This book was panned in the Times Higher for its ‘persistent anti-capitalist tone’ – reason enough for it to be given further consideration here. ‘risk management’ has become a central feature within the administration of contemporary capitalist society and has correspondingly assumed a new significance within its academic disciplines, particularly economics, politics and sociology. It is fittingly so. In an earlier era the anarchy of the capitalist market was meant to resolve all problems.
Adam Smith’s invisible hand ensured that all resources were put to best available use and that general betterment resulted – even if weaker capitalists were trampled under foot and workers exploited. Marx himself saw this as the secret of capitalism’s dynamism. But, as Marx also foresaw, this competitive dynamism had its limits. Growth through competition would ultimately produce its opposite: monopoly. And monopoly would dislocate markets, generate fictitious capital and demand intervention by the capitalist state to manage the resulting crises.
‘Rrisk management’ is the tacit acknowledgement that markets can no longer resolve all economic and social problems. The complex interaction of monopolistic investment, financial engineering and manifold interventions by the state apparatuses of competing countries results in a dangerous and unpredictable environment for capitalist enterprises – and even more so for those employed by them.
The strength of this study by Beck and Kewell is that it stands outside the discipline of risk management itself and seeks a critical understanding of its wider social context and historical origins. It is not explicitly Marxist. But a Marxist understanding informs much of its argument – hence its ‘persistent anti-capitalist tone’.
The first chapter takes the pre-history of the mathematics of risk from the ancient world to the early modern period. Based on games of luck and the calculation of chance, the complex mathematics developed in ancient Greece were carried forward in the Arab world, rediscovered in the Renaissance by Cardano and reworked by Pascal and others in the seventeenth century. In the Enlightenment the resulting mathematics gave substance to the belief that large scale data, on populations, births and deaths, on prices and output, could predict future outcomes and establish order and regularity. Such statistics were able to record, comfortingly, the overall progress arising from apparently anarchic markets.
Chapters two and three document what might be described as the pathology of uncertainty and risk in the early twentieth century. They move from the genre of disaster novels (the stereotyping of military enemies and of racial threats) to the misuse of statistical information to defend social policies of ethnic cleansing and control: class differentiation justified by ‘intelligence’ testing; eugenics and crusades for racial purity sustained by similar scientific rationales. Chapters four and five examine the use of statistical chance and game theory, particularly in the United States, to rationalise the interaction between, first, the state and the corporate development of technology, and, second, the state and what were considered to be external threats posed by foreign powers. Social scientists became the handmaidens of Pentagon in games of probability that determined the fate of millions in Vietnam and potentially many more during the Cuban missile crisis. Similar calculations underlay the development of nuclear energy, pharmaceuticals and the safety of oil installations.
The final chapter would be of particular interest to readers of this journal. It examines the dynamics of capitalist risk, in the larger sense, in the twentieth century. It begins with the theorists of imperialist expansion, from Hobson, Hilferding and Lenin to Sweezy, Magdoff and Perlo, and contrasts them with the theorists of global risk, Giddens and Ulrich Beck. The former demand some form of collective action for social change; the latter, particularly Giddens, present such risk as an existential crisis for the modern individual and one ultimately requiring some form of Hobbesian contract with globalising state institutions.