Risk, Uncertainty and Government

Pat O'Malley

• Publisher: Routledge-Cavendish
• Year: 2012
• eBook ISBN: 9781135311797
• Edition: 1
• Topic: Law
• Subtopic: Law Theory & Practice
• Index: Law

Both risk and uncertainty are neo-liberal concepts, which can be viewed as complementary techniques for governing diverse aspects of life, rather than natural states of things. This new book examines the way these constructs govern the production of wealth through 'uncertain' speculation and 'calculable' investment formulae.

The way in which risk and uncertainty govern the minimisation of harms through insurance and through the uncertain practices of 'reasonable foresight' is discussed, and O Malley looks at the way these same techniques were historically forged out of moral and social beliefs about how to govern properly. In addition, the book analyzes is how, during this process, ideas such as 'contract' and distinctions between insurance and gambling were invented to order to 'properly' govern the risky and uncertain future.

Chapter 1

Risk, Uncertainty and Government

Someone who depicts the world as risk will ultimately become incapable of action.

(Ulrich Beck, 1994, p 9)

Uncertainty makes us free.

(Peter L Bernstein, 1998, p 229)

In current sociology it is almost banal to make the claim that we live in a risk society. For the most part it seems no longer necessary to draw even a lay audience’s attention to the fact that risk-based routines and practices of government pervade most areas of our lives. Techniques based on the calculation of health risks set out dietary and exercise regimes that thousands, even millions, now follow routinely. We periodically undergo diagnostic tests, in an effort to minimise or prevent the effects of pathologies that were hardly known to us a few years ago. Risk frameworks form the basis of regimes of security that attempt to turn each of us into crime prevention practitioners and in some cases to turn our homes and even communities into hi-tech fortresses. Motor vehicles are increasingly marketed in terms of their sophisticated risk-reducing features, ranging from the humble and taken-for-granted seat belt, through multiple air bags, sophisticated braking systems and side-impact bars, to a new array of proximity alarms that warn of impending collisions. On the darker side of life, psychiatric assessments are now usually framed in terms of the risks posed by patients to themselves and others, while in many jurisdictions former sex offenders are publicly identified so their neighbours may be aware of the risks they represent. Mass imprisonment is practised in some states as a way of reducing crime risks, a strategy aided by the application of risk-based sentencing tables that displace judicial decision-making. Major government projects set out to educate us in the need to practise risk assessment along these and other lines, and whole industries have been established to manufacture and sell commodities that secure us against risks to health, property, personal security and virtually every hazard that can be imagined.

This way of governing reflects a familiar model in which great bodies of data are turned into predictive formulae. Armies of crash test dummies are sacrificed, masses of information on burglaries and assaults are accumulated, endless research into the distribution of pathologies of every conceivable form is processed in order to reveal ‘risk factors’. Such indicators often tell us the exact degree of probability there is of us experiencing the relevant harm, although sometimes they only approximate this statistical ideal. In all cases, the aim is to improve on the ‘uncertain’ prognoses of those judges, social workers, medical practitioners, psychiatrists, probation officers and so on who practise more traditional arts and sciences of judgment. They seek to make objective, standardised and exact predictions to replace subjective expectations based on such non-quantitative modes of calculation as rules of thumb, experience, foresight, estimation and professional judgment.

Much of the public discourse on risk in fields such as medicine, crime prevention and public health has emphasised the positive contribution of these new techniques toward minimising harms and increasing security. In social theory, however, the response to the spread of risk-centred government has been far more negative. In particular, a new ‘risk society’ orthodoxy in social theory led by Ulrich Beck and Anthony Giddens regards risk as – at best – a mixed blessing for government. In Beck’s (1994, p 9) words, risk ‘… dims the horizon …’ because it tells us only what we cannot do, not what we can do. It fixes us in the past, for an irony of risk is that its predictions will work only if in relevant respects the world is unchanging. Risk society theorists further argue that risk-based predictions deliver insecurity rather than security, for the more that science discovers, the more it demonstrates that life is saturated with risks.

Of course, the promise of risk – or of most other governmental innovations for that matter – is not often the subject of contemporary sociological investigation. Sociology is rarely an optimistic discipline. Indeed it is prone to discovering that the world is on the brink of a new crisis or catastrophe, and risk society theory is no exception. For this theory, whatever promise risk once held is regarded as largely null and void, for we are now said to live in a changed world. This is a world of new, incalculable, unpredictable and catastrophic ‘modernisation risks’ such as global warming, depletion of the ozone layer and nuclear contamination. These emergent risks are held to have been created by the very success of modernity: its scale of production, its pace of innovation and its compression of time and space. Harms created in Chernobyl are visited upon English farmers. A hole in the ozone layer generated largely by industry in the northern hemisphere delivers increased rates of cancer to ‘isolated’ areas in the southern hemisphere. The industrialised world, through global warming, is even melting the polar ice caps, threatening the long-term viability of almost every coastal town and city on the planet. None, not even the wealthy, can escape the global reach of these harmful effects. Nor can they buy protection. Risk-based early warning techniques are useless against catastrophic events of very low statistical frequency, and for types of event in which the processes that produce the harms usually go unrecognised until it’s too late.

While these modernisation risks are said to be ‘incalculable’ or ‘uncertain’, it is argued that scientists and governments continue to assert they are knowable and governable. Official discourses, it is claimed, assert that even infrequently occurring harmful events can be predicted and minimised, that they fall within ‘acceptable’ risk levels, or are in some way ‘insignificant’. For this reason, Beck and his colleagues regard risk as an ideology. It is used by powerful interests to mask the politically destabilising truth that we are threatened by unpredictable catastrophes. And because modernisation’s catastrophes frequently prove scientific predictions and reassurances wrong, the risk society thesis suggests we are entering a new era in which the ideological authority of expertise is beginning to be undermined. Faced with the insuperable contradiction that the more it produces goods, the more it produces unpredictable catastrophes, the world of ‘reflexive modernity’ comes to question and reflect upon the value of its core processes. Belief in ‘progress’ and ‘truth’ gives way to fundamental doubt.¹

In this highly influential literature ‘uncertainty’ takes a key role as risk’s alternative. Beck suggests that uncertainty is government of the ‘incalculable’. For this reason we can only be governed by ‘estimation’: possible catastrophes are identifiable but their probability and magnitude remain unclear. Uncertainty thus appears both as a characteristic of events (that is, events that are not statistically predictable), and as a way in which the future can be imagined or predicted (that is, forecasting methods that are not based on statistical calculation). The two usages of ‘uncertainty’ are closely linked in this theory, since under conditions of uncertainty we cannot deploy risk and must resort to uncertain techniques. Considered as ‘estimation of the possible’, uncertainty is given a rather negative value, for it is made to appear as the poor cousin of risk calculation.² The problematic status granted to uncertainty is most evident, perhaps, in Beck’s (1998) and Ewald’s (2002) focus on governmental deployment of the ‘precautionary principle’. The precautionary principle involves governmental proscription of certain practices – such as genetic modification of foods – even though no conclusive scientific evidence yet corroborates the claim that the process is harmful. In such cases, waiting until the level of risk has been determined is itself considered an unacceptable risk. We are forced to deploy uncertainty because the superior technology of risk is not available. However, uncertainty of this sort offers no compensating advantages because, like risk, it too paralyses us into inactivity.

Almost diametrically opposed to this vision of crisis is another account, recently exemplified by Peter Bernstein’s (1998) hugely successful Against the Gods: The Remarkable Story of Risk. After a lengthy analysis of the history of risk and probability, Bernstein concurs with Beck’s view that risk is a worrying technology. In Bernstein’s view, probabilistic prediction of the future creates a ‘prison’ that consigns us to an endless repetition of past statistical patterns over which we have no control. ‘Nothing we can do, no judgement that we make, no response to our animal spirits, is going to have the slightest influence on the final result’ (1998, p 229).³ In complete contrast to Beck, however, Bernstein celebrates uncertainty.

Uncertainty appears not as the imprecise fall-back technology for dealing with impending catastrophe, but as the technique of entrepreneurial creativity. He quotes, with approval, the economist Frank Knight who – drawing on 19th century precursors – argued that uncertainty is crucial to business enterprise. This is because any given situation:

… is so entirely unique that there are no other or not a sufficient number to make it possible to tabulate enough like it to form any inference of value about any real probability in the case we are interested in. The same obviously applies to the most of conduct and not to business decisions alone. (Knight, quoted with emphasis added by Bernstein, 1998, p 221)⁴

Bernstein added the emphasis in this quotation to make his point clear. But his highest approval is retained for John Maynard Keynes. Keynes rejected the possibility of using statistical methods to forecast such significant future events as whether there will be war, or whether stock market prices will rise or fall. These are matters subject to ‘uncertain knowledge’. ‘About these matters’ said Keynes, ‘there is no scientific basis on which to form any calculable probability whatsoever. We simply do not know!’ (quoted by Bernstein, 1998, p 229). Bernstein concludes that a ‘tremendous idea lies buried in the conclusion that we simply do not know. Rather than frightening us, Keynes’ words bring great news: we are not prisoners of an inevitable future. Uncertainty makes us free’ (Bernstein, 1998, p 229). By itself, Bernstein’s conclusion might be regarded as slightly anachronistic. After all, some risk society theorists such as Sanjay Reddy (1996) have argued strongly that Keynes represented the last hurrah for such thinking before it was trampled into undeserved extinction by the risk-oriented machinations of statistical economists. Reddy may be right about this subordination of uncertainty in the middle years of the 20th century, when the planned economy appeared as a rational governmental response to massive swings in the fortunes of the market. But things are rather different now. Against the Gods is only one example of an extensive and immensely influential managerial literature, appearing since the early 1980s, that extols the ‘transformative power of the entrepreneurial spirit’ and sees in this a blueprint for the ‘reinvention of government’ (Osborne and Gaebler, 1993).

Like Beck, many of these ‘new managerial’ writers see us as entering a novel world of uncertainty, produced by the forces of global modernity. But they don’t see uncertainty as linked to catastrophe. In the rhetoric of Tom Peters (1987, p 5), another guru of the uncertainty industry:

The times demand that flexibility and love of change replace our longstanding penchant for mass production and mass markets, based as it is upon a relatively predictable environment now vanished … Chaos and uncertainty will be market opportunities for the wise; capitalizing on fleeting market anomalies will be the successful business’s greatest accomplishment … the strategy is paradoxical – meeting uncertainty by emphasizing a set of basics: world class quality and service, enhanced responsiveness through greatly increased flexibility, and continuous short cycle innovation …

For Peters, ‘predictability is a thing of the past’ because in the real world ‘we don’t know whether merging or de-merging makes more sense, and we have no idea who will be partners with whom tomorrow or next week, let alone next month’ (1987, p 6). Uncertainty, then, is to be the fluid art of the possible. It involves techniques of flexibility and adaptability, requires a certain kind of ‘vision’ that may be thought of as intuition but is nevertheless capable of being explicated at great length in terms such as ‘anticipatory government’ and ‘governing with foresight’ (Osborne and Gaebler, 1993, p 229).

What also is intriguing here is the similarity between Frank Knight writing early in the 20th century and Tom Peters writing near its end, either side of the heyday of the interventionist state. In both analyses uncertainty – in the shape of the entrepreneurial reliance on practical experience, inspiration and foresight – is central to profitability and good economic governance. In this vision of enterprise, risk – the management of avoidable and statistically calculable harms through insurance and related techniques – is made subordinate to the rationalities and practices of uncertainty. Risk-centred arrangements are merely tools for governing the incidental and collateral harms (such as industrial accidents, consumer injuries or exposure to crime) generated by the core enterprising activities. When mathematical models of risk usurp the sovereign role of uncertainty, as in the planned economy, it is claimed that disaster and stagnation will doubtless strike. For Knight, Peters and Bernstein, the entrepreneur must be at the centre of the economy. The essence of the entrepreneur is envisaged as possession of the responsibility and skills for managing and creating not merely wealth but the future through techniques of uncertainty. Thus Peters ‘pays tribute to the entrepreneur’ by quoting George Gilder:

… entrepreneurs sustain the world. In their careers there is little of the optimizing calculation, nothing of the delicate balance of markets … The prevailing theory of capitalism suffers from one central and disabling flaw: a profound distrust and incomprehension of capitalists. With its circular flows of purchasing power, its invisible handed markets, its intricate plays of goods and moneys, all modern economics, in fact, resembles a vast mathematical drama, on an elaborate stage of theory, without a protagonist to animate the play. (Peters, 1987, p 245)

This is heady stuff indeed. Peters is the promoter of a new market-based modernity, and sees the interventionist state as defeated by a resurgent capitalism driven forward to prosperity by enterprise. There are resonances with Beck, for Beck, too, feels that the day of the interventionist state is over. But Beck is the prophet of a new modernity that has lost confidence in itself. The interventionist state, he argues, can no longer be relevant because it (re)distributes goods whereas the contemporary task for government is the management of ‘bads’. Peters, on the other hand, is the prophet of a new modernity that is enormously self-confident. It has defeated the twinned evils of the planned welfare state and the command economy. Peters thrives on chaos, Beck descends into it.

Let us for the moment suspend judgment about whether the world actually has leapt into a condition governable only through uncertainty, as Peters, Giddens and Beck suggest in their different ways, or whether, as Knight, Keynes and Bernstein argue, uncertainty is the timeless reality of all entrepreneurial activity. Instead, we could consider that all these discourses of risk and uncertainty, these academic analyses and economic polemics, these dire warnings about governing a catastrophic future, these optimistic manuals for born-again managers, represent diverse positions in a long-term governmental politics. Each position is focused on establishing the ‘proper’ way of governing through a reasoned estimation of an indeterminate future. They are unwittingly allied with each other in their suspicion of risk and related expert knowledges. They each recognise that alternative forms of knowledge, associated under the broad umbrella terms of ‘uncertainty’, ‘foresight’ or ‘estimation’, must necessarily be deployed in order to govern a contemporary ‘incalculable’ world. What is more, despite various polemics against risk, they are even in accord on the assumption that risk should not be abandoned but rather put in its ‘proper’ place.⁵ Risk’s assigned tasks are to govern security only in those domains where statistical prediction is held appropriate, and even then to be but one of multiple forms of knowledge brought to bear on the government of the future. In short, all these discourses concur that our future should governed through risk and uncertainty. This being so, it is striking how little time all of these authors spend on a series of questions about how past and present governments have deployed what they refer to as risk and uncertainty. All of these authors rail against the tyranny of expertise under regimes of risk, but none provides any analysis of the variability of techniques and knowledge of risk already deployed by government. None seems concerned to consider the differing implications of these diverse forms. Do household insurance policies deploy risk in the same way as preventative mastectomies? Does the installation of street lights to reduce the statistical risk of crime operate in the same way as using computer technologies to manage financial risk futures markets? Do these differing risk techniques have the same governmental implications for how we live our lives and what kind of people we are being made into? What do we lose analytically and politically by collapsing diverse technologies of risk into one undifferentiated category?

All these commentators, without any irony, emphasise the inevitability of having to deploy uncertainty in the future, but none provides any analysis of the diversity of ways in which ‘uncertainty’ is already imagined and governed. Surely there is a critical distinction to be made between 19th century exhortations to govern the vicissitudes of life though savings and thrift, and the neo-liberal exhortations for us all to become enterprising investors chancing our wealth on the stock market? How are we to investigate the diverse governmental visions and programmes in which uncertainty is embedded and given form, if it is reduced to merely the monolithic and generic ‘incalculable’ alternate to risk? None of these commentators considers that if we are to be governed through frameworks of ‘risk’ and ‘uncertainty’, then we should attend to how these ways of governing have been linked together in past and present practices of government. While insurance is regarded as the quintessentially risk-based institution, even it is strongly marked by educated guesswork, traditional routines and hunches (Ericson, Doyle et al, 2003); and to the extent that this is typical, what are the implications for how we understand the ‘spread’ of risk into new areas in the past few decades? Indeed, how much ‘risk’ is, rather, ‘uncertainty’ renamed?

Risk and ...

Table of contents

• Cover
• Title Page
• Copyright
• Acknowledgments
• Contents
• 1. Risk, Uncertainty and Government
• 2. From Independence to Social Security
• 3. Enterprising Liberalism
• 4. Uncertainty, Liberalism and Contract
• 5. Risky Contracts: Gambling, Speculation and Insurance
• 6. Insurance, Actuarialism and Thrift
• 7. Risk, Crime Control and Criminal Justice
• 8. Risking Drug Use
• 9. Risk, Uncertainty and Freedom
• Bibliography
• Index