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Political Warfare in the Digital Age

Thomas Paterson and Lauren Hanley – two leading scholars in the Strategic Defence Studies Centre at The Australian National University – have a new, must read journal article on political warfare in the Australian Journal of International Affairs. Here’s the abstract:

The digital age has permanently changed the way states conduct political warfare—necessitating a rebalancing of security priorities in democracies. The utilisation of cyberspace by state and non-state actors to subvert democratic elections, encourage the proliferation of violence and challenge the sovereignty and values of democratic states is having a highly destabilising effect. Successful political warfare campaigns also cause voters to question the results of democratic elections and whether special interests or foreign powers have been the decisive factor in a given outcome. This is highly damaging for the political legitimacy of democracies, which depend upon voters being able to trust in electoral processes and outcomes free from malign influence—perceived or otherwise. The values of individual freedom and political expression practised within democratic states challenges their ability to respond to political warfare. The continued failure of governments to understand this has undermined their ability to combat this emerging threat. The challenges that this new digitally enabled political warfare poses to democracies is set to rise with developments in machine learning and the emergence of digital tools such as ‘deep fakes’.

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Economic Crash Books

Some context for this week’s coronavirus panic and financial market correction:

A First-Class Catastrophe: The Road to Black Monday, the Worst Day in Wall Street History by Diana B. Henriques (New York: Henry Holt and Company, 2017). What happened on Monday, October 19, 1987, and what led to it.

A Demon of Our Own Design: Markets, Hedge Funds and the Perils of Financial Innovation (Hoboken, NJ: John Wiley & Sons, 2008). A leading quantitative portfolio manager notes two causes of the 2008-09 Great Recession or Global Financial Crisis: the use of leverage, and the rapid growth in complex financial assets (such as mortgage debt securities and collateralised debt obligations).

Manias, Panics and Crashes: A History of Financial Crises (Seventh edition) by Robert Z. Aliber and Charles P. Kindleberger (New York: Palgrave Macmillan, 2017). An influential history of why manias, panics and economic crashes occur.

Market Madness: A Century of Oil Panics, Crises, and Crashes by Blake C. Clayton (Oxford: Oxford University Press, 2015). A behavioural economics view of why oil panices, crises, and crashes occur – building on Robert J. Shiller’s pioneering framework.

The Asylum: Inside The Rise and Ruin of the Global Oil Market by Leah McGrath Goodman (New York: HarperCollins, 2011). How traders and speculators deal with the global oil market and risk-reward decision-making.

Aftermath: Seven Secrets of Wealth Preservation in the Coming Chaos by James Rickards (New York: Penguin, 2019). One of the best well-argued bear cases for a financial crisis or recession in the near future.

World Event Trading: How to Analyze and Profit from Today’s Headlines by Andrew Busch (Hoboken, NJ: John Wiley & Sons, 2009). How event arbitrage traders trade economic crises, pandemics, geopolitical conflict, and other forms of volatility events: they look for tradable catalysts.

The Rise of Carry: The Dangerous Consequences of Volatility Suppression and the Financial Order of Decaying Growth and Economic Crisis by Tim Lee, Jamie Lee, and Kevin Coldiron (New York: McGraw-Hill, 2019). How volatility suppression strategies can create the market conditions for volatility events.

Narrative Economics: How Stories Go Viral & Drive Major Economic Events by Robert J. Shiller (Princeton, NJ: Princeton University Press, 2019). A behavioural economics perspective on the role of narratives in creating and shaping volatility events.

Adaptive Markets: Financial Evolution at the Speed of Thought by Andrew W. Lo (Princeton, NJ: Princeton University Press, 2019). An influential quantitative finance researcher and quantitative hedge fund consultant outlines his Adaptive Markets Hypothesis – and how it differs from the Efficient Markets Hypothesis.

During my 2002-04 Masters studies in strategic foresight at Swinburne University, I also wrote a postmortem on the 2000 Dotcom Crash.

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“Give Me Some of Those High-Yield Bonds”

The New York Times headline today: United States President Donald Trump has pardoned or commuted the sentences of high profile white-collar criminals.

For me, Trump’s most significant pardon is of the former high-yield bond financier, turned cancer research and innovation philanthropist Michael Milken. Milken’s fallen firm Drexel Burnham Lambert backed Sir James Goldsmith’s Acapulco strategy of corporate raiding. In the excellent Adam Curtis series The Mayfair Set (BBC, 1999), the late Frank Sinatra tells Milkens’ Predators Ball investment conferences: “Give me some of those high-yield bonds.”

On 11th October 2011, I took a copy of Connie Bruck’s Predators’ Ball book (New York: Penguin Books USA, 1988) to the Tokyo Stock Exchange building. James B. Stewart’s Den of Thieves (New York: Simon & Schuster, 1991) informed how collaborator Barry Saunders (now a McKinsey design director) and I examined the organisational culture and methodologies of investigative journalism. Stewart has penned a New York Times reflection on Milken’s legal and cultural significance.

Trump’s pardon of Milken may become a Billions plot point. It’s also a signal to me that Trump’s executive power and its Wall Street oligarchical nexus means that white-collar crime will be around as a research program interest for many years to come.

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Journal of White Collar and Corporate Crime

SAGE Publications has recently launched the Journal of White Collar and Corporate Crime:

The Journal of White Collar and Corporate Crime is an international and a multidisciplinary, peer-reviewed academic journal featuring high quality contributions from a community of global scholars and researchers. The journal is aimed at uncovering the interrelations of theoretical and empirical investigation of the crimes of powerfully organized people and institutions while advancing the knowledge of white collar and corporate crime as well as the practices of social intervention and policy change.

The journal’s first issue features a range of interesting articles including an inaugural editors’ statement that suggests the benefits of linking criminology and political economy, and an article by the Australian National University’s Professor John Braithwaite on the crimes of the powerful.

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Mechanistic Criminology

K. Ryan Proctor and Richard E. Niemeyer’s recent book Mechanistic Criminology (Routledge, 2019) develops mechanism-based schemas for several criminological theories: social learning, social control, and general strain. The book advances a neopositivist approach to theory-building, theory-testing and causal inference tests. Whilst I drew on cultural criminology understanding of terrorist subcultures and social learning mechanisms in my PhD this book provides new insights that will inform my post PhD research program.

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The Attitudes-Behaviors Corrective (ABC) Model of Violent Extremism

In my PhD’s literature review I considered several different models of violent extremism and terrorism. Now, James Khalil, John Horgan and Martine Zeuthern have a new explanation:

Progress in understanding and responding to terrorism and violent extremism has continued to stall in part because we often fail to adequately conceptualize the problem. Perhaps most notably, much of our terminology (for instance, “radicalization”) and many variants of our existing models and analogies (including conveyor belts, staircases and pyramids) conflate sympathy for this violence with involvement in its creation. As its name suggests, the Attitudes-Behaviors Corrective (ABC) model seeks to overcome this issue by placing this key disconnect between attitudes and behaviors at its core. In this paper, we first present the key elements of our model, which include a graphic representation of this disconnect and a classification system of the drivers of violent extremism. The former enables us to track the trajectories of individuals in relation to both their attitudes and behaviors, while the latter helps ensure that we consider all potential explanations for these movements. We then adapt these elements to focus on exit from violence, applying the dual concepts of disengagement and deradicalization. Finally, we conclude with a section that aims to provide the research community and those tasked with preventing and countering violent extremism with practical benefits from the ABC model.

The article’s emphasis on separating out attitudes from behaviours will be quite important for deradicalisation and disengagement initiatives.

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Competing in the Gray Zone

The RAND Corporation think tank has released a new report on Russia’s gray zone tactics in targeting international opinion:

Recent events in Crimea and the Donbass in eastern Ukraine have upended relations between Russia and the West, specifically the North Atlantic Treaty Organization (NATO) and the European Union (EU). Although Russia’s actions in Ukraine were, for the most part, acts of outright aggression, Russia has been aiming to destabilize both its “near abroad” — the former Soviet states except for the Baltics — and wider Europe through the use of ambiguous “gray zone” tactics. These tactics include everything from propaganda and disinformation to election interference and the incitement of violence.

To better understand where there are vulnerabilities to Russian gray zone tactics in Europe and how to effectively counter them, the RAND Corporation ran a series of war games. These games comprised a Russian (Red) team, which was tasked with expanding its influence and undermining NATO unity, competing against a European (Green) team and a U.S. (Blue) team, which were aiming to defend their allies from Red’s gray zone activities without provoking an outright war. In these games, the authors of this report observed patterns of behavior from the three teams that are broadly consistent with what has been observed in the real world. This report presents key insights from these games and from the research effort that informed them.

This is an interesting contemporary use of wargaming methodologies.

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Alex Jones Counterfactual

The New York Times Magazine recently profiled video editor Josh Owens who offered a revisionist take on Infowars.com’s conspiracy theory celebrity Alex Jones. Slate‘s Aymann Ismail was more sceptical of Owens’ subjugation claims. When I worked for the former Disinformation website its publisher sought (unsuccessfully) to negotiate a book deal with Jones, earlier on in his career. This poses an intriguing counterfactual: what if the ‘meme warfare’ subculture surrounding Jones and conspiracy theories had been more liberal than alt-right in nature? How would that have affected the 2016 United States election outcome?

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Developing Australia’s Political Warfare Capabilities

Australian MP Andrew Hastie – Chair of the Parliamentary Joint Committee on Intelligence and Security – has called in a new paper published by the Henry Jackson Society and the Konrad Adenauer Stiftung think tanks for Australia to develop political warfare capabilities. Hastie contends that this is necessary for Australia to counter great and rising power competition (which is also a focus of ‘fourth generation’ scholarship on strategic culture) and its potential threats to Australian liberal democracy. In particular, Hastie focuses on the impact that sophisticated disinformation, misinformation, and hybrid warfare strategies can have. Hastie’s stance illustrates a military-informed, realist approach for Australia – and one that will lead to further academic, policymaker, and public debate.

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Konstantin Ernst

The New Yorker‘s Joshua Yaffa has profiled Russian television producer Konstantin Ernst who as Channel One’s general director, is an important media and propaganda expert for the Putin Administration:

“Baldly false stories, in the right doses, are not disastrous for Channel One; in fact, they are an integral part of the Putin system’s postmodern approach to propaganda. In the Soviet era, the state pushed a coherent, if occasionally clumsy, narrative to convince the public of the official version of events. But private media ownership and widespread Internet access have made this impossible. Today, state outlets tell viewers what they are already inclined to believe, rather than try to convince them of what they can plainly see is untrue. At the same time, they release a cacophony of theories with the aim of nudging viewers toward believing nothing at all, or of making them so overwhelmed that they simply throw up their hands. Trying to ascertain the truth becomes a matter of guessing who benefits from a given narrative.”