint.

• According to you the Afghans will have to wait 800 years before they can have democracy -- that's ridiculous!

I agree. But I am not saying the Afghans must wait 800 years. Some of the reasons why it took such a long time to establish democracy in western Europe do not have to be repeated. One is that the Europeans did not know where they were going. If you know where you are going, that must save a few hundred years. Another is that there was a lot of resistance and backtracking. If you are strong enough to go in a straight line to democracy and quickly overcome resistance, that ought to save a lot of time too. At the same time a straight line is not a short cut. There are still important reasons why democracy cannot be established overnight from a standing start.

Why can't we build democracy overnight? Democracy rests on the idea of moral equality. This means that you are entitled to the same consideration as me, even if I disagree with you, and even if I do not know you. It is the idea associated with Voltaire, who is supposed to have said "I disapprove of what you say, but I will defend to the death your right to say it." Not all regions of this world have this idea in their culture. Without it, checks and balances are always at risk of being overturned, and minorities are at risk of suppression.

Put another way, democracy rests on expectations. The winners have a right to expect the losers to go into loyal opposition. The losers have a right to expect to be allowed to live and fight again another day. In many countries the history of power is a story of all-or-nothing, victory-or-death. This history determines the expectations of the contenders for power. Democracy requires them to unlearn this history and learn to expect restraint and trust instead. This takes time -- possibly, more than one generation.

Building commitment to democracy also takes time because democracy can be a disappointing experience. One person's vote is rarely, if ever decisive. Elections rarely, if ever, produce fundamental change in either governance or the conditions of life. Even in stable, long-lived democracies, most elected representatives turn out to be disappointingly human. The main benefits of democracy arrive over decades and centuries, because the requirement of periodic re-election enforces checks and balances; whoever is in power, they are restrained from acting in oppressive or confiscatory ways by knowing that eventually they must face the electorate. This is another reason why building support for a working democracy takes time.

Historical short cuts to democracy are few and far between. The only ones I can think of arise from merging sovereignties, when a society that lacks democratic institutions and traditions borrows them from a democratic neighbour. Something like this seems to have happened in Bulgaria and Romania as they joined the European Union, but it is still a puzzle -- according to "Explaining Democratic Success as an Analytical Challege: Why are Romania and Bulgaria in the EU?" by Venelin Ganev, in NewsNet (News of the American Association for the Advancement of Slavic Studies) 48:4 (2008). Moreover, this cannot help those emerging democracies that have seceded from or are in conflict with their neighbours.

It takes a long time to build a democracy. There are risks in being guided too closely by this; the risk is that we end up doing too little to encourage it. But there are also risks in the short cuts. In Afghanistan, we face huge moral hazards as a country, and our troops are facing deadly physical ones. I fear these are greater than the dangers that would have arisen if we had adopted a more cautious approach, better tailored to the realities of that country.

Mark Harrison : 30 Aug 2009 17:51 |  Tags: Afghanistan Politics |  Comments (0) |  Close comments |  Report a problem