What does it mean for policy to be insulated from politics? That’s the question we ultimately confront when investigating the putative depoliticisation of the economy. Matters which should be publicly resolved, through organised processes of contestation, instead get decided privately. We can cite examples of such transitions, consider whether they embody a broader tendency and offer explanations which account for this direction of travel.

However I’ve often wondered about the micro-social aspects of such a transition, specifically how policy makers make sense of this depoliticisation. Is it a naked power grab? Is it a response to the vagaries of the electorate? Is it an attempt to address issues of socio-economic change which are seen as being impossible to raise with the public?  Yanis Varoufakis offers a partial answer to these questions in his gripping accounts of Eurogroup negotiations in his political memoir Adults In The Rooms. From loc 4202

As he spoke, Schäuble directed a piercing look at Sapin. ‘Elections cannot be allowed to change economic policy,’ he began. Greece had obligations that could not be reconsidered until the Greek programme had been completed, as per the agreements between my predecessors and the troika. The fact that the Greek programme could not be completed was apparently of no concern to him. What startled me more than Wolfgang Schäuble’s belief that elections are irrelevant was his total lack of compunction in admitting to this view. His reasoning was simple: if every time one of the nineteen member states changed government the Eurogroup was forced to go back to the drawing board, then its overall economic policies would be derailed. Of course he had a point: democracy had indeed died the moment the Eurogroup acquired the authority to dictate economic policy to member states without anything resembling federal democratic sovereignty.

In his political memoir, Adults In The Room, Yanis Varoufakis recounts a meeting with Larry Summer which took place in April 2015. Only months into his tenure as Finance Minister, he looked to this architect of the neoliberal world order for support as hostilities with European leaders over Greece’s fiscal future rapidly intensified. Coming straight from a meeting at the IMF in Washington, Varoufakis was met with an immediate warning from Summers that he had “made a big mistake”. This began a long conversation which ended with a fascinating warning. From loc 1050:

Finally, after agreeing our next steps, and before the combined effects of fatigue and alcohol forced us to call it a night, Summers looked at me intensely and asked a question so well rehearsed that I suspected he had used it to test others before me. 

‘There are two kinds of politicians,’ he said: ‘insiders and outsiders. The outsiders prioritize their freedom to speak their version of the truth. The price of their freedom is that they are ignored by the insiders, who make the important decisions. The insiders, for their part, follow a sacrosanct rule: never turn against other insiders and never talk to outsiders about what insiders say or do. Their reward? Access to inside information and a chance, though no guarantee, of influencing powerful people and outcomes.’ With that Summers arrived at his question. ‘So, Yanis,’ he said, ‘which of the two are you?’

When reading of this exchange in a review of the memoir, I immediately thought back to a story Elizabeth Warren had told about an encounter with Summers in a Washington curry restaurant early in her move from academia to politics. Upon purchasing Varoufakis’s book, I found that I wasn’t the only person to notice this parallel and be fascinated by it. As he recounts in an end note to the book:

A few months after I had resigned the ministry, my good friend and academic colleague Tony Aspromourgos, upon hearing about my exchanges with Larry Summers, confirmed my suspicion when he sent me this quotation from Senator Elizabeth Warren, documented in 2014: 

Late in the evening, Larry leaned back in his chair and offered me some advice … He teed it up this way: I had a choice. I could be an insider or I could be an outsider. Outsiders can say whatever they want. But people on the inside don’t listen to them. Insiders, however, get lots of access and a chance to push their ideas. People –powerful people –listen to what they have to say. But insiders also understand one unbreakable rule: they don’t criticize other insiders. I had been warned. John Cassidy (2014), ‘Elizabeth Warren’s Moment’, New York Review of Books, Vol. 61 (no. 9), 22/ 5–4/ 6/ 14, pp. 4–8.

Could this be seen as the professional socialisation of technocratic elites? Does Summers engage in a particularly practiced and performative example of something which takes a cruder form elsewhere? Does he particularly focus on those like Varoufakis and Warren who have moved from the academy to politics? As he reflects on loc 156, the technocratic oath is something which transcends agreements of strategy and analysis:

We spoke the same economic language, despite different political ideologies, and had no difficulty reaching a quick agreement on what our aims and tactics ought to be. Nevertheless, my answer had clearly bothered him, even if he did not show it. He would have got into his taxi a much happier man, I felt, had I demonstrated some interest in becoming an insider. As this book’s publication confirms, that was never likely to happen.

From Four Futures: Life After Capitalism, by Peter Frase, loc 1370-1383:

Ironically, the life enjoyed within Elysium’s bubble appears not too different from the Communist scenario sketched out several chapters earlier. The difference, of course, is that it is communism for the few. And indeed, we can already see tendencies in this direction in our contemporary economy. As Charles Stross has noted, the very richest inhabit a world in which most goods are, in effect, free. That is, their wealth is so great relative to the cost of food, housing, travel, and other amenities that they rarely have to consider the cost of anything. Whatever they want, they can have. For the very rich, then, the world system already resembles the communism described earlier. The difference, of course, is that their postscarcity condition is made possible not just by machines but by the labor of the global working class. But an optimistic view of future developments—the future I have described as communism—is that we will eventually come to a state in which we are all, in some sense, the 1 percent. As William Gibson famously remarked, “the future is already here; it’s just unevenly distributed.” 1

Add to this technologically induced mass unemployment and it becomes deeply sinister:

The great danger posed by the automation of production, in the context of a world of hierarchy and scarce resources, is that it makes the great mass of people superfluous from the standpoint of the ruling elite. This is in contrast to capitalism, where the antagonism between capital and labor was characterized by both a clash of interests and a relationship of mutual dependence: the workers depend on capitalists as long as they don’t control the means of production themselves, while the capitalists need workers to run their factories and shops.

This is the context within which what I’m terming ‘defensive elites’ emerge and Frase’s book gives some great examples of their contemporary behaviour, as well as speculating about where this could all lead.

An interesting thread I’m following up from Four Futures: Life After Capitalism. This is Samuel Bowles and Arjun Jayadev on ‘guard labour‘:

Another dubious first for America: We now employ as many private security guards as high school teachers — over one million of them, or nearly double their number in 1980.

And that’s just a small fraction of what we call “guard labor.” In addition to private security guards, that means police officers, members of the armed forces, prison and court officials, civilian employees of the military, and those producing weapons: a total of 5.2 million workers in 2011. That is a far larger number than we have of teachers at all levels.

What is happening in America today is both unprecedented in our history, and virtually unique among Western democratic nations. The share of our labor force devoted to guard labor has risen fivefold since 1890 — a year when, in case you were wondering, the homicide rate was much higher than today.

http://opinionator.blogs.nytimes.com/2014/02/15/one-nation-under-guard/?_r=0

How widespread could this become in the event of mass technologically-induced unemployment? One of my favourite dystopian fictions, Lazarus, imagines a world in which great status accrues to a warrior-class of guards amongst a population of citizens, living besides a vast population of non-persons:

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I find this interesting because it suggests Guard Labour could (does?) serve a socio-cultural function, as well as a structural one. It inculcates a mentality of guarding ‘us’ against ‘them’, offering opportunities to achieve status within the social order to those who might otherwise struggle to do so. But how would this intersect with the practical reality of actually guarding the wealthy elites? After all, military robotics is advancing at a remarkable pace:

From Four Futures: Life After Capitalism, loc 234-246:

the key question surrounding climate change is not whether climate change is occurring, but rather who will survive the change. Even in the worst-case scenarios, scientists are not arguing that the Earth will become totally uninhabitable. What will happen—and is happening—is that struggles over space and resources will intensify as habitats degrade. In this context—and particularly in concert with the technological trends discussed above—it may be possible for a small elite to continue to pollute the planet, protecting their own comfort while condemning most of the world’s population to misery. It is that agenda, not any serious engagement with climate science, that drives corporate titans in the direction of denialism.

From this fascinating paper by Roger Burrows, Richard Webber and Rowland Atkinson:

To talk of ‘Pikettyville’ is then to conjure up an image of an urban system that has become hardwired to adopting, channelling and inviting excesses of social and economic capital in search of a space in which the rich not only find safe haven but are also privileged by the kind of property and income tax regimes and wider economic climate that allows them to thrive on their capital investments, while the wider city experiences some of the most challenging economic conditions since the early 20th century (Atkinson et al., 2016b).

From Rethinking Social Exclusion, by Simon Winlow and Steve Hall, pg 116:

One of these is the apparent desire of the rich to retreat into private enclaves free from the malignancies of the real world. They want to encounter only those judged safe, subservient or ‘like them’ –and even then only in sufferance –and to restrict their social experience to appointed outlets or institutions that also offer safety from any encounter with the Real. This suggests a growing desire to evacuate the social to occupy a strange post-social and entirely artificial securitised world comprised of sanitised, protected and approved nodes and arteries that cut lines of travel and repose across what was once social space. The movement of the relatively rich from office to gated community, from gated community to private school, from school to retail space, from retail space to country club, from country club to airport, and so on, indicates quite starkly the ‘problem of the social’ in the present.

What I’m keen to explore under the banner of ‘defensive elites’ is the long term cultural consequences of his evacuation for the elites themselves. What about for the children and grandchildren who are raised under these conditions?

A fascinating observation in No Such Thing as a Free Gift, by Linsey McGoey, loc 785. I wonder if the digital elites who interest me see their wealth in similar terms?

It was a Janus-faced ideology; one side of Carnegie was extraordinarily generous, expending time and vast financial sums on goals such as military disarmament and racial equality. On the other side, he adopted ever more draconian policies towards his workers the more convinced he became that his wealth would ultimately benefit the larger community.

I had no idea how rapidly this was growing. From No Such Thing as a Free Gift, by Linsey McGoey, loc 282:

Nearly half of the 85,000 private foundations in the United States alone were created in the past fifteen years. About 5,000 more philanthropic foundations are set up each year.

There are questions that can be raise empirically about whether this represents an overall growth in charitable giving. But the evidence of elite philanthropy seems unsalableAs she observes on loc 302:

The surge in global philanthropy is rooted in growing wealth concentration, something that has enriched the ability to give away eye-popping sums.

From Common Wealth, by Jeffrey Sachs, pg 327-328. Quoted in Jefffey Sachs, by Japhey Wilson, loc 1457:

There are now around 950 billionaires in the world, with an estimated combined wealth of $3.5 trillion. That’s an amazing $900 billion in just one year. Even after all the yachts, mansions, and luxury living that money can buy have been funded many times over, these billionaires will still have nearly $3.5 trillion to change the world … All in all, it’s not a bad job for men and women who have already transcended the daily economic struggle faced by the rest of humanity!113

Who are the world’s 950 billionaires? How do they see the world and their place within it? How do they conceive of their own interests? How are they raising their children and how might this in turn shape their children’s answers to these questions?

An interesting point in Intern Nation, by Ross Perlin, reflecting on the long term consequences of the institutionalised internship system for the constitution of the professions. From loc 3035-3051:

Besides, it’s probably too early to gauge the deepest effects—the internship explosion has only gone fully mainstream, integrated into every white-collar field, since around the turn of the millennium. If current trends hold, today’s interns will dominate critical professions and hold positions of substantial power in a few decades, even more so than today; today’s non-interns will remain trapped in the basement of American life. By the time a proper accounting is possible, the damage to our meritocratic ideals will have been done.

But the internship system is also something over which defensive elites exercise their outsize influence. From loc 3133

“We have this advisory board, very high wealth individuals, heads of hedge funds and whatnot,” says “Tom,” describing a well-known poverty alleviation nonprofit founded by a Nobel Prize winner. “They send their nephew in and so we have no choice but to take him.” One summer, he adds, an individual office had six full-time staff, five graduate student interns, and four to five “nephews or nieces of important people” interns. “It happens to us all the time,” says Tom. “Who are these kids? They’re totally ineffective, they take up space, I have to redo their work products—but at the same time, you have to smile and say, ‘Great, thank you so much.’ It’s like babysitting, we have to keep them happy. I get frustrated—I just want somebody who does their job.”

From Digital Methods, by Richard Rogers, loc 769:

research has found that there is only a tiny ratio of editors to users in Web 2.0 platforms, including Wikipedia, illustrating what is known as the myth of user-generated content. Wikipedia cofounder Jimmy Wales has often remarked that the dedicated community is indeed relatively small, at just over 500 members. Thus the small cadre of Wikipedia editors could be considered a new elite; one research exercise thus consists in relativizing the alleged differences between amateurs and experts, such as through a study of the demographics of Wikipedians.

I realise this is a question I’ve been trying to articulate for ages. This is how Paul Mason articulates it in the Guardian (my emphasis):

To the mature democracies of the world, the Panama Papers – as with the Lux Leaks, Swiss Leaks and numerous other data dumps before them – are a warning. If wealth equals power, then the doubling of ratio of wealth to income in the advanced economies since the 70s (see Piketty and Zucman 2014) could tilt power so far in the direction of a new hereditary elite that there is no return.

http://www.theguardian.com/world/2016/apr/11/smash-uk-mafia-elite-treat-offshore-wealth-terrorist-finance-perugia?CMP=Share_iOSApp_Other

Is this possible? What would it mean? Is this a point of no return for a social formation? For a civilisation?

I wonder how widespread this sentiment is? Obviously there are particular aspects of the Cameron case that this analysis applies to, but it’s hard not to suspect that it reveals a broader world view in which wealth is seen as a constraint due to residual class antagonism:

You often hear of people being “trapped in poverty”, but it is also possible to be trapped in wealth. This is David Cameron’s fate. He is not a financially greedy man, or stinking rich, but he comes from a background in which hereditary wealth is the norm; his wife Samantha even more so. He does not think such wealth is wrong – if he did, he would have an easy remedy: get rid of it – but he finds it embarrassing. He also knows that it can make him politically vulnerable.

Once he began, years ago, to play along with the essentially Left-wing idea that private money is suspect and that tax-planning and legal avoidance are immoral, he was trapped. Now everything he has done in this area is made to look dodgy. Yet it is little different from saving in a tax-free ISA or even buying duty-free drink.

http://www.telegraph.co.uk/news/2016/04/10/david-camerons-fate-is-to-be-caught-in-the-wealth-trap/

A really interesting idea offered by Aditya Chakrabortty in yesterday’s Guardian:

To flesh out the corrosion of democracy that is happening, you need to go to a Berlin-born economist called Albert Hirschman, a giant in modern economic thinking. Hirschman died in 2012 at the age of 97, but it’s his concepts that really set in context what’s so disturbing about the Panama Papers.

Hirschman argued that citizens could protest against a system in one of two ways: voice or exit. Fed up with your local school? Then you can exercise your voice and take it up with the headteacher. Alternatively, you can exit and take your child to a private school.

In Britain and in America, the super-rich have broken Hirschman’s law – they are at one and the same time exercising economic exit and political voice. They can have their tax-free cake and eat it.

http://www.theguardian.com/news/commentisfree/2016/apr/10/money-offshore-corrupt-democracy-political-influence

From The Deep State, by Mike Lofgren, pg 255-256:

The quality of blind self-absorption is not confined to our national security elites. Many Wall Street and Valley billionaires, living a hermetically sealed existence surrounded by sycophants and coat holders, appear genuinely surprised that their public reputation is not that of heroic entrepreneurs selflessly creating jobs for employees and value for shareholders, but rather of greedy buccaneers who are not above exploiting labor and shortchanging investors or depositors. 

Since these superrich elites are beyond reproach in their own minds, they interpret the criticism as victimization. When Obama suggested eliminating the “carried interest” loophole so that hedge fund managers would have to pay the same federal tax rates on their income that ordinary Americans pay, Stephen Schwarzman, the Blackstone Group CEO, said, “It’s war. It’s like when Hitler invaded Poland in 1939.” 5 Pretty strong stuff, considering that Obama’s suggestion went nowhere, nor did he even push it very hard. Silicon Valley venture capitalist Tom Perkins continued with the Nazi trope, writing a letter to the Wall Street Journal to “call attention to the parallels to fascist Nazi Germany in its war on its ‘one percent,’ namely its Jews, to the progressive war on the American one percent, namely the ‘rich.’” 6 Oh, the humanity!

From The Deep State, by Mike Lofgren, pg 123-125:

By secession, I do not mean physical withdrawal from the territory of the state, although that does happen from time to time. Erik Prince, who was born into a fortune, is related by marriage to the even bigger Amway fortune, and made yet another fortune as CEO of the mercenary-for-hire firm Blackwater, moved to the United Arab Emirates in 2011; and some Republicans, who are so quick to say “America, love it or leave it,” showed a remarkable sense of latitude when Eduardo Saverin, a Facebook cofounder, renounced his citizenship. When Democrats introduced a bill to make expatriate tax dodgers pay a 30 percent tax rate on all future U.S. investments and ban them from the country, Republican operative Grover Norquist likened the bill to the actions of Nazi Germany against Jews. 1 

These examples apart, what I mean by secession is a withdrawal into enclaves, an internal immigration whereby the rich disconnect themselves from the civic life of the nation and from concern about its well-being. Our plutocracy, whether the hedge fund managers in Greenwich, Connecticut, or the Internet moguls in Palo Alto, now lives like the British did in colonial India: ruling the place but not of it. If one can afford private security, public safety is of no concern; to the person fortunate enough to own a Gulfstream jet, crumbling bridges cause less apprehension, and viable public transportation doesn’t even compute. With private doctors on call and a chartered plane to get to the Mayo Clinic, why worry about Medicare?

There’s a great anecdote later on that page about the strange worldlessness of economic architect of neoliberalism Robert Rubin:

I once discussed this syndrome with a radio host who recounted a story about Robert Rubin, the former treasury secretary. He recalled that Rubin was being chauffeured through Manhattan to reach some event whose attendees consisted of the Great and the Good such as himself. Along the way his limousine encountered a traffic jam, and on arriving late to the event, he complained to a city functionary with the power to look into it. “Where was the jam?” asked the functionary. Rubin, who had lived most of his life in Manhattan, a place predominantly of east-west numbered streets and north-south avenues, couldn’t tell him.

From The Deep State, by Mike Lofgren, pg 86-87. I’m beginning to try and catalogue public examples of this defensiveness because some of the over-reactions seem fascinatingly unbalanced:

It is surprising how much fear his timid policies have generated among the big-money boys. There are no rational grounds for the hyperthyroid reactions of hedge fund bosses like Steven Schwarzman when Obama is largely a champion of the status quo who raises much of his money among Schwarzman’s colleagues. Nevertheless, the neoliberal mandarins at the venerable Economist say Obama has an image as one “who is hostile to business.” 36 It is one thing to shake our heads at the behavior of gun nuts who fear Obama will take away their firearms and send them to a FEMA concentration camp in Montana and quite another to consider that many canny Wall Street operatives, whose business model is based on a reptilian calculation of their own material interests, have succumbed to the irrational idea that totalitarian socialism is just around the corner and that Obama is going to usher it in, when he is only a more hesitant version of his predecessor. 

That such a weak reed, who has acceded time and again to the entrenched interests of the permanent state, should incite so much negative passion among so many in the billionaire class suggests they are displacing their fears of the simmering discontent among the 99 percent onto a convenient political symbol. Their touchy defensiveness reveals the contradictions within the political system they dominate. President Obama, who appears to administer that system without enthusiasm or belief, has dissatisfied key constituencies of the Deep State even as he has alarmed the traditionalists who defend the remnants of the constitutional state.

I just came across a stunning quote by Larry Summers, economic and policy doyen of the Democratic establishment, reflecting on the rise of inequality in America. It’s from The Confidence Men, by Ron Suskind, pg 363:

“One of the reasons that inequality has probably gone up in our society is that people are being treated closer to the way that they’re supposed to be treated.” 

I’ve rarely seen such a pure expression of the post-democratic tendency within market liberalism: a project to overcome the distorting constraints of social democracy and ‘treat people how they’re supposed to be treated’.

There’s a fascinating insight a few pages later from Alan Krueger, a friend and former graduate student of Summers, concerning the genesis of this ethos of ‘truthfulness’ through markets. From pg 368:

“Larry felt that it didn’t make sense that while he was being paid well by Harvard, some other professors were being paid in his ballpark. After all, he was Larry Summers, and who the hell were the rest of them? He began to study structures, like unions, that compressed wage distinctions in ways that went against the market. Of course, some of those compressions are meant to soften the blow of such distinctions, mindful of a complex array of factors, many uneconomic, that go into who gets paid what. But that’s part of the point. Larry believes that the goal is to make everything more brutally ‘truthful’—in terms of the market being basically right in how it values people and trying to make it more so—and that process shouldn’t be tampered with unless there is overwhelming, indisputable evidence that the market is not working. After a few decades, Larry has gotten very good at undercutting arguments for any government intervention into free markets. “If you’re the policymaker, you need to show overwhelming evidence that a market is not functioning, in a profound and disastrous way, to merit an intervention. The default is to go back to the first principle, of market efficiency, and to let matters mostly continue as they’ve been.”