Corporate Law

Healing our Angry World with Angrynomics: In Conversation with Prof. Mark Blyth

Binit Agrawal speaks with Prof. Mark Blyth on the rise of angry populism across the world and the solutions proposed by him in his book ‘Angrynomics’.


Mark Blyth is a political economist whose research focuses upon how uncertainty and randomness impact complex systems, particularly economic systems. He teaches International Economics, Political Science and Public Affairs at the Watson Institute of International and Public Affairs at the Brown University.


Binit: Sir, I had the opportunity to read your latest book, “Angrynomics”. It makes some very compelling arguments on the rise of anger we see today. You link this anger to economic failure and dwindling livelihood security. But will you agree that these elements do not alone define our lives? Quality of life across the world was much worse in the 20th century: crime was very high, healthcare quality was not as good and wars were a lot more common. Why were people not angry then? Or is it that people were angry, but it was not as visible due to few and slow information sharing mediums?

Mark: Well, let’s not be too harsh on the 20th century. Well, let’s think about this. Right? The 20th century started with intense competition amongst the imperial powers, which led to World War One. World War One led to the breakdown of international economic governance, which in turn led to the Great Depression, and the Great Depression led to World War Two. So, you have done almost half of the 20th century with people being angry enough to kill around 200 million people. So, there was a great deal of anger. And in fact, the period when the anger stopped was the period from 1945 to 1975, when at least amongst, if you will, the post-imperial northern countries there was a social compact between capital and labor, which meant the labor share increased relative to the capital share, but both of them grew together. And so that kind of positive growth enabled a period of peace that fell apart in the 1970s, which was a decade of conflict in the core northern countries, particularly over inflation. And as explained in the book, a lot of this had to do to the returns to capital. I’m a businessman in the 70s investing over a five year period, expecting a return of 5% a year. However, because the inflation is 10%, I have no point in investing. So the inflationary crisis of the 70s caused quite a lot of trouble.

There was then the big system reset of the 1980s, which brought about a focus on price stability, rather than full employment. It also saw the liberation of finance, globalization, integration, and marketization. Basically, the world that we have today was built then. This new system also worked to suppress anger, while causing a lot of anger on a global level.  While the rise of India and the rise of China during this phase is to be applauded, it has been happening simultaneously with a depression of wages between the 65th percentile and 80th percentile of a lot of Western countries. And in those countries that anger has been weaponized by politicians. We’ve seen this through Brexit, through Trump, but also let’s not forget that anger has been appearing in France in the form of the yellow jackets, in Germany with the rise of the right, in Chile with anti-inequality protests, in Hong Kong, with democracy protests, and even in India, for example, with the relaunch of Hindu nationalism in various guises. So I would contest that the 20th was very, very peaceful, it was definitely angry. There was tons of anger. But this decade has seen a lot of suppression of anger. This is beginning to come out. And that’s what we’re trying to talk about.


Binit: In the book, you mention that economic failure may be the most important factor, but cannot alone explain today’s anger. In many countries like Hungary, Poland, India, etc. economic failure is either absent or minimal. Then what explains the increasing public anger in these countries?

Mark: It is not that economic failures in these countries are absent. It’s just that they do not seem to be in the picture anymore. So I’ll give you two very good examples of this. Let’s take Hungary, and let’s take Sweden. Everyone loves the Swedes, right? Everyone’s favorite social democracy, how can they possibly be angry?

First, let’s think about what Viktor Orban did in Hungary. Hungary basically was a destination for German equity capital investment in the 2000s. They became part of the network for making cars, amongst other things. And when the financial crisis hit in 2008, there was an agreement that was signed between the Eastern European governments and the IMF, called the Vienna agreement. It basically said that the banks that own all of your banks (which are the Western European banks) promise not to shut down your economy entirely, and repatriate all their capital to save their own banks, if you guys do massive budget cuts, and announce huge austerity packages. When this happened the incumbent leaders said that we do not really have an option but to go with these conditions. Then Orban came in the picture. He said, wait a minute, why are we paying for the mistakes of the western countries? And then he turned on the central bank and said, you guys care more about what they say in Brussels then you do about what we say here. Now at a time when a country’s at an extreme economic shock, and everyone is basically saying we will do whatever Brussels and IMF want, somebody comes along and says, wait a minute, why are we doing this? That’s very popular, and is really, ultimately about economics. Now, the guy may stay in power by politicizing homosexuality, by prohibiting the entry of refugees, by undermining the media and all the usual authoritarian playbook. But what got him there was that economic moment.

Now let’s turn to Sweden. They didn’t have a huge economic crisis. They have functional government, and have high trust in their government. But they had a right wing party called the Swedish democrats that came out of nowhere, and took nearly 12% of the vote. Why? Because there was a consensus that despite the fact that Sweden used to be a very homogenous and relatively closed place in terms of immigration flows, over the past 30 years, it has become a very open country with a large, diverse population. No one was allowed to talk about this. There was basically an elite consensus that immigration is good, and anybody who questions it is a fascist. Well, once you do that, you build up a great deal of suppressed anger amongst the people who are saying, why can’t we just talk about this? And when you have this cross-party consensus that anyone who questions the status quo is a fascist, then that creates the opening for Swedish Democrats to weaponize this as an issue. So, the bottom of the problem with blaming cultural factors on their own is that you can’t explain a change in a cultural factor by reference to the value of the cultural factor. And you can’t see that there is more racism around because there are more racists. By definition, that’s true. But you have to ask the prior question:  Why are there more racists? This question often has an underlying more economic explanation.


Binit: Sir, do you believe your theory of Angrynomics can be extended to countries across the world. Or is it specific to the west? For example, in many countries across Africa and Asia, we have had economic failures, political failure and social failure for many decades now. Why are people in these countries not angry? Or is it that Angrynomics requires the existence of a minimum democratic framework? If yes, what are the minimum necessary elements required to give rise to public anger and to allow it to flourish?

Mark: My short answer is that we wrote the book about the West. It is about anger in the West. But if you were to put it in a more general frame, I would put it this way: the West is becoming like the rest. In a sense, we’re getting used to disappointment and authoritarian governments too. Because we are no longer able to cash the cheques that we’re writing, we’re no longer able to keep the promises that we make. And when you continually disappoint your people, the first reaction  is anger. But eventually they just get to resignation because they don’t expect the system to be anything other than corrupt. Now, I hope that that’s not the case but that is ultimately where we’re heading.

But again, let’s take some other cases. So Chile, it is the poster child of Latin American success. They are not Argentina, they don’t go bankrupt. They have a big reserve fund. They have good governance. Well, people forget that two years ago, for almost 14 months, there were riots in the streets that cost nearly 50 people their lives. What was the trigger for that? A rise in subway fares. What’s going on in Israel? There’s a middle class revolt against Benjamin Netanyahu: they call him the king. Why do they hate the king? Because middle class people can no longer afford houses anywhere in Israel they actually want to live in. What’s going on in Hong Kong? It’s about democracy, yes. But it’s also about inequality. It’s about the fact that mainlanders have pushed up property prices so much that indigenous Hong Kong citizens can no longer afford to live there . So even within these stories, which are outside of the Western core, there’s a common thread, which is a disappointment in politics and the ability of politicians to fulfil the promises. Then there’s this collapse in the ability of ordinary people to realize their life expectancy goals and a denial by the politicians that this is a problem. So there’s this gap between expectations on the one hand and what politicians promise on the other. And inside that is the potential for anger. And I think we are seeing that in lots of different countries.


Binit: Coming to the solutions, you have a proposed a set of economic proposals which can help reduce societal anger. These include the creation of sovereign wealth funds to ensure a stream of revenues to fund social security programmes. Do you feel public anger can only be satiated by economic policy measures? I ask this because, as you show, most tribal anger is not so much about money, but about feeling important, feeling relevant and having a say in the society. What are the other measures we can take as societies?

Mark: So in the book, there is an analogy of the Irish folk singer which is a metaphor for people who feel that the world has passed them by. And those people are pivotal in elections, but they’re actually a small, angry minority. They are not the majority. However, they become pivotal during electoral moments. But generally, they’re still actually quite a small percentage of the population. Most people don’t want to riot. It’s hard work. And it’s dangerous, right? So the way that I look at this is if ultimately, the conflict we’re having is cultural, let’s say, for example, Hindus against Muslims, that’s zero sum. There’s no way around it. If I win you’ll lose. And no amount of economics can get over that. Because the problem is you exist, and you are different from me. But the nice thing about economics is you can always change the distribution. So if we define these problems as insolvable things, the only thing we can do is have a giant war, which I don’t think is a good public policy move. But if we define them as primarily economic, then at least we can try and fix them. So, there’s a possibility that you can actually do something about it.


Binit: Covid-19 has led to unprecedented job losses. It has also accelerated the pace of automation. Many big firms have gained in value as a result, even as small businesses are going bust. Where do you see public anger going from here? Will it still be populist, or will it seek solutions to real-life problems like jobs, social-security, green environment?

Mark: I hope so. But you never know. Let’s take for example the tendency to focus, particularly in the US, on the digital firms: Apple, Google, Facebook, the whole thing, right. There’s an amazing book coming out in November by an author called Brett Christophers called Rentier Capitalism. I read an advanced copy. Essentially, what he does is, he puts into context the way that modern western economies work, particularly the Anglo-American types. These economies don’t make things, they own things. And when you own things, whether it’s a digital platform, whether it’s the ability to franchise a restaurant, whether it’s the cell phone towers that everyone else has to rent space on in order to run a cell phone network, you’re able to basically squeeze income, just through ownership: rents in the classic sense. The digital companies are just one example of this. It’s much more widespread than we think. And if you live in a rentier  economy, what’s the incentive to invest? After all you have to pay me a fee just to get on my road, you have to pay me a fee just to  use my cell phone tower and I don’t have to invest. I’ll do minimum investment. Do I have to be productive? Well, no, because I control the asset, no one else does.  What about wages? Well , because I run the whole thing, I subcontract everything out. The only way the subcontractors make money is by squeezing labor. So you end up with super low wages at one part and then super high wages at the tiny, protected core. So if you work for Google, you’re doing great. If you clean Google’s offices, you get paid nothing. This is the world we live in. If we want to change things, we must start focusing on this. This is seeping into political discourse slowly and we may see the result of the same.


Binit: What are you reading these days? Would you like to recommend our readers something to read? (Other than Angrynomics obviously, which I am sure all of them are going to pick a copy of soon)

Mark: When it comes out in November, get Christophers’ ‘Rentier Capitalism’. It’s based in the United Kingdom, but the lessons are actually much broader. So that’s a very good one to read. Also, there’s a book called ‘The Storm before the Storm’, which is a wonderful metaphor for the United States. It’s actually about the Roman Republic before Caesar. Basically the story is about how a bunch of populist get into power, and promise the moon and the stars. In its core, the book is a story about rising inequality. The only way you could populate the Roman legions and run the massive empire effectively was by promising people land when they came back home from the campaigns. But the people who stay at home, who are the ones at the top 1%, they basically control the registry as to who gets the best land. They give everyone who’s coming back all the shit land and they keep all the good ones for themselves. Rentier Economy, it’s the same story. And guess how that one ends: very badly. So that’s another fun read. I would go with those two.

Binit Agrawal is a V Year B.A. L.LB (Hons.) student at NLSIU, Bangalore.

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