Branko Milanovic. World inequalities and the European social contract

Notes from the seminar on inequality by Branko Milanovic, organized by the Government of Catalonia and held in Barcelona, Spain, on 14 May 2019.

Branko Milanovic. World inequalities and the European social contract

After 1917 the world had a new way of production that lasted some decades and reached up to 1/3 of the population. And before, there were also different ways of production (e.g. slavery vs. free men, etc.) that lived together. This is not true anymore. Nowadays, capitalism rules alone —China being mostly capitalist in practical effects.

Global inequality has been rising since the early 1800s, stopped after WW1, rose again and stopped to grow once more after WW2. Around year 2000, due to the rise of Asia, global inequality begins to drop drastically. These are three periods: (1) fast growth of inequalities due to the Industrial Revolution, (2) the plateau of high but stable global inequality during the XXth century, (3) the decrease of global inequality due to the raise of Asia.

Europe (includes the US and the “Western” world) is shrinking at the global level: population, share of the global GDP, etc. This, among other things, means that other countries are catching up with European countries and some of their citizens are surpassing Western citizens in purchasing power. This does not mean that Europeans are moving down in absolute terms, but they do in relative terms: high income people from low income countries begin to be richer than low income people from high income countries.

There is an emergence of the global “middle/median class” and a shrinkage of national middle classes.

Migration is not something that will be a season matter. Migration will be with us for some decades. That is why it is so important. It will become structural at least for a very long time, as the tensions.

Another way to look at the tree ages according to inequality:

  • Age of empires and class struggles, there is a divergence between countries and between classes.
  • Age of the Three Worlds and diminished class conflict, with divergence at the peak.
  • Age of convergence and internal cleavages.

We have 10% of the people of the World living the same way they were living 1,000 years ago, in absolute poverty. Yes, we have improved a lot, but we are still leaving a lot of people behind.

It seems that most equalising policy instruments —labor unions, education, taxation to the richest ones— seem to have reached their limit. And not withstanding, capital concentration is growing, especially at capturing its rents, and this is newly creating inequalities.

Can we de-concentrate capital? By what means? Taxing capital, stimulating new enterprises that create de-centralized (new) capital, etc.

The past 25 years in the rich world.

Political/philosophical issues brought up by looking at global, as opposed to only national, inequalities.

What kind of policies, and what can they do?

Discussion

Pere Almeda: is there a way that a global governance can control global finance / global capitalism? Branko Milanovic: On tax evasion that could actually work, also on tax dumping. But maybe not for other matters.

Mireia Borrell: why is it inequality bad? Is it “only” for moral reasons? Economic ones? Branko Milanovic: all of them apply. There is high impact by inequality on growth. See it, for instance, for gender discrimination and how inefficient it is to leave aside women’s talent.

Ismael Peña-López: we are not witnessing a growing de-materialization of capital, especially in the form of digital capital and knowledge. And some think that this democratizes the chance to access capital, as it is less costly an it is not finite (not a good with rivalry issues). There might be a tension between economies of networks and a digital-commons based production. Can the latter be a way to de-centralize capital? Milanovic: on the one hand, if capital ownership does not change, things might not change despite the fact that production technologies may. Besides, the definition of labor is changing a lot, so it really depends on how we define labor and capital and how we tax them. So the answer is not clear and it may vary a lot depending on definitions, ownership, taxation models, etc.

Natàlia Mas: what about fostering cooperatives? Branko Milanovic: a first interesting approach is how to make capital returns remain within the system, and be reinvested, put in innovation, etc. Another thing is how to work on ownership, like giving shares to their workers. This usually works, but it maybe would work better if not only top-workers got them, but all the workforce.

Jordi Angusto: how do we measure inequality better? will the gap between capital returns and labor returns keep on increasing? Branko Milanovic: technological change usually benefits owners of capital; as technological change will remain in the future (or increase), is is likely that capital owners will see their share in the global GDP grow. If we saw a democratisation of capital, that would certainly be the opposite case.

Marta Curto: given the mobility of capital, how do we tax capital? Branko Milanovic: it is very difficult indeed. Globalisation is like a huge tsunami and it is very difficult to tame. Pere Almeda: Maybe the creation of a global financial registry, but it would only be possible to do by a legitimised global organisation, which we have not.

Branko Milanovic: “homoploutia”: high capital and labor income received by the same people. Some people in the top are both capitalists and workers, which is a new thing compared to past times where one would be either one or the other, but never both. Homogamy has increased from 13% to 30% in 50 years. That is, what is the probability of someone at the top to marry someone also at the top. These two aspects make it more difficult to design policies that are effective in redistributing income or reduce inequality.

Report. Study on the impact of the internet and social media on youth participation and youth work

Cover of the Study on the Impact of the Internet and Social Media on Youth Participation and Youth work
Study on the Impact of the Internet and Social Media on Youth Participation and Youth work

The Directorate-General for Education, Youth, Sport and Culture of the European Commission has just released the Study on the impact of the internet and social media on youth participation and youth work, that was coauthored by Francisco Lupiáñez-Villanueva, Alexandra Theben, Federica Porcu and myself.

The study analyses 50 good practices and 12 case studies to examine the impact of the internet, social media and new technology on youth participation and look at the role of youth work in supporting young people to develop digital skills and new media literacy.

In my opinion, the main result of the study confirms what others have already found and that is increasingly becoming the trend in inclusion and development: top-down approaches only do not work, and bottom-up, grassroots initiatives are necessary for projects to work. In other words, weaving the social tissue has to come first for any kind of community intervention one might want to deploy.

The 10 pages of conclusions can more or less be summarised this way:

  • Socio-economic status is crucial at the individual level and the knowledge gap has to be addressed immediately before social interventions.
  • Enabling the social tissue at the micro level contribute to strengthen the community and thus improve the diagnosis and mobilise social capital.
  • As people act in different communities, weaving networks at the meso level makes sinergies emerge and synchronise multilayer spaces. Skills and training are key at this level.
  • Once the initiatives have begun to scale up, it is necessary to mainstream and institutionalise them at the macro level, which means fixing them in policies and regulation. Quadruple helix of innovation approaches are most recommended.
  • The acquisition of digital skills has to be based on digital empowerment, on a sense of purpose.
  • Digital participation and engagement has to aim at being able to “change the system”, to structural changes, to digital governance.
  • The now mostly deprecated approach of build it and they will come should leave way to an approach in the line of empower them and find them where they gather. That is, to look for extra-institutional ways that young people participate and engage to design your capacity building and intervention scheme.

Abstract:

The study examines the impact of the internet, social media and new technology on youth participation and looks at the role of youth work in supporting young people to develop digital skills and new media literacy. It is based on an extensive collection of data, summarised in an inventory of 50 good practices and 12 case studies reflecting the diversity of youth work from across the EU. It confirms that youth work has an important role to play, but more has to be done by policy makers at both EU and national level to respond to the challenges and adapt policies in order to foster engagement and active citizenship of young people.

Downloads:

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Full report:
Lupiáñez-Villanueva, F., Theben, A., Porcu, F. & Peña-López, I. (2018). Study on the impact of the internet and social media on youth participation and youth work. Brussels: European Commission.

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Executive report:
Lupiáñez-Villanueva, F., Theben, A., Porcu, F. & Peña-López, I. (2018). Study on the impact of the internet and social media on youth participation and youth work. Executive report. Brussels: European Commission.

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Annex 1, Inventory of good practice:
Lupiáñez-Villanueva, F., Theben, A., Porcu, F. & Peña-López, I. (2018). Study on the impact of the internet and social media on youth participation and youth work. Annex 1, Inventory of good practice. Brussels: European Commission.

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Annex 2, Case studies:
Lupiáñez-Villanueva, F., Theben, A., Porcu, F. & Peña-López, I. (2018). Study on the impact of the internet and social media on youth participation and youth work. Annex 2, Case studies. Brussels: European Commission.

Centralization vs. decentralization tensions in the Digital Economy

When we speak about Information and Communication Technologies, it is an almost unavoidable mantra to say that this is an era of democratization of technology, of democratization of (access to) information. Meanwhile, we witness how the major technological firms grow, acquire or bury their competitors, keep on growing and concentrate the market in a decreasing number of hands. Which is quite the opposite of the democratization of technology.

Let us simplify things a little bit for the sake of the explanation.

Two of the main reasons for the centralization of production in the Industrial Age were the cost of capital and the economies of scale. That is, the need to gather huge amounts of money to build up factories and infrastructures in general meant that only organizations with lots of money (e.g. governments) or large coalitions of people (e.g. big firms and their stakeholders) could afford huge enterprises and, thus, property of the productive tissue was concentrated in few hands. This concentration had, in its turn, a side-effect: the bigger the investment, the bigger the returns, as economies of scale are significant in mass production.

In a digital economy it does not exactly work this way. Investment costs usually are much lower than in the Industrial Age. Let us take creating a newspaper. Lots of in-house journalists have to be allocated inside a building (it is cheaper this way), and an expensive printing press and tons of paper are strictly necessary before a single issue sees the light. On the contrary, a free software installation on a cheap web server is enough for a decentralized team of freelancers to create content and automatically and very cheaply put that content online (remember this is a simplification of reality).

On the other hand, though, big returns come not with doing more with less (returns of scale), basically because we are already operating with lesser costs, both fix and per unit. Returns will come with people: the more people join your (publishing in this case) platform, the bigger the returns. These are the network economies or network effect: something is more valuable the more people use it.

Pre-industrial
Industrial
Digital
Capital cost Low High Low
Economies None Scale Network
Appropriation Distributed Concentrated Distributed
Exploitation Distributed Concentrated Concentrated

Table 1. Centralization vs. decentralization tensions in the Digital Economy

And here is where the tension appears: as investment costs decrease, appropriation of capital — or technology — can be decentralized. That, is individual people or smaller groups have it easier to have state-of-the-art technology in their hands. When there is no copyright (an non-technical added barrier to the cost of technology), such as in openly licensed information, free software or open hardware, then costs are even lower and technology distribution can spread further and broader. This is where “democratization of technology” does apply.

But it is different with the exploitation of digital capital and digital infrastructures. Unlike appropriation, it still needs a critical mass to make the best of it, to benefit from its returns. Its nature is different — from production costs and economies of scale to network effects and network economies — but the result is similar: concentration of production of goods or delivery of services to have a deep impact.

This tension can be solved in two different ways.

  1. The first one is that people can still use technology for their own particular purposes, but main corporations will still dominate production — including media and agenda setting. You can have a blog, but media rule the communication market. You can have a 3D printer, but big factories produce everything. You can sell online your used stuff, but the big digital retailers distribute everything that there is to be sold. And so on.
  2. The second one is that there is a way where individual appropriation can be combined with collective exploitation. Or, better said, communal exploitation. Just like in cooperatives.

The latter is an idea with a highly transforming potential, because it may — it may — change the economy (and society) as we know it. It represents taking the best of XIXth century cooperatives with the best of the digital revolution. On of the most interesting ideas behind this model is described in Platform Cooperativism. Challenging the Corporate Sharing Economy by Trebor Scholz.

Here come other references for reflection:

Acevedo, M., Moreno Romero, A. & Mataix, C. (2015). “ICT4D as the driver of Network Cooperation actors, connections and collaboration in the post-2015 international development landscape”. In Steyn, J. & Van Belle, J. (Eds.), Beyond development. Time for a new ICT4D paradigm?, 18-39. Proceedings of the 9th IDIA conference, IDIA2015, Nungwi, Zanzibar. Nungwi: IDIA.
Espelt, R., Peña-López, I. & Rodríguez, E. (2016). “Activismo desde el consumo cooperativo de productos agroalimentarios: ¿Economía alternativa o tecnopolítica?”. In Balcells et al. (Coords.), Building a European digital space, 560-581. Proceedings of the 12th International Conference on Internet, Law & Politics. Universitat Oberta de Catalunya, Barcelona, 7-8 July, 2016. Barcelona: UOC-Huygens Editorial.
Saveri, A., Rheingold, H. & Vian, K. (2005). Technologies of Cooperation. Palo Alto: Institute for the Future.
Scholz, T. (2016). Platform Cooperativism. Challenging the Corporate Sharing Economy. New York: Rosa Luxemburg Stiftung.

Technopolitics, networks and citizenship: a syllabus

Man walking under the rain in a Japanese city
Singing in the rain, courtesy streetwork.com

My colleague Mirela Fiori is redesigning the Master in City and Urbanism which she is directing. In the updated version that she is planning she wants to include a subject on how technology and civic action have a role in the shaping of the city.

In my opinion this is a most important acknowledgement. Adolfo Estalella and Alberto Corsín have systematically proved how the city can be used both “hardware”, much in the line of Gidden’s Structuration Theory where the “system” is both an instrument and a target for change. Manuel Castells also speaks about cities and their (different) role in the Network Society, a role that oftentimes is emergent in the sense of Steve Johnson. In newest “open source” cities, action turns into activism and activism cannot be without action.

Thus, it does look very relevant to me that there is a little time or space to think about the city not as a mere receptacle of people doing things, but as an actor that is both affected and affecting the uptake of technology and its use for citizen action and, thus, being part of the (new) definition of citizenship.

The goal of the master’s new subject Technopolitics, networks and citizenship is to provide this vision of the city as an institution, a player that requires a renewed strategy and a renewed vision on its role in a complex ecosystem.

My preliminary syllabus (it does not even deserve that name yet) would include the following topics — comments welcome:

Digital revolution and globalization

How dire are the changes we are witnessing in the global economy? How are connected the new trends in the business and financial spheres with the democratic and governance spheres? Are Information and Communication Technologies instruments for improvement or for transformation? Is this a revolution? Why are some things happening? Why would they last — if they do?

Limits of the institutions of the industrial age

Is there a crisis in industrial age institutions (schools & universities, political parties and parliaments, firms and work, media and journalism, etc.)? What is their role in society? Is their role still needed? Can we separate the continent (institutions) from their content (role, tasks)? If yes, who will take up with these roles? How? Why? Why not?

Hacker ethics, commons and gift economy

Is there a new way to design collective initiatives? Is decision-making over as we knew it? Are hierarchies a thing of the past? Is information still power? Can we shift power balances? How different is information from knowledge? How different is controlling information from controlling knowledge? How will the control of knowledge transform our daily practices? And our institutions?

Social innovation, open innovation and open social innovation

What used to be innovation? What is innovation today? What is the relationship between innovation, knowledge and power? Can innovation be distributed? Can innovation be socialized? Can power be socialized? Can innovation lead to better governance? Can better governance lead to innovation? Should we act in either or another way to affect the final result? Can we?

Technopolitics, cooperation platforms and network-organizations

How is technology (ICTs) changing human behaviour? How is technology (ICTs) changing human collective behaviour? What are the main trends? How will they evolve? Why? What new organizations will come enabled (and fostered) by technology? How will this change the map of actors and institutions in society? How will they interact? How will this change the city landscape?

Yes, these are questions and not answers. Because there are not many answers — yet. And the ones being are constantly changing and evolving. But the questions will remain for much longer. These are days for good questions and for flexible answers. Dogmatic answers for feeble questions will rarely help us to map the new territories that need being explored.

Communication. Mapping agro-food consumption groups in the city of Barcelona

Cover of Espelt, R., Peña-López, I., Losantos, P., Rodríguez, E., Martín, T. & Pons, F. (2015). “Mapping agro-food consumption groups in the city of Barcelona”

My colleague Ricard Espelt is these days at the XXVI European Society for Rural Sociology Congress, in Aberdeen, Scotland. The motto of this year’s edition of the congress is Places of possibility? Rural societies in a neoliberal world and this is just what Ricard is presenting on behalf of a small team he put up to analyse and map agro-food consumption groups in the city of Barcelona.

The communication he just presented, Mapping agro-food consumption groups in the city of Barcelona, is but a part of a major research project that Ricard is doing and that I have the luck to be a part of. Following can be found the abstract, slides and downloads of our communication, signed together by Ricard Espelt, Pere Losantos, Enrique Rodríguez, Toni Martín, Francesc Pons and myself. Mind that it is only a short paper and, thus, only a small part of the information produced is available. Comments (and/or requests) will definitely be welcome.

Abstract

“Consumption groups” (or “consumption cooperatives”) is one of the types of short circuits of food consumption. They are organized to create an alternative to the dominant model, the agro-food big chain. Breaking the barriers between consumers and producers, this model of organization strengthens the possibility of stimulating social and economic local development.

In this article, we show how consumption groups take advantage of the traditional cooperative move-ment rooted in the XIXth century, and Information and Communication Technologies (ICT) in the context of Barcelona.

We analyse how the Social and Solidary Economy (SSE) measurement indicators are achieved by agro-food consumption groups, the nature of the networks made up by consumers and producers and the rele-vance of ICTs to maintain the business activity. Using geolocalized data and social network analysis we highlight the significance of local economical connec-tions among the actors involved.

Even though consumption groups stimulate local business and correlate with SSE indicators, they are not represented in the design of public policies. This article wants to draw a different point of view in the promotion of alternative food futures as emerging social and economic actors, and the public policies to promote them.

Slides

Dowloads

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Short paper:
Espelt, R., Peña-López, I., Losantos, P., Rodríguez, E., Martín, T. & Pons, F. (2015). “Mapping agro-food consumption groups in the city of Barcelona”. In Places of possibility? Rural societies in a neoliberal world. Proceedings of the XXVI ESRS Congress, Aberdeen, Scotland, 2015. Aberdeen: The James Hutton Institute

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Slides:
Espelt, R., Peña-López, I., Losantos, P., Rodríguez, E., Martín, T. & Pons, F. (2015). “Mapping agro-food consumption groups in the city of Barcelona”. In Places of possibility? Rural societies in a neoliberal world. Proceedings of the XXVI ESRS Congress, Aberdeen, Scotland, 2015. Aberdeen: The James Hutton Institute

Emancipation and the failure of the Sustainable Development Goals

Cover of the Open Working Group Proposal for Sustainable Development Goals

Tim Unwin has written a terrific critical article on the Sustainable Development Goals (PDF) entitled ICTs and the failure of the Sustainable Development Goals. As can be inferred from its title, the main criticism — which I fully share — is about the almost total oblivion in what relates to Information and Communication Technologies (ICTs), and some other issues concerning the design itself of the Sustainable Development Goals (SDGs), how poverty is defined (and how development and the Economy are defined too), how the United Nations System works.

I want to borrow Tim Unwin’s title to go a little bit further on his analysis. In my opinion, the problem is not (only) a total disdain for ICTs and all their potential in enabling, articulating, fostering or multiplying any other initiative against poverty or for sustainable development. The problem, I believe, is that this disdain for ICTs is just a symptom of the real, direst problem: a total disdain for emancipation.

There is only one goal out of 17 that deals, in general, about peace, freedom, rights and the government:

Goal 16. Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels.

When one drills down to the 12 targets and sub-goals, some of them are clearly what one would expect to see under the general goal. Some of them are mixed. And some others make one rethink about the previous ones. Indeed, an accurate reading of Goal 16 and its 12 targets and sub-goals raises a shadow of suspicion: is it about people that Goal 16 is talking about, or is it talking about maintaining things in order so that everything (the economy, trade) runs smoothly?

Paranoid?

  • Sub-goal 16.a reads Strengthen relevant national institutions […] to prevent violence and combat terrorism and crime. That is, strengthening institutions is not a matter of peace, equality, progress… but to combat terrorism, which is what richest countries care about: their own safetey.
  • Sub-goal 16.b reads Promote and enforce non-discriminatory laws and policies for sustainable development. That is, the problem with discrimination is… development. Sustainable development. It is true: it is known that inequality damages economic growth. But one would expect that the direct goal would be inequality itself, and that the indirect one would be growth. Not the other way round.

After that, as it was said before, one becomes suspicious about some well phrased goals that, under a new paranoid light, can be read with different meanings. Such as target 16.3, which speaks of the rule of law: is it really to achieve justice for all, or is the rule of law good in itself at the national and international levels (which is were trade happens)?

Now, on a more serious note, I think there are at least three big omissions in the way the Sustainable Development Goals are stated that are compatible with a vision that

  1. The Sustainable Development Goals are especially about economic development, and not about individual and social development.
  2. The Sustainable Development Goals are especially about institutional development, and not about personal emancipation.

And these three issues that are omitted in the SDGs are, again in my opinion, closely related with the potential that ICTs can deploy if thoroughly applied. I’d dare say even more: if ICTs have any role in development, I believe that it is in the three following issues. It is not surprising, thus, that ICTs and our three issues are all missing in the 16 Sustainable Development Goals. Issues are:

  • Freedom, civil rights, citizen rights, political freedoms, freedom rights… many names for the very same concept. Freedom — or free — is mostly missing in the SDGs. It is only explicitly referred in target 16.10, and mixed up with public access to information… in accordance with national legislation. Well, according to Freedom House’s Freedom in the World 2015, 54% of the countries surveyed were partly free or not free… in accordance with their respective national legislations. Freedom is simply not a seriously taken issue in the SDGs.
  • Empowerment is a step beyond freedom. If freedom is about the lack of constraints to think or do one’s own will, empowerment is about strengthening the capability to think or do that will of one’s own. Not only can you do whatever you want within the system, but you will be helped to. Again, empowerment, or capabilities, are widely mentioned in the formalities of the declaration, but are limited to gender and inequalities. This is quite a bit, for sure, but it is not enough. There is no way that development can be sustainable if it is not endogenous, and there is no way for endogenous development without empowerment. In my opinion, empowerment is paramount to development. Only one step below governance.
  • Governance, democracy, political participation, deliberation, co-decision. If freedom is do one’s own will, and empowerment is doing it with multiplied strength, governance is way above that: it is not thought and action within the system, but over the system. Governance is shaping the system to one’s needs (or the collective needs, more appropriately), instead of shaping one-self to the system. This is why it is so important… and so surprisingly missing from the SDGs. Yes, decision-making is in there, but always as a way to have a certain influence on institutions. But no words on changing institutions, on transforming them, substituting them by other ones, or even getting rid of them.

And, as I see it, increased freedom, empowerment and governance are the biggest potential outcomes of ICTs for development. When Tim Unwin says he misses ICTs in the Sustainable Development Goals, not only I agree, but wonder whether the SDGs are also missing what I believe are the main reasons to apply ICTs for sustainable development, for instance: ICTs applied to Health increase one’s own degree of freedom; ICTs applied to Education improve one’s capabilities and empowerment to achieve higher goals; ICTs applied to Politics can lead to better governance.

I, for one, believe that people behind the writing and wording of the Sustainable Development Goals are neither stupid, nor ignorant. A thorough reading of the SDGs is inspiring and every statement is perfectly grounded on evidence.

But.

It’s the approach. It’s industrial. It belongs, in my opinion, to the Industrial Age. It does not, I think, take into account the digital revolution and, more important, the many social revolutions that we have witnessed in recent years. And no, I am not (only) talking about the Arab Spring, or the 15M Spanish Indignados Movement. It’s about the revisiting of the commons and the digital commons; about free software and open educational resources and free hardware and open science and free knowledge; about e-government and open data and open government; about liquid democracy and hybrid democracy and e-participation; about personal learning environments and cMOOCs and communities of learning and communities of practice; about innovation hubs and co-working spaces and open innovation and social innovation and open social innovation; and peer-to-peer whatever and dis-intermediation wherever. Almost nothing about this is in the Sustainable Development Goals, which are to last current until 2030. We are not only ignoring the last 15 years of development, but making them last 15 years more. All in all, the Sustainable Development Goals do not seem to belong to the Information Age.