Tradition, fairness and the big society – a new politics for new times?

October 12, 2010 by · 15 Comments
Filed under: Credit crunch, The RSA 

I need to get back to regular posting. So I’m going to spend a few days exploring the contours of a new political framework….   

After a difficult period it was a treat last night to settle back in the Great Room and watch The Flaw, a film about the credit crunch which numbers amongst its executive producers the RSA Chairman, Luke Johnson. It is a terrific film, intelligent and persuasive, but also entertaining, witty and at times moving. Most fascinating to me was its core thesis; that the biggest driver of the crisis was wage and asset inequality.

The period between the late 1970s and 2007 saw accelerating income inequality. This reflected, on the one hand, globalisation and de-industrialisation in the West, and, on the other, deliberate policies to weaken trade unions, liberalise labour laws and lower taxes on wealth. In essence, growing income disparity in the USA saw an extra trillion and half dollars flow up to the richest one percent.

But, while the rich and their banks were unwilling to allow middle and poorer workers to be paid more (over the last three decades wages for all but the rich have stagnated in the US), they were more than happy to encourage the poor to borrow money. Of the 1.5 trillion dollars that flowed up in wealth, a trillion then flowed down in borrowing, much of it, from the point of view of the borrower, very ill-advised. This was the cause of the bubble and the bust.

(By the way, here in the UK we are far from out of the woods. The fall in house prices reported last month by Halifax and yesterday’s confirmation of disappointing retail sales both reinforce the worries of those who think we are in for a Japan-style long stagnation, or worse. As Paul Krugman and Robin Wells argue in the latest New York Review of Books, the problem is how to kick start an economy when deficits are already high and interest rates are close to zero.)

As I have written before (and at the risk of sounding self serving), I think one of the strengths of the RSA in comparison to other, more predictable think tanks is that we have a Chief Executive from a left of centre background and a Chairman who is an enthusiastic champion of competitive markets and private enterprise. It was fascinating that Luke should have been involved in a film which reached a conclusion so comforting to social democrats. In part, I suspect, this reflects Luke’s commitment not to interfere with the film’s creative team, but might it also be a sign of the changing contours of political debate?

I see a new political space opening up which combines three positions which have not traditionally cohered:

- Opposition to extreme, unmerited and destructive levels of inequality: ‘fairness does matter’

- Scepticism about the central state as a direct agent of social change and a preference for models which are driven bottom up by citizen initiative and community action; ‘a big society not a big state’

- Recognition of the importance to human functioning both of values such as respect, virtue, thrift, moderation and of the norms and institutions which embody these values: ‘enlightened social conservatism’. 

Fairness matters, big society not big state, enlightened social conservatism: do these ideas make sense and can we agree broadly what they mean? Are they philosophically compatible and is it possible to imagine a political and policy programme emerging from them?

This new framework doesn’t dissolve ideological differences. Someone from a right of centre background might agree that inequality is excessive now but would be willing to go much less far towards egalitarianism than someone from the left. But practical politics starts from where we find ourselves now. It is the world after the credit crunch and facing such challenges as the relative decline of the West, population ageing and climate change, and that provides the basis for unusual alliances and innovative ways of thinking. 

I would be thrilled if people could give me their thoughts so we could get this debate going for a few days.

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