Invest Yourself (Against the Limited Liability Society)
By Stuart WhatleyMarch 15, 2015
Image: Theatrical production of Franz Kafka’s The Castle
Manhattan Ensemble Theatre, January 2002
AT THE TURN OF THIS CENTURY, the sociologist Manuel Castells touched upon a consequential change in contemporary republican life. The eclipse of the Cold War had made way for a “new economy,” he wrote in the second edition of The Rise of the Network Society, and with it a new game between nations based on GDP and the success of corporations flying the national flag. This new arrangement, he observed, led those in power to confer upon a nation’s people not so much the status of “citizen,” but “shareholder.” In the years since, the spirit of that new moniker abides, and it connotes an underlying civic grammar we’ve all accepted in the new century.
Such a pivot demands a certain reconsideration of civic life itself; indeed, Castells’s work coincided with a flurry of social science jeremiads about the state of political and community engagement since around the 1970s. Most famously, Robert D. Putnam, in a 1995 Journal of Democracy essay and again in his 2000 book, Bowling Alone, told us of a marked decline in “social capital,” the “social networks and associated norms of reciprocity” necessary for a properly functioning democracy. Putnam sketched an image of civic devitalization that seems all but conventional wisdom now. He identified downward trends across a broad spectrum of civic and community involvement over time, whether it be voting, attending church, volunteering or donating to charity, or joining a fraternal society. Across the civic plane, passivity and spectatorship were ascendant over action and participation.
Putnam fingered a number of causes, giving a modest hat tip to women entering the workforce, suburban sprawl, and new technologies. He emphasized the generational succession beginning with the Baby Boomers, whereby each new generation since has been less civically inclined than the one before it.
Some of Putnam’s critics, such as the political scientist Eric M. Uslaner, noted that there are “distinct modes of participation” driven by entirely different motives and with “only modest correlations among” them. This makes sense — while voting and campaigning are “confrontational” and generally selfish acts, volunteering for a local charity is communal and altruistic.
It even makes sense within a single category such as group membership, where aside from fulfilling the natural human need for sociality, quite unrelated volitional factors can play a part. What impels someone to sit in a pew every Sunday probably has little to do with that someone joining a weekly community support group such as Weight Watchers. This led Uslaner to conclude that “there is no single syndrome of participation.” While political engagement had ebbed, other approximations to civic action, such as membership in professional groups, were on the rise. Which is to say, we may not have seen a declining volume of civic activity so much as a changing manner in which civic intercourse was, and is, conducted.
This debate has moved along quite a bit in the digital era, and its complexity still frustrates any easy social science consensus. In 2010, Putnam returned to the pages of the Journal of Democracy to celebrate the “[strengthened] civic conscience of young people in the United States,” now commonly associated with the high-turnout 2008 election of Barack Obama. But he also warned of a growing civic-class divide (a discussion he furthers in a new book this year) and remained “agnostic” on social media as a beneficent civic tool. Other large-scale studies share his concern with social inequality bearing negatively on individual civic development, but not his sanguinity about the current stock of young people. In a 2009 report from the Tufts University Center for Information & Research on Civic Learning and Engagement (CIRCLE), the authors conclude that “today’s young adults are less engaged in civic and political activities than their predecessors were 30 years ago,” and that the delayed “transition to adulthood” in our culture is to blame. “Even more alarming,” they write, “is a growing social-class divide between the college- and non-college educated — and especially between high school dropouts and those with college degrees.”
Meantime, 2014’s election turnout bolsters this finding. According to the Washington Post, it was, especially for the youth vote, “the lowest it’s been in any election cycle since World War II,” and, all told, the average turnout for presidential and midterm elections alike has pretty much remained steady since its initial decline in the 1970s. As for social media, the available findings still permit only agnosticism. In 2013, a Pew study found “major growth in political activity on [social networking sites] between 2008 and this survey in 2012,” but concluded that “Americans’ day-to-day political conversations mostly occur offline [emphasis theirs].” Of the conversations online, 43 percent of respondents told Pew that they had sought additional information about a civic issue after having encountered it first on social media, while only 18 percent “decided to take action” of any kind.
The 2008 election, the Occupy movement, and the dubious ALS Ice Bucket Challenge last summer reflect a certain kind of modern civic saturnalia where political bodies align. But rarely do they lead to quantifiable change. Beyond that, another way of divining civic undercurrents is through public trust and confidence in institutions — the latter being the republican engine that citizen action is supposed to fuel. Here the data is telling, and pessimistic, with Gallup finding 40- or 20-year lows in confidence across most institutional categories (especially banks, Congress, education, and the press) within the past decade.
Corroborating Gallup’s results, a May 2013 report from NORC, an independent social science research outfit housed at the University of Chicago, found that “on average the public’s confidence in institutions has declined over the last four decades.” That average comes from General Social Survey response trends pertaining to 13 distinct institutions — banks and finance, major companies, organized labor, the executive branch of the US federal government, Congress, the Supreme Court, the military, the press, TV, the medical community, the scientific community, education, and organized religion1 — and within these the only sectors to not have suffered notable declines in confidence are organized labor, the Supreme Court, the military, and the scientific community. The rest followed the lead of business and finance, which are seeing near all-time lows.
This may be more fitting than it seems. During this same time period business and finance have come to be the operational model to which most of our civic institutions adhere. Which is to say, with regards to matters of governance in the past few decades, there really might be a “single syndrome.” As the Brookings Institution political scientist Donald F. Kettl recounted in his 2000 book, The Global Public Management Revolution, “Since the 1980s a global reform movement in public management has been vigorously under way […] Painted with the broadest brush, these reforms have sought to replace traditional rule-based, authority-driven processes with market-based, competition-driven tactics.” In the years since, we’ve seen some of the results of those reforms, not least in the sprawling labyrinth of private sector outsourcing and “public-private” projects that color everything from Obamacare to the manner in which we conduct warfare (which Kettl traced more of in another book in 2008).
Some of the decline can be accounted for in part by events on the ground, with the financial crisis obviously souring the public on banks. But even controlling for that, the current trend overall is indeed historically low. One reason for this, writes Janine R. Wedel2, a social anthropologist who studies systems of influence, is that, even for those not opting out of civic participation, “more and more we feel like we’re outsiders, excluded from a system we used to know how to negotiate but no longer quite do.”
In Unaccountable, her latest book, she describes a “new corruption” whereby unpunished violations of the public trust — in government, the private sector, and the murky space in between — have become pervasively and systematically normalized over the past few decades, despite so-called “accountability” reforms in all sectors. Rather than an exchange of cash under a restaurant table, or even the commensurate yet legal campaign finance system, Wedel identifies processes far subtler at work. For one, “structured unaccountability,” a term used by social scientists who study bureaucracy but familiar to anyone who has ever called a cable or insurance company, is now an organizational feature of most public institutions. This results in a dysfunction that “goes to the very core of society: our corporate and government organizations,” Wedel writes. Despite “checklist accountability” systems they’ve instituted, most large organizations have in fact come to be “structured, in effect, to be unaccountable and to discourage the public trust.”
New technologies and outsourcing, rather than making institutions more efficient and transparent, have instead created more distance and inscrutability for a “customer” seeking redress. And according to Wedel, this is all baked in:
[…] today, interactions of the digital age have disconnected the bureaucrat from the client in ways [German sociologist Max] Weber couldn’t have imagined. The new-world bureaucracy is organized into discrete information universes with essential bits of information separated from each other, treading in a sea of digital routines. Employees are trained to know only what’s in their own tiny silo […] Both bureaucrat and client sit in the dark, at the mercy of new information technologies that live in an accountability-free no-man’s-land that no one can totally manage. Where is the accountability in the automated phone tree, the customer chat line, and other inventions that take on a life of their own?
Weber may or may not have imagined such bureaucratic morass when he published his landmark work on the topic, Economy and Society, in 1922, but Kafka certainly did when he wrote The Castle that same year. While the corporate call-center model has been exported far and wide, much of our civic intercourse has come to resemble that of K.’s dealings with the Castle official Klamm, whose “remoteness, his impregnable abode, his muteness […] his piercing downturned gaze […] could never be proved, never be refuted […].” Such is the maddening and convoluted bureaucracy of mass market customer service, a profit-minded performance designed to discourage all who confront it. A telling example may be found in the McKinsey & Company report “When the Citizen Is Your Customer,” which gushes about the value of “interactive-voice-recognition” software to field queries from the public. Through all this you may eventually get someone on the phone, but if they fail to address your need there’s really nothing you can do about it, even if you did catch their first name.
Structured unaccountability is just one way in which the public sphere has been operationally remodeled to replicate business over the past few decades; a byproduct is that indiscernible factotums like Klamm are now all but ubiquitous.
Beginning under Ronald Reagan (and Margaret Thatcher in the UK) in the 1980s, this new modus vivendi was abetted by another imported conceit from the business world — accountancy-style auditing and performance evaluation — which favor those who are privy to its inner workings. As Wedel noted in her previous book, Shadow Elite, this makes it “ill suited […] to monitor the activities of today’s top influencers,” and yet, for public sector reforms, it has nevertheless been canonized as the political tool nonpareil.
The extent to which so-called “audit culture” has transformed the public sector in the Western world is the stuff of much debate in social science circles, especially during the past decade and a half. We see it anywhere we see the language of quantification — terms such as “benchmarks,” “ratings,” “scores,” “ranks” — being applied to an institution’s efficacy, an individual’s merit. As the political scientist Melvin J. Dubnick, who has studied the erosion of meaning from “accountability,” has observed, its “promise [is] drawn from the literature and mythology of private sector governance” and “there exists an almost unquestioned assumption that the creation or enhancement of accountability mechanisms of any sort will result in greater democracy.”3 This is what the anthropologists Cris Shore and Susan Wright, observing the same trend in the UK during the 1980s and 1990s, call “conceptual inflation.” Where once there were only financial audits, now there are “academic audits, company audits, computer audits, medical audits, teaching audits, management audits, data audits, forensic audits, environmental audits, even stress audits.”
Nobody thinks twice about this anymore, especially now that the 20th century’s audit culture has matured into “big data” culture, the promises of which are said to be profound. As an October 2012 blog post on the appropriately named Utopia, Inc.’s website tells us, “Businesses are using the power of insights provided by big data to instantaneously establish who did what, when and where” and “ensure effective enterprise decision-making.” And the web is saturated with effusions about “smart cities” and “smart states” wielding statistics to “optimize government.” One commentator, writing for Forbes, goes so far as to challenge the very notion that “good governance can exist without it.” Civic life — republican representation; governance itself — has been quantified.
How much do traditional accounting and, now, big data auditing methods ensure accountable and responsive government? Scholar John Clark refers to the “paradox of success,” an insight inferred from that old aphorism, “What gets measured is what gets done.” In fact, what gets measured, and how it’s interpreted, is wholly subjective — it is a political decision in technocratic skin. One example in the Obama era (and under Bush as well) is test-based accountability in education. Instructors “teach to the test” and are with increasing frequency fired or promoted based on their students’ scores. It’s tough luck for the teacher whose scores are lower because she is the desired pedagogue for the most challenging pupils, or the one who prefers to balance test preparation with more contemplative methods of learning.
Another example, ironically, is the previously secret big data approach to intelligence revealed by Edward Snowden — effectively a security audit on an entire society. All the available evidence bolsters US intelligence services’ claim that metadata collection programs are necessary and effective, or at least in some way worth the routine violations of privacy. In fact, as journalist Mattathias Schwartz reported recently in The New Yorker, “The government has not shown any instance besides [Basaaly] Moalin’s in which the law’s metadata provision has directly led to a conviction in a terrorism case.” (Moalin was convicted for wiring funds to al-Shabaab in his homeland of Somalia, not for actively plotting or attempting an attack.)
The metadata program, like its big data consumer marketing cousin at Utopia, Inc., can “instantaneously establish who did what, when and where.” But while creating the appearance that everything is being done to ferret out threats to national security, it has consistently failed to hold almost anyone to account in that regard. And, as we’ve seen, a similar problem plagues other attempts by the public sector to audit, optimize, or otherwise ascertain the needs of itself, other institutions, or the people through a business-style praxis.4
Schwartz summarizes the view of former NSA whistleblower Thomas Drake: “Decisions about which targets matter […] should be driven by human expertise, not by a database.” Which is to say, good, old-fashioned police work still works. If that concept seems quaint and time consuming now, it is a good indication of how much our expectations have changed.
These changes to our social mores and vocabularies didn’t come about through some crude backroom coup. Rather, as Kettlobserved, an increasingly neoliberal polity wanted government to “produce more services with less tax money,” and thus imposed them democratically. With this impossible demand in place, the language of performance optimization, efficiency, and returns on investment made perfect sense to those shaping government for the 21st century. This is also the same polity that, beginning in the 1980s, shifted from being members in democratically organized civic groups to “consumers” of causes, as Christopher Bosso put it — or, more bluntly still, “the protest business,” in Grant Jordan and William A. Maloney’s phrasing.
Cause consumerism was enabled by civic advocacy groups pivoting away from community-based chapters toward centralized, national organizations using a corporate structure, only with revenue taking the form of donations instead of sales. Rather than having to show up to a weekly Elks Lodge meeting, citizens could now exercise their civic virtue through their checkbooks and debit cards. And as should be familiar to us in the digital age, many of these organizations in fact have no members, supplanting that previous source of clout with the capital of currency or, today, also “followers.”5 As early as 1999 the Harvard sociologist Theda Skocpol lamented that, while theoretically reducing the burden of civic engagement, “too many valuable aspects of the old civic America are not being reproduced or reinvented in the new public world of memberless organizations.”
The protest business has followed a predictable trajectory in the decade and a half since, with a series of innovations and iterations that have rendered most forms of philanthropy and social activism all but indistinguishable from profitable enterprise. As Union Institute & University’s Mark Rosenman detailed in a 2011 Chronicle of Philanthropy column, corporate cause marketing has given way to “social entrepreneurship,” “B-corporations,” and, finally, to “social-impact” or “pay-for-success” bonds, proposed, respectively, by David Cameron in the UK and Barack Obama in the US. Pay-for-success bonds allow private investors, if they demonstrate effectiveness, to reap a profit off of social services previously thought to be the domain of government.
According to the White House webpage outlining the plan, this could include anything from early childhood education to elder care to assistance for people with disabilities. Speaking the language of investors, the administration’s promise to the American people is to “minimize risk to the government” by only paying out on “demonstrated results.” How those results are measured and what happens to the people they affect gets scarce mention. Social justice itself has been wrought into a financial product, complete with auditing to measure success and structured unaccountability in the case of failure. As Rosenman concludes, “Commercializing social projects is not the solution; putting more money into programs government and donors can support — and that are accountable and serve everyone in need — will do more good.”
Pay-for-success bonds aren’t the only government outlays the Obama administration offers. Still, this idea’s mere presence in the 2016 “middle class economics” budget has a semantic and conceptual importance that cannot be denied; it makes real Castell’s citizen-shareholder metaphor. This was in many ways inevitable. As Shore and Wright observe, new processes have a “capacity to re-shape in their own image the organizations they monitor.” The reconceptualization of civic institutions into businesses, of civic intercourse into market-style transactionalism, does not stop with a new vocabulary. It alters and replaces the very values to which we assign meaning and significance in civic life.
In its December 1999 Millennium Issue, The Economist named limited liability the “key to industrial capitalism” and attributed to the idea two centuries of industrial growth:
Before limited liability, shareholders risked going bust, even into a debtors’ prison maybe, if their company did. Few would buy shares in a firm unless they knew its managers well and could monitor their activities, especially their borrowing, closely. Now, quite passive investors could afford to risk capital — but only what they chose — with entrepreneurs.
Limited liability works because it eliminates the existential risk of directing one’s money toward enterprise and thus encourages far more participants, and thus liquidity, in equity markets than there would otherwise be. A byproduct is that it also increases the distance between agents and principles. For an investor minimizing risk, this is a good thing. But in the case of a limited liability state, it can have all the opposite effects. Rather than bringing more people to the table, it closes the table off entirely to all who can’t afford a seat through an eerie post-industrial proletarianization of the citizen. The biggest investors have a direct line to the boardroom, as it were, while all those with nothing but a 401(k) must go through the call centers of civic life. If you, like most everyone, are in the position of the village alien K., you’ll never get to Klamm or see inside the Castle, the metonymic state, though you can always feel its looming presence and watch its arbitrarily selected functionaries come and go. In this republican dystopia, the CIRCLE study’s warning that increasing inequality would limit upcoming generations’ opportunities for civic engagement will have been prescient.
This alienation is compounded if most of the people aren’t even aware of it, as has been the case in the past, but the decline in trust for institutions in recent years suggests increasing knowingness to the contrary. This knowingness is further aided by the growing conversation around inequality, a socio-economic reality that risks undermining the shared political consciousness that constitutes American identity.
Still, politically, this will be difficult to reverse, even if there’s the will to do so. Business governance mechanisms and an appeal to the naturalistic myth of objective markets have undeniable political appeal for power holders who can simply switch their administrative duties to auto by invoking Smith’s invisible hand. Whatever outcome the market decides is seen as scientific and indisputable; the leader, having abdicated his duties to a political mechanism whose efficacy and legitimacy “is very difficult to question,” washes his hands of the result. No other political tool boasts such flexibility for one to claim equal parts ownership and disavowal of the end result.
No simple explanation is available for the various trend lines that have knotted into a limited liability society. Generational threads wove with the ideological language of managerialism, global historical contingencies, legitimate democratic processes, and the natural evolution of culture and society at home. Like a pair of earbud headphones shoved into a jeans pocket, the unique tangle seems unlikely, and yet inevitable in hindsight.
The adage “Nothing personal, it’s just business” is as good as any for the limited liability society. It is its central, guiding philosophy. Business in this sense is abstracted into a kind of naturalistic imperative bereft of human motives, imagination, or agency, with a vocabulary to obscure its mixed promise. It is the ultimate alibi for civic engagement or public service. As customers and shareholders we can still fill out our ballots, write our letters to the editor and Kickstart or Upvote our chosen causes, and we can trust that the political market will see them through to their proper destination. We could invest ourselves in a new way of talking about and fighting for these issues, but we’ll more likely continue to uphold the existing language of our civic life. If our ideas are deserving of success, maybe they’ll succeed; if they fail, well, we shouldn’t take it personally.
- The question the GSS asks is: “I am going to name some institutions in this country. As far as the people running these institutions are concerned, would you say you have a great deal of confidence, only some confidence, or hardly any confidence at all in them?”
- Full disclosure: I publish Wedel’s column in my capacity as an editor at The Huffington Post.
- Dubnick looked at the titles of House and Senate proposals for the 107th Congress (2001–2003) and estimated that “the word [“accountability”] is applied to 50-70 distinct proposals each two-year term.”
- Here we can return to Kafka: “Are there control agencies? There are only control agencies. Of course they aren’t meant to find errors, in the vulgar sense of that term, since no errors occur, and even if an error does occur, as in your [K.’s] case, who can finally say that it is an error.”
- In the case of religious participation, another area Putnam and others studying social capital look to, churches in recent years have had to adjust how they count their flock. For most of the 20th century it was an industry standard to simply count registered, tithes-paying members. But now, according to LifeWay Christian Resource’s Pastor Thom Rainer, membership “comes with few and low expectations” and little correlation to weekly attendance, which has become the new and “most common statistical metric today.” As to the larger trend of civic institutions coming to resemble business, the rise in “megachurches” — which increased in number from 10 in 1970 to 1,611 in 2011, and are led by multi-millionaire pastors — should more or less speak for itself.
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