A good state would give each of us the chance to thrive
The Guardian, by Yvonne Roberts
A dynamic modern country should not treat its citizens as passive clients, but as agents for a greater change
The terrible irony of the last three decades, under Labour, the Conservatives and the coalition, is that the effort to minimalise regulation, weaken trade unions and liberalise the financial markets has patently failed to propel modern capitalism to greater heights. On the contrary, when even the International Monetary Fund disputes rightwing politicians who claim inequality is an incentive to the rich to make more and a spur to the poor to work harder, the project is in deep trouble.
Since 2003, economic growth has decoupled from earnings. According to the ONS, output per man-hour in the UK is 21 percentage points below the G7 average, the biggest productivity gap since 1992. Britain is 30 percentage points less productive than Germany, France and the United States. We are becoming a low-productivity, low-wage economy, with desperately poor exports. Our "flexible" workforce is enabled by underemployment that wastes talents, while a lack of training bodes ill for the future.
Meanwhile, according to the Institute for Fiscal Studies, unless there is change, the number of children in poverty in one of the most affluent countries in the world will grow by an additional 400,000 over the course of this parliament. This is not only appalling in its own right, it is detrimental to society and the economy.
Keynes said that capitalism couldn’t survive if its workings are reduced to furnishing the wealthy to become wealthier. His warning has been overshadowed by the message that we must have a flexible workforce, short-term contracts, zero hours and underemployment – or jobs will go to other parts of the globalised economy.
Yet workers in German factories are paid 30 times those of the Chinese and twice their American competitors. The reason is that the German state has invested heavily in research and development, strong technical education, advanced machinery, workers’ representation on boards and regional banks that provide local support. It is imperative that the British government looks to and learn from examples such as these.
In 1977, the Bullock report in the UK proposed a form of workers’ participation or workers’ control – all boards of companies with more than 2,000 employees would have a right to have representation for workers. The report was strongly opposed, including by the City company law committee, which argued that shareholders are the "owners" of the companies, "those who provide the capital". The opportunity presented by the Bullock report should be revived, acknowledging the central role trade unions play in securing fair wages and decent conditions.
At a micro level, the state, directed by the neoliberal agenda, also falls short. It needs to see citizens as whole individuals with assets and a sense of agency, not clients who passively and sometimes punitively receive its services.
The organisation Participle provides a useful example of how the state can fulfil the vision set out by Beveridge at the foundation of the welfare state. In a programme called LIFE , established in 2009, now ended, it worked with families in Swindon with complex needs that it was estimated cost the state £250,000 per family per year.
One not untypical family was in receipt of 73 services from 24 departments. One social worker spent 86% of his time filling in forms and meetings other professionals about a teenager in the family; managerialism triumphed.
Participle redesigned support in a way that has vital lessons for the state. It sees individuals as having attributes; they are more than a bundle of problems, no matter how complicated and chaotic their lives. It sets goals, provides strong, consistent relationships and adopts a holistic approach; a welfare state that enables, not disables, the individual, milking him or her of resilience in the process.
The old-fashioned transactional state operates on the notion that if a variety of professionals fix the separate parts – truanting, rising damp in the house, debt, diabetes, unemployment – the whole will come together as a model citizen, except that that approach only accentuates the atomisation of the individual.
The state, influenced by a neoliberal outlook, has yet to work out the metrics of savings where the quality of life is improved.
What price on a happy life? These are areas of civic health that fail to count in a neoliberal climate, where the efficiency of the market is prioritised above all else.
A reframed narrative about the state must acknowledge the link between the mental and physical wellbeing of citizens and economic growth and the prosperity of markets.
An opportunity for a genuinely participatory, challenging, creative and active citizenship requires something different from the state than the retail politics of selling "the offer" to the electorate.
Brazilian professor Roberto Unger, a former minister in Lula da Silva’s government, believes that equality in society is too modest a goal; every man, woman and child can aim for "a higher life".
Unger describes a very different role for a state "energised" from the top down, as well as the bottom up. "However, in the broad area between this floor and the ceiling the state should engage independent civil society not for profit but in the experimental and competitive provision of public serves without ever endangering the universal minimum."
That concept is no more fanciful than the notion of a national health service free at the point of delivery to taxpayers in the 1920s, so how can it be brought about? The state is already innovative and proactive, as economist Mariana Mazzucato eloquently argues, investing in green tech, for example and the technology in the US that led to Apple and Google, but it needs to be less retiring about its achievements.
State banks such as Germany’s KfW bank and the Brazilian development banks work well; it is time they were emulated in the UK. House building, social housing, the provision of social care, free universal childcare are all areas in which the state could play a vital innovative role. By ensuring supply and not just subsidising demand, upholding universal standards of quality and rewarding entrepreneurism, including the development of co-operatives, mutuals and not-for-profits, the modern state can lead the way.
William Davies, author of The Limits of Neoliberalism, poses the ultimate challenge for the dynamic modern state – what is it for? How can it resolve the tension between the individual and the collective? How can it constrain the most powerful and restore the value of the common good? "An alternative needs to be identified other than simply more competition and competitiveness, in which isolated actors take no responsibility for the collective and the collective is immune to the protestations of those isolated actors."
Just as the neoliberal lawyers redrafted the rules to the benefit of the "free" market, it is time to redraft the social contract and reassert the positive contribution a modern state can make to the establishment of new forms of a political and social economy.
As Keynes wrote in 1926: "We do not dance even yet to a new tune – but change is in the air." A state with a strong ethos and clear remit has to be a part of that change, since little else has the power to fight off the worst excesses of a global capitalism that is malfunctioning, fashioned by the creed of neoliberalism that has been found so wanting.