Adam Curtis’s return to the documentary scene is always welcome. No matter whether one agrees with his dark conspiracy theories or finds the complex narratives implausible and unconvincing, his programmes are always well made, challenging and enjoyable to watch.
I have therefore been looking forward to All Watched Over by Machines of Loving Grace, “A story about the rise of the machines and how they made us believe we could create a stable world that would last forever”. Appropriately, the title – and it’s abbreviation – immediately trended on Twitter, with @cherryhiltonblu observing wryly that “In a sinister new machine-dominated world, all hastags will look like #AWOBMOLOG”.
Of course, the film was not really about machines, but about people, and specifically about Curtis’s ongoing themes of power, society the threat of liberty.
Curtis attributes the rise of the machines to Silicon Valley entrepreneurs influenced by Ayn Rand, the Russian-American creator of Objectivism. Rand argued that the moral purpose of human existence was the pursuit of happiness through enlightened self-interest, and that consequently the only ethical basis for society was individual liberty and free market capitalism. Indeed, Curtis focuses heavily on Rand throughout the programme, creating – as one comment on Twitter suggested – “an Ayn Rand shaped straw man” that he proceeded to beat like a child going at a piñata. It was particularly notable that Curtis dwelt on Rand’s personal failings – on her affair (which she rationalised in Objectivist terms, naturally) and on the fact that she died a lonely old spinster – which left the viewer with the feeling that Curtis felt Rand had somehow deserved her sad fate.
Rand’s influence led Silicon Valley entrepreneurs to commence a mission to “turn everyone into heroic individuals” through the liberating power of the communications revolution:
A vision of society where the old forms of political control would be unnecessary because computer networks could create order in society without central control. This had never happened before, because at the heart of Western political thought there had always been a fear that if you gave individuals too much freedom you would get anarchy.
The fear that “too much freedom” leads to anarchy (and that anarchy is inherently unpleasant and dangerous) is one of Curtis’s running themes, expressed most vehemently in his March 2007 docu-series The Trap: Whatever Happened to our Dreams of Freedom. As I summarised it at the time,
Curits argued that a narrow view of freedom and a distrust of public authorities had led us into a dead-end, a morally vacuous society prey to the positive promises of tyrants and demagogues. Curtis instead proposed a return to the values of positive liberty, which he claimed offered us a hopeful vision of a brighter and better future … The [alternative] was [a world] without purpose. This narrow and limiting vision was [Curtis claimed] a dangerous trap, offering nothing to counter the reactionary forces that would seek to sweep liberty aside by offering order and equality in place of freedom. A world of negative [liberty] was not inevitable, however, and Curtis ended with a paean for a rediscovery of a progressive politics, because positive freedom does not have to lead to tyranny.
(You can read a full and detailed critique of The Trap in my now-archived blog Liberal Polemic)
His aim in Machines of Loving Grace is clearly to reprise that argument, despite being presented as a discussion of the effects of the communications revolution on society (and despite a tokenistic and rather tacked-on foray into the Commodification of the Self, a subject beloved of critical theorists and other acolytes of the neo-Marxist branches academia). The idea that society might create a spontaneous order, one where “nation states were irrelevant and politicians should not try to control the system”, is one that he finds deeply disturbing. However, Curtis chooses not to challenge the theory of spontaneous order head on, or tackle its greatest proponents: the mutualist and socialist Pierre-Joseph Proudhon or the liberal philosophers Adam Smith and Friedrich Hayek. Rather, he picks as his target Ayn Rand who, as well as being more easily objectified and demonised than Proudhon, Smith, Hayek or other liberal thinkers, enables Curtis to target another of his pet hates: Alan Greenspan and the Clinton Presidency.
One might imagine that “Progressives” would be sympathetic to and supportive of the Clinton presidency, representing as it did the first time a Democrat had won two terms in office since Harry Truman, forty years before. But for many progressives, Clinton sold out “The Left”. Greenspan persuaded Clinton not to further expand the deficit to fund the expensive social programmes that he had promised during the 1992 election campaign; instead, he should cut public spending, reduce the deficit and “allow the markets to transform America; not politics.”
Though the first episode made no clear reference to events 15 years later, it is obvious that Curtis is drawing parallels with our own time. The greatest debate of the last few years has been the extent to which government intervention – be it by expanding the money supply or by borrowing and spending – is necessary to bring blighted economies out of recession, and indeed whether such policies in fact cause greater harm.
As Curtis noted, Clinton’s economic policies are followed by a recovery in the 1990s, but with it came the hubris that “this time the boom would be different”; that it might last forever. Curtis attributes this to an increased reliance on supposedly-infallible computer modelling: “In the chaos of the markets the computers had, for the first time ever, created stability”. In fact the cause of the long boom was far more human. Greenspan kept the markets rising by responding to every jolt in the financial markets with a flood of cheap money: every time a bubble burst, interest rates would be dropped to stimulate borrowing and investment. The Asian Financial Crisis; the Dot-Com bubble; 9-11 and finally the Great Recession are just the most prominent examples.
This should have been massively inflationary – and thus the error should have been exposed relatively quickly – but as Curtis goes on to explain, the deflationary effect of hundreds of millions of Chinese and other labourers entering the global economy masked the inflationary effect of Greenspan’s monetary manipulations. Meanwhile, the insatiable appetite of American (and British) politicians for cheap money meant that an unhealthy relationship formed whereby Western governments connived with their Eastern counterparts to create a system where the West could run vast budget deficits while the East exported Trillions of dollars worth of goods. The result, as we now see, is public debts in Europe and America at levels not seen in a generation – in some cases, not since the War. The result was that massive bubbles and huge amounts of malinvestment went uncorrected for over a decade, leading eventually to the greatest financial crisis and recession in 70 years.
Curtis is right to present this as an ominous conspiracy, but he draws from it the wrong conclusions. The problem was not that markets had been allowed free rein, but that they were being manipulated by central bankers and Treasury ministers. Low interest rates create the illusion that long-term investments (in, say, skyscrapers or houses) are safe. If market interest rates prevail, these investments look more risky. It is only because central banks kept interest rates low that the investors piled in. This was a matter of deliberate public policy on behalf of politicians.
Furthermore, the recessions that result from the eventual bursting of these bubbles are not terrible disasters to be avoided; they are the inevitable and necessary exposure of the malinvestments that have been made by entrepreneurs fooled by artificially-low interest rates. The recession is painful, but it is also necessary. The result is a reallocation of resources to where they are genuinely productive. That reallocation is painful (I have been made redundant twice in as many years, and I have known people out of work for more than a year) but it is also necessary. In theory it should also create a more stable economy founded on more realistic assessments of value, but this positive outcome of recessions is undermined because politicians cannot resist the urge to serve up more of the low-interest, high government-spending medicine that created the problem in the first place. Recessions are rarely left to do their work of purging the system.
Another error is to blame and seek to restrict speculative flows of capital. Despite Joseph Stiglitz’s concern that South Korea’s openness to flows of foreign capital provides small short-term benefits and large long-term costs – and indeed despite the clear anxiety and suffering of Korean citizens that was showed in Curtis’s film – one need only observe that South Korea is now the twelfth largest economy in the world to appreciate that Korea’s openness has in fact done wonders for this once-poor country.
Curtis rightly observes that the IMF bailouts of the East Asian “Tigers” created merely a temporary pause in the inevitable collapse. The reason for this is that the IMF treated the Asian Financial Crisis as a series of liquidity crises – a lack of cash in each country’s banking system as a result of the Western withdrawal of investment – whereas the problem was in fact one of solvency: the investments were fundamentally flawed; the banks bankrupt. The irony, therefore, is that Curtis is right to blame the IMF, but he does so for the wrong reasons: it was not the structural adjustment packages (i.e. the economic reforms) that were at fault – countries have shown a remarkable willingness to take the IMF’s money and then ignore the conditions, with little sanction from the IMF. The problem was the IMF loans in the first place. These could never solve the problem because they were treating the wrong disease: instead, as Curtis and Stiglitz rightly note, they merely bailed out western investors and Asian borrowers at the expense of western taxpayers.
The final error Curtis makes is to suggest that “the reason that so few bankers and politicians questioned” the new economy was because of their faith in computers. Sadly, the bankers and politicians are not so naive. The source of their faith is far more venal: politicians and bankers personally benefit from the system they have created. The cheap Chinese money enabled the Labour government to run budget deficits in every year from 2001 (putting the lie to their claim that debt and deficit were functions of a crisis that came six years later); it funded George Bush’s wars in Afghanistan and Iraq; and it made the leading bankers billionaires.
This is of vital importance, because implicit throughout this first episode of Machines of Loving Grace, and explicit in The Trap four years earlier, is Curtis’s belief that the West needs a more active, more interventionist politics; that politicians should again be trusted with control of the economy and of society. In fact, rather than “create a new type of market democracy”, politicians have continued to manipulate the economy for their own ends: mainly, to allow them to lavish money on popular social welfare programmes knowing that responsibility for paying for those programmes would fall on future politicians and through them on future voters and taxpayers.
That the politicians agreed to bail out investors is not a sign that the market is at fault: Adam Smith himself observed that businessmen are the greatest enemies of free markets, as they seek constantly to collude with one another and with politicians to fleece consumers and taxpayers. Rather, the bailouts show that politicians cannot be trusted with the economy, and that only a system that prevents politicians from intervening in the economy will be safe from corruption.
Contra Curtis, therefore, the idea of market stability has not failed, and we can envisage an alternative. Market stability has been exposed as a lie masking massive and de-stabilising political interference. But there is an alternative: one where politicians are unable to intervene in markets and cannot use their power to bail-out their fellow elites. What we need is not positive liberty and progressive politics, but rather negative liberty and laissez-faire.