FT BUsiness books 2019

SYNOPSIS

We love to hate the 800-pound gorilla. Walmart and Amazon destroy communities and small businesses. Facebook turns us into addicts while putting our personal data at risk. From skeptical politicians like Bernie Sanders who, at a 2016 presidential campaign rally said, “If a bank is too big to fail, it is too big to exist,” to millennials, only 42 percent of whom support capitalism, belief in big business is at an all-time low. But are big companies inherently evil? If business is so bad, why does it remain so integral to the basic functioning of America? Economist and bestselling author Tyler Cowen says our biggest problem is that we don’t love business enough.

In Big Business, Cowen puts forth an impassioned defense of corporations and their essential role in a balanced, productive, and progressive society. He dismantles common misconceptions and untangles conflicting intuitions. According to a 2016 Gallup survey, only 12 percent of Americans trust big business “quite a lot,” and only 6 percent trust it “a great deal.” Yet Americans as a group are remarkably willing to trust businesses, whether in the form of buying a new phone on the day of its release or simply showing up to work in the expectation they will be paid. Cowen illuminates the crucial role businesses play in spurring innovation, rewarding talent and hard work, and creating the bounty on which we’ve all come to depend.

2

The meteoric rise of the largest unregulated financial market in the world-for contemporary art-is driven by a few passionate, guileful, and very hard-nosed dealers. They can make and break careers and fortunes.

The contemporary art market is an international juggernaut, throwing off multimillion-dollar deals as wealthy buyers move from fair to fair, auction to auction, party to glittering party. But none of it would happen without the dealers-the tastemakers who back emerging artists and steer them to success, often to see them picked off by a rival.

Dealers operate within a private world of handshake agreements, negotiating for the highest commissions. Michael Shnayerson, a longtime contributing editor to Vanity Fair, writes the first ever definitive history of their activities. He has spoken to all of today’s so-called mega dealers-Larry Gagosian, David Zwirner, Arne and Marc Glimcher, and Iwan Wirth-along with dozens of other dealers-from Irving Blum to Gavin Brown-who worked with the greatest artists of their times: Jackson Pollock, Andy Warhol, Cy Twombly, and more.

This kaleidoscopic history begins in the mid-1940s in genteel poverty with a scattering of galleries in midtown Manhattan, takes us through the ramshackle 1950s studios of Coenties Slip, the hipster locations in SoHo and Chelsea, London’s Bond Street, and across the terraces of Art Basel until today. Now, dealers and auctioneers are seeking the first billion-dollar painting. It hasn’t happened yet, but they are confident they can push the price there soon.

megabucks and excess in the art market

Rich in anecdotes, the book charts the transformation of art into an investment vehicle

May this year, “Rabbit”, a shiny, stainless steel sculpture created by Jeff Koons in 1986, sold in New York for $91.1m, re-establishing Koons as the world’s most expensive living artist. It trounced presale expectations of $50m and went to art dealer Robert Mnuchin, father of the current US Treasury secretary Steven Mnuchin, bidding for an unidentified client. That client was reportedly hedge-fund mogul Steve Cohen of Point72 Asset Management. Everything about the sale — the eye-watering prices, the parade of billionaires vying to acquire trophy assets, the powerful dealers advising them — also painted a broader picture of today’s financially polarised economies. This high-octane world — of contemporary art, megabucks and market excess — is the subject of a highly readable book by Vanity Fair contributing editor and author Michael Shnayerson. He tackles his subject with gusto, parading a cast of colourful characters and charting how contemporary art went from being a tiny, initiates-only part of the market to an international juggernaut. Central to the first part of the story is Leo Castelli, the “prince of dealers” who brought European sophistication and elegance to the brasher New York art scene in the 1960s. At that time attention had shifted from Europe to the US, where thanks to abstract expressionism, Pop art, Minimalism and conceptual art, New York dominated the contemporary art scene. But at Castelli’s death in 1999, Shnayerson writes: “His reign was over, and a new one had begun.” The newcomer was Castelli’s protégé and former salesman Larry Gagosian, certainly the best-known art dealer in the world, who today controls a global empire of 17 galleries. Gagosian, as well as his fellow “mega-dealers” David Zwirner, Iwan Wirth (of Hauser & Wirth) and father-and-son Arne and Marc Glimcher (of Pace) are extensively profiled. Shnayerson interviewed all five and their comments and insights are one of the book’s most interesting elements. Boom is rich in anecdotes, from artists being poached by bigger galleries to high-profile lawsuits. For example, John Currin, a painter whose highly detailed and slightly satirical portraits are influenced by Mannerism, ditched Andrea Rosen for Gagosian; or Takashi Murakami, the Japanese artist who draws on manga for his paintings and sculpture, leaving Marianne Boesky, also for Gagosian. Or the story of how in 2012 the Rubells, Miami real estate developers and major art collectors, gave an art residency to the rising Colombian art star Oscar Murillo, whose scrawled, abstracted canvasses incorporate text and a variety of media including dirt. It was the first residency their foundation had awarded, and in return they kept the 40 paintings he created. A Murillo painting subsequently topped $400,000 at auction, and he is currently shortlisted for Britain’s prestigious Turner Prize. Most of the anecdotes, and indeed details of lawsuits, for instance the legal spat over a $100m Picasso sculpture, a portrait bust of Marie-Thérèse from 1931, which pitched the royal family of Qatar against the major collector Leon Black, have been culled from existing sources, mainly newspaper reports (full disclosure: I am also quoted). The merit of Boom is to bring them all together, in the single volume. But the sheer detail of some of the chapters — in some cases a month-by-month account — makes for a rather baggy and overlong read. Recommended Books Book reviews of the week And while Shnayerson does chart the rise of contemporary art to today’s world of glamour and excess, his book fails to tackle fully the reasons for this rise. By focusing closely on the deals and the dealers, he pays scant attention to why these contemporary trophies have become the “must-have” of billionaires the world over. What does emerge is the transformation of art into an investment vehicle, an alternative currency and sometimes even an asset class. Boom notes longtime dealer Paula Cooper reflecting that: “There was nothing she could do to stop the flood of money and all it had brought.” And as the Romanian artist Adrian Ghenie — whose top price for his dark, rather menacing works, often depicting historical figures, is now more than £7m — told the New York Times in 2016: “I feel I’m being speculated; it’s not me. It’s the new art world.”

3

In search of a fresh perspective on the modern economy, Extreme Economies takes the reader off the beaten path, introducing people living at the world’s margins. From disaster zones and displaced societies to failed states and hidden rainforest communities, the lives of people who inhabit these little-known places tend to be ignored by economists and policy makers. Richard Davies argues that this is a mistake, and explains why the world’s overlooked extremes offer a glimpse of the forces that underlie human resilience, help markets to function and cause them to fail, and will come to shape our collective future.

Whether trekking with Punjabi migrants through the lawless Panamanian jungle or revealing the clever trick Syrians use to underpin trade in the world’s most entrepreneurial refugee camp, Richard Davies brings a storyteller’s eye to places where the economy has been destroyed, distorted, and even turbocharged. In adapting to circumstances that would be unimaginable to most of us, the people he encounters have become economic pioneers whose lives help us reflect on our own.

At once intimate and analytical, Extreme Economies draws the lines between personal narratives and global trends, shedding light on today’s biggest economic questions and providing vital lessons for our turbulent future.

4

From the three primary architects of the American policy response to the worst economic catastrophe since the Great Depression, a magnificent big-picture synthesis–from why it happened to where we are now.

In 2018, Ben Bernanke, Tim Geithner, and Hank Paulson came together to reflect on the lessons of the 2008 financial crisis ten years on. Recognizing that, as Ben put it, “the enemy is forgetting,” they examine the causes of the crisis, why it was so damaging, and what it ultimately took to prevent a second Great Depression. And they provide to their successors in the United States and the finance ministers and central bank governors of other countries a valuable playbook for reducing the damage from future financial crises. Firefighting provides a candid and powerful account of the choices they and their teams made during the crisis, working under two presidents and with the leaders of Congress.

The authors of Firefighting undeniably have a tale to tell. They held America’s highest economic policymaking offices during the global financial crisis — Ben Bernanke as Federal Reserve chairman, Henry Paulson as the Bush administration’s last Treasury secretary (and before that a Wall Street chief executive), and Tim Geithner as president of the New York Fed and then Paulson’s successor in the Obama administration. This is the inside story, 10 years on, of how America’s top policymakers tried to contain a financial implosion that threatened to send not just the US but the whole world into a replay of the 1930s Great Depression. Beyond historical interest, the authors insist that without understanding the steps they had to take, we risk being unprepared next time a crisis hits. Those who want to understand how the US financial system could suddenly collapse, taking seasoned policymakers like these three by surprise, could do a lot worse than this book. Firefighting is mercifully short and succinct, yet all the key elements of the chronicle are here: the ballooning borrowing and blinding complexity of the boom in mortgage-backed securities, the legally creative Fed loans into frozen markets, the expanding schemes to prop up asset prices, the capital injection and stress tests for banks that calmed investors and the huge fiscal and monetary stimulus that put the economy back into gear. The book is also surprisingly well-written — not always a given when technocrats and wonks take to the keyboard. Apart from slightly overworking the metaphor in the book’s title, whoever penned the words avoids getting bogged down in technical details and keeps the pace with some felicitous turns of phrase (“The Wild West with better plumbing was still the Wild West” is the verdict on the meagre regulatory efforts before the crisis). However, for those who followed the crisis more closely the interest does not lie in new information, of which there is really none, but in how the authors assess their own efforts with the benefit of hindsight. Needless to say, they think they got it mostly right, while honourably admitting they had to scramble and improvise given the opacity of the financial sector when the crisis started and the speed at which previously unthinkable events unfolded. Their overarching imperative was to arrest the financial panic by restoring confidence that US financial institutions could honour their obligations. Put another way, they saw it as the government’s responsibility to forestall as far as possible the propagation of losses through the financial system. They largely avoid the term “bailout”, but that was clearly the policy they pursued. Not, admittedly, without dismay: the authors express their deep dislike of taxpayer support for banks, but argue that in a financial panic, the normal rules do not apply. So when they hit back at critics who said they should not have let Lehman Brothers go bankrupt they do not challenge the premise that the bank should have been saved — they just claim they did not have the legal powers to do so. But they offer precious little argument to those who think the government was too quick to put all institutions in the “must be saved” category. In effect, the authors assert that in a crisis, all private financial debt must be treated as the government’s responsibility. By their own admission, they went beyond Walter Bagehot’s rule for stopping liquidity crises: lend freely but at penalty rates, to solvent borrowers and against good collateral only. Their view that government should prevent losses for banks’ creditors to the fullest extent possible puts Bernanke, Paulson and Geithner in opposition to a person they unfairly relegate to a bit player in the book. That is Sheila Bair, the chair throughout the crisis of the Federal Deposit Insurance Corporation — the agency President Franklin Delano Roosevelt created to wind up failed US retail banks while guaranteeing deposits. Only a few days after Lehman’s collapse, the FDIC wound down Washington Mutual, one of the country’s biggest mortgage lenders. Depositors were protected but other creditors forced to take losses. The authors claim this triggered deposit flight from Wachovia but offer no evidence it could otherwise have stayed out of trouble. It is too easy, given the financial storm that was happening, to blame Wachovia on Bair being more sceptical of bailouts than they. Why did they not ask for resolution powers, which would have let them split up a bank such as Lehman? Whether to try to make private investors share in the losses of banks was the most important divide in the administration. Bair also insisted, for example, that a new guarantee of broad bank liabilities (which the authors pushed her to accept) should only apply to new contracts, not old debt, in an attempt to support new lending to solvent borrowers without saving banks for their past mistakes. This, too, they disliked. Even as they pick at the FDIC’s wind-down of retail banks, the authors complain there was no resolution regime for the bigger financial companies on their watch. Creating such a regime has since been central to efforts to end the problem of banks that are too big to fail. But they do not seem to have asked for one in the stressful days of 2008 when they were banging down the doors on Capitol Hill to lobby for greater powers. Why did they not ask for resolution powers, which would have allowed them to split up such a bank as Lehman and write down some of its liabilities but not others? They do not tell us, but the answer that presents itself is that this was an authority they did not want to wield. Recommended FT Podcast Love, lust and burnout This deference to Wall Street comes up elsewhere, too. They lament that they did not think they could force financial companies to increase equity capital above the regulatory minimum. Why did they then not raise the regulatory minimum? They do not say. They report leaving 20.1 per cent of insurance company AIG in the hands of its private shareholders because taking more would “force the government to bring the company formally onto its balance sheet”. They do not say why this would be a bad thing. No doubt these policymakers did a solid job in extraordinarily challenging circumstances. Their policies worked, and they worked rather well. But they were not the only policies available, nor do their choices have a strong claim to being the best ones; bank bailouts have after all fuelled populism. What they do not seriously consider is whether their policies to restart credit flows could have worked even with a less bailout-friendly approach, saving both money and political anger. These are the ideological blind spots revealed by reading Firefighting between the lines.

5

A leading artificial intelligence researcher lays out a new approach to AI that will enable us to coexist successfully with increasingly intelligent machines… Conflict between humans and machines is seen as inevitable and its outcome all too predictable. In this groundbreaking book, distinguished AI researcher Stuart Russell argues that this scenario can be avoided, but only if we rethink AI from the ground up. — Penguin Random House

A leading artificial intelligence researcher lays out a new approach to AI that will enable us to coexist successfully with increasingly intelligent machines

In the popular imagination, superhuman artificial intelligence is an approaching tidal wave that threatens not just jobs and human relationships, but civilization itself. Conflict between humans and machines is seen as inevitable and its outcome all too predictable.

In this groundbreaking book, distinguished AI researcher Stuart Russell argues that this scenario can be avoided, but only if we rethink AI from the ground up. Russell begins by exploring the idea of intelligence in humans and in machines. He describes the near-term benefits we can expect, from intelligent personal assistants to vastly accelerated scientific research, and outlines the AI breakthroughs that still have to happen before we reach superhuman AI. He also spells out the ways humans are already finding to misuse AI, from lethal autonomous weapons to viral sabotage.

If the predicted breakthroughs occur and superhuman AI emerges, we will have created entities far more powerful than ourselves. How can we ensure they never, ever, have power over us? Russell suggests that we can rebuild AI on a new foundation, according to which machines are designed to be inherently uncertain about the human preferences they are required to satisfy. Such machines would be humble, altruistic, and committed to pursue our objectives, not theirs. This new foundation would allow us to create machines that are provably deferential and provably beneficial.

In a 2014 editorial co-authored with Stephen Hawking, Russell wrote, “Success in creating AI would be the biggest event in human history. Unfortunately, it might also be the last.” Solving the problem of control over AI is not just possible; it is the key that unlocks a future of unlimited promise.

6

Imagine a world where your phone is too big for your hand, where your doctor prescribes a drug that is wrong for your body, where in a car accident you are 47% more likely to be seriously injured, where every week the countless hours of work you do are not recognised or valued.

If any of this sounds familiar, chances are that you’re a woman.

Invisible Women shows us how, in a world largely built for and by men, we are systematically ignoring half the population. It exposes the gender data gap – a gap in our knowledge that is at the root of perpetual, systemic discrimination against women, and that has created a pervasive but invisible bias with a profound effect on women’s lives.

From government policy and medical research, to technology, workplaces, urban planning and the media, Invisible Women reveals the biased data that excludes women.

Award-winning campaigner and writer Caroline Criado Perez brings together for the first time an impressive range of case studies, stories and new research from across the world that illustrate the hidden ways in which women are forgotten, and the impact this has on their health and well-being. In making the case for change, this powerful and provocative book will make you see the world anew.

It’s a man’s world — how data are rife with insidious sexism

New book examines how gender bias in statistics has led to death and exclusion for women

n 2011, officials in the Swedish town of Karlskoga decided to clear snow from pavements and public transport routes before clearing roads, rather than the opposite. This meant that women, whose travel patterns tended to be more complicated than men, as they picked up children and did the shopping as well as going to work, suffered fewer accidents in the winter. Before 2011, pedestrians were injured three times more often than motorists in the winter, and more than two-thirds of these were women. The estimated cost of all these falls in a single winter season was SKr36m, about $4m. The switch in the priorities of the snow-clearing schedule did not disadvantage commuters — it is easier to drive a car through three inches of snow than a buggy — and it ended up saving the local authorities money. This is one example cited by Caroline Criado Perez, the British journalist and activist who led the campaign for Jane Austen to appear on the new £10 note, in Invisible Women: Exposing Data Bias in a World Designed for Men to demonstrate the benefits of including data about women when designing policy. Her book is mainly full, however, of the consequences of excluding them in areas as disparate as healthcare, parliaments, town planning, offices, factories, academia, agriculture, peace talks and humanitarian disasters. While some of these “gender data gaps” are well-known, others are strikingly unexpected. Women do three-quarters of unpaid work, irrespective of the proportion of household income they bring in; carers and cleaners can lift more in a shift than a construction worker or a miner; indoor air pollution from domestic open-fire stoves is the single biggest environmental risk factor for female mortality globally. The book covers a huge range of examples of how data are biased against women — from industrial design to healthcare systems to disaster responses. As Criado Perez says, most, if not all, of these examples did not come about because men deliberately excluded women from the data, but because they just didn’t think about them. Many resonated with me personally. I, like the author, have been asking my employer and other events organisers for years to provide microphones that don’t require a suit jacket and trousers to wear comfortably. But the consequences of the gender data gap are far more serious than such minor irritations. Treating men as the “default human” in the scenarios described by Criado Perez means that women are not just being treated unfairly — but are actually dying unnecessarily. The lack of sex-disaggregated data in clinical trials, for example, affects the ability to give women sound medical advice. The electrical wave threshold below which a pacemaker is fitted in the US is the correct one for men but should be lower for women. Some drugs that are commonly prescribed to treat high blood pressure have been found to lower men’s mortality from heart attacks — but to increase it in women. Healthcare is far from being the only area where leaving women out of the data can affect their lives. Drivers’ seats in cars are designed for men and they protect women less well in a crash. Providing food but not fuel or water during the Ebola epidemic in Sierra Leone in 2014 meant that women were forced to leave quarantine areas and spread the disease. Most worrying, perhaps, is Criado Perez’s argument that the gender data gap is getting worse. The introduction of Big Data, she contends, “can magnify and accelerate already existing discriminations”. Algorithmic scanning of CVs is a particularly problematic area. She cites the example of Gild, a tech hiring platform, which uses algorithms to analyse candidates’ online presence to identify the best computer programmers. According to Gild, frequenting a particular Japanese manga site is a “solid predictor of strong coding” — despite the fact that women have less leisure time to spend online than men and often don’t like manga sites, which are dominated by men. It is not just CV-scanning software that is trained on data that under-represent or misrepresent women. So do algorithms used in voice-recognition technology and translation. Satnavs in cars recognise male voices better than female ones; Google’s speech recognition software is 70 per cent more likely to recognise male than female speech, while Google Translate will assign stereotypical genders to, for example, Turkish gender-neutral pronouns, defaulting to “he is a doctor” and “she is a nurse”. Male-biased databases, Criado Perez argues, are not just reflecting but amplifying biases. Even when policymakers are aware that women are being excluded from their data sets, the responses are often inadequate — or plain wrong. Recommended FT Podcast Why the exclusion of women from data matters In the 1990s and 2000s some US universities adopted a policy that gave parents an extra year per child to earn tenure, in order to help women find it more feasible to achieve. Analysis of economics department hiring, however, showed that the policy resulted in a 22 per cent decline in their chances of gaining tenure at their first job — because women used the year to look after their children, while men used it to dedicate more time to their research. Gender pay gap reporting, a requirement on UK employers designed to narrow the difference between what women and men are paid, has been introduced at the same time as a retrograde benefit system that pays a “universal credit” to the main earner in each household, who is often a man and who, years of research have demonstrated, is less likely to spend money on his children. Data determine how resources are allocated. Bad data lead to bad resource allocation. Criado Perez hammers home this message with example after example, and a lack of evidence is certainly not a criticism that could be levelled at the book. There are 69 pages of references, and one worry is whether the author can have done adequate due diligence on the quality of all the research she cites. This, and the repeated assumption that correlation (a fall in female legislators, for example) equals causation (a comparable drop in education spending) are likely to give ammunition to any readers determined to reject her thesis. It is also hard at times not to feel overwhelmed by the drumbeat of examples of how women have been routinely left out of the data on which the most important decisions — in disasters, in hospitals, in factories, on our roads — are made. But instead of being overwhelmed, I felt angry. Criado Perez comprehensively makes the case that seemingly objective data can actually be highly male-biased, and that public spending, health, education, the workplace and society in general are worse off as a result. Policymakers everywhere should take heed.

7

Kochland

Christopher Leonard

 longlist 2019

Kochland reads like a true-life thriller, with larger-than-life characters driving the battles on every page. The book tells the ambitious tale of how one private company consolidated power over half a century—and how in doing so, it helped transform capitalism into something that feels deeply alienating to many Americans today. 

Just as Steve Coll told the story of globalization through ExxonMobil and Andrew Ross Sorkin told the story of Wall Street excess through Too Big to Fail, Christopher Leonard’s Kochland uses the extraordinary account of how one of the biggest private companies in the world grew to be that big to tell the story of modern corporate America.

The annual revenue of Koch Industries is bigger than that of Goldman Sachs, Facebook, and U.S. Steel combined. Koch is everywhere: from the fertilizers that make our food to the chemicals that make our pipes to the synthetics that make our carpets and diapers to the Wall Street trading in all these commodities. But few people know much about Koch Industries and that’s because the billionaire Koch brothers want it that way.

For five decades, CEO Charles Koch has kept Koch Industries quietly operating in deepest secrecy, with a view toward very, very long-term profits. He’s a genius businessman: patient with earnings, able to learn from his mistakes, determined that his employees develop a reverence for free-market ruthlessness, and a master disrupter. These strategies have made him and his brother David together richer than Bill Gates.

But there’s another side to this story. If you want to understand how we killed the unions in this country, how we widened the income divide, stalled progress on climate change, and how our corporations bought the influence industry, all you have to do is read this book.

Seven years in the making, Kochland reads like a true-life thriller, with larger-than-life characters driving the battles on every page. The book tells the ambitious tale of how one private company consolidated power over half a century–and how in doing so, it helped transform capitalism into something that feels deeply alienating to many Americans today.

8

SYNOPSIS

A powerful argument for how to succeed in any field: develop broad interests and skills while everyone around you is rushing to specialize.

Plenty of experts argue that anyone who wants to develop a skill, play an instrument, or lead their field should start early, focus intensely, and rack up as many hours of deliberate practice as possible. If you dabble or delay, you’ll never catch up to the people who got a head start. But a closer look at research on the world’s top performers, from professional athletes to Nobel laureates, shows that early specialization is the exception, not the rule.

David Epstein examined the world’s most successful athletes, artists, musicians, inventors, forecasters and scientists. He discovered that in most fields–especially those that are complex and unpredictable–generalists, not specialists, are primed to excel. Generalists often find their path late, and they juggle many interests rather than focusing on one. They’re also more creative, more agile, and able to make connections their more specialized peers can’t see.

Provocative, rigorous, and engrossing, Range makes a compelling case for actively cultivating inefficiency. Failing a test is the best way to learn. Frequent quitters end up with the most fulfilling careers. The most impactful inventors cross domains rather than deepening their knowledge in a single area. As experts silo themselves further while computers master more of the skills once reserved for highly focused humans, people who think broadly and embrace diverse experiences and perspectives will increasingly thrive.

Range by David Epstein — how not to be outfoxed

A look at how intellectual thinkers can be carved up between ‘foxes’ and ‘hedgehogs’

After majoring in earth and environmental sciences at university, David Epstein was certain that he would become a scientist. But working in a research laboratory convinced him that in fact he wasn’t cut out for academic life. He realised that he was not the kind of person willing to devote his life to “learning one or two things”, but instead wanted constantly to be acquiring new knowledge that he could share with others. So he swapped the lab for the news desk of a local paper in New York. To borrow a distinction due to the ancient Greek poet Archilochus and made famous by the philosopher Isaiah Berlin, Epstein came to see that he is a “fox”, not a “hedgehog”. “The fox,” Archilochus wrote, “knows many things, but the hedgehog knows one big thing”. Berlin thought intellectual history could be carved up, more or less neatly, between hedgehogs and foxes — between thinkers who seek to press the world into the mould of a single, overarching vision and those who pursue multiple, often contradictory, ends. Anyone who has given up graduate school for Grub Street will be comforted by Epstein’s conclusion, which is buttressed by copious scientific research, that knowing when to quit or being willing to switch path can often be strategic advantages in one’s career. “Switchers,” he says, “are winners”. Yet Range is not merely a vindication of his decision to leave academia’s cult of specialisation behind. As the book’s subtitle puts it, the author is attempting to explain why and how foxy generalists can “triumph in a specialised world”. Epstein discusses research done by the academic Abbie Griffin into the behavioural traits of “serial innovators”. Griffin and her co-researchers found that such people displayed a “high tolerance for ambiguity”, were able to move between apparently discrete domains of inquiry and tended to make connections between “previously dissimilar concepts and technologies”. He finds these qualities in Gunpei Yokoi, a Japanese electronics graduate who made a virtue of his limitations as an engineer, flaunted his indifference to what the competition was up to and indulged his flair for lateral thinking. The result of his inveterate tinkering was the wildly successful Nintendo Game Boy. Epstein sees the same traits in Charles Darwin, a “professional outsider” who valued his intellectual promiscuity. (Darwin, he notes, had at least 231 scientific pen pals, correspondence with whom he constantly mined for insights.) None of this, Epstein is careful to say, means that “hedgehog experts are unnecessary”. To illustrate this he draws an illuminating contrast between the foxy Darwin and the hedgehog-ish Albert Einstein. The point, rather, is that hedgehogs flourish in very specific sorts of cognitive environments. Epstein employs a distinction drawn by the psychologist Robin Hogarth between “kind” learning environments and “wicked” ones. A “kind” context, which is rule-bound and predictable, rewards the obsessive focus typical of the hedgehog. But in a “wicked” one, where the rules are indiscernible and repetitive patterns absent, a hedgehog-ish induction from past experience yields dramatically diminishing returns. “In a wicked world,” Epstein writes, “relying upon experience from a single domain is not only limiting, it can be disastrous.” On at least one occasion, however, he doesn’t heed his own lesson. He examines a study in which the psychologist James Flynn compared the grade point average of seniors at an American university with their performance in a critical thinking test. Flynn found that there was no correlation between this test of “broad conceptual thinking” and GPA. But there was a correlation between what major students were studying and their performance in the test. Neuroscience and business majors did worst, while economics majors performed best overall. Epstein attributes this success to the ability of economists to apply their principles “outside their area” and quotes approvingly Harding’s observation that “the terminology and reasoning processes of economics work their way into almost all topics”. But it seems not to occur to him that this extension of the writ of economic reasoning where previously it hadn’t run could be anything other than benign. Maybe, as Berlin observed of Tolstoy, in every fox there’s a hedgehog struggling to get out.

9

The challenges to humanity posed by the digital future, the first detailed examination of the unprecedented form of power called “surveillance capitalism,” and the quest by powerful corporations to predict and control our behavior.

In this masterwork of original thinking and research, Shoshana Zuboff provides startling insights into the phenomenon that she has named surveillance capitalism. The stakes could not be higher: a global architecture of behavior modification threatens human nature in the twenty-first century just as industrial capitalism disfigured the natural world in the twentieth.

Zuboff vividly brings to life the consequences as surveillance capitalism advances from Silicon Valley into every economic sector. Vast wealth and power are accumulated in ominous new “behavioral futures markets,” where predictions about our behavior are bought and sold, and the production of goods and services is subordinated to a new “means of behavioral modification.”

The threat has shifted from a totalitarian Big Brother state to a ubiquitous digital architecture: a “Big Other” operating in the interests of surveillance capital. Here is the crucible of an unprecedented form of power marked by extreme concentrations of knowledge and free from democratic oversight. Zuboff’s comprehensive and moving analysis lays bare the threats to twenty-first century society: a controlled “hive” of total connection that seduces with promises of total certainty for maximum profit–at the expense of democracy, freedom, and our human future.

With little resistance from law or society, surveillance capitalism is on the verge of dominating the social order and shaping the digital future–if we let it.

Should we think of Big Tech as Big Brother?

Are tech companies manipulating data to control human behaviour — or are their leaders simply naive?

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Many adjectives could be used to describe Shoshana Zuboff’s latest book: groundbreaking, magisterial, alarming, alarmist, preposterous. One will do: unmissable. As we grope around in the darkness trying to grasp the contours of our digital era, The Age of Surveillance Capitalism shines a searing light on how this latest revolution is transforming our economy, politics, society — and lives. As the inventor of the concept of “surveillance capitalism”, Zuboff fulfils a persuasive role in explaining the ways in which this “voracious and utterly novel commercial project” is radically rewriting the rules of the economic game, creating extraordinary new asymmetries of knowledge and power. By tracking our every click, our every digital expression of interest, ambition, longing and desire, the surveillance capitalists can climb inside our heads and sell those behavioural insights on to their real customers, the advertisers. Although Zuboff is a professor emerita at the Harvard Business School, her account is as much polemical as it is academic. She is determined to awaken our sense of astonishment and outrage about how this rogue capitalism has evolved to dominate and degrade our lives, largely unnoticed and unchallenged. She also makes one other more worrying and highly contentious claim: that surveillance capitalism has created a new kind of unaccountable power: instrumentarianism. She defines this as the instrumentalisation of behaviour for the purposes of modification, prediction, monetisation and control that threatens to challenge some of the functions of the state and usurp the sovereignty of the people. Instrumentarianism can determine the ends, because it can manipulate the means. Because this is an unprecedented development, we fail to understand what is happening, just as we failed to comprehend the rise of totalitarianism in 1920s Europe. Moreover, even if we sound the alarm, we should not expect governments to arrest these pernicious developments because they are in many ways their complicit beneficiaries. The security dictates of the post-9/11 world meant that US administrations have given a largely free pass to the tech companies to develop surveillance capitalism, while the Chinese leadership has jumped on it as a powerful means of entrenching control. The main focus of Zuboff’s analysis, and the primary target of her attack, is Google. She argues that the search company invented and perfected surveillance capitalism in much the same way as General Motors invented and perfected managerial capitalism a century ago. But other practitioners of surveillance capitalism come in for some vicious pummeling too, most notably Facebook and Microsoft. In Zuboff’s view, Google’s original mission of making all the world’s information accessible mutated into a ruthless imperative to make money by exploiting and modifying human behaviour, by serving up ads to users just at the moment they are the most susceptible to persuasion and generating wants they did not know they had. Google is now pursuing a land grab for all our data, inventing new products to vacuum up every morsel on the digital map. Every “smart” device — from digital assistants, to rectal thermometers, self-driving cars, to connected homes — has become a data-gathering mechanism. They all serve as one-way mirrors allowing the surveillance capitalists to spy on us without us ever seeing what is going on behind the glass. “There was a time when you searched Google, but now Google searches you,” she writes. Seven of Google’s products and platforms engage 1bn active monthly users: Gmail, Android, Chrome, Maps, Search, YouTube and Google Play Store, enabling the company to track ever more areas of a user’s life. Similarly, Facebook has more than 2bn users and is also expanding its interests into the physical world. She compares the expansionism of the surveillance capitalists to that of the Spanish conquistadors, who staked claims to virgin territories in the New World while suppressing the unsuspecting native Americans. Yet there is a two-sided nature to surveillance capitalism that makes it so dangerous, in Zuboff’s view, concealing the dark reality behind the public illusion. Google’s users are not its customers, which means it is radically indifferent to their real interests. Advertising-supported search engines will always prioritise those who pay the bills over those who use its services, so long as they remain hooked. That also used to be the view of Sergey Brin and Larry Page, Google’s founders, who presented a paper in 1998 highlighting the perils of advertising. “We expect that advertising-funded search engines will be inherently biased towards the advertisers and away from the needs of consumers. This type of bias is very difficult to detect but could still have a significant effect on the market,” they wrote. The expansionism of the surveillance capitalists is like that of the Spanish conquistadors, who staked claims to virgin territories in the New World That worldview changed when Google realised that the behavioural insights it could draw from its data were a potential gold mine, offering far greater rewards than other advertising-driven businesses such as commercial television. Zuboff argues that the clearest logic of surveillance capitalism has been articulated by Hal Varian, Google’s chief economist, who is sometimes referred to as the “godfather” of the company’s advertising model. As an expert in computer-mediated transactions, Varian identified four features of this new economy: data extraction and analysis; new contractual forms due to better monetisation; personalisation and customisation; and continuous experimentation. It was that formula that enabled Google to generate its vast wealth and has been copied by so many others since. What makes surveillance capitalism particularly pervasive is the way it preys upon our behavioural vulnerabilities. Indeed, Zuboff argues that the ability to trade in our behaviour has created a new “commodity fiction”, to use Karl Polanyi’s classification. In this historian’s view, the market economy only really took off when three mental “inventions” developed, in the form of labour, land and money, turning abstract concepts into exchangeable commodities. In a similar way, Zuboff says, the surveillance capitalists have been able to commoditise the fiction of behaviour, turning our data into profit. “They no longer merely host content but aggressively, secretly, and unilaterally extract value from that content.” Where Zuboff strays into still more controversial ground is in her analysis of power. Surveillance capitalists are not only able to monetise our data but can also use it to predict our behaviour and thereby modify it. In mechanical terms, they are no longer just sensors but actuators. She traces a straight line from the controversial behaviourist theories of BF Skinner, the Harvard psychologist from the 1960s, to those espoused today by Alex Pentland, the MIT professor and author of Social Physics. In their view, she claims, computational “truth” might prove a more effective way of running society than human governance. The intent is to replace our political autonomy with heteronomy, or the rule of others. But who will determine the values of this Big Other? China’s vision is to use technology to monitor its citizens and assign them social credit scores, used to reward or punish citizens for what the authorities deem to be socially good or bad behaviour. Having destroyed trust by annihilating all social institutions, the Communist party has seen technology as a means of recreating it artificially. This is best understood as the “apotheosis of instrumentarian power fed by public and private data sources and controlled by an authoritarian state.” In the west, Zuboff argues that we are in danger of experiencing an anti-democratic coup des gens rather than a classic coup d’état, an overthrow of the people rather than of the state. Her grand thesis can be contested on many levels. She largely ignores the positive side of our technological revolution. She almost certainly understates the competitive dynamics of the market. And she portrays the young as helpless saps, who use their phones 157 times a day, even as they appear to be becoming ever more savvy about and sceptical of technology. Zuboff’s analysis of power is also debatable. After all, it is a strange kind of power that can be wiped off a phone in a matter of seconds. Besides, the people who theoretically wield power appear to have little interest in exercising it, beyond enriching themselves and their shareholders. They have no grand project for humanity other than vague notions of doing good. The cardinal sin of the likes of Larry Page, Mark Zuckerberg and Satya Nadella is surely not that they are evil but that they are naive. Extrapolation of current trends also leads to some extravagant conclusions. The evidence for suggesting that surveillance capitalism may be increasing control over human actions is somewhat sketchy, to say the least. In the west, at least, the greater danger may be Facebook-inspired anarchy, rather than excessive control, as protest movements like the gilets jaunes show in France. The weakest part of The Age of Surveillance Capitalism, though, concerns what she herself would do about the concerns she raises. If the problems are so urgent then why are her proposed responses not more radical? She suggests that 20th-century conceptions of privacy laws and antitrust policies are outdated, but sketches out few ways in which they could be updated. She says the debate should revolve around three questions: Who Knows? (who has access to knowledge); Who Decides? (which institutions have authority); And Who Decides Who Decides? (a question of power in deciding which institutions have authority). Having raised so many stark questions, her book tends to peter out in a series of mumbled answers. But her conclusions are surely right on at least two fronts. First, she attacks technology’s ideology of inevitabilism (even though that tends to undermine her case about its growing omniscience). Just because technology has turned out the way it has does not mean that was the only way the internet could have evolved. Its development was contingent on circumstance and influenced by individuals. Societies can still choose to use technology in different ways so long as they can mobilise sufficient action. Second, we should be constantly wary of those offering sweeping technological solutions to human problems. Such “solutionist” remedies are invariably worse than the original disease. Robert Conquest, the late conservative historian, once argued that many of the greatest tragedies of the 20th century stemmed from “solutions” rather than problems. Eliminating undesirable classes or races, as in Stalin’s Soviet Union, Hitler’s Germany, or Mao’s China, were monstrously worse outcomes than any of the problems they were supposed to “solve”. It is always better to grapple with problems in imperfect, messy, human ways than to jump to all-embracing, inhuman solutions, no matter how decisive or alluring they may seem to some. The Age of Surveillance Capitalism: The Fight for a Human Future at the New Frontier of Power, by Shoshana Zuboff

10

SYNOPSIS

The long-awaited magnum opus of one of Britain’s most wide-ranging historians

Capitalist enterprise has existed in some form since ancient times, but the globalization and dominance of capitalism as a system began in the 1860s when, in different forms and supported by different political forces, states all over the world developed their modern political frameworks: the unifications of Italy and Germany, the establishment of a republic in France, the elimination of slavery in the American south, the Meiji Restoration in Japan, the emancipation of the serfs in Tsarist Russia. This book magnificently explores how, after the upheavals of industrialisation, a truly global capitalism followed. For the first time in the history of humanity, there was a social system able to provide a high level of consumption for the majority of those who lived within its bounds. Today, capitalism dominates the world.

With wide-ranging scholarship, Donald Sassoon analyses the impact of capitalism on the histories of many different states, and how it creates winners and losers by constantly innovating. This chronic instability, he writes, ‘is the foundation of its advance, not a fault in the system or an incidental by-product’. And it is this instability, this constant churn, which produces the anxious triumph of his title. To control or alleviate such anxieties it was necessary to create a national community, if necessary with colonial adventures, to develop a welfare state, to intervene in the market economy, and to protect it from foreign competition. Capitalists needed a state to discipline them, to nurture them, and to sacrifice a few to save the rest: a state overseeing the war of all against all.

Vigorous, argumentative, surprising and constantly stimulating, The Anxious Triumph gives a fresh perspective on all these questions and on its era. It is a masterpiece by one of Britain’s most engaging and wide-ranging historians.

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Save to myFT Harold James JUNE 26, 2019 Print this page34 Capitalism today is under fire from every angle. Not just from the left, from Bernie Sanders or Elizabeth Warren or Jeremy Corbyn, but also from the right, with Fox News anchor Tucker Carlson asking: “Does anyone still believe that cheaper iPhones or more Amazon deliveries of plastic garbage from China are going to make us happy?” Corporate bosses follow the zeitgeist and start their pronouncements with a confession of sin that has now become almost mandatory. Business leaders compulsively expatiate on the broken “system” and the imperative search for a “new narrative”. They resemble those French noblemen who in the 1780s sat on the side of the stage at performances of Pierre Beaumarchais’s hit anti-aristocratic play The Marriage of Figaro, slapping themselves on the face for their privilege. Capitalism, like aristocracy in the ancien régime, is a quite elusive concept. It requires selling or spinning a message and spin makes for dizziness. There is an enemy, but it is hard to define. In 18th-century France great aristocrats coexisted with horribly impoverished hedge squires, but all had a particular and peculiar legal status. One concept of privilege — the aristocrat — covered all of them and aroused disdain and eventually violent hatred. Who, today, is a capitalist? Is it just Jamie Dimon of JPMorgan or billionaire philanthropist Bill Gates? Or, for that matter, real estate developer Donald Trump? The 1 per cent or the 0.01 per cent? Or are we (almost) all capitalists because we have retirement and pension plans that make us the owners of capitalistic assets? Today’s many diverse owners of capital might be the real parasites who toil not. So are we all guilty of capitalism, beneficiaries of its fruits and complicit in its flaws? If we want to understand how problematic concepts emerge, what they mean and how they are used, we need to look at their ancestry. History is a good way of getting to grips with capitalism and its discontents, especially when it is told by someone who is rhetorically gifted and also deeply learned. Yet history too has had a bad rap. Historians who are stylistically superb can be systematically slick and superficial; the learned are incredibly knowledgeable about small chunks of the past, but clueless and hopeless about the big picture. Fortunately Donald Sassoon, an emeritus professor of European history at Queen Mary College London, who has written extensively on cultural and political history, is both a brilliant writer and has a polymathic range. With The Anxious Triumph, he has produced a magnum opus, an accessible and genuinely global history of the transformative but unstable character of the capitalist phenomenon. The half-century before the first world war has remarkable parallels with our own uncertain times. It is often thought of as the first age of globalisation — erroneously, in that there was global interconnectedness before. But large institutionalised capital flows, mass migration, expanded trade in products both necessary and frivolous, vast wealth and social disruption set the stage for a backlash that drove nationalism and conflict. And in the end produced the catastrophe of the first world war. Sassoon is less concerned than many recent authors with telling the story of the brutal origins of capitalism. That approach has been a staple of the anti-capitalist literature since Karl Marx but has been revived in today’s anxious age, especially by a school of younger writers who call themselves “historians of capitalism” and pride themselves on lambasting modern economic science. For Marx, capital was “dripping from head to foot, from every pore, with blood and dirt”. By contrast, Sassoon doesn’t worry too much about whether the initial profits were generated by rapacious plantation owners working with slave labour or from the expropriation of peasant farmers or simply from the appalling conditions of work in the early mines and factories. That is just a meaningless bit of mythmaking prehistory. Instead, Sassoon tells a story that could easily be a celebratory one of how capitalism established the links and connections that made for a staggering general increase in prosperity and welfare. One of the most effective sections of The Anxious Triumph is the discussion of the mortality regime of the pre-capitalist world. Even the rich and famous mostly did not live long in the 19th century, and it wasn’t just tuberculosis that killed them. Some statesmen had long lives. Palmerston got to 80, Bismarck to 83 and Gladstone to 88. But disease and death took many rulers and artists early. Composer Vincenzo Bellini died at 33 (intestinal disorder), while typhoid claimed both Franz Schubert (31) and poet Gerard Manley Hopkins (44). Sassoon provides a long list of easily curable conditions and problems, as well as social dysfunctions from lead and mercury poisoning to duelling. People are more frustrated because there is no obvious real enemy and capitalism is delivering the stuff The transition to the new dynamic was painful: at the beginning, extensive urbanisation meant unhealthy crowding and increased mortality. Then a virtuous cycle set in. There was medical progress but also consumer satisfaction as new products were sold in new ways that simply make life better. This is a tale of success from the invention of the department store (Paris, 1838) and the pricetag (Philadelphia, 1861) to the cash register (1879). Competition drives capitalists to try harder to understand the customer. At the end of the 19th century, German sociologist Georg Simmel even thought that it inspired love of the customer. But not all needs are good. In a few hard-hitting pages, Sassoon contemplates one of the most sinister 19th-century ventures, as British merchants concluded that Chinese customers were so sated — they had the best food, the best tea, the best clothing — that the only demand they might have was for something quite new and alluring: opium. In an interesting contrast of the early capitalist malaise with today’s world, Sassoon claims that in the 19th-century version, it was easy to feel exploited by the system. Today, he argues, people wrestle with inexplicable and apparently increasing and unjust inequalities, yet don’t feel exploited. They are more rather than less frustrated because there is no obvious real enemy and capitalism is delivering the stuff. Sassoon ends the book with the amazing but correct claim that popular anti-capitalism has never affected the working of the system, and that no advanced country has experienced an armed or violent revolution. Revolutions are the results of failure to progress or of the strains of underdevelopment — as in 20th-century Russia or China — but not of the capitalist dynamic itself. That systemic resilience came about because of the political changes brought by prosperity and progress: the extension of the franchise but also a novel politics that swept new social groups — and women — into the political system. The rise of capitalism, and the first phase of modern globalisation from the 1860s with the transatlantic steamship and the telegram, produced a demand for the state to intervene, protect, include and organise. Sassoon explains the interlinkage of the ascendancy of capitalism with the rise of the modern state in intriguing detail, with an odd twist: it was less pressure from below that forced change but rather the reflections and concerns of the political elite. Sassoon then gives a convincing account of the relationship of capitalism with brutal western imperialism: it wasn’t so much that the European quest for empire was driven by an economic imperative to create the basis for capitalism, but rather that the large European countries turned to overseas territorial expansion when they believed their own version of capitalism was floundering or failing. Britain did this in the late Victorian climacteric, when the US and Germany were overtaking it; France in the aftermath of the military defeat of the Franco-Prussian war. Capitalism was amorphous, and it didn’t have a message or a point. Sassoon quotes the great Cambridge economist (and admirer of Mao) Joan Robinson: “Modern capitalism has no purpose except to keep the show going.” Its nemesis in various forms of socialism was a politically controlled project that Sassoon describes as “devised by conscious political actors”. While capitalism is constantly changing, politics was not only about protection but about achieving dominance over other societies. That is why the logical point for Sassoon to end the narrative is with the disaster of 1914. The causal dynamic runs from capitalism to anxiety to a search for protection to a demand for dominance. And Sassoon ends by asking whether the confrontation of Chinese and western capitalism is a repetition of that old logic of a century ago. States did not and could not understand competition and how it worked dynamically. A striking example was when a liberal Japanese intellectual tried to translate an economics textbook and thought that the best term for competition would be an invented word, kyōsō — race-fight or contest. As that dynamic of states shaping capitalism played out, social and political thinking was transformed and uprooted — and became in part deeply incoherent. By the end of the 19th century, conventional economic liberalism was discredited, and Sassoon approvingly quotes political scientist Michael Freeden to the effect that socialism “in its general ethical sense had become part of the liberal terminology”. Even the liberals — the capitalist elites — began to speak of laissez-faire with scorn. This transformation of ideas produced a topsy-turvy world by the early 20th century. Romania, which Sassoon deploys effectively as a key barometer of global trends, is a fine illustration of the transformation. “So the Liberals were statist and protectionists, whereas the Conservatives feared a strong state and were in favour of free trade.” Recommended Books Book reviews of the week The polarisation occurred around the question of orientation to an international connectedness in preference to a national carapace. Again Romania gives a striking example: playwright and historian Nicolae Iorga complained that too many plays in Bucharest were performed in French, creating a division between the people and the “good and the great and the rich who speak another language”. The liberals were in a trap: they had insisted that they should do things by themselves, “prin noi insine”, the Romanian equivalent of “America First,” but that brought the whole packages of nationalism, anti-cosmopolitanism and anti-Semitism. David Goodhart’s recent account of society’s present polarisation into hostile tribes of “anywhere” and “somewhere” was also the great division at the end of the 19th century. Capitalism means the mobility of people, as well as of goods and capital and ideas. Sassoon rightly says that “global migration reproduced the essential condition for the reproduction of capitalism”, uprooting peasants from the land and expanding markets for commodities. The author details some of the backlashes against migration and of a new nativist struggle. The particularly human effects of migration may be a little underplayed in his account. A major critique of early capitalism — made by Marx and Engels — was that capitalism destroyed the family, which they saw as the key social institution of the world of the bourgeoisie. But in the event successful capitalism in the late 19th century freed more people to engage in romantic affection and then associated that emotion (love) with the formation of families. It provided some stability in an anxious world. By contrast, in the early 21st century, in many rich societies the breakdown of family existence leads to poverty and social fragmentation, and has become one of the hallmarks of the “deaths of despair” that afflict the US — and increasingly also the UK. Capitalism sometimes relies on spinning and mis-selling. The only slight mis-selling of this book is in the chronology offered in the subtitle, 1860 to 1914. It’s really also a study of modern capitalism that looks back to the early phases of Britain’s Industrial Revolution but also forwards to modern globalisation and hyper-financialisation and today’s populist backlash. Sassoon slaps capitalism, but it is in part a congratulatory (and deserved) slap. This is a book for today and tomorrow. The Anxious Triumph: A Global History of Capitalism, 1860-1914, by Donald Sassoon,

Comment section

This review tells us that The Anxious Triumph is a history of 'how capitalism established the links and connections that made for a staggering general increase in prosperity and welfare'. That is closely related to the classic story which economic historians seek to tell: how did the West become rich and diverge from Asian economies from the eighteenth century onwards? But most of the review discusses a rather different question: what are the cultural and political effects associated with this newfound wealth? Both are interesting questions, but the reviewer should make clear that the book's main interest is the cultural/political change resulting from the industrial revolution, as opposed to explaining the economic change itself. (There is an obvious clue of course, where the reviewer notes that Donald Sassoon is a professor of cultural and political history.) For FT readers interested in the economic questions - of how Britain made the transition, beginning in the late 18th century, to sustained economic growth, to a sustained rise in per capita income unprecedented in human history, followed by Europe, the US and Japan in the 19th/early 20th century - there are already some excellent books: 1. Robert Allen, Global Economic History (2011) - the best 100-page answer to this question (written by Oxford's Professor of Economic History) 2. Kenneth Pomeranz, The Great Divergence: China, Europe, and the Making of the Modern World Economy (2000) - this might be called a magnum opus - the most famous work on the subject 3. Prasannan Parthasarathi, Why Europe Grew Rich and Asia Did Not: Global Economic Divergence, 1600-1850 (2011) 4. Jorg Baten, A History of the Global Economy from 1500 to the Present (2016) 5. E. A. Wrigley, The Path to Sustained Growth (2016) - probably the most renowned writer on the subject, and very clear 6. Joel Mokyr, The Enlightened Economy (2010)

A superficial account of capitalist history. Hardly surprising, for without a deep understanding of the economics, you can't understand the politics. The third quarter of the 19th century saw a boom, that's why Marx focused on writing Das Kapital than producing more revolutionary pamphlets like the Communist Manifesto. This boom was largely based upon the new gold discoveries in California & Australia. But the last quarter was the original Great Depression. The rate of profit had fallen & the 'overproduction' crisis, whereby the market had been temporarily inflated by leverage to keep up with production, had broken out. That's what drove imperial plunder & ended in WWI. After two world wars & another Great Depression the rate of profit was restored & we had the post-war boom, & so a stronger labour class. This broke down in the 1970's & Nixon broke with gold. So began the rise of finance capital based upon fiat money & the moving of production to cheap labour in the East. China's Communist Party understand the law of uneven development & have been happy to help deindustrialise the West & avoid colonial control. 2008 saw the breakdown of 50 years of fiat money. But the markets have been fooled by central banks buying up their bad debts & giving them money. 'Moral hazard' reigns supreme.  Now it is a race between currency debasement & the descent into WWIII & a worldwide socialist revolution. The end of the world make look more realistic than the end of capitalism at the moment, but history always surprises those who have a superficial understanding.

11

A call-to-arms about the broken nature of artificial intelligence, and the powerful corporations that are turning the human-machine relationship on its head.

We like to think that we are in control of the future of “artificial” intelligence. The reality, though, is that we–the everyday people whose data powers AI–aren’t actually in control of anything. When, for example, we speak with Alexa, we contribute that data to a system we can’t see and have no input into–one largely free from regulation or oversight. The big nine corporations–Amazon, Google, Facebook, Tencent, Baidu, Alibaba, Microsoft, IBM and Apple–are the new gods of AI and are short-changing our futures to reap immediate financial gain.

In this book, Amy Webb reveals the pervasive, invisible ways in which the foundations of AI–the people working on the system, their motivations, the technology itself–is broken. Within our lifetimes, AI will, by design, begin to behave unpredictably, thinking and acting in ways which defy human logic. The big nine corporations may be inadvertently building and enabling vast arrays of intelligent systems that don’t share our motivations, desires, or hopes for the future of humanity.

Much more than a passionate, human-centered call-to-arms, this book delivers a strategy for changing course, and provides a path for liberating us from algorithmic decision-makers and powerful corporations.

Book review: The Big Nine by Amy Webb

Why allowing big tech to set its own rules on artificial intelligence is a threat to civilisation

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Human brains are bad at assessing risk and peril,” points out Amy Webb in her by turns fascinating and alarming piece of (mostly) non-fiction, The Big Nine: How the Tech Titans and Their Thinking Machines Could Warp Humanity. The point she is making is that “we assume common activities are safer than novel or uncommon activities”. This explains why we fail to think driving is a dangerous activity (chance of dying in a car crash: 1 in 114), while many are terrified of flying (chance of dying in an air accident: 1 in 9,821). It also explains, pertinently for a book about the rise of artificial intelligence, why “we’re similarly bad at assessing the risk of AI because we mindlessly use it every single day as we like and share stories, send emails and texts, speak to machines and allow ourselves to be nudged”. Artificial intelligence is already so deeply embedded in our lives that we don’t notice it. As Webb says, the “killer robots” fear that humans have about AI is way off the mark. Far more likely, she says, is that the detrimental effect of AI in future will be cumulative: we are in for “paper cuts” — everyday hurts, small setbacks, that add up over time. These “paper cuts” can happen when AI algorithms take over from human decision-making. The flight boarding protocols used by most airlines, for example, are driven by algorithms, and usually it goes smoothly. But in April 2017, United Airlines staff on an overbooked plane from Chicago had failed to attract any takers for an $800 payment to take another flight. The algorithm suggested whom to remove. In this case, Webb says, “human staff had ceded authority to an AI system that was designed by relatively few individuals who probably hadn’t thought enough about the future scenarios in which it would be used”. The resulting footage of David Dao being dragged off the plane went viral. “What everyone wanted to know: How could something like this happen in the United States?” David Dao is dragged off a United Airlines flight in 2017 © Reuters The answer is: quite easily. The AI we get now (the future is a different matter) is a result of the choices and biases of the people who develop it. We have known this since 1968, when a US computer programmer and school teacher called Melvin Conway observed that “systems tend to reflect the people and values who designed them”. Conway’s law is important in AI, and Webb, a professor of strategic foresight at New York University’s Stern School of Business, offers up many examples. “If you — or someone whose gender, race, language, religion, politics and culture mirror your own — are not in the room where it happens, you can bet that whatever gets built won’t reflect who you are.” Webb knows how to change things — get a more diverse group of people working in this field. But at the elite university level, where AI “tribes” form — many go on to work at the tech giants she describes elsewhere in the book — there is a dearth of women and people from ethnic minorities. In the US, women receive 18 per cent of undergraduate degrees in computer science, down from 37 per cent in 1985. Protests at the treatment of Dao by the airline © Reuters However upsetting, and potentially life-diminishing, the effects of current AI, Webb’s visions for the future are worse. We have failed to make sure that AI is treated as a “public good”, rather than just a digital platform built by commercial giants. Leaving development of AI to big tech companies, with little to no governmental or regulatory oversight, has already been a colossal mistake. Unlike China (about which Webb has terrifying things to say), the US has never co-ordinated policies or pushed funding into universities, which she says is a total lack of planning and foresight. Recommended FT Magazine Aliya Ram The perils of AI bias The overarching theme of Webb’s argument is a giant one: that the huge companies in the US and China — The Big Nine of the title — have an unassailable lead in introducing AI into our lives and that is going to have a profound impact in ways we cannot yet imagine. There is a geopolitical angle: in China the three giant companies — Baidu, Alibaba and Tencent — are closely tied to the government, and AI is a key part of the country’s wider plans for dominance in the global economy. It already has a social credit score programme, which ranks and rates citizens on their behaviour, with real-world outcomes such as being able to travel, or not, and deciding which school children attend. In the US, because the government has abdicated responsibility for developing AI as a social good, the free market has taken over, leaving ethical and legal decisions to the companies she calls the G-Mafia: Google, Microsoft, Amazon, Facebook, IBM and Apple. Webb outlines three possible future scenarios for a world living with the “learned helplessness” of a G-Mafia-powered life where we are nudged to make the “right” choices in terms of eating, exercise and other habits through our smart devices, while creating a constant stream of personal data that will affect, for example, how much we pay for health insurance. Even the most optimistic scenario is influenced by a coming change: “While we argue that future generations are likely to be dumber because of technology, we never consider that we humans might someday find ourselves dumber than technology. It’s an inflection point we are nearing and it has to do with our respective evolutionary limitations.” Once AI becomes ASI (artificial superintelligence) it will, Webb says, be “impossible to imagine the consequences for our civilisation”. The most dystopian version of the future involves a Chinese global empire built “on the foundation of data” and which might include a southern US border wall with Mexico, built by the Chinese to isolate Americans who do not have social credit scores, so cannot travel freely. Webb’s book at times reads like a thriller in which the ending looks bleak. But she affords us a clear, jargon-free view of the power and potential of AI — and how we as citizens should seek to influence its development — before a coming superintelligence shapes human lives in ways we cannot yet imagine. 

12 Renaissance

Jim Simons is the greatest moneymaker in modern financial history. His record bests those of legendary investors, including Warren Buffett, George Soros and Ray Dalio. Yet Simons and his strategies are shrouded in mystery. The financial industry has long craved a look inside Simons’s secretive hedge fund, Renaissance Technologies and veteran Wall Street Journal reporter Gregory Zuckerman delivers the goods.

After a legendary career as a mathematician and a stint breaking Soviet codes, Simons set out to conquer financial markets with a radical approach. Simons hired physicists, mathematicians and computer scientists - most of whom knew little about finance - to amass piles of data and build algorithms hunting for the deeply hidden patterns in global markets. Experts scoffed, but Simons and his colleagues became some of the richest in the world, their strategy of creating mathematical models and crunching data embraced by almost every industry. Simons and his team used their wealth to upend the worlds of politics, philanthropy and science. They weren’t prepared for the backlash.

In this fast-paced narrative, Zuckerman examines how Simons launched a quantitative revolution on Wall Street, and reveals the impact that Simons, the quiet billionaire king of the quants, has had on worlds well beyond finance.

The Man Who Solved the Market

Gregory Zuckerman

 longlist 2019

In this fast-paced narrative, Zuckerman examines how Simons launched a quantitative revolution on Wall Street, and reveals the impact that Simons, the quiet billionaire king of the quants, has had on worlds well beyond finance. — Penguin

13

The Third Pillar

Raghuram Rajan

 longlist 2019

In The Third Pillar, an important and timely new book, the economist describes an ongoing struggle for balance between the three building blocks of a good society: market, state and community.The Third Pillar represents a new departure into grand social history, which in its breadth often echoes big-picture theorists such as Barrington Moore and Francis Fukuyama and their attempts to tease apart the long-term tensions between capitalism and democracy

SYNOPSIS

From one of the most important economic thinkers of our time, a brilliant and far-seeing analysis of the current populist backlash against globalization.

Raghuram Rajan, distinguished University of Chicago professor, former IMF chief economist, head of India’s central bank, and author of the 2010 FT-Goldman-Sachs Book of the Year Fault Lines, has an unparalleled vantage point onto the social and economic consequences of globalization and their ultimate effect on our politics. In The Third Pillar he offers up a magnificent big-picture framework for understanding how these three forces–the state, markets, and our communities–interact, why things begin to break down, and how we can find our way back to a more secure and stable plane.

The “third pillar” of the title is the community we live in. Economists all too often understand their field as the relationship between markets and the state, and they leave squishy social issues for other people. That’s not just myopic, Rajan argues; it’s dangerous. All economics is actually socioeconomics – all markets are embedded in a web of human relations, values and norms. As he shows, throughout history, technological phase shifts have ripped the market out of those old webs and led to violent backlashes, and to what we now call populism. Eventually, a new equilibrium is reached, but it can be ugly and messy, especially if done wrong.

Right now, we’re doing it wrong. As markets scale up, the state scales up with it, concentrating economic and political power in flourishing central hubs and leaving the periphery to decompose, figuratively and even literally. Instead, Rajan offers a way to rethink the relationship between the market and civil society and argues for a return to strengthening and empowering local communities as an antidote to growing despair and unrest. Rajan is not a doctrinaire conservative, so his ultimate argument that decision-making has to be devolved to the grass roots or our democracy will continue to wither, is sure to be provocative. But even setting aside its solutions, The Third Pillar is a masterpiece of explication, a book that will be a classic of its kind for its offering of a wise, authoritative and humane explanation of the forces that have wrought such a sea change in our lives.