Category Archives: Book Review – Nonfiction

Capitalism without Capital

Bill Gates reviews Capitalism without Capital, a new book about “intangible” products and services.

They start by defining intangible assets as “something you can’t touch.” It sounds obvious, but it’s an important distinction because intangible industries work differently than tangible industries. Products you can’t touch have a very different set of dynamics in terms of competition and risk and how you value the companies that make them…

What the book reinforced for me is that lawmakers need to adjust their economic policymaking to reflect these new realities. For example, the tools many countries use to measure intangible assets are behind the times, so they’re getting an incomplete picture of the economy. The U.S. didn’t include software in GDP calculations until 1999. Even today, GDP doesn’t count investment in things like market research, branding, and training—intangible assets that companies are spending huge amounts of money on.

Measurement isn’t the only area where we’re falling behind—there are a number of big questions that lots of countries should be debating right now. Are trademark and patent laws too strict or too generous? Does competition policy need to be updated? How, if at all, should taxation policies change? What is the best way to stimulate an economy in a world where capitalism happens without the capital? We need really smart thinkers and brilliant economists digging into all of these questions. Capitalism Without Capital is the first book I’ve seen that tackles them in depth, and I think it should be required reading for policymakers.

Recently I was reading something suggesting that countries should keep a balance sheet, which keeps track of stocks, in addition to GDP, which is more like an income statement keeping track of flows. This seems right to me. Spending on education and training adds to the stock of human capital at some rate, but efficiency may vary and the stock is also being depleted at the same time. Drawing down natural capital increases income on the short term but comes at the expense of the long term. Research and development are a little different because they affect the pace of progress, or at least improve the odds of the gamble.

Giants: The Global Power Elite

This is a new book from Project Censored (or at least that’s where I became aware of it). I’m not sure whether I agree with the politics 100%, but numbers are numbers and these are a bit shocking.

As the number of men with as much wealth as half the world fell from sixty-two to just eight between January 2016 and January 2017, according to Oxfam International, fewer than 200 super-connected asset managers at only 17 asset management firms—each with well over a trillion dollars in assets under management–now represent the financial core of the world’s transnational capitalist class. Members of the global power elite are the management–the facilitors–of world capitalism, the firewall protecting the capital investment, growth, and debt collection that keeps the status quo from changing. Each chapter in Giants identifies by name the members of this international club of multi-millionaires, their 17 global financial companies—and including NGOs such as the Group of Thirty and the Trilateral Commission—and their transnational military protectors, so the reader, for the first time anywhere, can identify who consitutes this network of influence, where the wealth is concentrated, how it suppresses social movements, and how it can be redistributed for maximum systemic change.

The Wizard and the Prophet

Charles Mann, author of 1491, has a new book called The Wizard and the Prophet: Two Remarkable Scientists and Their Dueling Visions to Shape Tomorrow’s World.

Here’s the Amazon description:

From the best-selling, award-winning author of 1491 and 1493–an incisive portrait of the two little-known twentieth-century scientists, Norman Borlaug and William Vogt, whose diametrically opposed views shaped our ideas about the environment, laying the groundwork for how people in the twenty-first century will choose to live in tomorrow’s world.

In forty years, Earth’s population will reach ten billion. Can our world support that? What kind of world will it be? Those answering these questions generally fall into two deeply divided groups–Wizards and Prophets, as Charles Mann calls them in this balanced, authoritative, nonpolemical new book. The Prophets, he explains, follow William Vogt, a founding environmentalist who believed that in using more than our planet has to give, our prosperity will lead us to ruin. Cut back! was his mantra. Otherwise everyone will lose! The Wizards are the heirs of Norman Borlaug, whose research, in effect, wrangled the world in service to our species to produce modern high-yield crops that then saved millions from starvation. Innovate! was Borlaug’s cry. Only in that way can everyone win! Mann delves into these diverging viewpoints to assess the four great challenges humanity faces–food, water, energy, climate change–grounding each in historical context and weighing the options for the future. With our civilization on the line, the author’s insightful analysis is an essential addition to the urgent conversation about how our children will fare on an increasingly crowded Earth.

I made my own attempt to reconcile these world views a few years ago. My conclusion was that it is theoretically possible to grow without exceeding limits, if almost all innovation that occurs is aimed at transcending those limits. In the real world, I don’t think there is any evidence our species is capable of that. What is more likely is that technology helps us grow until we come up against the limits, then we experience a setback that takes us back under the limits, then eventually we start again. We may push the limits a little further each time, but the setbacks can be long and painful enough to ruin entire human lifetimes. If I am right, we haven’t even finished the first cycle yet as a planetary civilization. Mann’s book 1491, along with Jared Diamond’s Collapse, were instrumental in helping me to realize that regional and even continental cultures have experienced major setbacks before.

is nature doing fine?

A new book by Chris D. Thomas, Inheritors of the Earth: How Nature Is Thriving in an Age of Extinction (the link is to the New York Times review), argues that ecosystems are adapting to human-induced change. The argument seems to be that there are winners and losers in terms of species, and the Earth is headed for a future dominated by less diverse, more tolerant species. It may be true that rats, pigeons, cockroaches and jellyfish see a bright future for themselves, but I still have an ethical problem and a practical problem. The ethical problem is that humans are knowingly destroying species and ecosystems that have existed more or less throughout the 10,000 year or so modern history of our species. Sure, in another 100,000 or million years it will all have changed with or without our intervention, but if you believe these ecosystems have any intrinsic value, then what we are doing is wrong. The practical problem has to do with ecosystem service. Our standard of living depends on a lot of free and low cost help from nature – to name just a few, pollination, fertile soil, rainfall, groundwater, fisheries, breathable air and reasonable temperatures. If these were taken away suddenly, the rats and pigeons might be fine but we might find that we are not among the more adaptable species.

Daniel Ellsberg and nuclear weapons

It turns out that Daniel Ellsberg, who stole and released the Pentagon Papers, stole and planned to release a lot of information on U.S. nuclear weapons.

It turns out that Ellsberg also took many thousands of pages of documents pertaining to another subject: nuclear war. Ellsberg, a prominent thinker in the field of decision theory, had worked on the military’s “mutual assured destruction” strategy during the Cold War. Once a believer in deterrence, he now says he was a collaborator in an “insane plan” for “retaliatory genocide.” He wanted to tell the world decades ago; with nuclear threat looming again, he’s put the whole story into a new book, The Doomsday Machine…

Ellsberg believed that his bureaucratic opponents — mainly the military brass — were not thinking through the consequences of nuclear war. Then, in 1961, he was allowed to see a piece of information previously unknown even to Kennedy, the death count the military projected for theoretical strikes: some 600 million, not including any Americans killed in counterattacks. (That was still an underestimate.) Ellsberg writes of being gripped with a feeling of revulsion, realizing that the document “depicted evil beyond any human project ever.” The planners weren’t heedless — they intended to inflict maximal civilian casualties. “The shock was to realize that the Joint Chiefs knew,” Ellsberg tells me. “I was working for people who were crazier than I had thought. I had thought that they had inadvertently constructed a doomsday machine, without knowing it…”

The book examines many close brushes with nuclear war. He says that at least twice during the Cold War — once aboard a Soviet submarine during the Cuban Missile Crisis, once inside an air defense bunker outside Moscow in 1983 — a single individual came close to triggering a nuclear war because of a false alarm. “There is a chance that somebody will be a circuit breaker,” Ellsberg says. “What I conclude is that we’re lucky, very lucky.”

 

why start a war?

Why do governments start wars when they kind of know that long, drawn-out wars end up being bad for all sides. A new book by Lawrence Freedman suggests it is because they think they can deliver an early knockout blow and achieve some limited objective. Technology tends to aid and abet that belief.

Freedman — an emeritus professor at King’s College London, one of Britain’s pre-eminent strategic thinkers and a former member of its official Iraq war inquiry — argues that the prognosticators often expect to limit the destructiveness of the next war through a surprise knockout blow. But they tend to overlook what happens if that first salvo doesn’t win a quick victory, underestimating the salience of demographics and economic capacity while overestimating citizens’ willingness to keep on fighting and dying in a prolonged struggle. Bloody stalemates at the front can spark revolutions, mutinies or civil wars at home…

There’s an important Asian case in point, mentioned only briefly here, that strongly supports Freedman’s warnings against delusions of knockout battles: Japan in World War II. Plotting their surprise attack on Pearl Harbor, Japanese militarists hoped to win some quick victories and then negotiate peace on more favorable terms…

Today the allure of a swift victory comes packaged in new military technologies combining information with more accurate targeting from afar, killing enemies without endangering American soldiers. Freedman is unbeguiled by our current tech obsession. While studies of the evolution of warfare have often concentrated on newfangled weaponry like machine guns, nuclear submarines or artificial intelligence, he spurns the “constant temptation to believe that there were technical fixes for what were essentially political problems.”

the decline and fall of the U.S. empire

Okay, it is not falling quite yet, but The Intercept has a review of two books that make a persuasive case we are witnessing its decline.

Wright sees the system under threat from a combination of newly emerging powers and recent American missteps. McCoy, for his part, sees the unraveling of the U.S. empire as analogous to the series of events that led to the decline of the British and French empires before it. The first step is the loss of support from local elites in territories under imperial influence, a process that McCoy says is clearly underway for the U.S. in many critical regions of the world. In recent years, America has seen its ties strained with military partners such as Turkey, the Philippines, Pakistan, and Saudi Arabia, while major U.S. allies like Germany and South Korea have increasingly come to question America’s capacity to continue leading the imperial system that it created.

It is the Arab Spring uprisings against mostly pro-U.S. dictators, however, that McCoy says marked the slow beginning of the end of American imperium. While the revolts are widely judged to have failed in bringing about liberal democracy, they did succeed in unseating longtime American allies in Tunisia and Egypt, while straining U.S. ties with Gulf Arab countries and even Iraq. As McCoy writes, “All modern empires have relied on dependable surrogates to translate their global power into local control.” He adds, “For most of them, the moment when those elites began to stir, talk back, and assert their own agendas was also the moment when you knew that imperial collapse was in the cards.” The British empire famously became a “self-liquidating concern” when local elites across the empire began demanding self-rule, as did France’s far-flung rule when it was forced to wage a grinding war of attrition to keep control over Algeria. The Arab Spring and the forces it unleashed, which have reduced U.S. influence while exhausting its resources to deal with terrorism and migration, “may well contribute, in the fullness of time, to the eclipse of American global power…”

Partly as a consequence of so many self-inflicted losses, China, Russia, and Iran have all mounted growing challenges to American hegemony in recent years, contesting the tenets of the U.S.-enforced order in the South China Sea, eastern Europe and the Middle East, respectively. Russia has successfully annexed territory and asserted its influence along its periphery, in places like Ukraine, while China has moved ahead with plans to put the economically-vital South China Sea region under its control. Instead of a world in which a hegemonic U.S. enforces the political and economic rules of engagement in these regions, its now possible to see a future in which the world is carved up into a “spheres of influence” system that gives regional powers wide latitude to set the agenda in their immediate neighborhood.

Love the republic, hate the empire. Or at least let the empire go and maybe breathe a sigh of relief to let some of the self-imposed responsibility go with it. But if we are going to do that, we need to support and strengthen international institutions that promote peace, trade, and human rights. Instead we seem to be abandoning those institutions at the same time we are abdicating responsibility.