Henry Farrell on Weaponized Interdependence, Big Tech, and Playing with Ideas (Ep. 78)

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Mercatus Center
Oct 23 · 50 min read

The one concept most valuable for understanding the news today might be Henry Farrell’s theory of weaponized interdependence. Whether it’s China’s influence over the NBA, the US ban of Huawei, or whether social media should be regulated on a global scale, Henry Farrell has played a key role articulating how global economic networks can enable state coercion.

Tyler and Henry discuss these issues and more, including what a big tech breakup would mean for security and privacy, why political economics suggests Facebook’s Oversight Board won’t work, what Italy might reveal about China’s future, his family connection to Joyce, his undying affection for My Bloody Valentine, why Philip K. Dick would have reveled in QAnon, why Twitter seems left-wing, and being a first generation academic blogger.

TYLER COWEN: Hello. I’m here today with Henry Farrell. I first learned of Henry through his blogging at Crooked Timber. He has been a co-founder there, but Henry, in addition to that, is a professor of political science at George Washington. He has written two notable books, The Political Economy of Trust and more recently, with Abraham Newman, Of Privacy and Power.

He has popularized and developed the notion of weaponized interdependence and done in fact much, much more in the popular sphere. He is an incoming editor at Monkey Cage blog at the Washington Post and has written just about everywhere else you can imagine. Henry, welcome.

HENRY FARRELL: I’m delighted to be here.

COWEN: First question: if we think about the Chinese company Huawei, what can and should the United States government do to counter Huawei from controlling 5G communications networks for its main allies?

FARRELL: Well, what the US government is currently doing is considering using its control of supply networks in order to try to block Huawei because Huawei relies substantially on chips which are made by companies like Qualcomm. The United States has used the so-called Entity List, which is a means of effectively designating Huawei as a problematic company, to put the supply-chain relationships, which Huawei needs, under threat.

Now, it’s not clear whether the US is going to deliver on this. And this is one of the problems that the current administration has, which is that there’s an implicit break between, on the one hand, people like Donald Trump who think primarily in terms of trade and some very strange ideas about what victory in trade is, and on the other hand, people who are more concerned with the long-term security relationship, who have viewed Huawei as a threat for a number of years.

What I would suggest is probably going to happen is that we’re going to see some kind of a compromise where Trump is going to offer — and indeed, has suggested that he will offer — some concessions on Huawei, which is going to make people in the defense establishment very unhappy because they see Huawei as a long-term threat, because they fear that the 5G network that has been constructed around the world could be used by Huawei to give China access to people’s communications in more or less the same way as the NSA was able to help the United States listen in on the world for a number of years.

COWEN: Sure. But what should we do? If you imagine Huawei controlling Germany’s 5G network, that sounds pretty dire, almost like letting the KGB run your phone system.

FARRELL: We probably need to wake up to the fact that we’re going to be in a world where there are going to be security vulnerabilities, and there’s, more or less, not very much that we can do about it. The key questions to think about here is there’s different tradeoffs. First of all, you can think about the tradeoffs of surveillance, which I think is what most people think about with Huawei.

And there is a good reason why a number of countries, including US allies, have decided to opt for Huawei because they figure they’re already being listened into by the United States. They’re probably going to be listened into by China anyway. So what matter does it make? It probably doesn’t make all that much difference. Whichever technology you’re going to use, there’s probably going to be some way of penetrating it.

The more complicated, more difficult question is whether or not Huawei, or other kinds of technology companies like it, could be linked into other forms of systems in ways which might pose an active security threat which goes further than just listening.

This is something that Bruce Schneier, for example, has talked about in a wonderful book that came out about nine months ago called Click Here to Kill Everybody, where he more or less talks about the huge security risks which are associated with the so-called internet of things, which turns out to be an internet of really, really badly designed and badly secured things.

And when one thinks about the ways in which, for example, what kinds of consequences it might have if you have a breakdown of communication at the time that there is a military attack — that’s the kind of thing that people really need to think carefully about.

So I would guess that the best way to think about this is to, on the one hand, accept the fact that there’s going to be some level of surveillance that is happening; that given current technologies, there’s always going to be some kind of a back door there to be exploited.

On the other hand, try to make critical systems as secure and robust as possible and think as much as possible about things like multiple redundancies, not necessarily economically efficient in terms of market, but nonetheless things which will allow you to secure yourself and have possible backup systems in the case that something major is suddenly compromised.

I think that’s where we’re moving towards — a world which is much less going to be about trying to pare things down to the minimum in search of economic efficiency and much more about robustness, redundancy, and trying to think carefully through the fact that we live in a fundamentally insecure world. People are beginning to take advantage of it, and we need to gear up in order to think better about this.

COWEN: But if I call you now on my iPhone to your iPhone, China can’t listen in, right? We’d be giving them the whole key to all communications.

FARRELL: Well, that depends. We don’t know whether China can or cannot listen in.

COWEN: We don’t know. But we know that if it’s Huawei 5G, they can intercept any communications they want by manipulating Huawei, which is not quite a state-owned enterprise, but it’s state controlled, as are most or maybe all major companies in China. It just seems to not fulfill the fiduciary responsibilities of the United States government.

FARRELL: Then the interesting question is whether or not all of the other governments than the United States government have not been fulfilling their fiduciary responsibilities by allowing systems which have been penetrated — we know quite thoroughly — by the NSA to the point that the NSA for a period basically recorded all of the phone calls going back and forth within a particular country — I believe it was Bermuda — in order, more or less, to show that this could be done.

COWEN: Sure, so Merkel won’t make an important call on her iPhone anymore, but I would say that’s the correct German response. And the correct American response is to be equally or even more skeptical of Huawei, which is not a democracy. It’s an autocracy. It’s from a country that’s put over a million people in camps. Why should we even consider letting them be the backbone of the free world’s communications network?

FARRELL: There are two questions here. First, there’s the US question, the domestic question, which I think is being sorted out. The US has decided that Huawei is not going to be allowed to supply goods to its telecommunications providers. In fact, Huawei has never played any significant role in US telecommunications providers, more or less telcos.

I remember being told by a lawyer what they did was, they used to effectively take bids from Huawei in order to scare Ericsson and Nokia and other companies into offering them better terms, but with the presumption that they were never going to use Huawei because this would get them into too much trouble in security. So the question for the US is straightforward.

The question for other countries is much less straightforward. Do they see China as being a fundamental threat? Or do they just view this as being another nuisance along with the fact that the NSA is listening into their phone calls? And it’s interesting to see that some countries, including close allies such as the United Kingdom, have been much, much less forthright on the US side than one might expect.

Roughly speaking, one could say that there is a . . . if one wants to look at the ways in which countries have responded, I think a lot of it has to do with their geopolitical or geo-strategic exposure to China.

So places like Australia and Japan have been far, far more willing to listen to the US on these kinds of things than places like the United Kingdom, which see that there is a plausible threat from Huawei but think that, at the end of the day, the balance between that and having cheap telecommunications infrastructure is such that they’re willing to allow Huawei to provide at least some parts of the machineries that they are looking to have subcontracted out.

COWEN: How and when will European nations be able to bypass SWIFT as a payments network?

FARRELL: That’s a very good and very interesting question because SWIFT, as it stands at the moment, is nominally a European organization. It is a nonprofit organization, a nonprofit consortium which is based in Belgium.

There are ways in which, I think, if the European Union were to get serious in this, it would probably be less about trying to create an alternative system to SWIFT than trying to bring SWIFT more under its own command. At the moment, SWIFT is nominally European but in fact has a lot of influence from the United States. The United States has provided many of its senior decision makers, including people like Lenny Schrank. And it has also provided a large number of board members.

The European path forward, I think, if Europe wanted to try and minimize its exposure, would be to start to impose a much clearer and more substantial mandate upon SWIFT to effectively force SWIFT — under circumstances where the United States tells it to do one thing and Europe tells it to do another — SWIFT would effectively have much stronger reasons than it does at the moment to comply with the European threats.

Now, the problem without, from Europe’s point of view, is that that involves creating much, much heavier institutional paraphernalia at the EU level, which is going to be something that is going to be problematic for a number of the member states who don’t like to see the European Commission and European institutions taking up that level of power.

But at the same time, there is, I think, a much, much clearer case being made. And if one looks, for example, at the comments that have been made in the run-up to the new commission, it’s very, very clear from Josep Borrell and other people that they’re looking to really create the European Union as an economic power in a way that hasn’t been true in the past.

To the extent that member states begin to buy into that kind of agenda, they probably are going to have to buy into much, much heavier regulatory cloud at the EU level, including the kinds of things that could be used to bring SWIFT to heel.

COWEN: But take, say, New York as a banking center. Maybe half of Deutsche Bank’s business is in New York. Assume the US often cares about foreign policy issues more than Europe does, and we have a potential first-mover advantage if we choose to use it.

So if we say to European companies, banks, whatever, “If you do business with the US financial system, you must adhere to some long list of restrictions that may be as simple as Iranian sanctions,” what does the equilibrium actually look like where they can just say, “No, we’re going to go ahead and trade with Iran”? Isn’t that really quite distant, given the importance of New York as a banking center?

FARRELL: The way I would push back against that a bit is to not assume what you’re assuming, which is to say that under many circumstances, it is going to be true that the United States is going to care about this stuff much more than the European Union is. And Iran, I think, is a great case of that. The EU trade with Iran — it’s not insignificant, but it isn’t anything enormous either. But there are other things which Europe is much, much more worried about.

In particular what they’re worried about is Russia. I think that the counterexample to what you say is assume, for example, that we have a 2020 election in which Donald Trump is ignominiously defeated. What we are going to see then, plausibly, is a situation where a presidency and a Congress, even if the Republicans still have the majority in the Senate — they are going to be loaded for bear.

They are going to go after Russia with sanctions of one sort or another. Many of those sanctions are plausibly going to implicate the European Union. So, when one looks at the policy debate in the EU at the moment, a lot of that policy debate is gearing up for perceived likely fights with the United States over the relationship between Europe and the Russian economy because, of course, Europe depends much more heavily on Russia for energy and has a wide variety of other economic relations with Russia.

I think that’s the situation in which Europe would care much more substantially than the United States, or would care as substantially as the United States and would be prepared to push back hard. Those are the circumstances under which there has been a recent paper by the European Council on Foreign Relations, which has talked about ways in which Europe could deter United States actions.

One of the actions that is proposed there is that the European Union think about licensing requirements for US firms that want to operate in Europe, such that if they cooperate with sanctions against European entities that Europe doesn’t like, that these licenses to operate would be withdrawn.

That’s the kind of circumstance in which I could see actual, at the very least, posturing happening at a very, very substantial scale between Europe and the United States and perhaps actual low-level economic warfare if the US steps in to try to push back against what Europe regards as being its core interests.

COWEN: Now, we’re chatting in early October, and there were two huge stories today, both about weaponized interdependence. The first is that the European Union seems to be insisting that Facebook take down material posted on internets outside the European Union. What’s your view? Is that a good decision or a bad decision?

FARRELL: Well, when I’m looking at this stuff, I try to wear my hat —

COWEN: But I’m interviewing Henry Farrell, the person. Right?

FARRELL: Okay, let me back up and say two things. First of all, if I’m to think about this as a political scientist under my political science hat, what I would say is that this is something which is inevitable. And this is something which we’re going to see more and more of, which is that the internet for a long period — there was a kind of an equilibrium in which the United States managed to persuade everybody that self-regulation and platforms looking after their own business was more or less okay for most purposes.

That equilibrium has broken down. It has broken down in the US. It has broken down in Europe, and it has broken down in authoritarian societies in particular. So I think we’re going to see more and more efforts to try and use the platform companies effectively as a means of extending reach into other jurisdictions and imposing universal-type restrictions on what they can or cannot do.

There was a kind of an equilibrium in which the United States managed to persuade everybody that self-regulation and platforms looking after their own business was more or less okay for most purposes.

That equilibrium has broken down. It has broken down in the US. It has broken down in Europe, and it has broken down in authoritarian societies in particular. So I think we’re going to see more and more efforts to try and use the platform companies effectively as a means of extending reach into other jurisdictions and imposing universal-type restrictions on what they can or cannot do.

If I want to think about this as an individual, what I would say is that I’m not at all happy with what the European Union is doing in specific here, but I do think that there needs to be much greater regulation of platform companies. And in the absence of the United States, I think that the European Union is the most plausible actor which has got the regulatory clout and the willingness to do so in a manner which is at least somewhat compatible with broad liberal norms.

So my basic attitude will be to push back against a specific decision but to say that if the choice is between the United States not regulating or perhaps regulating — perhaps that will be different under a possible Warren administration — and authoritarian states, that I would much prefer to have a robust European Union than any of the other actors that I can think of that have the clout and the ability to try and bring the platform companies to heel.

On the NBA and China

FARRELL: Again, looking at this from my political science hat, this kind of stuff has been happening for a long, long time, but not so much to the United States. There’s a book by Blackwill and Harris, which came out with the Council on Foreign Relations a couple of years ago, which looks at how China has been imposing this kind of pressure against a variety of smaller countries, especially with respect to the Dalai Lama. And when China says jump, companies do tend to jump.

And of course, we’ve seen Hollywood for the last number of years has been quite sensitive to the Chinese market, most recently as exemplified by the decision to remove, I think it was the Taiwanese flag from the remake of Top Gun from the back of Tom Cruise’s jacket because this was perceived as being possibly provocative. So this is pretty standard stuff, and this tells us something about the way that businesses operate.

You can see the way that businesses operate globally as having both great benefits and great weaknesses. If one wants to think about the standard story about how interdependence, at least under some circumstances, creates peace because businesses have an incentive to try and create peaceful and happy relations between nations in order to secure their commerce, I think that there’s something to it, although as my work with Abe on weaponized interdependence suggests, there also are some clear limits to that as well.

But the obverse of this is that business is obviously in the business of making profits, and when there are clear political risks associated to business doing certain kinds of things, by and large, businesses are not going to be especially courageous. And this is particularly likely to be true of big firms, which I think are more likely to come under this kind of pressure.

One saw this already with regards to Hong Kong. There have been that airways chief executive who effectively got ousted. I’m trying to remember the company, but I can’t.

I think that this is, in a sense, if you want to outsource a lot of our decision-making about culture, about the ways that things ought to be done to business, this is what you’re going to expect, for better or for worse.

On the shift to multipolar international relations

FARRELL: Oh, very, very good question. I would say that what we’re seeing at the moment is a transition from a world of one big nation — which is the United States, which has had to a very great degree a near monopoly on this stuff — to a group of nations, including the United States, but also including China, European Union, India perhaps, although people don’t pay much attention to it. I would be interested to know much, much more about what India is doing in this space. And also with Russia playing less as a significant power that is able to exert much influence than as a spoiler trying to figure out ways to screw things up for everybody else.

So I think that we are moving from a world of unipolarity — to use the standard term that international relations scholars use — to a world of multipolarity. And one of the things that we can expect from that is that multipolarity tends to lead to a lot of danger of things screwing up and things going wrong.

So I think that we are moving from a world of unipolarity… to a world of multipolarity. And one of the things that we can expect from that is that multipolarity tends to lead to a lot of danger of things screwing up and things going wrong.

When one looks at how the US has done this over the last number of years, it has managed to prosecute its interests reasonably well while not pushing other countries too far, until the Trump administration. That’s not true anymore.

And I think that as other countries come in, many of which are less sophisticated about thinking about what kinds of things they can or cannot do without messing up things for other countries or for their own companies, we’re going to see far, far more mistakes being made. This is especially true because nobody really understands what the networks are, but they’re trying to weaponize.

There was one very interesting example of this, which happened with the United States, in fact, when it went after Oleg Deripaska, who is one of the Russian oligarchs. Deripaska had a big interest. He effectively had control of the Russian aluminum industry. The US Treasury Department OFAC [Office of Foreign Assets Control] sanctioned Deripaska but didn’t realize that when it was sanctioning Deripaska’s companies, it was going to mess up the entire West European car manufacturing industry, which relies upon specific aluminum products that only Deripaska’s companies can create.

This led to this very, very complicated ballet dance in which the Treasury sought to both extend the sanctions and to specify them in ways that would allow for the unwinding, at least the nominal unwinding, of Deripaska’s formal control of the company, so as to create an exit strategy.

But one can see that, as we’re going to have more and more countries trying to do this stuff, and as they are doing so in a competitive way rather than one country trying as a unipolar power to impose it on everyone else, that the possibilities of mistakes being made and mistakes leading to escalation, and minor trade wars blowing up into substantial spats and even outright economic warfare — I think that that possibility is going to get much, much worse.

COWEN: Arguably, dominant firms are easier to regulate. And since you seem to favor some kinds of additional regulation on the major tech companies, does this mean we’re too worried about monopoly, that we actually want to keep around a few dominant firms, and that if we split them up into many small parts, there would be more chaos or more fake news or more privacy violations?

If some parts of what they do are bad, and you get more competition in the bad, don’t we just want to put in GDPR barriers to entry, not quite public utilities, but keep them big and fat and happy and somewhat not so dynamic, yes or no?

FARRELL: It depends on what you value.

COWEN: But what you value.

FARRELL: Yeah. Let me put the tradeoff to you this way. If you value security, if the highlight is on security, then the answer is, you probably want to keep big companies around because you’re going to want to impose broad standards. You’re going to want to create collective security goods, and the only actors that can really do that in a substantial way are big businesses of one sort or another.

If, alternatively, you value things like privacy and other kinds of rights, then you probably want to move towards an equilibrium in which there are far, far fewer big firms. So that’s where I see the fight being played out. I see the fight being played out between people who value security and people who value privacy. I think they point in somewhat different directions.

COWEN: And where are you on that spectrum?

FARRELL: Well, it depends on the time of the day, and I find myself —

COWEN: It is 2:22 p.m.

FARRELL: Okay, 2:22 p.m. Or whether the month has an R in it.

This is something that I’ve actually been struggling with and thinking about because there’s another interesting aspect to this as well, which is, if one thinks, for example, about a possible Warren administration — which is quite plausible at the moment, as the most plausible candidate perhaps at the moment on the Democratic side, although who the hell knows — then I think that what we’re going to see is, we’re going to see the Warren administration trying to pursue a much more energetic foreign policy agenda, especially on economic policy, than we have seen for a number of years.

And I think that this is especially going to be true in places like tax evasion. The Warren administration is going to begin to leverage some of these powers that have been used for other purposes, primarily for security purposes. It is going to leverage these against Swiss banks, against other countries which are not willing to jump up to the need to try and push back against international financial flows and so on. And from my perspective, that will be awesome.

That said, I also think that the problem . . . and this is getting away from the question of corporate power to the question of unipolarity, which is perhaps the question I’d be more interested in and I’ve been more trying to think about.

The other side of that, of course, is that unipolarity and the US willingness to use its power in order to crush all opposition has been used in a variety of problematic ways over the last few years. Sometimes I see myself . . . I’m interested in trying to provide advice to businesses about how to push back against this. So Abe and I have a piece that is under editing at the moment for the Harvard Business Review, where we are providing a sense for businesses as to what the landscape is that they’re going to face.

Sometimes I think that will be very good, to see a big, powerful government beginning to pursue the wholesale reform of the international financial system, which has become problematic for democracy in a variety of ways. And quite frankly, which side of that debate I’m going to end up on over the longer term is going to depend on who the particular actors are on the two sides, and which seems to me to be most compatible with a broad, small-l-liberal understanding of the good life and the good society.

On Facebook’s new Oversight Board

FARRELL: I’m very pessimistic.

COWEN: Why?

FARRELL: This is a piece that Margaret Levi, who has written on the theory of the state, and Tim O’Reilly and I wrote about 18 months ago. More or less what we did was, we took a standard set of arguments from political economy, and in particular North and Weingast.

North and Weingast, I’m sure you’re familiar with, and many of your listeners will be familiar with. They have this great article on tying the king’s hands, where they argue that the Glorious Revolution — this crucial moment in British history — why it was so incredibly important was that it effectively allowed the monarch to make promises. Previously, monarchs had been able to borrow money and then renege on their debts.

Once Parliament is instituted, the monarch can’t do that nearly so easily anymore. And this weakness turns out to be an incredible source of power for the British crown over the next couple of centuries. It effectively allows it to borrow money, and to borrow money freely, because the lenders don’t have to worry that the money’s going to be confiscated. And as people like John Brewer have discussed in their discussion of the British fiscal state of the 18th and 19th century, this turns out to be an enormous source of power projection.

The problem is, I think, that if you look at Mark Zuckerberg and Facebook at the moment, he does not have the power to tie his hands. You have this very, very strange corporate structure where Zuckerberg is effectively CEO. He is in control of the board. He has the majority of the shares that count. And this means that it’s very, very difficult for Zuckerberg or anyone who is in Facebook to really credibly commit to tie their own hands in this kind of way.

COWEN: Doesn’t he have the incentive to tie his own hands? Because the moment he deviates from the court, people blame him for the decisions. And what he possibly would like is simply for it to be someone else’s responsibility. So it’s then incentive compatible, no?

FARRELL: Oh, we’ve seen multiple instances in the past where Facebook has proposed all of these arrangements by which there would be referendums of their users and so on, and where it effectively began to renege on this once it became clear that this was inconvenient for Facebook’s underlying business models.

I think that this is going to work up to the point where there are serious implications for Facebook’s business model, and past that point Zuckerberg is going to have a very, very strong incentive to renege.

And there’s a more general problem if we think about platform economies, that platform companies have become too powerful to commit to behave in good ways. If you look, for example, at Amazon, if you look at Google, all of these — they’re not only businesses, but they’re also effectively microeconomies in their own right. They’re both market players and they are the marketplace itself for key aspects of the information economy.

That makes it really, really difficult for them to guarantee credibly to other market actors that they are not going to take advantage of the unique power, the unique access to information, access to ability to shape market conditions that they have. And even if they want to, it’s going to be extremely difficult, I would imagine, for somebody like Jeff Bezos, when he’s got all of these hungry young executives who are trying to make money and whose future depends on their ability to make money, to stop them from pushing the envelope in ways. And that may undermine Amazon or Google’s or indeed Facebook’s market position over the longer run.

So I think that this is a much, much more general problem, and we know far less about the internal hierarchies of these companies and the internal political economies of these companies than we ought to. But what we do know, and here Tim O’Reilly’s recent book is quite good on this, gives us some reason to suspect that they may have some real problems.

COWEN: What should we do, then, with speech on Facebook if the Supreme Court idea is so flawed? What’s the better idea, especially for a country that has a First Amendment?

FARRELL: That’s a problem that I’ve —

COWEN: But maybe it’s the best idea that there is. Right?

FARRELL: Okay, okay. But I guess the problem with Facebook is, you look at the business model — there’s just no way, given Facebook’s business model, that it can credibly act. Even if you get away from the questions of political responsibility and who ought Facebook be responsible to, there’s no very good way for it to successfully police speech on its platform, given the tools that it has.

Machine learning can do wonderful things, but machine learning simply is not going to ever be able to keep up with the multifarious ways in which human beings can use language in order to communicate nasty and unpleasant things to each other. So the completely unsatisfactory answer I have to your question is, I just don’t think that one can come up with a satisfactory solution, either in political terms or in terms of effectiveness — given the economy that we have at the moment — to the problem of policing free speech.

First of all, there are no universal standards. Secondly, even if there were universal standards, I don’t think that we have the appropriate technical tools to be able to implement them when we’ve got companies that have billions of users and thousands or tens of thousands of employees.

COWEN: But we can’t regulate 8chan very well either, right? They post the very nastiest stuff you can imagine. They’re presumably a small company. They don’t have any kind of dominant position.

I’ve never even wanted to visit, but I read about what’s on there, and we can’t stop them either, so it doesn’t seem the problem is Facebook or the structure of the economy. Isn’t it just the case we now have technologies where everything that can be said will be said, and we’re not going to stop that?

FARRELL: Well, I guess the question for me is — and again, this is a wide open question because we simply don’t have enough good empirical research — but what is the relationship and the broader ecology between companies like 8chan and companies like Facebook? I suspect that companies like 8chan will be far, far less successful if there weren’t much bigger platforms like Facebook that they could effectively grow upon.

So here are the arguments, something as follows. If you think about 8chan, and if you think about 4chan before it, they were basically meme factories. They were basically these places where these bored individuals hung out. You also created these memes in a kind of process of frenzied Darwinian evolution, where you desperately want to make sure that whatever you had said was on the front page because otherwise it would disappear forever. So you’ve got this survival-of-the-fittest thing, where incredibly valuable or incredibly effective memes go out and begin to populate the entire space.

But you need two things for that to work. First of all, you need a process of generation, and secondly, you need some kind of process of dissemination. You need other platforms which have far greater reach, which can then allow for these memes to propagate through the atmosphere.

I suspect that if we were in a world in which everything was at the scale of 8chan, rather than having a mixture of companies at the scale of 8chan and companies at the scale of Facebook, that the likelihood of this stuff spreading and becoming epidemic across the entire community of internet users would be far, far less. Obviously, we would have other problems then. But I think that the problems that we would face would be a very, very different set of problems from the problems that we face in the current environment.

COWEN: Right now, WhatsApp is end-to-end encrypted, and it’s either very hard or impossible to crack that. Should the law insist on a back door in the United States?

FARRELL: In the United States. Okay.

COWEN: Not Denmark.

FARRELL: I’ve got a lot of friends who are on the other side of this. I think that it is okay to have this as long as there is clear legal process around it. That is the question.

COWEN: If you were a kangaroo court for NSA surveillance, right? Snowden has pointed out, basically, that they’ll approve whatever request comes in.

FARRELL: That has changed to some degree. If you look at FISA now, FISA is a very, very different beast than it was in the past. More or less, the problem with FISA, as I understand it, was effective as a court in which only one side was able to present its evidence, and now you have effective public advocates. You have a number of people who act as advocates of the general public interest and who are read into the secrecy surrounding it but are not representative of the interests of the security community.

My understanding is that FISA is still perhaps problematic from a civil liberties perspective, but it is far, far less problematic than it used to be. So I think that it is possible to do this kind of stuff. It takes careful institutional design, and in general, I think that it is okay to have some legal access to heavily encrypted information.

The problems, of course, are going to be (a) as you say, this is likely to be something which is going to be swept up into the security state, and (b) let’s really implement this properly — we’re going to have to see the creation of some kind of a system, probably among advanced industrial democracies in Western Europe, the United States, Japan, South Korea, and a small number of other countries where there is some set of shared standards and shared agreements around this.

We’re beginning to see the battles starting over that with agreements between the United States and the United Kingdom over access to electronic evidence. I worry that this discussion is going to be dominated by the security side of the House, but to the extent that privacy advocates, privacy officials are able to get into this debate as well, I think that one could plausibly come up with something which is going to be reasonably respectful of civil liberties.

COWEN: Why does Twitter seem to be relatively left-wing politically? I don’t mean the company. I mean the service.

FARRELL: Yeah, the service. First thing, I’m taking the statement on faith because I actually haven’t seen any research on this. There must be somebody whose research shows sort of broad left-wing versus right-wing views on Twitter, using NLP or something similar. I haven’t seen that research.

To the extent that it is true, I think that if one wanted to come up with a half-baked social science theory which might or might not be correct, it might be because the valences of the service are much more about their quasi solidaristic . . . about creating affirmations of shared values, of shared communities in ways that plausibly work. But then, arguing against myself, I would immediately think the same thing ought to be true of a variety of conservative communities.

When I look at my Twitter, my Twitter is certainly much more left-wing, but that is also —

COWEN: But so is mine, right? [laughs]

FARRELL: Yeah, that’s a function. I wonder again if there’s research on this. And if there’s not research, if it’s just perception rather than reality, to what extent is that perception the results of the truncation of a big chunk of the Right out of the conversation?

Because if you think about the conversation that we’re involved in, it’s a conversation which you might call small-l liberal, that is, people who are on either side of the aisle but who are plausibly committed to a kind of Popper or Gellner way of thinking about the world, in which you want to have debate on both sides of the aisle because this is how you advance argument, advance your understanding of society.

But on the Right side of that, there has been a truncation where a lot of people have peeled off, and where Donald Trump has had some very, very substantial consequences for debate. I don’t follow many people who are avid followers of Donald Trump, and I follow them more or less in a clinical way rather than a these-are-people-who-are-going-to-have-interesting-and-unexpected-things-to-say-to-me kind of way.

So I wonder whether or not that perception is much more a result of the fact that, if you are a certain kind of libertarian, the people you want to talk to are going to be far more on the left side of the aisle right now than they would have been five or six years ago.

COWEN: The Martin Gurri thesis is that, with the internet, we see everything better and more clearly, and there’s more transparency, and we become jaded and cynical because the elites are not so wonderful. And everyone seems more dogmatic on Twitter, perhaps, than they are in real life. And thus, we grow disillusioned with politics. Agree or disagree?

FARRELL: Well, a lot of it also has to do with the form of Twitter, that it was 140 characters and then 280 characters. There has been some research which suggests that the increase in the character limit has actually had consequences for perceptions of real argument happening as opposed to people just setting out stances. There is certainly something to be said for the increased dogmatism — that is, when you see the other side and what the other side actually says, that there can be a tendency towards polarization.

But I also see a lot of very interesting conversations happening on Twitter that I would never have been exposed to before. And over time, maybe I’ve mellowed. I’ve become much nicer. I’ve become much more deliberate and not getting involved in confrontations or fights on Twitter myself because I just don’t have time in my life.

As a result, I found it a much, much more pleasant experience to get to know people and not feel that when they say something that you think is idiotic or reprehensible, that you necessarily have to argue with them because maybe tomorrow or the next day they’ll say something that’s more interesting, and that brings you back into a feeling of communion with them.

On things under- and overrated

FARRELL: Sure, go ahead.

COWEN: Bitcoin.

FARRELL: I think overrated.

COWEN: Why?

FARRELL: If you think about Bitcoin, it purports to be a technological hack. It’s really an effort at a sociological hack, and I don’t think it’s particularly worked. I think that we’re going to see the underlying technologies being adopted to the extent that they are useful for better financial services.

If you think about Bitcoin, it purports to be a technological hack. It’s really an effort at a sociological hack, and I don’t think it’s particularly worked.

But the ideology of Bitcoin, the idea that you could effectively, like the villain in Rapunzel, that you would create this machine for sowing value out of rubbish — basically, that’s what Bitcoin is. It’s turning wasted computer cycles into something that people view as being a thing of value. It succeeded among a significant enough community that it’s going to survive and be around for a while. I don’t think it’s ever going to take off beyond that community.

COWEN: The Slovenian theorist, Žižek.

FARRELL: I don’t have any very strong opinions. I have never actually read Žižek.

COWEN: I think that means you think he’s overrated.

FARRELL: Yeah.

COWEN: Analytic Marxism.

FARRELL: Analytic Marxism, I think, is underrated. I think it’s going to come back. Now, when I say analytic Marxism, let me be specific about that. There’s a lot of Marx which I think is flat-out wrong. And the analytic Marxist project itself drove itself into a hole. If you look at people like [Jon] Elster, the other people who are strongly committed to it, they eventually ended up figuring that if you wanted to make sense of Marx, you’re going to come to the conclusion that eventually there wasn’t much point, there wasn’t much sense to be made of it.

But nonetheless, the basic underlying idea, which is that if you bring together rationalist perspectives with a direct concern with power relations and a desire to understand power relations in the Marxist and the Weberian way, that this is something which is coming to the fore again, which is extremely valuable.

Somebody else who I think is underrated in this context is Mancur Olson. For example, if you want to understand where Elizabeth Warren is going, you want to go back to Mancur Olson’s book, The Rise and Decline of Nations, because I think what Elizabeth Warren is pursuing is very much an Olsonian view of how markets work: that drag and dross and corruption builds up and that in order to allow markets to achieve their full potential, you basically need to cleanse them at a certain point.

I see Warren as being somebody who has very much taken on the law and economics training, and you see big marks of that in her thinking, but who has turned it in a very different ideological direction.

COWEN: The economic future of Bologna, Italy?

FARRELL: I’ve not been there in about 20-odd years. My sense is that the kinds of manufacturing community that I studied back then is still surviving, but I don’t think it’s thriving in nearly the same way. But I really don’t know enough to say. I’ve not been there.

COWEN: Does Italy have any way out of its current box — high levels of debt, zero per capita income growth for now, what, 18 years? Doesn’t it all have to end badly? Or is there a magic escape?

FARRELL: It’s a really good question. The standard story of Italy, according to people like Carlo Trigilia, was that it was public weakness and private strength. More or less, the idea was that you had this ridiculously over-elaborated state structure, regulations which made it extremely hard to get things done, and you have this incredibly dynamic private sector that managed to survive and to thrive despite this and to produce to markets elsewhere.

Now the question is, for Italy, that its big strength was in manufacturing. It was not in computer science or in any of the new data-related economy. Italy’s problem is that it is, more than anything else, it is stuck in a previous cycle, except in certain areas such as luxury eyewear, which are not going to power an economy. It’s going to have a very great difficulty clambering out.

The interesting question is, to what extent is the Chinese state kind of like Italy writ large? You can see the same kinds of problems with this massive bloated state sector in China, these big companies, which are closely and intimately related with the state. You have these small private companies, which have been incredibly powerful, incredibly dynamic, incredibly successful.

I wonder whether China may suffer from a version of the Italian disease two or three decades from now, and perhaps even more starkly because of the lack of democracy. Because it really is only possible to maintain that private dynamism for a period of time while the public economy does not provide the appropriate public goods. Sooner or later, it just becomes impossible to maintain.

COWEN: The Irish musical group My Bloody Valentine — overrated or underrated?

FARRELL: I think this is something that we will agree. I don’t think it is possible to overrate My Bloody Valentine. They’re just incredible.

COWEN: And what’s their best work?

FARRELL: For me, the track on the end of Loveless, “Soon,” is one of the most sublime achievements. I’m also very fond of Kevin Shields’s MBV Arkestra mix of the Primal Scream song “If They Move Kill ’Em.” I think that it was released first of all as a B side and then on their next album. It’s like this crazy Sun Ra meets all sorts of strange guitar distortion music. It’s very, very good.

I think that they really are one of the essential groups. That album, which they released three or four years ago, I don’t think was quite as good as they released back in their heyday, but it was still pretty damn good compared to what most of their contemporaries are doing.

COWEN: For a 20-year hiatus, remarkable, I’d say.

FARRELL: Yeah.

COWEN: Finnegans Wake. Is it a readable book? Is it a good book?

FARRELL: I’ve never read it. I have a great-uncle who features in Ulysses, but I’ve never read Finnegans Wake.

COWEN: What’s the role of your great-uncle in Ulysses?

FARRELL: To appear as a drunk windbag in the Aeolus chapter.

COWEN: Was he a drunk windbag?

FARRELL: He was an interesting character. His real name was Hugh McNeil. He appears as Professor MacHugh in the Aeolus chapter. He comes in. He makes various remarks about Greeks and Romans and the comparison to the Irish and the British, more or less insinuating that the Greeks, like the Irish, are great liars, thieves, tellers of stories. And the Romans and the British are great builders of sewer systems.

He was a lecturer in classics, as I recall, at the predecessor to University College Dublin. Had problems with gambling, had problems with alcohol, and ended up, more or less, being alienated from his family and dying alone in a boarding house decades after. A rather sad story.

COWEN: Speaking of Ireland, let’s say I look at the last 30, 35 years of Irish history and I say, “Ireland went from being very poor to being one of the wealthier European nations. And this, in essence, just shows neoliberalism is correct, and we don’t need any more from the Left.” What would your response be?

FARRELL: I would say that there is a certain amount of neoliberalism in there, but maybe not in quite the sense that you suggest. There are two things. First of all, I would say, insofar as there is anybody who’s identified with neoliberalism in Ireland and has another family member who has an uncle who was the deputy prime minister of Ireland, Michael McDowell, who I’m very fond of and who I have strong political disagreements with.

But if one is to look at neoliberalism as a kind of global power structure, plausibly Ireland managed to figure out very creatively, very ingeniously, ways to fit into that power structure that allowed for massive inward investments. Here specifically, a lot of what Ireland has done over the last number of years is to figure out a combination of a regulatory play and a taxation play.

So it has been a relatively lax place in regulating various financial activities, in regulating platform economies. And it has also been relatively willing to facilitate some very exotic tax arrangements. I think that the former of these still continues and has managed to kickstart a genuine native industry, which will continue to do very well.

I think that the latter part, the taxation game, is coming to an end, and it’s very clear that it’s coming to an end. People in the Central Bank have been making statements about it, more or less warning the government of the fiscal implications to a cessation of Ireland’s ability to finesse the global tax system. This is coming to an end, and the Irish state is suddenly going to have a fiscal headache as a result, which, added to a possible Brexit headache, could have some pretty significant implications.

COWEN: Karl Polanyi’s book, The Great Transformation — what was it, if anything, that he got wrong in there? It’s a brilliant book. It’s had massive influence on Dani Rodrik, I think yourself, many other people. Does it have a flaw?

FARRELL: It has many flaws. I think it’s a really interesting, good book that everybody ought to read. I also think that people ought to read Schumpeter, the book on the Right that people need to read is Capitalism, Socialism, and Democracy.

But I would say that Polanyi is a very, very . . . There are two things that are fuzzy in it. First of all is his ideal alternative, which is based on a kind of specifically Christian notion of socialism that I think he derives from people like Tawney, which is very, very hard to create in the modern era. So there’s a lot of pretty overt nostalgia for a previous, almost quasi-medieval sense of organic connection between society and economy, which I think simply cannot be reestablished under liberal conditions.

And the other thing that, of course, is very, very vague and wafty in Polanyi is how it is that “society” reacts against the market, reacts against these depredations of the marketplace’s double movement that he talks about. Personally, I tend not to believe in big abstractions such as society as explanations or as social causes.

I think that he captures something real. And if you want, alternatively, to say what Polanyi gets right, I think that there is something that can be said very plausibly about the ways in which many of the aspects of Trump are, alternatively, what we see happening with people like Orban and Kaczynski in Central and Eastern Europe, that these can be explained as being reactions against overly harsh market forces of one sort or another.

But the specific micromechanics, which it happens are really, really important, and we still haven’t really figured out what those micromechanics are. And trying to figure out how to create a better society is really going to force us to look at this much more specifically than a Polanyian framework would allow us to do.

COWEN: Who or what will replace labor unions as the offsetting or special-interest group to oppose capitalism or capitalists? Can we really count on the urban professionals? Aren’t they a bunch of spoiled brats?

FARRELL: I think labor unions are going to replace labor unions. Now, that said, this is a long-term bet, which could, of course, turn out to be completely wrong. But I think that it’s more or less impossible to imagine a world in which you have protection for large segments of the population that doesn’t roughly resemble labor unions.

Now this may be very, very different, just as the platform economy involves a greater degree of disaggregation in standard work practices. One could imagine that we’re going to have to see labor unions being very, very different in form, but I think that they’re important.

And it’s also very interesting to see people like Acemoglu and Robinson making a very important political case for labor unions, saying that if you’re an economist, you can’t think about labor unions as being a first-best solution because, clearly, they’re about distribution and distribution of stuff to their members. But if you’re thinking about maintaining the underlying conditions for a democracy, which presumably is a good thing for markets and for capital, then having something like labor unions is necessary.

And I think that the way that Niskanen has moved and, in particular, the way that people like Brink Lindsey, together with Steve Teles, have moved towards endorsement, albeit with a certain amount of grudgery of labor unions, really points to the realization by smart people on the center right and on the libertarian-tinged center right that this is something that maybe libertarians have gotten wrong over the last couple of decades.

COWEN: Pseudoerasmus issued the following tweet a few weeks ago. It was something like, “Has any successful industrial policy been backed by a regime that took the side of labor rather than business?” You have a response?

FARRELL: Hmm. Not off the top of my head. I would have to think about that.

COWEN: In terms of trust, you’ve written a great deal on trust. What’s the most solid piece of evidence or body of understanding we have on why some societies are higher trust than others?

FARRELL: I tend to think about trust in terms of institutions. There are different people who have different takes on this. Some people talk about trust in terms of this broad social sense of optimism or happiness and things. I tend to think that if you want to have trust, you need to have well-functioning institutions, which —

COWEN: But that’s circular in a way, right?

FARRELL: Well, it depends on what you say. I could bore you for hours about how I think institutions work. But if you really want, I guess, the Farrell sense of the social production function, it’s something like the following: that you need rough levels of economic inequality which allow for institutions which are reasonably fair, which in turn, create the conditions for social trust.

COWEN: A little bit on literature: Gene Wolfe, The Book of the New Sun, four volumes. Maybe you know the Monty Python skit where they do, “Summarize Proust, and you have 10 seconds.” How would you summarize what’s in those four volumes? Why is it interesting?

FARRELL: I would summarize it as Proust with rocket ships and ray guns. So I would say — “summarize Proust” — to summarize Wolfe, Wolfe is Proust with rockets and ray guns.

COWEN: Is it introspective? It all seems to be in the sphere of action. So we never know what the torturer, Severian, is thinking or feeling. Or I don’t know. It confuses me. Is he a good guy, a bad guy? I’m never sure.

FARRELL: Well, we know what he says he’s thinking.

COWEN: Of course, but Wolfe misleads us systematically.

FARRELL: Yes. Wolfe misleads us systematically, and clearly Severian is not a reliable narrator, but then neither is Proust’s narrator either. I think that if you really want to understand where Wolfe comes from, it really is Proust. His writing style is Proustian. His concern with time, with how it is that time works, is quintessentially Proustian.

And you don’t look to Wolfe any more than you look to other science fiction for characterization. I don’t think that’s the particular strength. What you do look for is a kind of a sense of the world. And in Wolfe, in particular, he provides this real understanding of how it is that the workings of society, and interestingly, conservative understanding of the workings of society.

I think of him almost as being Proust in reverse. Proust is describing a world in which the modern world is overtaking aristocracy. And that clearly is one of the great problems of Proust, what is happening on the social level. You have all of these aristocratic understandings: the Merovingian, all of these histories, all of these castles, all of this wonderful art, and they are being replaced by the modern world with its telephones, with its electric lighting, and so on.

And how do you think about this? How would you try to preserve what was happening in the past? What Wolfe does, which I think is an extraordinarily interesting thing, which would be impossible for anybody who is not a science fiction writer, is to take that and to reverse this and to imagine a world in which modernity has disappeared.

So it is at the other end of the telescope. It is this tiny image which is barely discernible if you look through the telescope the wrong way. It has been surrounded and replaced and, to some extent, supplemented by medieval ways of thinking, medieval ways of organizing the world, and what that looks like. And it’s very, very interesting.

There’s this beautiful image. One of my favorite images from The Book of the New Sun is of the famous picture that was taken, not by Armstrong himself, but of Armstrong in his helmet on the moon — with Neil Armstrong, with the flag in the background, and the reflection of the other astronauts. Wolfe has that as a picture which has been preserved for thousands of years, perhaps, in this art gallery, which is maintained in this forgotten citadel.

It gives you this wonderful sense of what it would be to have an image like that taken and ripped entirely out of context and seen through an entirely alien set of eyes. And that’s what science fiction does when it does it well, is to make the strange familiar and the familiar strange in the Novalis sense of the word. And that’s why, for me, Wolfe is a head trip.

COWEN: Philip K. Dick — in his worldview, why do checks and balances fail in a democracy? How do things go wrong? “Oh, we’re America. We vote for people. They give us things. We live, we die.” What’s the actual problem?

FARRELL: I think that Dick’s understanding of politics — at least his intellectual understanding of politics — is not his strength. Clearly, he’s got this very strong paranoid streak. Everything is about Richard Nixon, which I suppose is not unreasonable given the way that the world is.

What Dick gets much, much better than his sense of politics and such — or, for that matter, than his sense of character because he is absolutely terrible on character, especially when it comes to women characters. His women characters — they’re all expressions of Dick’s own personal anxieties in one way or another. What he gets better is the sense of massive complex systems that don’t work particularly well — the kinds of constraints that they impose upon individuals and the kinds of ways that people try to respond to those constraints.

And also, of course, the sense of a profound unreality in his novels, which I think is really why Dick, much more than, say, Orwell or Huxley or any of the other people you might think of — Zamyatin — is really the person who captures the kind of dystopian characteristics of the society that we live in at the moment, which isn’t a society where we have a state telling everybody what to think, but it’s a world in which nobody knows quite what to believe is true anymore. And you have multiple different versions of the truth.

Philip K. Dick would have just reveled in QAnon. He would have had a very, very good sense of how it is that we could end up in a world with people like Donald Trump and QAnon reinforcing each other in a kind of a feedback loop.

COWEN: What’s the best of his creations? And what’s the most important? And are they the same?

FARRELL: So the best of his creations, if you want to think of the best as a novel, I think is The Transmigration of Timothy Archer, which is plausibly the only genuinely good novel that he wrote, and also is the only novel that has a sympathetic and interesting female character in it. But it’s not his most important work. I think it’s good at showing that towards the end, he managed to get some kind of a sense of himself from outside and a perspective on his struggles with mental health, which clearly were both a driving creative force for him and a source of much personal agony and destruction.

I think that the works that are most important are Ubik and Martian Time-Slip. Both of these are the quintessential Dick novels about how it is that reality can break up and what it feels like to be in that kind of world.

When I feel depressed about the way in which somebody like Donald Trump seems to dominate in very unhealthy ways our collective imagination so that it’s almost impossible to get away from, I really think about one of the kinds of psychic predators that Wolfe describes — Jory Graham, I think it is, if my memory is correct — in Ubik. There’s this sense of the world in which all of these paths converge towards a single actor who just gobbles up all of our attention.

Dick doesn’t have any very plausible way of getting out from that. He suggests, more or less, that we need some kind of divine intervention. But it captures some of the reasons why the world that we live in very often feels so unpleasant. Even when we don’t want to pay attention to Donald Trump in the United States, we find everybody around us wants to pay attention to Donald Trump. And Trump, if nothing else, seems to have a unique mastery of the skill of remaining at the center of attention.

COWEN: A few questions about Ireland. What do you miss about Ireland the most?

FARRELL: What I miss is also what I’m happy to get away from, which is the sense of comfort and belonging. Ireland is a very small country. Within 60 seconds of having met another Irish person, you probably have figured out who that person’s family are, where they come from. You will have made a wide variety of inferences about what kind of person they are, what their plausible political beliefs are, and so on.

And that’s very, very comforting to be in. It’s also somewhat constraining and constricting. So what I love about the United States is the precise opposite, that nobody much cares about where you come from. If they think about Ireland at all, they think about it as being a small, quaint place with leprechauns and green fields and what have you.

So you have a much greater opportunity to make yourself and to decide who you are in the United States than in Ireland, at least if you have the economic wherewithal to do it. That makes Ireland in some ways a much more confining, a much more restrictive place than the United States, again, assuming that you have enough money in the United States to be able to realize yourself.

COWEN: Why did Ireland seem to secularize faster than just about any other country in world history? Less than 30 years. Now the rate of churchgoing is very low. It used to be one of the most religious Catholic places.

FARRELL: I think that it’s — what’s his name? Timur Kuran. I think that this is a Timur Kuran story, where you have the set of beliefs and expectations which are mutually reinforcing because everybody believes that everybody else believes them. And when this collapses, the collapse can happen very, very quickly indeed.

We saw a massive wave of preference revelation happening, and it’s pretty possible to pinpoint the point at which it happened. One of my professors was a character called Brian Farrell, who was very well known for being quite careful and reticent because he was also a television broadcaster. He ran the big Ireland current affairs show.

Then one day, we had the revelation that a bishop who had become the spokesperson for the Irish church had been found to have had a child and had been supporting that child for 17 years, using church funds. The following morning, I saw Brian in the car park in University College Dublin, and I saw him in absolute glee saying, “The bastards, they’ve lost. Finally, the bastards have lost.”

And he was right because at that moment, the stranglehold which a certain version of conservatism had held on Ireland — it began to evaporate very, very quickly. And after that, I think that having the church as a center of society, as a center of all these social functions — all of these things began to disappear.

Material prosperity helped substantially, as well. But I really think the reason why it happened so fast was because it should have happened 20 or 25 years before. And it took a shock to the system to really cause this cascade of norm degeneration. So the people switched rapidly from one equilibrium to another.

On the Henry Farrell production function

FARRELL: We do, although I feel guilty because I haven’t been writing nearly as much in Crooked Timber as I would like to.

COWEN: But in the equilibrium, why aren’t there more Crooked Timbers? What is the scarce input, right? People like readers.

FARRELL: I think that Crooked Timber — we had a useful catalyst function. If you look at the world today, there are a lot of people who are able to do the things that we were able to do in different mediums.

If you look at the world that we began writing in, this was the world where the Iraq War was beginning. We started writing just around the time that the Iraq War took off, in which there wasn’t much of an organized Left and a coherent and systematic intellectual Left in the United States. There was more of one in the United Kingdom. I think that in a sense, that isn’t true anymore.

If you look at the Left, you may disagree or you may agree with what it says, but there’s a lot of thriving debate. There’s a lot of argument. There are a whole bunch of journals, schisms, factions, all of these things — much more lively, much more thriving intellectual debate than there was back then.

So in a sense we came into being at a moment when a lot of the energy of the Left had run out. You had places like Dissent and other places which were really running on the accumulated energy of the 1960s and 1970s, but which weren’t particularly strongly . . . They weren’t oriented towards the present-day circumstances that they found themselves in.

Now I think we’re in a very different world, where there just isn’t as much need for Crooked Timber as there used to be because there are so many other places where people can write, where people can argue, where people can find things to say. And I think it’s a very interesting intellectual phenomenon, and you have a vibrant Left, which is also beginning to engage with the policy process again, in a way that it hasn’t for a long, long time.

COWEN: If you think about, just in general, how you study things, what is something you do that’s nonobvious and maybe most other intellectuals do not do? You read standing on your head, you go for long walks in the rain, what?

FARRELL: What do I do that’s unusual? I would say I read widely, and I play with a lot of ideas, most of which don’t come to fruition. Again, this is one of the advantages of social media, that you can toy with an idea. You can turn it into a micro thread of three or four things on Twitter, and you can throw it out into the world, and you can see if it sticks. You can see if it grabs attention. You can also see if you’ve worked it out to your own satisfaction.

And most of the time, that’s not going to work. Most of our intellectual products are failures, but we live in a world where it’s possible to throw these failures at a far, far more rapid rate at other people and try to figure out what works than in the past. I found that to be an extremely useful way of thinking through things and playing with initial ideas.

COWEN: So a kind of combinatorial iteration.

FARRELL: Yeah, yeah. You can think about it as evolutionary dynamic. You throw out variations. Most of those variations fail. Some of those variations take root, and then those variations can succeed far, far better.

COWEN: What’s your favorite movie?

FARRELL: That’s the kind of question . . . Secrets & Lies, actually. Mike Leigh’s Secrets & Lies.

COWEN: Last question. Your plans for the future, intellectually — what you will write or what you will do. What can you tell us?

FARRELL: What I’m really interested in at the moment — two things. First of all, the weaponized interdependence work, which we’ve talked about already, so it probably doesn’t bear much more talking about.

COWEN: No, the world will cooperate and serve you up much more content.

FARRELL: Yeah, the world is maybe cooperating too much. Myself, my co-author are finding ourselves . . . We joke that we’re on a treadmill because stuff keeps on happening. People keep on asking us to write stuff. It’s fun and it’s exciting and it’s wonderful to see your ideas go out there into the world. But it also requires a lot of work to keep pedaling. Also — and I think this is the plausible fate of anybody who has an idea that takes off — you see the idea effectively escaping your control.

So people are talking about weaponized interdependence with respect to a much wider and broader and diffuse range of phenomena than what we talked about. And that’s just the way that these things work.

Second thing that I’m interested in is the informational content of democracy. Here, maybe the intuition is something like the following. We have a standard set of arguments that have been extremely influential among libertarians and, I think, more broadly in the world, which are derived from people like Hayek.

We have this set of arguments which are beautifully expressed and which are very important arguments that Hayek makes about how markets work extraordinarily well to gather all of this diffuse information, this information which is simply unencodable, and to make it into something that can be useful through the price mechanism. The price mechanism takes all of this tacit knowledge and makes it actionable in important ways.

The Hayek and the Mises story is, of course, one where they contrast this with state planning, and they argue very plausibly that if you look at central planning processes, that these central planning processes are never plausibly going to be able to compete with the market, at least for doing that kind of thing. I think that states can do lots of other things. They underestimate that, but that’s a different argument.

What I also think is that democracy also has a set of techniques or tools for capturing information because — and again, this is going back in a certain way to what I was saying about the Gellner or the Popper view of society, which is more or less that we have all of these people with different understandings, different aims, different aspirations within society.

And you want to do two things. First of all, you want to maintain peace among all of these quarreling people with their very different aims and aspirations. You want to try and figure out how you can stop them from going to war with each other. But secondly, there also is going to be a lot of information which is captured precisely in their disagreements, in their differences, in their different perspectives.

So my ideal for democracy is, as a machinery, to try and get as much information out of those differences as possible, to take things like partisanship — which is messy and rancorous and squalid much of the time — but to recognize that the clash of different ideas, the clash of perspectives also has a lot of information value and does things that markets can’t capture.

So, trying to think through much more systematically, what are the modes under which democracy is better or worse at doing this? What are the kinds of institutions that allow democracy to do this better or worse? This is a major set of questions.

Obviously, there are lots of other people who are doing good things on it, but if I think about the other work that I’m doing with people like Cosma Shalizi, who you are familiar with, with Hugo Mercier and Melissa Schwartzberg, these are the kinds of ideas that we are trying to get at.

And also work with Bruce Schneier, which is thinking about the opposite side of this, which is that democracy is likely to be overwhelmed under circumstances where people disagree too much on basic facts, on basic information. And in what ways can you try to make democracy less vulnerable and more robust against various forms of informational attacks? Not only Russian-type attacks, but the kinds of attacks that domestic political actors seek to use in order to pursue their own short-term aims.

COWEN: Henry Farrell, thank you very much.

FARRELL: Thank you.

Conversations with Tyler

A podcast in which esteemed economist Tyler Cowen engages with today's most underrated thinkers in wide-ranging explorations of their work, the world, and everything in between.

Mercatus Center

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The Mercatus Center at George Mason University is the world’s premier university source for market-oriented ideas.

Conversations with Tyler

A podcast in which esteemed economist Tyler Cowen engages with today's most underrated thinkers in wide-ranging explorations of their work, the world, and everything in between.

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