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“Blackwater: The Rise of the World’s Most Powerful Mercenary Army” by Jeremy Scahill, (Serpent’s Tail, 2007, 550 pp); “Whoops! Why Everyone Owes Everyone and No One Can Pay” by John Lanchester (Penguin, 2010, 239 pp)

Here is an interesting contrast in efforts at persuasion.

“Blackwater” is a worthy, liberal critique of one of the creepiest facets of our age: the outsourcing of state violence to “security companies” and “defence contractors”—correctly outed in the subtitle as “mercenaries.” This topic deserves serious and widespread attention but, alas, this book has little chance of persuading anyone not already convinced of Blackwater’s intrinsic creepiness. It is unlikely even to add significantly to the armoury of facts and arguments at the disposal of those already so persuaded, because it is such a tiresome read. I could not get past Chapter Two (a disquisition on the family, early life and character of the company’s founder and proprietor, Erik Prince).

There are two, main problems. Firstly, the reader is treated as a person of rather limited intelligence. It’s not enough to make a point or state a salient fact once, they have to be hammered home every few paragraphs, each looking for a punchier way to say the same thing. Everything must be spelled out, made vivid and illustrative, like TV written down. Presumably, this exasperating style is driven by a concern for accessibility in a world where even readers of “non fiction” are taken to be suffering from Attention Deficit Disorder. But, that being the case, we might just as well leave the book on the shelf and wait for the TV documentary to come around.

Secondly, the book wears its politics on its sleeve in such a casual way that it can aspire to speak only to the already converted. (As if to underline the point, literal sleeve endorsements come from Naomi Klein and Michael Moore.) The pages are littered with passing references to “neo-cons” and “the Christian Right.” My complaint is not that there are no valid connections to be made here, but that these labels are themselves deployed as instruments of persuasion. We are, in no small measure, invited to deplore Blackwater merely by association with people and beliefs that we can be relied upon already to despise. This gives the text a distinctly parochial quality.

Also parochial is the concentration on a single company, the eponymous Blackwater. It is, surely, not the individual case that calls for analysis but the wider field, which includes hundreds of companies, and the general trends: the expansion of the “military industrial complex” from manufacturing into services, enabled by ideological determination to roll back the state; the transition from seedy, post-colonial adventurers like “mad Mike Hoare” (a Briton hired by governments in the 1960s for skulduggery in Africa), through posher outfits like Executive Outcomes (established in the late 1980s by a veteran of the apartheid-era South African Defence Force), to a full blown and socially respectable mercenary industry; the concurrent, expansionary trend of existing domestic security service providers—groups like G4S (formerly Securicor), which was allowed into prison management in the UK during the Thatcher years; the huge boost given to this industry by the war on terror; its globalisation, both in the bigger firms going multinational, and in the business model is springing up across the world: for example, Uganda’s Saracen International, established by President Museveni’s brother and now guarding the homes and businesses of the Kampala elite while also bidding for lucrative defence and training contracts in Somalia. These patterns are far more important than the kind of car that Erik Prince’s dad drove.

Well, maybe broader analysis comes in later chapters—for the book is fully 550 pages long—but that was fatally late in my case because I had already switched channel. The repetitions and the repeated appeals to visceral prejudice brought on an attack of the very Attention Deficit Order that they seemed designed to prevent. Less, in this case, would certainly have amounted to more.

“Whoops!”—which analyses the financial crisis still casting long shadows over Western civilization—is more concise yet also much more thoughtful, provocative, and informative.

The author benefits, it should be said, from “the advantages of backwardness”—the fact that, for all the benefits of 24/7 news and current affairs programming, the great majority of the Western public, and even its intelligentsia, is so ignorant of how financial markets work. (A fact which alone makes two cheers for democracy seem like one too many.) Lanchester reveals all, in ways that are clear enough to grasp, succinct enough to be well worth the effort, yet thoughtful enough to avoid patronising the reader. He makes a powerful (albeit far from original) case that the “crisis” was rooted in and directly attributable to the big push for de-regulation which started in the Reagan-Thatcher years, and which wreaked utter havoc on some small countries—notably, Iceland and Ireland. Importantly, it is a case that is made here, a matter of argument, not of ideological conceit.

Lanchester unravels both the complexities of investment banking (“leveraging,” “derivatives,” “securities” etc) and the calculus of risk (developed by egghead mathematicians with PhDs from Oxbridge and the Ivy League) on which investment funds relied—but which, whoops!, turned out to be wrong. Yet his account is also compelling for the way he locates these “technical” aspects of today’s finance industry in the broader historical context of the late 20th and early 21st centuries.

In particular, he highlights the negative effects—on western polities—of the end of the Cold War. Whilst asserting that “the western liberal democracies are the most admirable societies that ever existed” [page 9], he argues that:

[T]he population of the west benefitted from the existence, the policies and the example of the socialist bloc. For decades there was the equivalent of an ideological beauty contest between the capitalist west and the communist east, both of them vying to look as if they offered their citizens the better, fairer way of life. The result in the east was oppression; the result in the west was free schooling, universal healthcare, weeks of paid holiday and a consistent, across-the-board rise in opportunities and rights. In western Europe, the existence of local parties with a strong and explicit admiration for the socialist model created a powerful impetus to show that ordinary people’s lives were better under capitalist democracy. In America, the equivalent pressures were far fainter—which is why Americans have, to Europeans, grotesquely limited holiday time (two weeks per year), no free healthcare and a level of life expectancy lower than that of Europe.

And then the good guys won, the beauty contest came to an end and so did the decades of western progress in relation to equality and individual rights. In the USA, the median income—the number bang in the middle of the earnings curve—has for workers stayed effectively unchanged since the 1970s while the inequality of income has risen sharply. Since 1970, the highest fifth paid of US earners have grown 60 per cent better paid. Everyone else is paid 10 per cent less. [10]

This is broad-brush stuff, but it is also a strong thesis. Lanchester himself grew up in Hong Kong (the son of a banker), where the refugees flooding across the border into Britain’s last colony of substance needed no persuading that Maoism was a vile system. Thus, Hong Kong had no need to develop a politically and socially liberal welfare state, and could just get on with the no-holds-barred moneymaking that, in Lanchester’s book, became the post-Cold War “Western” template.

This is, of course, a simplification, and one that applies pre-eminently to the US and UK. For, as Lanchester makes clear, it was those countries that led the deregulation charge—with Britain, especially, going full tilt away from manufacturing and into financial services. In Europe, Germany retained a more balanced and robust economy; while in North America Canada resisted the deregulation zeitgeist. Post-Maoist China and other cheap labour economies don’t get as much mention as they deserve here either—not as a cause of the crisis, but as helping to enable that Anglo American drive into a “post-industrial” wonderland.

Nevertheless, Lanchester is surely right in treating “the crisis” as multi-layered and thus requiring multiple levels of explanation:

[The financial crisis] was based on a climate (the post-Cold War victory party of free-market capitalism), a problem (the sub-prime mortgages), a mistake (the mathematical models of risk) and a failure, that of the regulators. It was their job to prevent both the collapse of individual companies and the systemic risks which ensued; they failed. But that failure wasn’t so much the absence of attention to individual details as it was an entire culture do to with the primacy of business, of money, of deregulation, of putting the interests of the financial sector first. [173]

One of the most important consequences of the crisis will be its long term impact on the global division of labour that was emerging at the close of the 20th century—the West investing and the rest sweating. The future now seems likely to be much more complicated than that.

Lanchester’s view of the Anglo American future is bleak. In an epilogue written in 2010 he states that “no meaningful proposals to effect change have been enacted” (202), noting how Obama’s initially “meaningful” reform proposals have since been watered down through corporate and political pressure. “Meaningful” proposals may also come from the UK’s Vickers Commission when it reports in September 2011; but they will likely be diluted by a government hoping to re-privatise the British banks bailed out through nationalisation (for who will want to buy shares in banks whose freedom to pursue profit is limited by regulations?).

Thus, Lanchester concludes, we are more than likely heading for a second crisis:

“The real fix is going to have to wait until after the next crash . . . The risks proposed by the financial sector remain intact, and . . . are likely to lead to another systemic crisis within the next few years . . . When that happens, there will be a period of extraordinary danger, greatly exceeding the crash of 2008, because the next time it will be close to impossible for the politicians to help the banks stay solvent . . .(217)

Hmmm. Time, perhaps, for Britons to start burying canned food in the garden.

It is, however, possible that the Vickers Commission report will fatally fracture the UK’s Conservative/Liberal coalition government—for the Liberals will want much more regulation of banks than the Conservatives are prepared to stomach. A coalition rupture could even lead to general elections next year—after a winter that is almost bound to be horrible for many of the public sector workers now receiving redundancy notices, and for people whose welfare benefits have been slashed. An early UK election might be worth a punt at Ladbrokes.

A safer bet, though, is this: not many US Republicans will read Scahill’s book; quite a lot of UK Liberals will read Lanchester’s. It’s not political perspective that divides these authors, so much as the fact that Lanchester thinks more deeply and writes a lot better.

February 14, 2011