The house always wins

The state, like a casino's house, holds the edge. Disruptors may challenge, but in the end, the house always wins.

A regular casino goer readily attests to its overwhelming advantage over its customers. It is not easy to keep winning in a game. It is called the house edge. The edge varies from game to game. Even if you hit the jackpot, the amount you win is nothing compared to what the house makes in a single day. But even then, do not congratulate yourself on your victory because the house knows your nature. You will most certainly squander your earnings in the same casino to make even more money. Ergo, the saying: the house always wins.

How can we operationalise this politically? Who represents the house in politics? A government or a state? The answer to this question should tell us how to operationalise the entire construct. Who is the house in a casino - the management or a croupier? The casino management is the house, and the state is the house in our instance. Naturally, people run casinos, and governments run states. However, political forces and disruptors lose their advantage when they conflate the two.

This conversation is essential to move beyond the cliffhanger at which I left you at the end of my previous column. To jog your memory, let me mention here that at the end of my piece last week titled "Why states fear complexity", I pointed out that an eventual ugly clash between big tech companies and states was inevitable. But, of course, this was not enough for some of my readers. I received emails soliciting my view on the likely outcome of such a clash. I am not a seer, but as a modest student of history, I think the answer lies in the title of this piece. Let me explain.

In Ayn Rand's libertarian world, the fight might be viewed in black and white, where businessmen are always on the right side of history, but there is no dearth of people who see her utopia with scepticism. Perhaps the most recent examples are Daron Acemoglu and Simon Johnson's magnificent Power and Progress: Our Thousand-Year Struggle Over Technology and Prosperity and Yuval Noah Harari's latest, Nexus: A Brief History of Information Networks from the Stone Age to AI. We live in the age of technology's exponential growth, and Harari warns us against our tendency to summon forces beyond our control by referencing Goethe's poem, The Sorcerer's Apprentice. Last week, I also alerted you about the marriage of technology and population growth-led acceleration and complexity. But if you want to hear a fun illustration of all this, look no further than the 2012 sci-fi series Continuum. In the series, the corporatocratic and oligarchic business elite seizes power of the North American Union, ostensibly to combat instability and anarchy and creates a Corporate Congress. This results in a technologically advanced, high-surveillance police state. The rest of the story is about the struggle to overthrow the system and a law-abiding policewoman who inadvertently gets sucked into it. A corporatocratic coup with the help of cutting-edge technology is never out of the question, but in my humble view, advanced states like the US and the EU and now progressively China and Russia have enough safeguards to prevail in such an eventuality.

One thing perplexes me about Barack Obama's eight years in office. We have always treated him as an eloquent speaker with an uncanny ability to connect with ordinary people and a well-intentioned man. But I hope you realise that most of these forces we are battling today were either summoned or unleashed during his time. In my previous writings, I have already complained about his role in normalising Modi. But that's not it. In 2008, Elon Musk was struggling with bankruptcy, and by 2012, he had found his way into Forbes' billionaire list with his two billion. In 2008, Zuckerberg was at around 1.5 billion dollars and in 2012, Facebook's IPO raised the value to 19 billion. And by the time Obama left, Facebook had become such a force to reckon with that the Cambridge Analytica controversy accused it of handing a victory to Trump. Facebook acquired Instagram in 2012 and WhatsApp in 2014 without causing anti-trust concerns. While Bezos was already at 8 billion dollars in 2008, his wealth also grew exponentially during his time. In sharp contrast, those were the times when everything else stalled due to the 2008 market crash. None of this was possible without plush government contracts and active government acquiescence. Moral of the story: you cannot win big without the house's patronage.

Doth the house that giveth also taketh away? Ali Baba, Jack Ma, and China's examples sound extreme, but they show this is doable. That is why all this cryptocurrency craze. But don't worry. The house knows how to get around that minor inconvenience, too.

India's case seems instructive as an outlier. Under Narendra Modi's stewardship, two billionaires have grown too big for their britches and currently seem to be holding the entire system hostage. Gautam Adani and Mukesh Ambani (or A1 and A2 as they are often called by their fellow Indians, respectively) seem to own the house in India and might soon be coming to take over your casino, too. If you want to know how whipped the Indian system is, look at how the Indian Airforce was operating the Jamnagar airport for the pre-wedding celebrations of the Ambanis and how the Indian government and institutions bend over backwards to protect Adani's plants in bodies like the SEBI and the RBI. If a correction doesn't arrive soon, India might have perfected the art of installing corporatocratic fascism, but the smart money is on the certainty of a correction.

Now, quickly to the analogue world. In 2016, Donald Trump cheated the house through a disruption. But that was not enough. He had to go there again in 2020, and the house bested him in return. Now, he has gone there again, and while I cannot do much about blind faith, the portents do not seem in his favour.

Back to our neck in the woods. After forcing Musharraf out of power, some media groups thought they could do the same to the DG ISI at the time. But there lies the trouble of conflating the government with the state and its institutions. They know better now. Or one would, at least, hope so. In Pakistan's history, the most powerful only fall when there is division within their ranks. But as proof of the pudding, May 9 failed miserably in overthrowing the dominant order in the most powerful institution in the country through division. Remember, when the institutions operate on their turf, they have the holding power beyond any disruptor's imagination. Of course, a prolonged strain on the system is an open invitation for the external spoilers (other houses) to meddle. It is prudent for the failed disruptors to find an amicable way out of the confrontation lest it is too late.

Conclusion: States can fail and fall, but the idea of the state in the absolute is here to stay as the house for the foreseeable future. And make no mistakes - the house always wins.