The Conservative Case for a People’s Vote

This week, I’ve been dipping into a book my grandfather, who was a Conservative MP, wrote in 1971, making the case for holding a referendum on Britain’s entry into the European Economic Community. At that time, Ted Heath’s Conservative government was in the process of negotiating the terms of British entry. The notion that those terms, once agreed, should be put to the British people was a very fringe idea, not yet endorsed by the leaders of any of the three main political parties.


So my grandfather was somewhat out on a limb, which is presumably why he decided to write a book about the history of the referendum as a Conservative political idea. Three Tory Prime Ministers in the first half of the 20th century – Arthur Balfour, Stanley Baldwin and Winston Churchill – all at some stage advocated holding a referendum, though none actually went through with it.

Two passages in the book stuck out. The first is from a speech by Baldwin in 1930, in which he first made the case for using a referendum on the issue of Empire Free Trade and food taxes, but with one significant caveat:

‘I have always been unwilling, and I am unwilling today, to ask the people of this country to give any vote on the question of food taxes unless and until they know exactly what is involved and what they may be going to get in exchange. I will not ask people to vote blindly.’ [Emphasis added]

If only David Cameron had been a fraction as scrupulous before calling the EU referendum in 2016.

The second passage that stuck out comes from a speech my grandfather made to his constituents during the 1970 General Election campaign:

‘I am sure that a Conservative Government will get the best terms for Great Britain. Will these terms be good enough? On an issue of such overwhelming importance, I believe that the people as well as Parliament should have the last word.

‘When all the negotiations are complete and the one remaining question is “Should we sign the treaty or not?” I believe that we should have a national referendum. Some people say that you don’t have the intelligence or knowledge to decide such an important issue. I think you have.’

Apply the logic of this to our situation today and it’s clear, surely, that now is the moment to hold a People’s Vote. Now that the best terms a Conservative Government was able to negotiate are known, the people should be given the option of vetoing the deal.

What are you so scared of, Theresa?

Posted in Politics | Tagged , , , , , | Leave a comment

The Most Important (and Least Asked) Questions in Economics

What is value? And what’s the purpose of economic activity? Recent books by Mariana Mazzucato and Kate Raworth have put these fundamental questions in the spotlight.

A cynic, Oscar Wilde wrote, is someone ‘who knows the price of everything and the value of nothing.’ In her latest book, The Value of Everything: Making and Taking in the Global Economy, Mariana Mazzucato argues that, by this definition, we have all unwittingly become cynics.


For centuries, economists debated different theories of value. Some saw it as intrinsic to commodities like gold and silver. Others argued it was determined by the quantity of labour required to produce a good.

But then, in the late nineteenth century, the debate more or less stopped. The reason: marginal utility theory swept all before it. ‘All of a sudden,’ Mazzucato writes, ‘value was in the eye of the beholder. Any goods or services being sold at an agreed market price were by definition value-creating.’

There are problems with this “value-equals-price” approach at multiple levels. Firstly, its logic is circular: ‘incomes are justified by the production of something that is of value. But how do we measure value? By whether it earns income.’

Secondly, it is philosophically inadequate: the implication of “value-equals-price” thinking is that anything you give or receive for free is valueless. This means that things like nature, community, culture and friendship — things which are not easy to monetise without undermining the intrinsic value of the good in question — are excluded from discussions of economic value. And yet these are not peripheral “externalities”: they are the very essence of what sustains us and makes life worth living.

Thirdly — and this is the issue that most preoccupies Mazzucato — there is a practical problem: ‘on the basis of contemporary economic assumptions, we can no longer reliably say who creates value and who extracts it.’

This inability to discern value creation from value extraction makes life very difficult for anyone looking to foster long-term growth. How are policy-makers and business leaders meant to decide how to allocate resources if they can’t tell which activities actually create value and which don’t?

Mazzucato’s book is stronger on diagnosing the problem than prescribing solutions. She argues that companies should pursue ‘stakeholder value’ as opposed to ‘shareholder value’, but does not really scratch the surface in terms of what this means. She does devote a chapter to the concept of ‘public value’ — a term missing from most economists’ lexicon. But this is largely a rehash of her previous book, The Entrepreneurial State, in which she argued that, far from being a leech on the economy, the state is a vital source of innovation and growth. Famously, she showed how practically every technology that makes an iPhone smart traces its origins to government-funded R&D.


Makers and Takers

In The Value of Everything, Mazzucato exposes instances of value extraction masquerading as value creation in the financial, pharmaceutical and technology industries. This is territory that others have covered before, but that doesn’t make her critique any less devastating.

Finance is first in the firing line. Until the 1970s, net interest payments, one of the principal sources of banks’ profits, were excluded from output in national accounts. Finance was seen as being about transferring existing value — a necessary activity, but not a value-creating one in its own right.

Then, thanks in no small part to financial industry lobbying, this changed. Today, the size of the financial sector relative to the whole economy is seen as an indication of how much value it creates. But this is exactly the wrong way round.

If the financial sector truly were creating (or at least facilitating the creation of) more value than it extracts, then finance’s share of GDP should go down, not up. Growth in the rest of the economy should outpace finance, as other industries benefit from its “risk-taking” and “financial intermediation” services.

Next, Mazzucato takes the pharmaceutical industry to task for its use of “value-based pricing”. Because their products save lives, mitigate pain and suffering, improve quality of life and, in theory, reduce overall healthcare costs, pharma executives claim they are justified in charging prices that are completely out of line with production costs and R&D expenses.

The reality is that “value-based pricing” is, in many cases, a smokescreen for rent extraction. As Mazzucato concludes, ‘the logical outcome of monopoly and rigid demand is sky-high prices, and this is precisely what is happening with specialty drugs… in addition to the normal profit rate, [pharmaceutical companies] earn huge monopoly rents.’

Monopoly power is at the heart of Mazzucato’s critique of the tech industry, too. Network effects and first-mover advantage have combined to give companies like Alphabet, Amazon and Facebook enormous power to extract value. The mountains of data those same companies now own will — unless the current model of data ownership is successfully challenged by politicians and regulators — enable them to go on extracting monopoly rents for the foreseeable future.

So where does this leave us in terms of defining value? Ultimately, Mazzucato argues, ‘the definition of value is always as much about politics, and about particular views on how society ought to be constructed, as it is about narrowly defined economics.’ In short, it’s impossible to answer the question “what is value?” without first answering another even more fundamental one: what sort of economy do we want?

Towards a new theory of value

This is where Kate Raworth — author of Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist — picks up the story. ‘The goal of the 21st-century economy,’ she argues, ‘should be to meet the needs of all within the means of the planet.’ That means abandoning our obsession with GDP growth and focusing instead on a wider set of indicators that incorporate environmental and social outcomes.


Raworth portrays economic success as a circular band — ‘the safe and just space for humanity’. The lower limit of this space is defined as the fulfilment of basic human needs and rights, such as health, education and shelter. The upper limit is determined by planetary boundaries.

Raworth’s approach chimes with the concept of ‘system value’ developed by the Future-Fit Foundation. The underlying premise is the same: the economy is nested within — and reliant upon — society and the environment; impacts on people and planet are not externalities — they are the essence of what it means to create, or destroy, value.

Marginal utility theory purists will object that system value and Doughnut Economics are normative rather than descriptive: currently we live in a world where companies can externalise social and environmental impacts. But, pace Mazzucato, this is a political choice, not an immutable economic fact.

Economics is a tool to build the future we want, not a science to describe the reality we endure.

There’s still a long way to go, but it’s not too hard to see the stirrings of a paradigm shift here. More than a century on from the intellectual revolution that made “value-equals-price” thinking mainstream, an inversion of that particular paradigm is long overdue.

The challenge now is threefold:

  1. To mainstream the system value/Doughnut Economics approach within the economics profession;
  2. To develop metrics to track system value at both a company- and a country-level (this is a process that is well underway, though the field is probably in need of some consolidation after a period in which there has been a Cambrian explosion of competing frameworks); and
  3. To develop a political agenda that focuses on ensuring that regulations and taxes incentivise system value creation.
Posted in Books | Tagged , , , , , , | Leave a comment

Four Home Truths About The Struggle To Build A Sustainable Economy

A new book by four leading lights of the sustainability movement tells us much about the state of our struggle to create an economy in service to life.


One of the blurbs on the back cover of A Finer Future describes it as an ‘entry ticket to the movement for sustainable well-being and a better world.’ And that it is. The book may be short on original ideas, but it is an impressive synthesis of much of the best recent thinking on everything from regenerative agriculture to regenerative economics.

Though the tone of the book is mostly hopeful, it did not leave me feeling particularly optimistic. Rather — both in what it says and in what it fails to say — it’s a stark reminder of just how steep a mountain we have to climb in order to build an economy that does not undermine the social and environmental systems on which we all rely.

Here are my four key takeaways:

  1. A HANDY analysis of the perils of continuing on our current trajectory

That we are headed towards a cliff edge has been the conventional wisdom of the sustainability movement for at least fifty years. The original Limits to Growth study of 1972 used then state-of-the-art system modelling techniques to show that, assuming the global economy continued to grow indefinitely without decoupling in absolute terms from resource consumption and ecological impact, civilisation as we know it would essentially collapse before the end of the 21st century.

The authors of A Finer Future, like many others, warn that we are right on track to hit the buffers in the next few decades. They cite a 2015 NASA-funded study into the history of civilisational collapse — the ‘Human And Nature Dynamical’ (HANDY) study — which found that, under conditions ‘closely reflecting the reality of the world today… collapse is difficult to avoid.’

The HANDY study identified two underlying causes that have been present in every single case of collapse over the last 5000 years: ‘the stretching of resources due to the strain placed on the ecological carrying capacity’ and ‘the economic stratification of society’. This is exactly where we are now.

Our fate is not yet sealed, but the stakes couldn’t be higher. Defusing these two timebombs — ecological overshoot and rampant inequality — is, in Buckminster Fuller’s words, ‘humanity’s final exam.’ There are no resits if we fail.

2. Ownership matters

One of the themes that lurks hidden beneath the surface in this book is ownership. It rears its head occasionally, as, for example, in the story of Interface, the carpet tile manufacturer founded by the late Ray Anderson, a pioneering industrialist who became, in the 1990s, an early champion of the need to do business in a way that does not undermine the natural systems on which we rely.

‘Ray’s effort to make Interface the most sustainable company on Earth was far from easy,’ the authors write. ‘Investors thought he’d lost his mind… [but] because Ray owned 51 percent of the company, he could stay the course.’

Another line much later in the book hints at the same issue: ‘many of the best renewables programs in the United States are run by municipal utilities, while the investor-owned utilities have to be dragged kicking and screaming into the solar age.’

These are not isolated examples. Consider another (not from the book): Danish energy company Ørsted transformed itself from a fossil fuel giant to a leading provider of renewable power in less than a decade. This was only possible because its majority shareholder through the transformation period was the Danish Government, which meant it had an owner willing to be patient through a prolonged period of depressed earnings. Without that buffer, the markets would likely have forced Ørsted to stick with its existing business model, screwing the planet but returning more cash to shareholders in the short term.

And is it entirely coincidental that Novo Nordisk and IKEA, two of Europe’s most consistent corporate sustainability leaders, are both foundation-owned? I don’t think so. Ownership, in the words of Marjorie Kelly, author of Owning our Future, is ‘the underlying architecture of our economy. It’s the foundation of our world. How ownership is framed is more basic to our daily lives than the shape of democracy.’

The more I reflect on the question of why most companies today are failing to serve people and planet, the more I am drawn back to this issue of ownership. It simply isn’t feasible for a publicly listed company, however well-intentioned, to place the same importance on its social and environmental bottom lines as it does on its financial bottom line.

The nature of the way public markets are structured means that short-termism isn’t a bug: it’s a design flaw. Doing away with public ownership (at least as currently configured) may turn out to be one of the prerequisites for creating an economy in service to life.

3. It’s the politics, stupid

Ownership is just one of the foundational structures of our economy that needs to be redesigned. So too does taxation: the authors of A Finer Future call for a shift away from taxing labour and income towards taxing instead ‘those activities, like excessive energy and resource use, that are undesirable.’ And welfare: they advocate implementing some form of Universal Basic Income. They want to transform the goals of economic policy: from maximising GDP and labour productivity, to maximising societal wellbeing and resource productivity.

Unsurprisingly, given this wish-list, they come to the conclusion that ‘only governments backed by strong public support can bring about the scale of change needed.’ This is an uncomfortable insight because the sustainability movement’s track record of engaging effectively in politics is poor.

In part, this failure is a symptom of neoliberalism’s success: ‘the neoliberal narrative has been extraordinarily successful in convincing us that our governments are inefficient, ineffective, and unnecessary.’ Too many smart, committed, progressive people have turned their back on politics and public service because all they see is dysfunction. In doing so, they — we — have ceded an easy victory to the ideological zealots of the “free” market right.

We can’t afford to stay disengaged any longer. It’s time for ‘you and me and all who would craft a finer future to get our hands dirty in the contact sport of politics.’

4. Hope is not a strategy

The story of neoliberalism’s rise has been told many times. The Dutch historian Rutger Bregman includes it in his book Utopia for Realists, pitching itas a tale about how ideas really can change the world. A Finer Future tells it too, but here it has a different moral: strategy and organisation are what change the world.

The crux of this particular telling of the story is a little-remembered 1971 memorandum by an American corporate lawyer (later a Supreme Court justice) called Lewis Powell. Powell was commissioned by the US Chamber of Commerce to develop a strategy for re-legitimising big business in the wake of the radical, anti-corporate turn that US politics and culture took in the late 1960s. The resulting memo advocated building up the business community’s political power and using it ‘aggressively and with determination’ to promote a “free enterprise” agenda.

‘Strength,’ Powell argued, ‘lies in organization, in careful long-range planning and implementation, in consistency of action over an indefinite period of years, in the scale of financing available only through joint effort, and in the political power available only through united action and national organizations.’

At the time, neoliberal ideas had been around for at least a quarter of a century — the Mont Pelerin Society, of which Friedrich von Hayek and Milton Friedman were the leading lights, had first met in 1947 — but had had little impact on mainstream politics. Within a decade of Powell’s memo being published, Reagan and Thatcher were in power and neoliberalism’s takeover was practically complete.

How did this happen? ‘A variety of foundations and donors assembled staggering amounts of money to implement the strategy that Powell had laid out.’ In Washington DC, think tanks were set up to prepare the neoliberal policy agenda. In California, the Pacific Legal Foundation set about embedding the concept of tax cutting and protection of property rights into California law. It also groomed a young actor called Ronald Reagan for public office. Across America, marketers were hired to help sell the neoliberal message to ordinary citizens. Political institutions at all levels — from local school boards to national broadcasters — were targeted.

Taking the Powell Memorandum as their inspiration, a group called the Wellbeing Economy Alliance has drafted the Meadows Memorandum (named after Donella Meadows, the late systems thinker and lead author of Limits to Growth). The trouble is it’s more of a wish-list than a strategy. The Meadows Memorandum is symptomatic of a wider failing of the modern sustainability movement: we are utopian about the ends to which we aspire, but too often squeamish and vague about the means of getting there.

It’s time to stop pretending that hope and a compelling vision of a better future are all we need. Political revolutions are not, on the whole, self-organising. Political will is not some magical emergent property: it’s something we have to manufacture and invest in.

Let’s get to it.

Posted in Books, Uncategorized | Tagged , , , , | Leave a comment

Climate Change: The Antidote To Democracy’s Mid-life Crisis

Last month, the New York Times published a mammoth article on the early history of US climate politics. ‘In the decade that ran from 1979 to 1989,’ argues the piece’s author, Nathaniel Rich, ‘we had an excellent opportunity to solve the climate crisis… During those years, the conditions for success could not have been more favorable.’

This sentence prompted Naomi Klein to pen a fierce rejoinder. ‘On the contrary,’ Klein writes, ‘one could scarcely imagine a more inopportune moment in human evolution for our species to come face to face with the hard truth that the conveniences of modern consumer capitalism were steadily eroding the habitability of the planet. Why? Because the late ’80s was the absolute zenith of the neoliberal crusade, a moment of peak ideological ascendency for the economic and social project that deliberately set out to vilify collective action in the name of liberating “free markets” in every aspect of life.’

Where Rich sees a missed window of opportunity – a brief historical interlude in which the basic science was settled and the fossil fuel lobby hadn’t yet begun to deliberately muddy the waters by funding climate denialists – Klein sees ‘an epic case of historical bad timing.’


Climate scientist James Hansen giving evidence at a US Senate hearing in 1988.

I admire Rich’s reporting, but Klein’s analysis is, to my mind, the more compelling. Climate change is, above all, a political problem that demands political solutions. It requires bold intervention on the part of elected officials to put the long-term interests of society ahead of the short-term interests of the market. Neoliberalism – which, crudely, is the belief that markets know best, governments are congenitally incompetent and “there is no such thing as society” – is therefore fundamentally incapable of delivering effective climate action.

It is testament to the strength and endurance of neoliberalism’s grip on western democracy that so many observers can no longer tell the difference between the two. Imagining a politics where markets are subservient to the will of democratic governments – something which the generations that grew up in the first three-quarters of the twentieth century would have regarded as normal – has become nigh on impossible.

Most democratic governments of the last three decades have lacked the self-confidence to even have a will that is distinguishable from a meek desire to keep the economic gods happy. Out of desperation, a growing number of liberal-minded Westerners have begun to fawn over China’s autocratic regime, impressed by the mere fact that it appears to have the will and power to influence the course of the country’s economic development.

But it’s a mistake to see these contemporary failings of democratic politics as intrinsic to the system. Western democracy is in a bad way right now but its best days may yet be ahead of it. And the climate crisis may, counter-intuitively, be just what’s needed to breathe new life into it.


In his recent book, How Democracy Ends, David Runciman argues that Donald Trump’s election is a sign that ‘western democracy is going through a mid-life crisis.’ Our current predicament is more akin to the 1890s than the 1930s, he writes, comparing the populist rage that swept Donald Trump into the White House in 2016 with the similar spirit that almost saw William Jennings Bryan elected President in 1896.


William Jennings Bryan: he’d have been on Twitter if it had existed.

Bryan’s campaign ‘bore all the hallmarks of future populist assaults on the White House.’ He attacked the political establishment of his own party (Bryan ran as a Democrat). He bypassed the mainstream media, instead publishing his own pamphlets, ‘which often played fast and loose with the truth.’ He derided experts and blamed foreigners for the plight of ordinary Americans.

But there’s one crucial difference between the 1890s and today: ‘early twentieth-century democracy was young.’ It had untapped potential and could assuage populist anger by offering new forms of democratic fulfilment. The franchise was expanded, social safety nets constructed, monopolistic enterprises broken up. In this way, political, social and economic democracy were all massively extended between the 1890s and the 1960s.

(Total war was, alas, also a critical ingredient for this democratic growth spurt. As Runciman writes, ‘no matter what politicians like Wilson, Clemenceau and Lloyd George were able to achieve before 1914 – and in each case, it was substantial – it was nothing compared with what they were able to do in the era of total war. Fighting wars that needed the full commitment of the entire population required a fuller commitment to democracy to justify the effort.’)

Today, on the other hand, there is less room for democracy to grow. What few gains there are left to make from the perspective of political and social democracy look trivial compared with votes for women, state pensions, a National Health Service and the Civil Rights Movement. Consequently, progressive politics has become defensive and nostalgic.

Runciman thinks it unlikely that this mid-life crisis will prove fatal, but nor is he optimistic about the chances of a democratic revival. Rather, he foresees a future in which democracy staggers on from crisis to crisis, surviving but not exactly flourishing.

But this pessimistic view assumes that there is no new frontier for democracy to settle. I disagree. Democracy needs a project – a raison d’ȇtre that’s more inspiring than being the least worst form of government yet discovered. Reversing global warming, it seems to me, fits the bill perfectly.

Climate change represents at least as big and worthy a challenge for democratic governments to tackle as did the injustice of a world where there was no safety net for the weak, the poor, the old and the sick. It is a cause big enough to give western democracy a new lease of life. And, importantly for democracy’s self-esteem, the state has a positive and indispensable role to play.


Next week, I’m off to San Francisco for the Global Climate Action Summit. Initiated by California Governor Jerry Brown, the Summit is a grand gesture – a rebuke to President Trump for promising to withdraw America from the Paris Agreement.

My hope is that it is more than just an opportunity for politicians to grandstand and CEOs to claim credit for commitments already made. My hope is that it is the birth of a new kind of democratic politics. A politics that puts climate change front and centre, rather than treating it as something we can afford to think about only when everything else is on track. A politics that channels the vision and ambition of the Roosevelts, of William Beveridge and Nye Bevan, of the suffragists and the Civil Rights Movement.

In spite of recent setbacks to sane climate policy in several countries, I believe the timing is good. In the afterglow of this summer’s heatwave, climate denialism is in full-blown retreat. 73% of Americans now accept that global warming is real – and 60% believe it is at least partially caused by human activity. As the burden of death and disruption caused by extreme weather inevitably grows in the years to come, the democratic will to act will only get stronger.

The manifesto for this new democratic movement will contain few, if any, new ideas. Rather, it will organise a familiar set of policies into a coherent programme:

  1. A flat-rate, no-exceptions tax on emissions – possibly linked to a dividend for all citizens, or with revenues used to fund other climate protection measures.
  2. Investment in renewables and low-emission transport infrastructure, which will also create jobs.
  3. Enhanced protections for natural carbon sinks in public hands, and incentives for private landowners to increase the quantity of carbon stored by the trees, plants and soils on their land.
  4. Funding for research into carbon capture and use, energy storage and next generation renewables.
  5. Higher mandatory energy efficiency standards for all new buildings, saving households and businesses money on their energy bills.
  6. Scrappage schemes for petrol and diesel vehicles and money for homeowners and landlords to upgrade the energy efficiency of existing properties.
  7. Investment in climate adaptation and resilience to ensure those most exposed to the impacts of extreme weather – from hurricanes to forest fires – are as well protected as possible.
  8. Public awareness campaigns to promote dietary changes that both reduce emissions and improve health.
  9. Lowering the voting age to 16, as a way of giving greater democratic voice to those who will be most personally affected by the long-term consequences of global warming.


Given the global nature of the climate challenge, international agreements like the Paris deal, or the less-feted but probably more important 2016 Kigali deal to phase out hydrofluorocarbons, do of course have an important role to play. But there’s a case for saying that the climate movement has become overly fixated on international diplomacy.

One lesson eco-warriors could do to learn from Cold Warriors is that the most effective way to influence change beyond your borders is by example, not by exhortation. For sure, the nuclear non-proliferation treaties negotiated between the 1960s and 1980s were worth having. But the most important factor behind the triumph of democratic capitalism over Soviet Communism was that the former led to demonstrably better outcomes for the countries that adopted it.

We should apply the same logic to climate change. Local and national political leaders should focus on showing the world that a zero-emissions economy is superior to a high-emissions economy by building one.


The emergence of global warming as a political issue just as (in Naomi Klein’s words) ‘the global neoliberal revolution went supernova’ was indeed a case of historical bad timing.

Thirty years on, the timing is better. Not because a politics more favourable to climate action has yet emerged, but because neoliberalism, which was full of zeal and confidence in the Thatcher-Reagan era, now looks worn out. 2008 was a body blow; 2016 was the year the heirs to Thatcher and Reagan lost control.

Now there is a void waiting to be filled – room, once again, for democracy to grow. A window of opportunity is opening, not closing. We can’t afford to miss it.

Posted in Politics | Tagged , , , , , | Leave a comment

Decarbonisation Is Not Enough

People in Canada are dying because it’s too hot. Roads in the UK are melting. It hit almost 32°C in Glasgow recently. And spare a thought for those humans who live in perennially warmer climes. In Quriyat, Oman, the lowest recorded temperature during one 24-hour period in June was 42.6°C.

So forgive me if I sound a little alarmist. Average global temperatures have already risen by more than 1°C since pre-industrial times. Atmospheric carbon dioxide (CO2) levels have risen by almost 50% – from 280 parts per million (ppm) to 410ppm, the highest they’ve been in 800,000 years. The rate at which Antarctic ice is melting has tripled in the last decade.

The Mercator Research Institute in Berlin has a countdown clock showing how long, at our current rate of emissions, until we’ve (literally) burned through our carbon budget. At the time of writing, it shows that there are just two months left until we’ve exceeded the amount of CO2 we can emit to have a middling chance of limiting global warming to 1.5°C. That’s the threshold that the governments of the world set as their aspiration in the 2015 Paris Agreement.

In short, unless the overwhelming majority of climate scientists turn out to be wildly wrong about how sensitive the climate is to increased levels of so-called “greenhouse gases” like CO2, we’re on track for a disastrous 3-6°C of warming by the end of the century.

So what should we do?

The obvious place to start is to stop emitting the stuff that warms the planet. The trouble is that this turns out to be fiendishly hard – probably impossible – to do over the kind of timescales we’re talking about to keep global warming below 2°C.

In the 30 years since climate scientist James Hansen testified to Congress about global warming – a pivotal moment in terms of bringing the issue into the political mainstream (and not just in the US) – the percentage of global energy demand met by fossil fuels has held steady at roughly 80%. Global energy demand has meanwhile gone up – and with it CO2 emissions – by more than 50%.

That doesn’t mean that we should stop trying to cut emissions – by switching to renewables (and nuclear), changing our diets (eating less meat), walking, cycling and using public transport more, and so on. Far from it. But it does mean we need other strategies to go alongside our so far fruitless quest for lower emissions.

This is the basic premise of Oliver Morton’s 2015 book The Planet Remade: How Geoengineering Could Change the World, which is by far the best exploration of those alternative strategies that I’ve come across.

Very crudely, the strategies he explores fall into two categories: first, removing carbon from the atmosphere, whether via biological or chemical processes; second, allowing less of the sun’s heat to reach the earth’s surface by creating some sort of stratospheric veil or increasing the propensity of clouds to shield us from the sun’s rays.

Let’s start with carbon removal since, as Morton acknowledges, it ‘is both ideologically more acceptable and politically more plausible than messing around with incoming sunshine. Moving carbon to safe stores feels more restorative than transformative, and sits well with common-sense notions of what to do when you have made a mess: clean it up.’

The most efficient method for removing carbon from the atmosphere that exists today is photosynthesis. Plants were in the business of CO2 capture and conversion long before humans came along and disrupted the natural carbon cycle and we certainly need their help now.

So yes, we can and should plant more trees and adapt farming practices to revive soil health, because healthy soil stores more carbon. And we should give photosynthesis a helping hand where we can: one of the great promises of genetic modification is that we might be able to make photosynthesis even more efficient, thereby reducing atmospheric CO2 and improving agricultural yields. We should temper our hubris on this front though, given that evolution has a 3.4 billion-year head start.

But there are limits to how much we can do with photosynthesis alone. While Morton supports adapting soil management, agronomy and forestry practices to increase carbon removal and storage, he ultimately concludes that ‘such actions do not store carbon on the scale needed to put a serious dent in the fossil-fuel-driven trajectory of atmospheric carbon dioxide, because the reservoirs into which they put the carbon are quite constrained. There is only so much woodland you can plant, only so much soil you can enrich, only so much farming you can do better. The biosphere is not that big.’

What about chemical processes for removing carbon from the atmosphere? These have garnered considerable attention recently as the first machines that capture CO2 directly from ambient air (as opposed to from an industrial chimney) have come online.

The semi-miraculous nature of direct air capture (DAC) is part of its appeal. Unlike traditional carbon capture and storage (CCS) technology, which has been around for decades but has not been widely deployed, DAC ‘suffers neither from being too mundane to thrill nor from being too simple to solve; it has Promethean world-changing promise, and finding a way to do it cheaply looks really hard.’

A computer generated image of a direct-air-capture plant. Source: Carbon Engineering

Progress is being made on the cost front. Recent evidence from the Canadian company Carbon Engineering suggests that they’ve found a way to do DAC at a cost of less than $100 a tonne. If true (their claim was published in a reputable scientific journal and subject to academic review, so we should take it seriously), this is a major improvement on previous costings of DAC, which have consistently been in the $300-600 a tonne range. But $100 a tonne is still not exactly cheap: at that level, the contexts in which DAC will prove commercially viable will remain fairly limited. ‘Measure them in tens of thousands of tonnes a year, not in billions,’ suggests Morton.

And much as we might wish to believe that the cost-reduction curve for DAC will follow an exponential trajectory, the laws of thermodynamics suggest otherwise. Extracting nitrogen directly from the atmosphere – as humans do all over the world to make fertiliser – is relatively easy because four out of five molecules in the air we breathe is nitrogen. Even after centuries of industrial CO2 emissions, it makes up just 0.04% of the atmosphere – that’s one molecule in every 2,500. A process where you have to filter out 2,499 molecules for every one you capture is inherently inefficient.

In this respect at least, capturing CO2 directly from the chimneys of fossil fuel power stations (CCS) should be more promising, since the concentration of CO2 is significantly higher and the process therefore more efficient. But CCS has so far conspicuously failed to take off, partly due to political resistance – the technology has largely been developed by fossil fuel companies as a way of prolonging their own life expectancy, with much of the captured CO2 being used for ‘enhanced oil recovery’; unsurprisingly, it hasn’t been wildly popular with environmentalists – and partly due to economics.

As Morton writes, ‘if companies thought they could make money from storing carbon underground they would probably find a way to do so in the face of opposition, just as in many territories they have found ways to frack.’ CCS at scale, he concludes, will not thrive without a stable price on carbon of at least $50 a tonne. And that price would need to be paid ‘as readily for the billionth tonne as for the first.’

There is one final issue that afflicts both biological and chemical carbon removal options: the counterbalancing effect of the ocean. ‘If you push carbon dioxide into the atmosphere the seas suck some of it up; if you pump carbon dioxide out of the atmosphere the seas give some up, reducing the effectiveness of your pumping. This means that to get a net reduction of a billion tonnes of carbon in the atmosphere, you need to pull out well over a billion tonnes.’

So what of the other forms of geoengineering Morton considers – those that involve altering not the carbon cycle but the way the sun’s radiation effects surface temperatures? In essence, the ideas presented all boil down to one thing: reflecting back more of the sun’s rays into space.

One option is to create a veil of aerosols in the stratosphere, artificially replicating, on a longer-term basis, the short-term cooling effect that has historically followed major volcanic eruptions. This is the result of the vast quantities of sulphur dioxide that volcanoes spew into the stratosphere. Morton (and others who favour this form of solar geoengineering) envisage sulphur dioxide being delivered to the stratosphere by fleets of very high-flying aircraft – successors, in a way, to the spy planes of the early Cold War.

The Lockheed U-2: spy plane or prototype stratospheric veil-maker?

A little nearer the ground, tampering with the brightness of clouds could also offer a cooling effect. Unlike the stratospheric veil option, which is by necessity a global intervention, cloud brightening could be done at a more local level, to protect precious coral reefs perhaps, or to lower sea-surface temperatures in order to forestall hurricanes.

There’s a potential danger in such a patchwork approach: the global climate is a fiercely complex interconnected system and small changes in one place can have big knock-on impacts half a world away. But, so long as cloud brightening remained truly local and informed by suitably rigorous modelling to assess possible side-effects, Morton concludes that it may well be a risk worth taking in many instances.

In discussions about climate solutions, geoengineering of this sort, if considered at all, is generally seen as a last resort. It’s sidelined both for its unnaturalness – most of us instinctively recoil from the thought of humans wielding the power to (partially) block out the sun – and because of the fear that it creates a form of moral hazard – if we know that we can, ultimately, save ourselves with a giant space parasol, why bother with the hard work of cutting emissions?

Morton addresses both these objections in some detail (read the book if you want to know how) and then makes an intriguing counter-suggestion: rather than a back-up option to be rushed out when we’re facing climate catastrophe, solar geoengineering, he argues, should be used now to give us a few decades’ breathing space in which to cut our emissions to zero and re-balance the carbon cycle.

What’s more, in a richly imagined set of scenarios in the book’s final chapter, Morton makes such a possibility seem remarkably plausible. He envisages, in the near future, a small group of nations taking it upon themselves to create and maintain a stratospheric veil. All sorts of things could go wrong with such a scheme, but the key to its plausibility lies in the relative immediacy of cause and effect when it comes to solar geoengineering as compared with changing the quantity of carbon in the atmosphere.

What makes climate change such a difficult problem to solve, ironically, is its slowness. Whether global emissions go up or down today will have a major bearing on what happens several decades from now, but neither the costs of inaction, nor the benefits of action, are felt in the present. Add to this the fact that what matters is the sum of all human activity – cutting emissions in one country whilst they continue to soar in another country is of limited use – and it’s no wonder climate change (when seen purely as a carbon issue) feels so intractable.

With solar geoengineering, on the other hand, ‘you don’t have to coordinate the actions of many different players in advance. You don’t have to wait for another generation to see the effects. There are clear responsibilities and prompt effects, and that would seem to make the problem inherently more tractable.’

This does not mean that solar geoengineering is a silver bullet. Morton explicitly rejects the notion that geoengineering is a solution for climate change, adding that ‘I think that it is a mistake to treat climate change as a problem to be solved. Something as complex as the relationship of industrial civilisation to the earthsystem that it shapes and is shaped by isn’t the sort of thing that is simply solved, once and for all, and it’s a snare to think that it is.’

There are no either/ors left, then, when it comes to addressing global warming. Cutting emissions, removing carbon from the atmosphere and ‘messing around with incoming sunshine’ are all necessary paths to pursue. Ideas that have long been the preserve of science-fiction writers and a small clique of scientists are now too important to leave to those groups alone.

It’s all-hands-on-deck time here on Spaceship Earth.

Posted in Books | Tagged , , , , , , , , , | 1 Comment

Three Things Techno-Religionists Get Wrong

Are humans any less religious today than they were 300 years ago?

It depends, of course, what you mean by religious. But it’s worth bearing in mind that 300 years is, in evolutionary terms, the blink of an eye. Our brains have not changed in that time and therefore we can be sure of at least one thing: our capacity for religious belief has not altered. So what are we non-believers doing with that spare capacity, now that it’s not busy maintaining our faith in the supernatural?

One possibility is that we’ve simply directed our religious habits of mind towards a different focus: technology. This, I will argue, is a problem because it leads us to misunderstand the impact technology has on our lives in three important ways.

Myth 1: The god-like autonomy of machines


One important aspect of religious belief is the ascription of autonomy and power to forces perceived to be outside human control. In this respect, our contemporary view of technology is religious in the extreme.

Karl Marx spotted this 150 years ago. In Das Kapital, he wrote that ‘[in] the misty realm of religion … the products of the human brain appear as autonomous figures endowed with a life of their own… So it is in the world of commodities with the products of men’s hands.’ Marx called this tendency fetishism and it’s not hard to spot examples of the fetishisation of technology today — especially when it comes to discussions about Artificial Intelligence (AI).

Hollywood has been fetishising AI for decades — think HAL 9000 in 2001: A Space Odyssey or Skynet in the Terminator films. Elon Musk has likened AI to ‘summoning the demon.’ Kevin Kelly — one of the foremost prophets of the new techno-religion — has laid out the fundamental tenets of the faith in his books What Technology Wants and The Inevitable: Understanding The 12 Technological Forces That Will Shape Our Future.

Fetishism is rife amongst both techno-utopians and techno-pessimists: whether you think AI is going to deliver us safe to the shores of abundance or into the jaws of joblessness, you’re guilty of it.

There are good reasons to be wary of fetishism: as Oliver Morton of The Economist writes in Megatech: Technology in 2050‘technology can never be relied on to solve problems in the absence of social action; one of the dangers of fetishising technology as an actor in its own right is that it obscures this point.’

But this doesn’t mean we should ignore the role of technology in modern society altogether — merely that we should strip it of its divine characteristics. AI will have — in fact, is already having — a profound impact on our economy and society, but the relationship goes both ways. We’re obsessed with the question of what AI will do to capitalism; we should also ask what capitalism is doing to AI.

A few years ago, Jeff Hammerbacher, an early Facebook employee who became disenchanted with the world of big tech, lamented the fact that ‘the best minds of my generation are thinking about how to make people click ads.’ Given the way economic power is distributed today, we risk the same being true of the best artificial minds of our generation.

Myth 2: The otherness of the future

Another common feature of religions is their fascination with what lies beyond the knowable horizon. We want to know what comes after death. For all that they may be grounded in ancient scriptures, all the major faith traditions keep the eyes of their true believers firmly fixed on the future and the rewards that they can hope to attain if they live a holy life.

Here, again, there are parallels with the way many people view technology. The singularity (the moment when a machine can outperform humans on any intellectual task) is to techno-religionists what the Day of Judgement is to Christians.

Whether or not you believe, with Ray Kurzweil, that the singularity is near, this mode of thought has infected most of the debate around technology and its impacts. We ask, incessantly, what will happen, rarely stopping to look at what is happening. The discontinuities ahead are so great, we are told, that the past is no guide to the future.

This, again, is a problematic view because it blinds us to the fact that our economy is not so much on the brink of an AI-powered seismic shift: rather, we’re a good 25–30 years into the revolution. As Pedro Domingos writes in The Master Algorithm:

‘[Machine learning’s] first big hit was in finance, predicting stock ups and downs, starting in the late 1980s. The next wave was mining corporate databases, which by the mid-1990s were starting to grow quite large, and in areas like direct marketing, customer relationship management, credit scoring, and fraud detection. Then came the web and e-commerce, where automated personalisation became de rigueur. When the dot-com bust temporarily curtailed that, the use of learning for web search and ad placement took off. For better or worse, the 9/11 attacks put machine learning in the front line of the war on terror. Web 2.0 brought in a swath of new applications, from mining social networks to figuring out what bloggers are saying about your products… Today, there seems to be hardly an area of human endeavour untouched by machine learning.’

So what has been the economic impact of this revolution in its first 30 years? The Economist’s Adrian Wooldridge, writing in Megatech, sums it up in a single sentence: ‘almost all the productivity gains of the past 30 years have been gobbled up by the richest 1%.’

Now, we should, of course, avoid the fetishisation trap. Technology did not make this massively unequal distribution of the gains of growth inevitable. A different set of political choices about how to regulate the economy could have led to a very different outcome. But technology has certainly been a key enabler of rampant inequality — not least because automation has already largely destroyed the link between job creation and wealth creation that underpinned the decades of shared prosperity that followed World War Two.

Consider the following numbers, from an Economist special report published in 2016:

‘In 1990 the top three carmakers in Detroit between them had nominal revenues of $250 billion, a market capitalisation of $36 billion and 1.2m employees. In 2014 the top three companies in Silicon Valley had revenues of $247 billion and a market capitalisation of over $1 trillion but just 137,000 employees.’

In other words, today’s big tech firms are generating equivalent revenues and a market capitalisation almost thirty times higher than the automotive giants of a quarter century ago, with just a tenth of the workforce. No wonder Silicon Valley bigwigs are starting to worry about becoming the new bankers: loathed for their role in creating a seemingly unbridgeable gulf between the top 1% and everyone else.

CEOs earning several hundred times more than their average employees — in 2015, the ratio for S&P 500 companies was a whopping 340 — has provoked justified anger. But this isn’t the real story. As Nicholas Bloom noted in a Harvard Business Review cover story last year, it’s inequality between firms — not inequality within firms — that is responsible for most of the increase in income inequality in the US over the last 30 years. Similarly, Bank of England Chief Economist Andy Haldane has shown that the top 5% of firms in the UK have seen strong productivity growth in recent years, whilst the productivity of the other 95% has flatlined.

In short, the big winners of the past 30 years have been a handful of big tech firms in the US and China: Apple, Alphabet, Amazon, Facebook, Microsoft, Tencent, Alibaba, Baidu. There is every reason to believe that, as AI in particular becomes even more pervasive in the next 30 years, the economic power of these companies will become even more firmly entrenched.

After all, they have amassed in unprecedented quantities the two things most crucial for success in the AI era: money and data. As Mariana Mazzucato notes in her new book, The Value of Everything, ‘just five US companies (Google, Microsoft, Amazon, Facebook and IBM) own most of the world’s data, with China’s Baidu being the only foreign company coming close.’ IDC, a research firm, predicts that by 2020 the market for machine learning will reach $40 billion and that 60% of AI applications will run on the platforms of just 4 companies: Amazon, Google, IBM and Microsoft.

Myth 3: Abundance

Which brings us to the third and final myth promulgated by the techno-religionists: that we are headed towards a future characterised by abundance. The land of milk and honey is to be our reward for holding strong in our faith in the machines.

But the important question, as should be clear by now, is: how will that abundance — assuming it materialises — be distributed? Here, the story is somewhat mixed.

Lest you’re thinking by this point that I’m a pessimist through and through, let me start by saying this: when it comes to energy, I think there are good reasons to believe we are headed towards a world in which clean energy is abundant and distributed. And that is a real cause for celebration.

In other areas, I am less optimistic. Data is already one of the key sources of value in our economy — and its importance is set to grow in the years ahead. It will undoubtedly be abundant, but unless we find the political will to democratise its ownership, most of us won’t reap the benefits of this abundance.

As Calum Chace argues in his book, The Economic Singularity:

‘Scarcity hasn’t disappeared: it has changed, and become more dangerous. The new scarcity is the privileged access to an accelerating flow of powerful new enhancement technologies. The danger is that the elite which enjoys this privileged access will rapidly become a separate species — a dominant species… The new scarce resource — the privileged access to the cascade of new technologies — is even more valuable than any scarce resource that we value today.’

Chace also makes the point that technological progress is at least as likely to undermine future growth as it is to unleash a new golden age of prosperity. This may seem counter-intuitive given that we know technological advances are the key factor in productivity growth, which in turn is critical for economic growth. But productivity is only half the story: without growing demand, productivity gains simply fuel a negative feedback loop of rising inequality, falling demand and stagnating growth.

Already, growing inequality has led to lower aggregate demand and therefore slower growth across the Western world. The relationship between inequality and demand is really very simple. As Joseph Stiglitz writes in The Price of Inequality, ‘moving money from the bottom to the top lowers consumption because higher-income individuals consume a smaller proportion of their income than do lower-income individuals.’

The full effect of rising inequality on growth has been masked by a series of asset bubbles (tech in the 1990s; the US housing market in the 2000s), central banks’ quantitative easing schemes since the 2008 crash, and a decades-long build-up of both private and public sector debt, which today stands at $164 trillion — or 225% of global GDP — according to the International Monetary Fund.

So we’ve backed ourselves into a corner: will AI help us get out of it?

Looking at a range of AI techniques and their applications across 19 different industries, McKinsey estimates that they have the potential to create between $3.5 trillion and $5.8 trillion in value annually. Add in analytics techniques that do not rely on AI and they predict the overall economic impact could be as much as $9.5 trillion to $15.4 trillion a year.

The argument that AI will create trillions of dollars of value is the orthodoxy in Silicon Valley. Microsoft CEO Satya Nadella may worry out loud about how the surplus created by breakthroughs in AI will be distributed, but he seems pretty certain that a surplus there will be.

But this view ignores the impact AI will have — indeed, already is having — on the demand side. Here’s what Chace has to say on the subject:

‘If machine intelligence renders more and more people unemployable, then other things being equal, the purchasing power exercised by those people will dry up. Their productive output will not be lost — it will just be provided by machines instead of humans. As demand falls but supply remains stable, prices will fall. At first, the falling prices may not be too much of a problem for firms and their owners, as the machines will be more efficient than the humans they replaced… But as more and more people become unemployed, the consequent fall in demand will overtake the price reductions enabled by greater efficiency. Economic contraction is pretty much inevitable.’

Universal Basic Income (UBI) is the de rigueur solution to this problem of rising inequality and falling demand. But the announcement in April that the Finnish Government would not be extending its flagship UBI trial on grounds of cost has dealt the idea a heavy blow.

In short, the sunlit uplands of abundance look rather a long way away — and whether we ever make it there actually has relatively little to do with technology. Unless we solve the social and political challenge of how to create a more distributive economy, all the AI in the world will do us about as much good as an umbrella in a war zone.

Posted in Books, Business, Life | Tagged , , , , , , | Leave a comment

The Growth Trap

In James Graham’s 2017 play Ink, Rupert Murdoch comes across as surprisingly likeable. The play tells the story of Murdoch’s takeover of The Sun newspaper in 1969 – at the time, a failing broadsheet – and its first year under new ownership. Sure, Murdoch is a bit boorish – a friendless outsider with an almighty chip on his shoulder – but he’s hardly a villain.


Bertie Carvel as Murdoch and Richard Coyle as Lamb in Ink.

Instead it’s the man he hires to edit his new paper, Larry Lamb, who’s responsible for the really bad stuff: undermining journalistic standards, pandering to people’s basest instincts, coarsening public discourse. It’s Larry that takes the decision to exploit the tragic kidnapping – and, ultimately, murder – of Muriel McKay, the wife of Murdoch’s deputy, to sell papers. And it’s Larry who makes the decision to blur the line between journalism and pornography by putting a picture of a topless girl on page 3.

Why does he do it all? Answer: early on in the play, Murdoch says to Lamb, half-jokingly, that he wants his Sun to beat the Daily Mirror’s circulation within one year. At the time, the Mirror was Britain’s most popular newspaper, with 5 million readers; The Sun had about 800,000. Lamb takes Murdoch’s words to heart, fixating on this single measure of success to the exclusion of all else. There is no code he lives by, no purpose that motivates him, apart from this single-minded quest to grow The Sun’s readership and beat the competition.

We are still living with the consequences of this growth obsession almost half a century on. Murdoch and Lamb were opening Pandora’s Box. The vitriol and vulgarity of the Trump era is the result.

The point of the story isn’t that Murdoch and Lamb are evil. Fine, neither of them is in the running to win a nice guy award. But nor is Murdoch the master villain that certain elements of the Left would have us believe he is. We didn’t get where we are today by design. The undermining of civil society (in both senses) was an unintended side-effect of the pursuit of growth at all costs.

The Murdoch-Lamb story is, alas, far from unique. Another version of the same drama played out in Silicon Valley in the mid-2000s. This time the protagonists were Peter Thiel (playing the part of Rupert Murdoch) and Mark Zuckerberg (Larry Lamb). As Noam Cohen writes in his excellent book, The Know-It-Alls: The Rise of Silicon Valley as a Political Powerhouse and Social Wrecking Ball, ‘Thiel’s consistent message to Zuckerberg was to grow and grow fast.’


The Facebook founder listened and the result was ‘a profound shift in the purpose of his social network.’ Out went the idea of a service centred on a particular location, an online network that would enhance the life of a real, offline community; in came the vision of a global behemoth that exploited our psychological needs and wants to keep us hooked.

A few years later and Zuckerberg was the one planting the insidious seed. “Wouldn’t it be fun to build a billion-dollar business in six months?” he said to Andrew Bosworth, the engineer brought in to build up Facebook’s advertising business after its IPO in 2012. With a mandate like that, there isn’t much time for worrying about ethics or unintended consequences. Hardly a surprise, then, that four years later Facebook was selling adverts to Russian operatives seeking to undermine the legitimacy and stability of America’s democracy.

‘Growth for the sake of growth is the ideology of the cancer cell,’ wrote the environmentalist author Edward Abbey in 1977. That’s not to say that growth, per se, is a bad thing. But, as we’ve seen with the stories of The Sun and Facebook, when growth is the overriding goal, the consequences for society can be ugly.

The same is true for whole economies. As the Dutch author Rutger Bregman points out in his bestselling book Utopia for Realists, when we make GDP growth the overriding goal of policy, the implications are beyond perverse:

‘If you were the GDP, your ideal citizen would be a compulsive gambler with cancer who’s going through a drawn-out divorce that he copes with by popping fistfuls of Prozac and going berserk on Black Friday. Environmental pollution even does double duty: One company makes a mint by cutting corners while another is paid to clean up the mess. By contrast, a centuries-old tree doesn’t count until you chop it down and sell it as lumber.’

Then there’s the question of ecological limits. There is, to date, no evidence to suggest we can decouple environmental impacts from economic growth anywhere near fast enough to avoid climate catastrophe under a business-as-usual scenario of 2-3% global GDP growth year-on-year. That doesn’t mean we should stop trying. Nor does it mean that we should aim to shrink the global economy instead. But it does mean that continued economic growth is, at best, irrelevant to our species’ ability to survive and thrive over the long term.

In her recent book, Doughnut Economics, Kate Raworth advocates being agnostic about growth and instead focusing on creating an economy that is ‘distributive and regenerative by design.’ This seems like an eminently sensible re-framing of our economic challenge. But how do we get there? Unless the whole world miraculously agrees to stop pursuing growth, won’t we still end up with people like Murdoch, Thiel and Zuckerberg creating enterprises that undermine social and environmental sustainability, even as the rest of us practice our growth agnosticism?

Abbey was right: the growth for growth’s sake ideology is cancerous. And the truth is we haven’t yet discovered a cure. The pertinent question, therefore, is one of strategy: are we better off working within the growth paradigm and seeking to make individuals and companies pay a fair price for the social and environmental “externalities” they create, as a way of incentivising the right kinds of growth? Or is there a realistic path to the kind of social and political revolution we would need in order to overturn the growth paradigm?

My answer, though a cop out, is that both are valid courses to pursue. As Thomas Kuhn, the American physicist and philosopher who coined the term, well knew, paradigm shifts often take many decades to happen. Knowing this, we have no choice but to work both within and against the current paradigm. Within it, because we can’t afford to wait; against it, because revolutions don’t happen on their own.

Posted in Books, Business, Politics | Tagged , , , , , , , | Leave a comment