A Whale of a State


Review of The Fourth Revolution: The Global Race to Reinvent the State, by John Micklethwait and Adrian Wooldridge

Penguin Books, 2015

A large and ineffectual beast plopped in the centre of society, greedily taking with one hand and unthinkingly handing out with another, tasking itself with responsibilities for which it is often unsuited, and imposing on the movement of citizens resigned to work around it. The portrait of the Western state presented by John Micklethwait and Adrian Wooldridge in their sixth book together, The Fourth Revolution, comprises a pair of arguments.

The basic argument is that the state is too large. This conviction of the authors comes across as much in their explicit arguments as through the amusing adjectives of sinful gluttony used to describe the state: as fat, sloppy, indulgent, suffering from elephantiasis and bloat, subject to supersizing, and even personified as Augustus Gloop. The more subtly made argument is that the modern Western state suffers from a lack of innovative design, partial still to hierarchy, centralisation and uniformity.

The authors begin by exploring the “three and a half revolutions” which offered answers to the question, ‘What is the state for?’, led by Thomas Hobbes (the state is for security), John Stuart Mill (for liberty), and Beatrice Webb (for welfare), and the half-revolution of Milton Friedman’s libertarianism. Far from being a plain summary of familiar ideas, the authors travel through the biographies and social networks of each thinker, offering explanations of how each set of ideas formed and shaped the way successive generations imagined the purpose of the state. In the case of Milton Friedman, the social network extends to the authors, one of whom at a young age apparently found himself in a sauna with Friedman, and both of whom forged their careers at The Economist, a standard bearer of small-state liberalism. These chapters are a rebuke to President Obama’s claim, which the authors cite (p. 220), that what matters “is not whether [the] government is too big or too small, but whether it works”.  They serve to show that what matters is for what the state works.

The authors reach for a rich global collection of case-studies, interviews and other data which make the book worth reading. In arguing that Western states need to urgently trim down, they look to Scandinavia in a chapter titled, “The Place Where the Future Happened First”. In their telling, Scandinavian countries “ran out of cash before everybody else did” (p. 174) and were thus required to build smaller, smarter governments. And so too soon for the rest of the world. This is unconvincing. For one thing, the crises to which the authors point - the 1991 “black-of-night” crisis in Sweden, the Danish “potato crisis” in the early 1980s and similar crises in Norway and Finland in the 1990s – were credit crises in the banking sector, not instances of the state running out of money.

Advocates of a smaller state have often relied on this rhetoric – of cash running out – to position their prescriptions as the only alternative. Empirically, however, things are not so black-and-white. Japanese debt levels have been reckoned to be at an unsustainable high for decades. In America, debt levels have been a central fear debated in presidential elections since the first Clinton was seeking office a quarter century ago. Yet, bond markets continue to price American debt as befits a liquid, reliable debtor. In Europe and elsewhere, central bankers printing money to finance sovereign debt have not produced runaway inflation. There is an open debate around identifying the sustainable level of public debt, and it is disingenuous to pretend the imperative for reform is as clear as a bank account running out of money.

This failure speaks in part to an unwillingness by the authors to heed the lessons of their early chapters – that ideological battles matter. Their advocacy for smaller states often slips into saying either that it is the only way or that it is in any case an easy way, arguments of practicality rather than principle.

Nevertheless, some of the strongest material in the book is in its observation that slimming the state is easy to do. It is an argument which is convincing independent of any claims about the appropriate size of the state. The authors observe that the modern Western state suffers from a lack of innovative design. Western states continue to abide by old preferences, for centralisation and uniformity, without heeding the lessons of management science and practice. The book presents a case-study of Californian government as illustrative of the afflictions of many western governments: low productivity gains, antiquated structures, middle class welfare, poor accounting practices etc. The authors present global contrasts. In China, the Chinese Executive Leadership Academy incubates and diffuses new ideas in governance by asking ‘What works best?’ and ‘Can it be applied here?’. In Finland, the national library is digitizing its content with the help of ad hoc volunteers on a digital platform. In Brazil, the now famous Bolsa Familia conditional cash transfer program is experimenting in welfare delivery.

Where Western Europe and North America led thinking in political science for centuries, the latest ideas are coming out of Asia, Scandinavia and South America. This is not to argue for the wholesale adoption of any particular regional model – the authors recognise the problems of democratic legitimacy, corruption and plain ineffectiveness plaguing states across the world. Instead, the image, convincingly sketched, is of a West lagging behind its potential in innovative zeal.

Whilst the authors are thorough in identifying the possible causes of this malaise – interest group capture, for example, is shown through a case study of the prison lobby in America – they are far too shallow and optimistic in prescribing solutions. A common fall back is that technological progress is making transformational change possible. There is an incongruence between this optimism and observing that “Technology has lamentably failed to change the public sector”(p. 207). The authors themselves point to how, despite the last 50 years of advances in computers, the UK tax authority’s costs of collecting tax has only fallen from 1.16% of the collected amount to 1.14% (p. 208). Clearly, it takes more than technological progress to spark change. It appears again as though the authors have forgotten what they uncovered through the examination of Hobbes, Mill, Webb and Friedman. Change will come at the heels of a battle of ideas, and according to the whims of political tide, which are not thoroughly examined by this book.

The Fourth Revolutionis a valuable resource for those of all political stripes considering the future of the state, and how best to manage the institutions of governance. It asks thought-provoking questions, with an earnest urgency, and provides compelling examples, even if the final answers it prescribes are incomplete.