The current Government has only one defence for its approach to public spending, and it is an argument which holds little water
For decades, thinkers have argued as to where exactly the boundaries of Government responsibility should lie. As a basic summary and deliberate oversimplification, there have been three main ideological perspectives on this. Socialists have argued that the State should do whatever is required to provide for its population and ensure relative equality. Conservatives and Liberals have both traditionally argued for a smaller state. Conservatives have argued that it should restrain from interfering in the Economy, but should defend Law and Order and take a paternalistic interest in maintaining public decency. Liberals (traditionally) argued that the State is a ‘necessary evil,’ which while an inherently tyrannical interference, can have a positive role in the life of the Individual, as long as it well knows its limits.
But today it feels like the focus has shifted. Rather than arguing about what the State should do, current discourse can be summarised as an everlasting argument as to how much the State can do. Figures of every partisan colour and ideological background fall over themselves to appear the most earnestly enthusiastic about what Government could do, if it had the resources.
In her first official speech as Prime Minister, Theresa May chose to speak about the ‘Burning Injustices’ facing British society, such as health inequality between the rich and poor, the near-impossibility of entering the property market as a young person, the lack of job security in the modern labour market, and the scarcity of resources available to help those with mental health issues. It was summarised by her desire to champion those ‘Just About Managing.’
At the time, it was noted that it had many tonal similarities with the kinds of speeches with which Ed Miliband tried and failed to become Prime Minister. It can barely be believed that this sort of sentiment exists in the party which just thirty years ago was led by the swashbuckling free-marketeer Margaret Thatcher.
Of course, Theresa May and her Government have subsequently done very little to address the issues she raised. But to an extent, the fact that they proved hollow platitudes is less interesting- and matters less- than the reason given that more has not been done. It is the same miserable argument with which the Conservatives have responded to nearly every policy or suggestion put forward by the Labour Party for the last eight years: that it simply isn’t possible for the Government to do anymore. That Her Majesty’s Treasury has already been bled dry, and that a combination of capital flight, rational expectations and damaged market confidence would render any effort to find more resources counterproductive. That as nice as these things would be, they are not possible.
A real supporter of the free market should see the supposed impossibility of a successful welfare State as secondary to the ethical arguments for small Government. But not the modern UK Conservative Party. I would go as far as to say that the Conservative Party does not dare face Labour at an ideological level. Its leadership is not stupid, and its electoral record reflects an outstanding ability to win in a variety of circumstances. The Tories know full well that, in the current climate, their ideological motives are a harder sell than Labour’s, and they effectively abandon them where necessary, hiding instead behind an image of steely practicality. And so in every Party Political Broadcast, on every leaflet, and at every session of PMQs, the same wearily unambitious argument is heard: things aren’t so intolerable at present that we dare risk throwing it all away.
I concede that there is a certain tear-away charm to a Government which limits itself out of sheer freedom-loving libertarian flair and an earnest fear of tyranny, even if it produces some unsavoury outcomes. When reality inevitably fails to match the theory of the ‘Invisible Hand’ guiding us to universal prosperity, people will suffer. But I can see why it appeals. Nevertheless, a Government which shys away from progress, out of fear of what the stock market might think if it dares to assert itself, is plainly reprehensible.
I do not accept the idea that a successful free market in any way undermines the viability of a large, active public sector, and a generous welfare state. Critics of ‘Big Government’ claim that humans are naturally self-serving, suspicious and ultimately too fallible to operate in the interests of the long-term common good. People, they argue, will never accept arbitrary and unnatural social constructs, and instead need immediate and personal reward for their efforts. They point to the triumphs of modern capitalism to show that we achieve most when working privately, separate to forced, ‘unnatural’ institutions.
Yet there is nothing remotely natural about the ‘Free Market,’ as we understand it today. For a start, the entire global economy is established around the existence of Money.
As an obviously arbitrary social construct, Money is an easy target for cynics; it is so ever-present in our lives and so well established in society that it is easy to ignore just how remarkable it is. I genuinely consider the universal acceptance of ‘Money’ to be the surest evidence that humans can forsake immediate self-interest in favour of Common Endeavour.
Think about it like this: a human individual without the capacity to exchange is a solitary animal, like a tiger. Tigers don’t build sophisticated societies, because every individual tiger has to meet all of its tigrine needs alone (and some other reasons, to be fair). Every individual must provide for itself its own food, water, shelter, and protection. This takes all of their time, and they do none of it particularly well, because they are forced to be a constant jack-of-all-trades, forever just about good enough at everything. And thus the living conditions of the individual tiger will never improve.
However, if a few tigers were to put their differences aside, and decide to cooperate, much more could be achieved. The key difference would be that individuals would now be able to specialise, safe in the knowledge that all their needs would be met through exchanging what they produce, among themselves. Tigers particularly adept at hunting for food could specialise as Hunters, and dedicate all of their time to perfecting their craft. Meanwhile, those tigers with an aptitude for medical science (of which there might be some, you never know) could try to become doctors. This would apply for all areas of life where work is required. All tigers- even those unable to secure an interesting job in the new Tiger Commune- would benefit, because every task would be performed by a specialist, with some personal expertise and skill, and the time to innovate to discover more efficient ways of doing that task. With increased efficiency, some tigers could even turn their attention to delivering non-essential services, allowing life to become about more than day-to-day survival.
Of course, this would work much more effectively at a larger scale. Tiger Commune is good, but the effect would be even greater if it could be translated into a Tiger Global Economy. This stage is harder. The cooperation in Tiger Commune was only possible because of trust. Every individual knew one another and therefore trusted that in return for their efforts they would receive a fair reward. At a larger scale, interpersonal trust will not suffice, and something more concrete is needed- i.e. the standardisation of exchange, with the introduction of a completely fungible ‘unit’ of wealth. Now when an individual goes out to work, the same effect emerges as did at Tiger Commune. It does not matter that they will only produce one thing or perform one function. They know they will receive adequate reward for their efforts, to provide for all their personal needs, in the form of an agreed amount of undifferentiated ‘wealth.’ They might not necessarily even themselves use the good or service that they dedicate their working life to producing. They also know that their reward can be exchanged for whatever takes their fancy, and will be of equal value to anyone with whom they try to exchange it. Money is like formalised karma. If you do something productive, you know that at some point in the future you will get to enjoy the results of the production of others.
This is clearly a very unnatural state of affairs. The Free Market isn’t just what happens when humans are left to their own devices- living as hunter-gatherers or subsistence farmers is our natural default.
So, what does this have to do with the fiscal policy of the current Government? The point I have tried to illustrate is that the existing financial system, the free market economy, would not function without the mutual consent of every individual, to accept constructs. Constructs which are existentially dependent on the cooperation and common endeavour of people that they do not and will never personally know one another. Capitalism can seem to isolate us, but it also binds us together. Capitalism and Government are not opposites, working against one another. They are both imperfect expressions of human will to cooperate, with their own strengths and weaknesses, and they can prosper best when working side by side as equals. Everything around you has come into your possession courtesy of an unknowably large and sophisticated web of human cooperation, every unit of which trusted every other component. The device on which you are reading this is in itself evidence of the power of Common Endeavour.
Therefore, I believe that the people of a country such as ours, a settled liberal democracy, should be more than accustomed to foregoing immediate gratification in the interest of the long term good. We do exactly that every time we make a purchase. Why, then, are we so quick to talk down human nature when it comes to choosing what kind of Government we want? Look at the heights of human achievement, and tell me: how can adequately funded public services be beyond our power?
