Instead, the ethic of Victorian voluntarism and punitive eligibility criteria was replaced by universal social provision, albeit varying considerably from country to country. The inability to work or to find work, far from being stigmatized, was now treated as a condition of occasional but by no means dishonorable dependence upon one’s fellow citizens. Needs and rights were accorded special respect and the idea that unemployment was the product of bad character or insufficient effort was put to rest.
Today we have reverted to the attitudes of our early Victorian forebears. Once again, we believe exclusively in incentives, “effort” and reward—together with penalties for inadequacy. To hear Bill Clinton or Margaret Thatcher explain it, making welfare universally available to all who need it would be foolish. If workers are not desperate, why should they work? If the state pays people to be idle, what incentive do they have to seek out paid employment? We have reverted to the hard, cold world of Enlightened economic rationality, first and best expressed in
The Fable of the Bees
, Bernard Mandeville’s 1732 essay on political economy. Workers, in Mandeville’s view, “have nothing to stir them up to be serviceable but their wants, which it is prudence to relieve but folly to cure”. Tony Blair could not have said it better.
Welfare ‘reforms’ have revived the dreaded ‘means test’. As readers of George Orwell will recall, the indigent in Depression-era England could only apply for poor relief once the authorities had established—by means of intrusive inquiry—that they had exhausted their own resources. A similar test was applied to the unemployed in 1930s America. Malcolm X, in his memoirs, recalls the officials who “checked up” on his family: “[T]he monthly Welfare check was their pass. They acted as if they owned us. As much as my mother would have liked to, she couldn’t keep them out. . . .We couldn’t understand why, if the state was willing to give us packages of meat, sacks of potatoes and fruit, and cans of all kinds of things, our mother obviously hated to accept. What I later understood was that my mother was making a desperate effort to preserve her pride, and ours. Pride was just about all we had to preserve, for by 1934, we really began to suffer.”
Contrary to a widespread assumption that has crept back into Anglo-American political jargon, few derive pleasure from handouts: of clothes, shoes, food, rent support or children’s school supplies. It is, quite simply, humiliating. Restoring pride and self-respect to society’s losers was a central platform in the social reforms that marked 20th century progress. Today we have once again turned our back on them.
Although uncritical admiration for the Anglo-Saxon model of “free enterprise”, “the private sector”, “efficiency”, “profits” and “growth” has been widespread in recent years, the model itself has only been applied in all its self-congratulatory rigor in Ireland, the UK and the USA. Of Ireland there is little to say. The so-called “economic miracle” of the ‘plucky little Celtic tiger’ consisted of an unregulated, low-tax regime which predictably attracted inward investment and hot money. The inevitable shortfall in public income was compensated by subsidies from the much-maligned European Union, funded for the most part by the supposedly inept ‘old European’ economies of Germany, France and the Netherlands. When Wall Street’s party crashed, the Irish bubble burst along with it. It will not soon reflate.
The British case is more interesting: it mimics the very worst features of America while failing to open the UK to the social and educational mobility which characterized American progress at its best. On the whole, the British economy since 1979 tracked the decline of its American
not only in a cavalier unconcern for its victims but also in a reckless enthusiasm for financial services at the expense of the country’s industrial base. Whereas bank assets as a share of GDP had remained steady at around 70% from the 1880s through the early 1970s, by 2005 they exceeded 500%. As aggregate national wealth grew, so did the poverty of most of the regions outside London and north of the river Trent.
To be sure, even Margaret Thatcher could not altogether dismantle the welfare state, popular with the same lower middle class that so enthusiastically brought her to power. And thus, in contrast to the United States, the growing number of people at the bottom of the British heap still have access to free or cheap medical services, exiguous but guaranteed pensions, residual unemployment relief and a vestigial system of public education. If Britain is “broken”, as some observers have concluded in recent years, at least the constituent fragments get caught in a safety net. For a society trapped in delusions of prosperity and good prospects, with the losers left to fend for themselves, we must—regretfully—look to the USA.AMERICAN PECULIARITIES
“As one digs deeper into the national character of the Americans, one sees that they have sought the value of everything in this world only in the answer to this single question: how much money will it bring in?”
ithout knowing anything about OECD charts or unfavorable comparisons with other nations, many Americans are well aware that something is seriously amiss. They do not live as well as they once did. Everyone would like their child to have improved life chances at birth: better education and better job prospects. They would prefer it if their wife or daughter had the same odds of surviving maternity as women in other advanced countries. They would appreciate full medical coverage at lower cost, longer life expectancy, better public services, and less crime. However, when advised that such benefits are available in Western Europe, many Americans respond: “But they have socialism! We do not want the state interfering in our affairs. And above all, we do not wish to pay more taxes.”
This curious cognitive dissonance is an old story. A century ago, the German sociologist Werner Sombart famously asked:
Why is there no socialism in America?
There are many answers to this question. Some have to do with the sheer size of the country: shared purposes are difficult to organize and sustain on an imperial scale and the US is, for all practical purposes, an inland empire.
Then there are cultural factors, notorious among them the distinctively American suspicion of central government. Whereas certain very large and diverse territorial units—China, for example, or Brazil—depend upon the powers and initiatives of a distant state, the US, in this respect unmistakably a child of 18th century Anglo-Scottish thought, was built on the premise that the power of central authority should be hemmed in on all sides. The presumption in the American Bill of Rights—that whatever is not explicitly accorded to the national government is by default the prerogative of the separate states—has been internalized over the course of the centuries by generations of settlers and immigrants as a license to keep Washington “out of our lives”.
This suspicion of the public authorities, periodically elevated to a cult by Know Nothings, States’ Rightists, anti-tax campaigners and—most recently—the radio talk show demagogues of the Republican Right, is uniquely American. It translates an already distinctive suspicion of taxation (with or without representation) into patriotic dogma. Here in the US, taxes are typically regarded as uncompensated income loss. The idea that they might (also) be a contribution to the provision of collective goods that individuals could never afford in isolation (roads, firemen, policemen, schools, lamp posts, post offices, not to mention soldiers, warships, and weapons) is rarely considered.
In continental Europe as in much of the developed world, the idea that any one person could be completely ‘self-made’ evaporated with the illusions of 19th century individualism. We are all the beneficiaries of those who went before us, as well as those who will care for us in old age or ill health. We all depend upon services whose costs we share with our fellow citizens, however selfishly we conduct our economic lives. But in America, the ideal of the autonomous entrepreneurial individual remains as appealing as ever.
And yet, the United States has not always been at odds with the rest of the modern world. Even if that were the case for the America of Andrew Jackson or Ronald Reagan, it hardly does justice to the far-reaching social reforms of the New Deal or Lyndon Johnson’s Great Society in the 1960s. After visiting Washington in 1934, Maynard Keynes wrote to Felix Frankfurter: “Here, not in Moscow, is the economic laboratory of the world. The young men who are running it are splendid. I am astonished at their competence, intelligence and wisdom. One meets a classical economist here and there who ought to be thrown out of [the] window—but they mostly have been.”
Much the same might have been said of the remarkable ambitions and achievements of the Democratic-led Congresses of the ’60s that created food stamps, Medicare, the Civil Rights Act, Medicaid, Headstart, the National Endowment for the Humanities, the National Endowment for the Arts and the Corporation for Public Broadcasting. If this was America, it bore a curious resemblance to ‘old Europe’.
Moreover, the ‘public sector’ in American life is in some respects more articulated, developed and respected than its European counterparts. The best instance of this is the public provision of first-class institutions of higher education—something that the US has done for longer and better than most European countries. The land grant colleges that became the University of California, the University of Indiana, the University of Michigan and other internationally renowned institutions have no peers outside the US, and the often underestimated community college system is similarly unique.
Moreover, for all their inability to sustain a national railway system, Americans not only networked their country with taxpayer-financed freeways; today, they support in some of their major cities well-functioning systems of public transport at the very moment that their English counterparts can think of nothing better to do than dump the latter on the private sector at fire-sale prices. To be sure, the citizens of the US remain unable to furnish themselves with even the minimal decencies of a public health system; but ‘public’ as such was not always a term of opprobrium in the national lexicon.ECONOMISM AND ITS DISCONTENTS
“Once we allow ourselves to be disobedient to the test of an accountant’s profit, we have begun to change our civilization.”
hy do we experience such difficulty even
a different sort of society? Why is it beyond us to conceive of a different set of arrangements to our common advantage? Are we doomed indefinitely to lurch between a dysfunctional ‘free market’ and the much-advertised horrors of ‘socialism’?
Our disability is
: we simply do not know how to talk about these things any more. For the last thirty years, when asking ourselves whether we support a policy, a proposal or an initiative, we have restricted ourselves to issues of profit and loss—economic questions in the narrowest sense. But this is not an instinctive human condition: it is an acquired taste.
We have been here before. In 1905, the young William Beveridge—whose 1942 report would lay the foundations of the British welfare state—delivered a lecture at Oxford, asking why political philosophy had been obscured in public debates by classical economics. Beveridge’s question applies with equal force today. However, this eclipse of political thought bears no relation to the writings of the great classical economists themselves.
Indeed, the thought that we might restrict public policy considerations to a mere economic calculus was already a source of concern two centuries ago. The Marquis de Condorcet, one of the most perceptive writers on commercial capitalism in its early years, anticipated with distaste the prospect that “liberty will be no more, in the eyes of an avid nation, than the necessary condition for the security of financial operations.” The revolutions of the age risked fostering confusion between the freedom to make money . . . and freedom itself.
We too are confused. Conventional economic reasoning today—ostensibly bloodied but apparently quite unbowed by its inability either to foresee or prevent the banking collapse—describes human behavior in terms of ‘rational choice’. We are all, it asserts, economic beings. We pursue our self-interest (defined as maximized economic advantage) with minimal reference to extraneous criteria such as altruism, self-denial, taste, cultural habit or collective purpose. Supplied with sufficient and correct information about ‘markets’—whether real ones or institutions for the sale and purchase of stocks and bonds—we shall make the best possible choices to our separate and common advantage.
Whether or not these propositions hold any truth is not my concern here. No one today could claim with a straight face that anything remains of the so-called ‘efficient market hypothesis’. An older generation of free market economists used to point out that what is wrong with socialist planning is that it requires the sort of perfect knowledge (of present and future alike) that is never vouchsafed to ordinary mortals. They were right. But it transpires that the same is true for market theorists: they don’t know everything and as a result it turns out that they don’t really know anything.
The ‘false precision’ of which Maynard Keynes accused his economist critics is with us still. Worse: we have smuggled in a misleadingly ‘ethical’ vocabulary to bolster our economic arguments, furnishing us with a self-satisfied gloss upon crassly utilitarian calculations. When imposing welfare cuts on the poor, for example, legislators in the UK and US alike have taken a singular pride in the ‘hard choices’ they have had to make.
The poor vote in much smaller numbers than anyone else. So there is little political risk in penalizing them: just how ‘hard’ are such choices? These days, we take pride in being tough enough to inflict pain on others. If an older usage were still in force, whereby being tough consisted ofenduring
pain rather than imposing it on others, we should perhaps think twice before so callously valuing efficiency over compassion.3