All entries for Wednesday 01 October 2008
October 01, 2008
“…Government cannot solve all economic problems or end the economic cycle. But by spending wisely and taxing fairly, government can help tackle the problems…”
- Labour Party Manifesto, 1997
There is no denying that governments have always sought to tax ‘fairly’ - for whom, is a little less certain, but it is always ‘fairer’. However, the particular significance of the above soundbite is drawn from the first six words; the concession that Keynesian economic strategy is no longer compatible in a world, where the British economy is but one constituent of an increasingly autonomous global market.
Believed by many that it died with Blair’s departure, recent statements from rivalling parties would ironically suggest that the New Labour Project has not been axed, but adapted and as such, has been able to gain a degree of permanency.
Cameron’s pledge to ‘nudge’ individual towards social responsibility, coupled with the Liberal Democrats’ leader, Nick Clegg’s campaign for fairer economic redistribution through a proposed modification of the tax system (under which responsibilities once reserved for the State would be entrusted to the individual) , both suggest a desire to if not to perpetuate, but certainly to progress policies witnessed in the mid-1990s as a way of filling the emerging idea-vacuum.
This therefore begs the question: Are we witnessing the emergence of a second phase to Gidden’s Third Way? Initially (and without too much simplification), the Third Way (in this case regarding specifically modern politics, although one cannot deny the underlying similarities with Italian corporativism which shared the same name and dates back to the turn of the twentieth century) provided a way of uniquely marrying capitalism and socialism in a single post-ideological doctrine (for although he dismissed post-modernism, Giddens sympathised with ideas considered to represent late modernity).
Gidden’s Third Way sought to redefine the role of government as a social activator, as oppose to a social implementer. Government was meant to recognise the permanency of market forces and regulate them, as oppose to define them.
But where Blair and Mandelson’s Project sought to make the State responsible for this role as ‘activator’ (to arguably compensate for the absence of direct fiscal and monetary management that Labour’s Left so keenly sought and in some quarters still seeks), both the Conservatives and Liberal Democrats believe that individuals should encourage themselves: Cameron and Osborne want people to be rewarded for their thrift and their voluntary contributions to community projects, while Clegg and Cable seek to reward those individuals who lead ‘healthier lifestyles’.
And it may well be that this type of politics - Third Way Mk II - could be precisely the strategy (if not the only strategy) that governments can feasibly pursue in the face of a looming recession. In the absence of high tax revenues, governments are arguably unable to regulate the markets (including the employment market) at a macro-economic level as Labour had done. Instead, politicians and political thinkers now see government’s role as facilitating micro-economic improvement - were that be cutting taxes (including Capital Gains tax) or specifically lobbying individual firms - particularly in the Energy Industry - to help the rest of the economic community.
Moreover, this thinking is beginning to be extended to social policy. Instead of Sure Start programmes, parties are offering incentives to local charities to do more for local youngsters, while Community Support Officer would be substituted by ‘Have-a-Go Heroism’. In a way, political thinkers want to go one step further than Giddens had proposed and actively get individuals engaged in their communities in a way that he thought people would do voluntarily, once barriers to social mobility were eliminated.
This has a profound implication on the structure of society. Rather than serving as an overseer, we have entered a phase where government’s desire to be an ‘implementer’ has led to a the creation of a governmental “market force”, but one with the power to express and perhaps impose the views of an electoral majority, where the forces of demand and supply are insufficient in gaining a ‘fair’ outcome for the public. Hence Labour’s more proactive role in managing not only Northern Rock but also Energy companies.
On one hand this is arguably more successful than merely ‘overseeing’ or ‘regulating’ the market economy. We can see this in two distinct senses. The first is that the government can be proactively involved in the economy, without damaging entire industries. In other words, the collateral damage incurred by Social Democratic economic policy would be avoided. The second is that the people’s wishes carry a lot more weight in parts of the economy where its oligarchic nature would ordinarily resist interference.
However, it is precisely this point that reveals 3.2’s greatest weakness. The notion of harnessing the public’s wishes may point towards a more democratic state, but in the absence of fundamental structural changes to the parliamentary system, ’social responsibility’ rhetoric may remain just that, as the people wouldn’t be able to assume the economic responsibility demanded of them in the absence of an increased say of where they can and cannot be self-sufficient. In other words, one cannot simply demand the poorest to be economically responsible, unless they are in a position to demand and negotiate for the community’s help - which, by the proposed model, could only be achieved by enlarging the political channels available to them - channels which are being overlooked by these current proposals and channels which could remain irrelevant if the majoritarian system doesn’t allow marginal, but significant groups to express themselves. This carries the implication therefore that a government with a ’social implementer’ agenda are more likely to realise Mill’s Dictatorship of the Majority, or should that be: impose ideas legitimised by the belief that it is sufficient to gain the agreement of a small percentage of a people, on one day every four years?
In order to steer us away from such a situation, Cameron and Clegg must therefore recognise that society doesn’t represent an Fukuyamian homogeneity, but rather an aggregation of different social groups, who - in order to become more politicised - must be articulated, rather than merely represented. In other words, no half measures can feasibly exist - economic responsibility must logically be matched with the delegation of democratic responsibilities to not only maximise people’s well-being in a practical sense, but also encourage their own political autonomy.
But in the absence of concrete proposals to localise politics, we shouldn’t expect 3.2 anytime soon.
If politicians are reading anything this summer, its Richard Thaler and Cass Sunstein’s ‘Nudge: Improving Decisions about Health, Wealth and Happiness’, cited by both sides of the Commons as heralding a distinctive shift in political thinking and policy.
Of course, governments have been trying to dictate society’s behaviour for time immorium - heavy taxation on perceived negative externalities and strict regulation is proof of that. But where Thaler and Sunstein have departed from previous idea is in their hope to integrate voluntarism with government direction in a way that both preserves individual liberty in the face of particularly ‘Green Authoritarianism’ and the Market Economy. Thus rather than legislating, ‘Nudge’ urges governments to encourage social responsibility in a way that echoes the age of communitarianism ushered in by New Labour and has been adopted by the Conservatives in their promotion of ‘Voluntary platoons’, where services ordinarily provided by the state are conducted by charitable organisations.
This raises the question - is ‘Nudge’ new? Governments have urged people to voluntarily ‘help themselves’ since the days of Samuel Smiles, when Post Office Saving Accounts were created to encourage ‘thrift’. Therefore rather than being libertarian, ‘Nudge’ has been attacked as being a cynical re-marketing of paternalism, which would ordinarily be incompatible in a Market Economy, where deference is dead and individual need placed above society’s.
And with good reason. The notion of gaining voluntary consent for a government initiative goes beyond mere 'agenda setting' and increasingly resembles Lukes’ third face of power - ideological control. This is worryingly revealed by the logic behind the ‘Nudge’ itself. The fact that a ‘Nudge’ would be conducted by representatives elected by voters who have not already voluntarily reversed perceived social costs indicates that any ‘Nudge’ would in fact be conducted against the individual’s interest. For some therefore, rather than representing, politicians would therefore serve as ideologues assuming an authority above their electors.
Nudge is therefore a form of ideological paternalism that demands rather than depends upon individual commitment.