IEA Blog

Liberalism, empowerment, responsibility, redistributing power so that people in their everyday lives don’t turn to officials or central government for help, but instead help themselves and their own communities – finally, we’ve got Cameron’s definition of the Big Society and it’s a clear and important one. But how we get there is as muddled as ever.

Cameron is arguing for something desperately needed – a revolution in the tired approach to public services which has sucked the life out of many communities, broken the connections between people and encouraged us to think there is no need for us to take responsibility for ourselves, let alone for those around us. Yet it is hard to see how he makes the leap from his visionary starting point of enabling people to the conclusion that the main way to improve this situation is for the state to take more responsibility. David Cameron’s primary commitment seems to be that the government will give people the tools to realise their vision for their local communities.

The precise point of civil society is that the tools people need to realise their visions cannot be given by central government. If enabling people to live a good life was a question just of public money or central organisation then with public spending at 52% of GDP things should be looking a whole lot better than they are.

People help themselves and those around them when they see the necessity of doing so. They understand their local problems and issues; they have flexibility to adapt and to meet need in a messy and diverse way. Cameron fears that if government pulls back, people won’t be there to take up the slack. He suggests that it is up to the government to build the Big Society. But government cannot build the Big Society; a Big Society will only develop by government pulling back and leaving room for people and communities.

A radical reduction in the size of the state is required if philanthropy, community building and personal responsibility are to flourish. This means reducing the number of functions perceived as the responsibility of government rather than individuals, with a corresponding cut in taxes, regulation and bureaucracy. Cameron seems to understand this with his approach of devolving more financial freedom to local communities to decide how their local budget is spent and with ideas such as helping local groups to overcome red tape, but he needs to apply this same principle to other areas.

On Newsnight last night there was a long feature by Paul Mason with comment by Phillip Blond about so-called new forms of capitalism. The piece consisted of Paul Mason going round various businesses in St. Davids in Wales and putting words into the mouths of the business owners about his perception of capitalism. Mason was then heartened by the responses of the business owners who seemed to be promoting a new softer brand of capitalism. Straw man after straw man was put up and knocked down again and again.

The basic idea Mason was trying to get across was that capitalism to date has been about maximising growth and profit and that this new breed of business people had a more balanced outlook on life which was socially more acceptable.

Mason would not recognise a free economy if it stood up and slapped him in the face. From a social perspective, a business is quite simply a community of persons that exists to meet its own ends by serving the ends of others. That fact alone deserves some contemplation and it is a wonderful thing. A free economy naturally leads to variety because seven billion people in the world have different aims and objectives both as consumers and producers. Most businesses are small and the ends of the business owners are naturally diverse. Most people who work for businesses also have quite diverse aims in life. There are relatively few people in society who get up every morning and try to maximise their material output for the day and most businesses best achieve their objectives (even if the main objective is return on capital) by remaining small. One of the people made an apparently profound statement that they “optimise not maximise”. Don’t we all? Haven’t we always?

Different types of business organisations come and go but the cooperative, fair trade, charities, universities (often set up as non-profit-making corporate entities), mutuals, building societies, friendly societies have, at different times, been part and parcel of the rich tapestry of a market economy. Football and cricket is very important to many people but who has ever come across of football club or county cricket club that maximises profit? No, they act purposefully to achieve whatever their objectives are.

Then, along comes Phillip Blond arguing that the re-localisation of finance was necessary to reinvigorate the economy, praising the organisations in Mason’s piece and criticising other forms of business as having created a thirty-year bust (on which we are about to embark). Two things can be said in response. Firstly, we should be careful when criticising those businesses that choose to grow big and produce more “things” more cheaply. It is precisely because of such businesses (for example, Easyjet) that the less well off enjoy the foreign holidays and so on that Paul Mason probably takes for granted. Much lower mortgage margins than my parents enjoyed exist today because of competition in the banking sector. Secondly, Blond wants to design the economy so it takes the shape he would like. He consistently ignores the evidence that the demise of many of the community-based institutions that he admires (especially in finance) was caused by state intervention – especially the welfare state (which to be fair Blond criticises) but also state intervention in the form of financial regulation.

In summary, if we want to have a more diverse free economy then we need to extend the domain of freedom and not constrict it.

Understatement is perhaps not Phillip Blond’s forte. The director of the “progressive conservatism” project aims at nothing less than ushering in a new era in British post-war politics. First came “state-sponsored Keynesianism” (1945-1979), then came “neoliberalism” (1979-2008), and now comes “progressive conservatism” (2009 – ?). 

In a nutshell, progressive conservatism is a belief that both the big state and the free market only serve small elites – bureaucrats and oligopolists respectively – and disempower “ordinary people”. The alternative to both consists of two (intertwined) pillars, “a full-blooded new localism” and a reborn civil society.

Surely localism means Swiss-style competitive federalism? Unfortunately not. For Phillip Blond, localism appears to mean that the central government (!) should break up supermarkets and other big players, who are “strangling local commerce” and destroying distinct local identities. 

But if Tesco, for example, rides roughshod over local cultures, then why do so many people buy there? Would you buy in a place that you feel is trampling on your values all the time? The answer must be that people either do not believe that their local identity is defined by where they buy their milk and toothpaste, or that they do have a preference for stores and products with a local character, but not at any price. 

So why not state the case like this: “Most people’s willingness to pay a mark-up at a store with a specific ‘local’ image is not high enough to offset Tesco’s price advantage. Therefore, Tesco’s prices must be artificially raised by depriving the company of economies of scale, to push consumers back on the high street, and bring their buying behaviour in line with Phillip Blond’s personal preferences.”

As far as the “civil society” pillar is concerned, the progressive conservatism project presents a variant of a social democratic fallacy which has been refuted by two IEA authors, namely, that the government can deliberately create “social capital”. While for social democrats “creating social capital” means handing out taxpayers’ money to organisations promoting leftist values, for progressive conservatives it would mean handing out taxpayers’ money to conservative-minded organisations like the “conservative co-operative movement“. 

The writer Gotthold E. Lessing is alleged to have said about a book he reviewed that it “contains many new and good things; but the good things are not new, and the new things are not good.” The same is true of progressive conservatism.

In his recent article in The Spectator, David Cameron tells us that “the public must be given a core reason to vote not just against Labour but for the Conservative Party.” He goes on to provide one central idea which provides such a core: the Conservatives will “usher in a new post-bureaucratic age” – made possible by the “information revolution”, which enables “a massive transfer of power from central government agencies to individuals and local communities.”

But the word “bureaucratic” refers to management in government and the public sector. (Profit management, the whole basis of economic calculation and efficiency, is available only in the private sector.) In fact the “post-bureaucratic age”, at least in the West, came about during the 18th century, propelled in particular by Adam Smith. Hobbled as it now is, Smith’s “invisible hand” is the most powerful information system the world has ever seen, bar none. The internet is a mere sideshow which enhances knowledge of whatever market signals are allowed by the bureaucrats. And as government grows, the internet is increasingly likely to become a tool for officials to achieve their own objectives.

To be truly post-bureaucratic and move “from state to society” (another of Cameron’s favourite phrases) Cameron needs only to dismantle the former, abolishing or selling it piece by piece, aiming to cut both spending and taxes by say 50% in his first term and the same again in his second. This will allow an explosion in the division of labour and genuine market prices – prices which people can act upon (rather than just vaguely talk about in their “communities”). In this way the “society” bit will look after itself.

Instead, he talks about redistributing the proceeds of taxes at current levels (or worse) amongst the aforementioned “communities” – which in practice would naturally be taken over by local government or other bully boys such as Jack in The Lord of the Flies, or Napoleon in Animal Farm.

Terry Arthur is the author of Crap: A Guide to Politics.