by Vafa Ghazavi
The Knowledge Economy Roberto Mangabeira Unger, Verso Books, 2019 Private Government: How Employers Rule Our Lives (and Why We Don't Talk about It)
Elizabeth Anderson, Princeton University Press, 2017
During a visit to Silicon Valley a few years ago, I stayed near Twitter’s headquarters in downtown San Francisco’s Tenderloin neighbourhood. To visit the Tenderloin is to be confronted with contradictions: innovation flows from the offices of tech firms, over the destitution of the surrounding streets, and into the world. Computer engineers skirt around drug users and rough sleepers on their way to and from their globally-connected offices. It’s a far cry from the scene painted by Alexis de Tocqueville when he observed how an opulent man and his shoemaker, despite the former’s ‘deep distaste’ for democracy, interact on the American street of 1835: ‘These two citizens are concerned with affairs of state and will not part without shaking hands’. That equality would soon dissolve with the coming of the Industrial Revolution in the late nineteenth century. The independent shoemaker would be replaced by a factory worker, while the cobbler would become a small-businessperson eking out a living. Does the digital age represent a new threat to our fragile fraternity? It seems so, even if the moral challenge echoes those of earlier transformations.
Egalitarians today have to grapple with the fact that decentralised markets create immense wealth. Their challenge is to ensure a society of equals can survive – and ultimately thrive – amid such growth. While many progressives advocate for social protections for those left behind, fewer have taken on the task of finding freedom in the market. The latter requires moving beyond curtailing market forces through centralised planning or dealing with their distributional effects retrospectively through tax-and-redistribution, the dominant approach in today’s liberal democracies. Recent books by Roberto Mangabeira Unger and Elizabeth Anderson suggest such fundamental concerns about freedom and equality are among the most important questions of our time.
Anderson is a prominent philosopher on matters of equality and economics. While many so-called ‘egalitarian’ theorists of the past debated the finer points of resource distribution, Anderson found their conception of equality woefully inadequate. In her seminal paper, ‘What Is the Point of Equality?’, Anderson challenged the predominant view among philosophers that equality was fundamentally about the possession of comparable resources. By placing social rather than material relations at the centre of her own conception, she helped shine a light on the fundamental need for a philosophy that was sensitive not only to material concerns but social ones. It was no longer simply about cutting welfare cheques but rather creating a society that confronts oppressive hierarchies so that each person’s fundamental worth could be realised. A recent profile in The New Yorker suggested that her problem-driven approach has helped ‘redefine the way contemporary philosophy is done’ and that because she brings together ideas from across the left-right spectrum to fight inequality, she ‘may be the philosopher best suited to this awkward moment in American life’.
With this background, Anderson can help tackle a question that persists even as an ideologically-driven, neoliberal version of capitalism is becoming untenable: what does it mean to be an egalitarian in a market economy in which inequality seems unavoidable? Her latest book, Private Government, is a good place to start.
Based on the Tanner Lectures Anderson delivered at Princeton in 2014, the book consists of two sections. The first reconstructs the history of free market egalitarianism – the idea that markets advance the cause of a free society of equals. Anderson elegantly weaves together different strands of this theory, which had gained traction prior to the Industrial Revolution. The economist Adam Smith is a central figure. He envisioned a society consisting of free men who would, through their equal standing in market exchanges, become independent artisans, merchants, or participants in small-scale manufacturing.
The emerging free market was linked to the ideal of freedom from oppressive hierarchy and domination of all kinds. For instance, the Levellers – egalitarian activists during the English Civil War in the 1600s – arose in a time of economic change and religious ferment which produced a new group of ‘masterless men’. Leading Levellers came from dissenting Christian sects that lived in expectation of Christ’s imminent return. By highlighting redemption from original sin, Levellers challenged authoritarianism legitimised by that doctrine: if people could be redeemed directly by God, then surely hierarchies imposed by fellow humans couldn’t be justified. ‘Individuals were thereby restored,’ Anderson explains, ‘to their natural (prelapsarian) state of freedom and equality’. Through their high-profile activities (one petition to parliament amassed signatures from a third of Londoners), the Levellers challenged restrictions on ownership of property, free trade and freedom of thought. Their cause was revolutionary, opening the door for ordinary people to become economically independent.
Across the Atlantic, Thomas Paine and Abraham Lincoln were proponents of this market egalitarianism. The American experiment gave hope to figures like Smith. The proliferation of self-employment suggested the masses could become free workers. As self-employed artisans or merchants they enjoyed greater agency over their own productive activities, and greater scope to deploy individual talent and judgement without becoming beholden to meddling managers.
This progress came to a crashing halt with the Industrial Revolution. That transformation was marked by the rise of large firms and factories that took advantage of mechanised equipment and centralised operations to increase efficiency through mass production – or what economists call economies of scale. How could an artisan textile manufacturer survive when factories could churn out similar products at greater speeds and lower costs? It was, in Anderson’s description, ‘a cataclysmic event for egalitarians’.
It was not just hope for widespread self-employment that was dashed. In changing the nature of firms, the Industrial Revolution transformed workplace relations, dramatically widening the employer-employee divide in manufacturing. Bosses and workers were now given radically different tasks. Mental and manual labour were separated, the latter were micro-managed relentlessly without a pathway for upskilling. Ranks and hierarchies proliferated. Bosses now even worked on different sites compared to their labourers and social interactions between them ceased.
Pre-industrial labour radicals called the new predicament ‘wage slavery’. Liberals, focusing on entry and exit from labour contracts, called it ‘free labour’. In a world dominated by large firms, liberals said you were free if you could choose who you worked for, and who worked for you. It was a definition of freedom that was amenable to the new configuration of economic power. An ideology associating freedom with markets crystallised in public discourse and overshadowed discussion of authoritarian culture inside firms.
Anderson argues that the discretion of managers over workers amounts in practice to a form of unaccountable and arbitrary dictatorship. Beyond the old debate of free markets (associated with libertarian ideology) versus state control (associated with leftist ideology), most people turn out to work under a form of what Anderson calls ‘private government’. Anderson’s goal is to clear the way for better workplace relations by shedding light on this phenomenon.
On that basis, Anderson compares the modern company to an oppressive state. The internal economic system of capitalist companies is communist because the firm owns all the assets and the top of the hierarchy designs the production plan to be implemented by subordinates. CEOs are like dictators, boards like an oligarchy, managers like superiors, workers like subordinates, and being fired is akin to exile.
Reading Private Government is like learning a new vocabulary to discuss how workplaces can realise the dignity and autonomy of workers. Anderson’s overriding concern is with ideology – ‘an abstract model that people use to represent and cope with the social world’ – and the way in which a particular market ideology, backed by powerful interests, has obscured the moral challenge of oppressive hierarchies and possibilities for addressing them.
While non-prescriptive about solutions, Anderson emphasises the importance of ‘voice’ to protect worker interests. She does not equate this with a particular formula of unionism but rather a more open-ended agenda for managerial accountability. She recognises potential for a ‘non-adversarial voice’ in workplace governance and notes high levels of support among American workers for joint governance between themselves and management, as exists in Germany’s system of codetermination, which legally requires firms to have workers represented on their board. The implicit message of the book is that workplace domination, including via micro-managing bosses and encroachments on basic dignities, is not an essential feature of successful firms.
Private Government demonstrates the attributes that have made Anderson one of the most compelling philosophers of our time. It reveals the relationship between historical circumstance and the evolution of moral values. It foregrounds the vulnerable among us and asks what it means to truly live in an equal society. It is unflinching in its critique of impoverished and obscurant ideologies but undogmatic about solutions, pointing to experimentalism and social innovation as a practical way forward. It is, in short, deeply humane, helping us think more clearly about who we want to become, as individuals and in our collective lives together. To my mind, it represents the best of political philosophy.
Where Anderson mounts a defence of the dignity of workers in their workplaces, Roberto Unger wants to enable them to cultivate their powers in new settings and in more fulfilling ways. Unger has been a professor at Harvard Law School since the 1970s, when his searing critiques of liberal doctrine helped launch the critical legal studies movement. In his native Brazil, he twice served as minister for strategic affairs. Unger’s prodigious output cuts across intellectual boundaries, from social theory to spirituality. Ed Miliband calls him ‘one of the smartest and most brilliant people on the planet’.
In his book, The Knowledge Economy, Unger borrows a move from Smith and Marx in identifying the structural potential of the ‘most advanced form of production’ of a given historical period. For Marx, it was mass production associated with the Industrial Revolution, while for Unger it is today’s knowledge economy associated with the digital revolution. In its simplest form, the knowledge economy refers to the elements of today’s economy in which information plays a central role in production and exchange. In this paradigm, data, networks and intangible assets are key drivers of how firms make and sell their products.
A fierce critic of the grand settlement between progressives and conservatives in liberal democracies which emphasises redistribution to attenuate inequality, Unger has long advocated experimentation with the market order itself. He chides social democrats and social liberals for abandoning transformative projects in this bargain. His own answer is not to forsake the decentralised market, but to reject the notion that there is a single version of it. He denies there is a closed list of alternative economic regimes (such as feudalism, capitalism and socialism), or that these form indivisible packages that only rise or fall as a whole. What really matters is the direction of change, made up of experimental steps on several fronts. For Unger, the goal of collective life is to enable humans to transcend their limited contexts and obtain a ‘shared bigness’. The knowledge economy is ultimately another way to gain a greater sense of our own agency to shape the world around us.
According to Unger, the knowledge economy promises to relax or even reverse diminishing marginal returns of production – the idea that simply adding more inputs to production, such as money or workers, will eventually have less effect on the level of output. The way out of that bind has typically been to raise productivity intermittently through technological or organisational innovation. The knowledge economy, in contrast, introduces the prospect of ‘permanent innovation’.
Knowledge-based companies run production processes that look more like scientific experimentation than top-down factories. Amazon executives don’t decide what to make in their production lines, nor do they decide the order products appear on the screen when you search for them. Instead, they enable engineering teams to develop algorithms that get better with more data. In contrast to command-and-control and centralised models of the industrial era, firms in the knowledge economy grow through product differentiation for customers (digital platforms, for instance, can constantly adapt to people’s preferences) and decentralised initiative by employees (rather than doing discrete tasks like in a factory, teams improve products iteratively). Instead of new buildings or more workers, knowledge has become their engine for growth. And because ideas and innovations build on each other, value grows in unprecedented ways.
While heralding the potential of the knowledge economy to enhance productivity and growth, Unger condemns its narrow transformational effects on the rest of the economy: ‘It is as if we had decoupled the locomotive from the rest of the train’. He highlights that the knowledge economy has been confined across different sectors to a small fringe of insular vanguard firms – those which innovate constantly, use digital infrastructures, and exploit network effects. Facebook, for example, keeps growing because it capitalises on the fact that many people are already on the platform, not because it is outspending comparable firms. These vanguards only employ a fraction of the overall workforce even as their value balloons.
As a rough indication of how concentrated the knowledge economy is, a Nesta report co-authored by Unger cites OECD data showing that 100 of the world’s 2000 biggest companies account for 55% of that same group’s research and development spending. Meanwhile, most small businesses remain retrograde, languishing almost entirely outside the knowledge economy. While the products of major technology companies are widely consumed (anyone with an internet connection can buy books on Amazon), their revolutionary practices are quarantined (good luck to the local bookstore that tries to compete with Amazon on price, range or efficiency). Scaling globally, we can observe how companies like Facebook harvest data from the developing world, even when most societies haven’t generated data-driven innovations of their own. This becomes an acute challenge as the old path of industrialised development fades.
Against these trends, Unger believes the knowledge economy can, through institutional and conceptual innovations, become inclusive. It can expand out of its concentrated pockets to become a norm of market society that includes more people. Rather than being confined to large tech firms in Silicon Valley or Shenzhen, for example, many of the practices of innovative firms can be distributed across sectors and encompass small and medium-sized businesses. The book charts a wide terrain in pursuit of this ambitious agenda, ranging from legal features of markets through to education, finance, politics, and the discipline of economics. Ultimately, Unger wants to turn the knowledge economy into a double-edged weapon against stagnation and inequality on the supply side of the economy.
Even if that succeeds, Unger is sceptical that technology will eliminate scarcity and usher in a post-work future. Such narratives have been popularised on the left through publications such as Paul Mason’s Postcapitalism, which posits the digital age will usher in a socialist future once the true price of abundant information – approaching zero – is actually reflected in the market. Like Anderson, Unger wants to find freedom in the market, not from it. Rather than resign ourselves to institutional conservatism or escapism, he proposes piecemeal structural change across domains from education (so that students can develop flexible capabilities) to financial markets (so that new ventures have easier access to financing).
For now, Unger believes most bosses will keep a firm grip on what workers do and how they do it. But he wants to resurrect the revolutionary spirit of nineteenth-century liberals and socialists by promoting more liberated forms of free labour, namely self-employment and cooperation in workplaces. An inclusive knowledge economy – one that enables more people to access work that emphasises initiative and imagination over machine-like activity – is the path to achieving this.
Unger’s programme thus has ramifications for Anderson’s concerns about workplace dictatorship. He wants to unlock the potential for firms to sustain their momentum while enabling workers to cultivate their creative potential. As it turns out, best practice among innovative firms favours cooperative strategies in which there isn’t a stark contrast between managers and workers, something observable among engineering teams in Silicon Valley. For these organisations, blurring hierarchical lines is critical for success because it allows production plans to be continually revised and improved. Managers aren’t focused on enforcing rigid roles or controlling employees but entrusting workers with greater discretion so as to unleash their creativity. The practices of the knowledge economy thus suggest authoritarian private government is discredited even by its own rationale of maximising firm productivity.
In the knowledge economy, work is increasingly focused on those aspects of the mind which Unger characterises as ‘anti-machine’ because they emphasise imagination. He decries formulaic work and believes that, as new work emerges, the danger is not that machines are replacing jobs but that the economy condemns people to work in replaceable jobs. Liberated from machine-like activity, workers can spend more time engaged in what makes them human, namely imagination. (To promote social solidarity, Unger suggests that all adults should engage in care for others outside their own family through voluntary or mandatory service schemes. I wonder how care work could also feature in the economic future he envisions.) Daily work in the knowledge economy therefore becomes another locus to transcend ‘all the finite determinations of our existence,’ including the conceptual and social worlds we build – or what Unger elsewhere calls ‘deep freedom’. To deprive people of access to this freedom is to diminish their humanity.
For those on the front lines battling for dignified work, Unger’s vision may appear fanciful. He anticipates this response: economic proposals too similar to the status quo are seen as trivial but sweeping structural change is dismissed as utopian. Unger bypasses this dilemma by foregrounding the steps involved in achieving his desired structural change. His specific proposals – the creation of alternative forms of property rights alongside the unified property right, individual data ownership, mechanisms to tighten the link between finance and the real economy and so on – should be read in this light. Rather than simply breaking up megafirms, he suggests exploring new forms of governance such as independent trusts with civil society representation and powers in relation to shareholders and managers.
To counteract job insecurity, Unger favours equipping citizens with safeguards, endowments and capabilities that are portable, attached to citizens rather than jobs. We can observe the spillover effects of this in somewhere like Sweden, where a 2017 European Commission survey found 80% of Swedes had a positive view of robots and AI. The government’s support for workers in transition between jobs – including through retraining – has given firms social license to advance automation and innovation.
The portability of endowments and safeguards is especially important in light of what David Weil has called ‘the fissured workplace,’ or the propensity of larger firms to outsource parts of their production to smaller firms, thereby making those smaller firms beholden to the larger ones. This phenomenon – amplified by digitally-savvy companies that can segment their operations – points to the evolving nature of the challenge of private government. How should we think about dictatorship in the workplace when sources of domination, such as large corporate customers, are structurally hidden? This is why Unger’s programme for expanding practices of the knowledge economy across the whole economy disrupts every aspect of collective life – including law, ideology, workplace culture, finance, and education – that stifles the prospect not only of dignified work, but imaginative work.
Still, the moral visions of Unger and Anderson are allied in important ways. They are both inspired by American pragmatism, which emphasises experimentalism over dogmatic principles in pursuit of progress. Unger’s debt to the pragmatists was laid out in his major philosophical work, The Self Awakened, while Anderson’s chair at the University of Michigan is named after the famous pragmatist John Dewey. Their philosophical pragmatism has particular significance in the context of political economy and the limits of market pathologies. Both reject an ideology which fixes on one (neoliberal) version of the market and which views any deviation from it as endorsing greater state control. Instead, they offer up – in different modes – the prospect that markets can be made and remade in ways that deepen equality and freedom. The path to get there remains open.
In 2017, Unger presented his ideas on inclusive vanguardism at OECD headquarters in Paris. At one point, the moderator quoted George Bernard Shaw: ‘reasonable people try to adapt their idea to the way the world is, unreasonable people try to adapt the world to their ideas’. He continued, ‘and so I think that Roberto Unger is probably in the class of the unreasonable people but that’s probably a good place to be’. Unger responded by quoting the words of Spanish philosopher Unamuno:
in the world the victorious are those who adapt to the world and the defeated are those who demand that the world adapt to them. So the progress of humanity rests solely on the shoulders of the defeated.
Despite the deluge of concern about the economic power of today’s tech giants and what this means for out-of-control inequality, an inclusive knowledge economy is an idea that may yet triumph. Let’s hope it does.
VAFA GHAZAVI reads for a DPhil in Public Policy at Balliol and teaches political theory at Pembroke. He finds the robust philosophy seminars in Oxford are a natural sequel to his past life as a diplomat in war zones.
Art by Abigail Hodges