Friday, 31 December 2010

The Big Alibi

Review of The Big Society: the anatomy of the new politics
by Jesse Norman

George W Bush would not believe in the Big Society. Not only was he responsible for an “extraordinary” ramp up in government spending before the financial crisis, he also increased federal powers over schools. He was not a real conservative.

The assessment of Bush by Jesse Norman, newly ensconced Conservative MP for Hereford and former director of free market think tank the Policy Exchange, is a real indication of what “the Big Society” is. Rather than a smokescreen for spending cuts, it’s about spending cuts, a perpetual alibi that works when others, such as the structural deficit, lose their power to convince. The Big Society may be "bollocks" as one Conservative shadow Cabinet member put it during the election campaign, but it has a function.

Those who want to cut back the state must first become infatuated with its power. The book is obsessed with the failure of government. According to Norman, the government has increased inequality, overseen a widening gap in life expectancy between poor and rich, made children miserable, caused private pension deficits and promoted unsustainable booms in houses and personal debt. Paradoxically, says David Cameron in the paragraph that introduces the book, the growth of the state has not promoted solidarity, but selfishness and individualism.

Norman’s conservatism is partially the perpetual American complaint against “big government”. But the point of The Big Society is to claim that this is not just negative.   A traditional small state conservative would think of selfishness and individualism as beneficial. They wouldn’t care about inequality and they wouldn’t think miserable children were their concern and they certainly wouldn’t give a fig about “solidarity”. But The Big Society frets about consumerism and greed and a culture of money displacing other values, it bemoans the fact that High Streets are indistinguishable, it deplores inequality and yearns for the things that money can’t buy. “Many people have been tempted to think that the deepest problem lies not in individual or even national actions,” says Norman, “but in the system of global corporate capitalism itself.” The Big Society is an attempt to explain the mess we’re in that avoids that temptation, and hold individuals and government responsible.

The deeper reason for our malaise, according to Norman, is that the government thinks of people as economic robots; selfish and calculating beings just out for themselves. This has gradually permeated throughout society, resulting not only in a growth in state power and centralisation which but an infatuation with wealth and a belief in unfettered free markets.  Uber-free marketeer Friedrich Hayek, of all people, is trotted out to remind us that economists need also to be well-rounded individuals, well-versed in all aspects of human life. Which is rather like calling on Dracula for a warning about the health dangers of drinking blood.

“Isn’t your system based on selfishness?” the interviewer (Bernard Levin) asks Hayek in the television interview in 1980 “Where does altruism come in?” “It doesn’t come in” replies Hayek. “We will benefit our fellow man most if we are motivated solely by the striving for gain.” The excerpt was shown at the start of Adam Curtis’ three-part BBC documentary, The Trap. The film fill in the gaps that Norman’s book conspicuously leaves out.

Hayek’s idea was that of a spontaneous system of free markets that creates prosperity because people are left alone by the state to behave selfishly. He was, says Curtis, lonely and isolated for decades under rediscovered by Margaret Thatcher, who became a great personal friend, in the 1970s. Inspired by Hayek (who also inspires Norman) and fellow-libertarian Milton Friedman, Thatcher set about reducing the power of the state to interfere in the market and privatised swathes of industry. But she realised she couldn’t privatise everything, so public services that remained in the state’s hands were to mimic the demands of the free market, through mechanisms like performance targets. The philosophy was based on the kindred doctrine of Public Choice economics, which denied that that there was any such thing as a public service ethos. But if public sector workers are treated like mini- entrepreneurs, out for themselves and not distracted by any wider sense of duty, services will improve.

The film shows that this idea was enthusiastically embraced by John Major’s government and then adopted with avengeance by New Labour, which enmeshed public sector workers in targets, measurement and auditing – the power of numbers, in Curtis’ words, which became a trap. Ironically, what was supposed to free people – an idealised market – has actually led to more bureaucracy.  There was a 33 per cent increase in managers in the higher education sector between 2004 and 2009. Managers were defined as a “new type of non-academic professional involved in finance, marketing, widening participation, human resources, student services, quality assurance.” Likewise in the NHS, alongside the introduction of the internal market, the number of senior managers rose from 1,000 in 1986 to 26,000 in 1995.

There are two things that Norman does not want to face. One is that in the 1970s, when pre-Thatcher Britain laboured under serfdom and unfreedom, the public sector was a lot less bureaucratic. The second is the related idea that the last Labour government in many ways strengthened and deepened Thatcherism. There were things it – like the minimum wage – that were not Thatcherite. But its insistence that all public services should be “contestible” and the private sector should run them if it wins the bid was a continuation of, not a break from, the logic of the 1980s. Norman wants an argument with Labour but behind Tony Blair and Gordon Brown lurks Margaret Thatcher.

 Consequently, there is an underlying logic to the book which the author tries his best not to follow. Norman doesn’t believe, unlike Thatcher and the Adam Smith Institute, in Public Choice Economics – its repudiation of “civic virtue” was wrong. So as well as such as thing as society, there is such a thing as a public service ethos. The problem was an “unholy alliance” between Labour ideology and conventional economics. But this standardised economics, says Norman, only permitted a “hyper libertarian” version of capitalism. Under Labour, public sector workers were subject to inappropriate private sector impositions like performance related pay. The trouble is they didn’t improve performance. Private sector companies may not be the best way to deliver public services, Norman concludes. We need to relax the present obsession with cost control and pay more attention to quality, he recommends. But at the same time he argues the state can’t continue to fund and plan public services, so the answer is the private sector is deployed in its place. Why is the answer to the marketisation of public services cuts and outsourcing?  What will the private sector bring if not private sector techniques?

But Norman, a former director of Barclays, can’t provide a critique of the private sector because he refuses to understand it. “There is no such thing as society,” said Margaret Thatcher famously. Ah but there is, says Norman (and Cameron). There is actually a three-way relationship between the state, individuals and intermediate institutions. These sideways institutions turn a society into a “flourishing organism”. What are these institutions? A rugby club for one, or a football supporters’ association, or a family, or a company. (my italics) “Each obeys certain procedures, and each can have a purpose; bearing and bringing up children, cheering on the team, making profits.” All these institutions are based in human affection.

But a moment’s reflection (or less) makes it obvious that he is talking about utterly different things. A football supporters’ club is a voluntary association. It very well may be steeped in affection but you can join or leave it as you see fit. A company – an organisation you rent yourself to because you need the money to survive – is something completely different. Capitalism is based on coercion, not affection. “We don’t go off to our jobs checking telephone lines or making cold calls or driving a forklift every morning because this is what we want to do,” says American writer Thomas Frank, “we do it because we have to.” Norman claims that his brand of Conservatism is pragmatic, a disposition not a doctrine, unideological. But to not see the fundamental difference between a voluntary association and a company you have to be very ideological indeed.

The Big Society is outraged by the symptoms but can’t see the disease. Norman cites what he calls rigor mortis economics, the idea that people are selfish and calculating, as the culprit. But rigor mortis economics – otherwise known by its other name of free-market economics – can’t turn flesh and blood humans into economic automata, anymore than companies need to be convinced by its dogma to be selfish. “Unlike the human beings that inhabit it,” writes Joel Bakan. “the corporation is singularly self-interested and unable to feel genuine concern for others in any context.” It only takes a glance at a 5 minute advert break on TV to know that human susceptibilities are exploited as matter of course by advertisers. But those companies, utterly cognizant of human frailties, will employ the best brains in the country to single-mindedly evade tax. They know where their interest lies and they don’t need Milton Friedman to tell them.

Rigor Mortis economics, or in modern incarnation neoliberal economics, is primarily all about the state, releasing the market from state control, deregulating and subjecting what remains of the public sector to market discipline. Once you’ve freed the market, there’s very little left to say. The fact that Norman has to say quite a lot, is indicative that something, socially, has gone wrong. But he won’t connect. That he, in one breath, can celebrate the deregulation of the City of London in the form of the Big Bang and in the next lament the replacement of financial partnerships by corporations and the destruction of building societies in a “wave of capital” is simply a failure to put two and two together.

When it comes to economic analysis Norman alternates between anodyne and bizarre. The financial crisis was caused because people and markets did not behave rationally as economic textbooks said they should, he says. People accepted teaser mortgages (where the interest rate is initially low but rises steeply) because they are naturally inclined not to think about the future. Markets are not efficient because banks offered 125 per cent mortgages to a “credulous public”. Amazingly, home owners may have sold their homes because they were sitting on “unrealised capital gains” thus fuelling further house price rises. Without definite information, people make “poor choices”.  It’s a sure sign of a desperate ideology when people are blamed for not behaving correctly. Dissolve the people and elect another.

 Norman laments the lack of a theory to explain the behaviour of institutions. But do you really need a theory to work out that some institutions are inherently coercive and have interests separate from those of the people that make them up? But because Norman believes that only the state is endowed with the power to coerce people against their will, the whole book is afflicted with a one-eyed vision of reality. He says, quite rightly though it’s hardly news, that Labour’s dominant Fabianism sidelined other left-wing ideas like Guild Socialism. Others such as David Marquand have suggested that the non-state socialist tradition represented by thinkers such as GDH Cole chimes with the Big Society. But these ideas would actually make the Big Society dangerous, which is precisely not the point. “Not poverty, but slavery and insecurity, the Guild Socialists urged, were the worst evils the workers need to overcome,” wrote GDH Cole. “the right to work under supervisors and managers of their own choosing and to rid the work-places of rulers appointed from above, whether by the capitalist employer or by the State, were the necessary foundations of industrial democracy, without which political democracy could be only a pretence.”

But Norman is quite content with the pretence. He says the true target of the book The Spirit Level is Labour’s statism. The book argued problems such as child well-being, imprisonment or teenage pregnancy were worst in countries like Britain and the US than in more equal countries.  But there is not royal road to reducing economic inequality, it doesn’t have to be through the state or increased taxes, says Norman. Actually the authors of The Spirit Level agree with him. “We need to address the concentrations of power at the heart of the economic life,” they argue, advocating the expansion of democratic employee ownership throughout the economy. This would avoid concentrating power in the state [a conservative aim] as well as putting earning differentials under democratic control. You might think Norman, who is chair of the All-Party Parliamentary Group on Employee Ownership, might applaud. You would think he might at least comment, especially as Chapter 11 of his book is summarised as “The real meaning of The Spirit Level.” But he is silent.

We live in a world of corporate capitalism, says Norman. The problem is that there is no sense which corporations exist to serve the “public good”. His answer is more power for institutional shareholders like pension funds. Theoretically that might means larger returns because less money is spent on huge salaries for executives. But institutional shareholders want yield like all other investors. Who represents the public good? The answer, unless you live in fairyland, is nobody.

It claims to be the anatomy of the new politics, but the book becomes a catalogue of problems with no solution. Norman is ultimately against any interference with the market beyond a voluntary wish to do things differently, a cultural renaissance. Direct government intervention is out but so, implicitly, are more substantive forms of economic and political democracy in which workers and citizens might exercise power.

And despite being about ‘The Big Society’, society is conspicuous by its absence. Norman is in favour of public sector staff setting up co-ops if they want to. (they’re entrepreneurial, but ordinary enterprises are too, it’s all good!). He likes the idea of “free schools” and academies. But there is no vision of ranks of ordinary people taking over and running public services. And there is no awareness of the restraints, such as time spent working for a living by both partners in a household, that might prevent them from doing so.

The “radical thoughts” at the end aren’t very radical. He wants voluntary restraint on executive pay, and a voluntary rebate on PFI (which was a Conservative policy originally but don’t mention the war!). If anything they are reminiscent of the last government.

The key point is that nothing in the underlying theory has really changed, says Norman, when reviewing happiness economics. “The remainder of the standard picture remains, with all it hidden problems and flawed presumptions intact.” The same could be said of the Big Society.

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