Them and Us. Will Hutton, The Mirror of Princes. Review.

 

Following our reviews of David Harvey, Alex Callinicos, and John Holloway, we turn to the centre-left’s response to the crisis.

Them and Us. Changing Britain – Why We Need a Fair Society. Will Hutton. Little, Brown. 2010.

“..I haue nowe enterprised to describe in our vulgare tunge the fourme of a iuste publike weale: whiche mater I haue gathered as well of the sayenges of moste noble autours…”

The Governour. Sir Thomas Elyot. Knight. 1531.

The Mirror for Princes was a popular literary genre in the Renaissance. Books offered guidance on the upbringing of Kings, Statecraft and the pastimes of courtiers. They exhorted virtue and justice. Machiavelli’s well-known treatise (often said to run counter to the last two qualities) (1532), Castiglione’s Book of the Courtier (1528) and Sir Thomas Elyot’s The Boke Named the Gouernour (1531) are famous examples. They were handbooks designed for rulers, magistrates and (sometimes) citizens. Historians of ideas have explored their context and theories in depth. But, with their claim to offer rules for success one can also consider their kinship to, say, 7 Habits of Highly Effective People and Chicken Soup for the Soul.

Present-day political (would-be) ‘best-sellers’ often owe a debt to these Looking Glasses. Them and Us  addresses to the Modern Princes and their Court – Politicians, Policy Markers, the Captains and foot-soldiers of Capital. Will Hutton informs them that “Capitalism is a much more subtle system than many capitalists think” belongs to this evergreen bookshop section. It has handy adages for running the market, that, “innovation, innovation, innovation”, needs “regulation, the friend of innovation.” He is optimistic, “Politics has already been transformed from managerialism to reasoned argument about policy and purpose.” He considers that, for “the “liberal Conservative government with a Liberal Democrat partner” he can help clarify their “incoherence of values”. One reason is that, “some of their aims echo the ideas that have been presented in this book – constitutional and banking reform, along with solid commitments on the environment.”(P 390.)  Hutton would like to push people further in this direction, talking to ‘them’, and ‘us’ too.

Them and Us is indebted to many “noble autours”, invariably introduced by the verb “to argue’ and sometimes with the description, “path-breaking”. Humanist virtues are glossed into a ‘big idea’. This is fairness, a “visceral moral imperative”. The principle that keeps capitalism buzzing, innovative and productive is “due reward” for effort. Effort and enterprise must be seen to be pay. But this is not wholly the case. Elites take a disproportionate share of the national cake, encouraging people to cling to what share of the rest they have in the ‘Have-What-I-Hold” society. In the process world capitalism has been taken over by toxic finance, which has a “destructive dynamic”. This burst through in the crises that are still shaking Europe. Hutton stands back from this to consider what is needed. This means, not just ways to repair the mistakes that caused them, but ethically informed reforms. We need a halt to undue benefits. “Rank unfairness threatens prosperity.” (P 227) Wealth is good, “But it should not be disproportional to effort, socially useless, or largely generated by luck” without any social responsibility. (P 273) He has discovered that, “The more capitalism adopts fair process, the better it works” (P 89) It would seem, then, that Entrepreneurs are from Mars, and Hutton’s “nurturing, binding together and investment.” is from Venus. According to at least one reviewer Hutton has a hit on his hands, “fairness is the word of the moment”.

The States That Were.

Will Hutton began his writing career as a giver of radical public-advice. His early publications are no doubt still there, browning, on many Progressives’ shelves. The State We’re in (1996) bristled with Machiavelli’s republican virtù. From the ‘centre-left’ he advocated a citizen’s army of ‘stakeholders’ to replace the “Treasury/Bank of England axis” and Britain’s “unwritten constitution”. After New Labour’s victory in 1997 The State to Come (1997) he announced that they these proposals had “a chance”. That, “the best in the English liberal tradition – reformist, fair-minded, tolerant even ‘stakeholder’ – is being awakened.” This was ignored. New Labour had “no appetite” for its ideas, or for “modernising social democracy”.

The stakeholding side of English liberal tradition (?) did not stay awake for long. Those attending Unions 21 Conferences at Congress House would have noticed that the late 1990s enthusiasm for Will Hutton, translated into ‘social partnership’ between unions, employers and government, fizzled out in the face of Blair, members, and business leaders’ indifference. The World We’re In, less read, appeared in 2002. It defended Europe’s “welfare states, trade unions, labour market regulations and belief in the husbanded or stakeholder enterprise..” Hutton believed that a “European dimension”, including financial regulation, transparency over accounts and taxation” would provide the basis for an alternative globalisation to full-flown free-markets. This did not happen. Blair and Brown did not move towards a ‘European’ or any other, regulation of capital flows. Finance, a “bubble economy” ruled instead. The result? Them and Us observes, “the big bet on big finance, property and construction didn’t pay off” (P 33). “Today, England is in another deep, deep sleep in the aftermath of the financial crisis, hardly disturbed by the disaster through which it has just lived, let alone the challenges ahead.”(P 37) Yet, “Politics as a craft has been given a new mission and even new integrity” (P 390). As we have noted, Hutton is ready, yet again, to proffer his counsel to the Princes of the land.

States That Never Were.

Hutton’s previous writings traced a variety of problems linked, initially, to the British (unwritten) Constitution. The United Kingdom, an ‘ancien régime’ was marked by the way Parliament and Crown underwrote the dominance of finance over manufacturing. Hutton wove another theme into his work. He lamented the lack of a collaborative industrial, political and cultural, structure committed to the long-term in industry, and meeting social need The constitutional reforms supported by Charter 88 (written constitution, devolution, more local decision-making, more judge-law, new electoral systems) were seen as a democratic foundation of social partnership and increased investment. There should be a “republican-style central bank” to “recast the financial system as a servant of business rather than its master”. Quenching British money markets’ appetite for immediate rewards and reining in financial power (the ‘City’) were part of the packaging. This link was never clearly explained. But Hutton managed to attract critics of economic liberalism, sections of the intelligentsia influenced by the New Left’s belief that Britain was a uniquely ‘unmodern’ country, supporters of a Constitutional Revolution, some of Marxism Today’s theorists of “post-class” politics, New Labour modernisers looking for a dose of political economy more substantial than the Third Way, and communitarians attracted to is elements of associational (non-Statist) democracy.

These diverse enthusiasts, Hutton at their head, were free to dream of further benefits. In 1997, Britain was “pregnant with possibility”; it could become the “most dynamic economy and healthy society in Europe” (The State to Come). A buzz-word in this was “trust”, something that Blair’s ‘Young County’ could no doubt rebuild. Some in the union movement were susceptible to the virtues of what they took to be the European ‘social market’ model of company partnerships, with workers’ representatives enjoying a statutory right to have a say in enterprises’ decision-making. In fact a plate of mushy peas would have been a more solid foundation for change, since nobody ever explained why industrial relations should be reformed to please the kind of supporters that Hutton had mustered rather than people who held real power in the economy. Critics compared this to the unsuccessful 1920s attempts at permanent industrial collaboration associated with the name of Sir Alfred Mond, or schemes of “co-partnership” advocated as an alternative to socialism and class conflict over the years. Without backing in the constituencies that mattered (bosses and workers) Hutton’s plans (even with some TUC endorsement) were sidelined.

Yet some sops were given to the constituency described above. New Labour made gestures towards TUC General Secretary John Monks, and embarked on constitutional changes. It made great play of being Cool and Modern – for at least a few months. The Cabinet studiously ignored class politics – though most would say most of them had never considered them. By contrast, it is difficult to argue that Blair’s reforms, from The Scottish Parliament, the Welsh Assembly, to the Human Rights Act were without effect. The Scottish Assembly ensconced a local political elite, which has often tried to play off Caledonia against the common class interests of the whole land. Other devolutionary measures expanded the numbers of state prebends, and no doubt did involve some decentralisation of decision-making – none the better for being closer to local centres of economic and political privilege than national ones. Judge law will remain a millstone for any one ever attempting radical socialist legislation. It would have been more than likely that ‘social partnership’, if ever enacted, would have equally led to more talk, and more sinecures, rather than industrial democracy. Oversight and scrutiny are not workers’ or popular power. Active citizenship is unlikely to come through the decrees of the state. The absence of widespread popular pressure for change – for the kind of strong democracy that would challenge property rights and ownership – was more important than even the conventional blinkers of Blair.

This is safely ignored. The Square Mile is an easier target. Blair’s supporters, such as Peter Mandelson and Roger Liddle, believed – with dullness of a list of share prices – in the market. The need for efficiency to compete on the global market, in which the City would play a role in a stable macro-economic environment, was paramount. Signals that New Labour was favourable to the ‘markets’ (all of them) were regarded as a precondition for electoral and governmental success – a price everyone but the Left considered well worth paying. As Them and Us, outlines, to nobody’s enlightenment, Blair rapidly reached a compromise with the City. ‘Making things’ dropped out of sight, “debt and debt-related activity” propelled half the country’s growth. So, at the heart of New Labour was a deal with Finance, whose purpose is to “make extraordinary riches”. But did Hutton have a serious alternative? The aim of a republican central bank aim was a changed “financial environment”. Was this the way to create it? Or was it just a wish? It is possible to argue with Hutton that investment costs should be permanently lowered, just as New Labour wanted to end the cycle of boom and bust. Few seem to have taken the idea seriously. His Bank did not even survive the transition from the State We’re In (1996) to The State to Come (1997). One has little confidence in the enduring strength of his other financial reforms.

But Hutton claims that New Labour did not just utter quiet words to smooth ruffled City feathers. It enthroned the power of Finance. “Just as the trade unions’ capture of the state ended in the breakdown of social democracy and the evident bankruptcy of the institutions and policies it generated – from incomes policies to corporatist efforts to stimulate productive entrepreneurship so the City’s capture of the state has ended in the current calamity.”(P 33) In this fashion the ghost of the ‘ancien régime’ theory haunts Them and Us. This time however the state’s age is even more venerable. Blair’s Cabinet saw a revival of the “feudal form”. Government was media-driven, “complete with courtiers and flatterers” (with no room for, say, Will). Centralism continued, “directly inherited from the Norman invasion of 1066: localities administer policies decided by the centre, as was demanded by William the Conqueror’s occupation regime.” (P 347)

These, and countless similar assertions, indicate an often askew view of the British politics The claim that the trade unions “captured” the state in the 1970s by the use of negative power over government policy (briefly the agreements over incomes known as the Social Contract) is ridiculous. The shop steward militancy in the 1970s was part of a European trend linked to conflicts within Fordist systems of mass production (which encouraged such phenomena as challenges to managerial authority and in the UK, ‘wage-drift’ through local pay-bargaining), the impasse of Keynesian ‘demand-management’ (mid 70s ‘stagflation’), continued UK relative economic decline, and the unravelling of the post-war Welfare state consensus. That is to name but a few well-worn themes.

In this context, to find a central explanation for the place of the City in the country’s economy, and its role in influencing policy, in the mysteries of the British Constitution was always threadbare. Nor is it particularly special. Britain’s Monarchy, its origins in the Normans, and Saxons, is no more such a special case than, say Belgium or Sweden’s. But in wider economic and political terms their resemblances outweigh their differences. These states are capitalist, that is, to put it crudely, institutions shaped by the power of various blocs of capital (industrial, commercial, financial). Today, after the heyday of globalisation, the bookshelves heave with tomes on the importance of international capital flows. The justification this has given to neo-liberal policies, from de-regulation to privatisation, is worldwide. Even Hutton admits the importance of finance’s “raw political power, together with mathematical modelling and the apparent abolition of risk.” This “would have been difficult to restrain even by the most determined of post-war Labour governments.”(P 149) The contrary took place. Blair and Brown got the City to accept (restrained) taxation to fuel social investment, in return they would not touch its profit-making schemes. But the ‘social’ funding was not principally aimed at universal welfare; it was directed to an increasingly ‘targeted’ system that made benefits increasingly conditional on their support for a ‘flexible labour market’. That is, a market not a social democratic state.

Privatisation was said to be one of Britain’s most successful exports in the 1980s and 1990s. The near universal shift towards a ‘market state’, which trims welfare and social functions to the needs of ‘globalisation’, is not just a matter of one country’s bargain with the City. The new century has seen the processes deepening into the state’s core functions. Hutton criticises government ‘reforms’ of the NHS, local government and the civil service in terms of democracy. Outsourcing, placing public services in private hands, and financing their profits out of taxes, is ignored. How this shape politics is far from mysterious. The film Up in the Air (2009), stars an ‘outsourcing’ professional redundancy man, Ryan Bingham (George Clooney). Under psychobabble he ruthlessly hammers out the bottom line between aeroplane terminals, is a better guide to the deficit reductions than Dicey’s Law of the Constitution. Today we face mass sackings in the public services, with no doubt similar techniques.

Fairness As Just Deserts.

Them and Us contains a lengthy discussion of Fairness – some would say stretching its meaning far beyond the senses the word could possibly bear. In an overview, Hutton begins with ‘first principles’, “we have intentions that result in actions, and we believe that the consequences should be proportionate. We believe in both due desert and its proportional distribution” (P 46) Apparently, “this ceases to be an abstract banality (?) the moment one puts some flesh on what kind of actions merit such due desert. We value effort, hard work, diligence, conscientiousness and application; we do not value free-riders, shirkers, the slapdash, those who do the minimum or jobsworths.”(Ibid.).

It is hard to resist the temptation to cite Paul Lafargue’s Right to be Lazy, or to say that we have always admired Jobsworths. But after reflection, one can only reply – so what? Distributive justice is based on proportionality and ‘due desert’. The ancients, contrary to Hutton, may have ‘validated’ their concept of justice by referring to nature. But it was also a virtue, amongst others such as friendship (reciprocal social bonds) that had to be deliberately cultivated, as we learn from Aristotle’s Ethics. Virtues nevertheless have to be argued for. This leads us back to issues such as the nature of justice, and the justification for private ownership of the means of production (challenged by 18^th century proto-Communists like Mably and Morelly, and demolished by Marx, limited by Rawlsian liberals, reasserted by neo-liberals, and neo-conservatives). Other modern topics include the claims of the moral worth of people (or animals) regardless of any of their virtuous characteristics whatsoever. Ideas, such as Equality have meaning to Hutton in relation to fairness. While responding favourably In short the structure of rights that give us a sense of what is ‘due;’ and what is our ‘desert’ is only a derivative area of these debates, not its foundation. A discussion, which Hutton then wanders into, of the moral roots of human inclinations – “hand wired” in the direction of fairness (due desert) – that steps over these fundamental ethical issues is like an Economic Textbook that only includes a chapter on Supply and Demand.

The upshot is a social-political claim. That fairness turns out to be “the indispensable condition to generate economic development and growth.”(P 106) Fair capitalism is capitalism with more productive entrepreneurship. And so on. It is with relief that one returns to this more familiar Hutton territory, of the ‘social market’. That ”to succeed, capitalism needs to be much more subtle than simple reliance on markets, requiring a mix of so-called ‘soft’ intermediate institutions and a capacity to ensure fairness while permitting openness and challenge.”(P 135) By contrast capital flows, and financial markets escaped this. “The precondition for the 2007/8 crisis was the excessive leverage and overextended balance sheets resulting from banks; unwarranted overconfidence in their risk-management techniques.” (P 197) Spurred by their own greed, they could exploit these devices. Unrestrained by the ‘soft’ network of regulation, their rampant activity let loose the financial crisis, the “collective tragedy that this duplicity, political influence and pressure for ever more liberalisation and competition came at the same time as a long boom – indeed, the rise of finance partly caused that boom, So what would always have been difficult became toxic.”(P 181)

This has some merits. Hutton clearly is very familiar with the banking and financial world and is often enlightening. But recent books by David Harvey have managed more successfully to locate the underlying mechanisms behind capital flows, toxic debt, bank crashes, and deficit crises. The disproportionalities involved are structural not individual qualities. He linked them capitalism’s long-term instabilities and fundamental injustices. Hutton concentrates on the short-term. His moral theory – of fairness, and its absence – is in effect the nearest he gets to offering a more general explanation for the failings of the system. Overreaching is a fault encouraged by the expectation of undue reward; ever-expanding credit numbed everyone. But it particularly fostered a “communism for the rich” – those who profited from the boom in financial operations were and are able to protect themselves. They were blinded to the inefficiencies and irrationalities of their own networks. Now the crunch has happened what is the answer? We must try to “hand-wire more fairness in the operation of the network” (P 205) From breaking up the banks, to regulation, to transparency, one can simply fill in whatever centre-left idée reçue comes to mind.

Here’s a list, “Fair democracy, coupled with genuinely competitive, plural markets and the institutions that surround them, which guarantee debate, argument and deliberation offers the best means to ensure that economy and society are governed by due desert. Only in that way will the entrenched elites who have secured undue desert be challenged effectively.”(P 99) It would save the reader’s time if the book ended here.

Hutton’s Fair Society.

Them and Us concludes with political musings, “after the cramping, treacherous and bullying years of the visionless Gordon Brown, there is an enormous sense of enfranchisement and possibility across all the political parties that is begging to seep into civil society.”(P 391) The Liberal-Tory Coalition has its faults; it is not (like Hutton) vaguely Keynesian (not massive state investment). Its cuts may herald a scorched earth policy, but in the short term it is an “assertion of us over them, and welcome for it.”(P 392) These should, he earlier noted, be fairer, “Britain needs to share the pain of adjustment and the rewards of success proportionally if it is to create a more productive capitalism, and if it is to avoid social unrest.”(P 215) Hutton combines warm words of friendship, in a bid for influence, with reservations, for posterity no doubt. One wonders who’s listening.

In the screen version of Klaus Mann’s Mesphisto  the stage-director and actor Hendrik Höfgen compromises with the Nazis to further his career. But he still tries to mitigate their horrors, at least for his circle. Like Hutton he is free with his advice. In one scene he approaches a Goering-like figure to bid for the life of a friend. The Nazi turns to him and says with contempt, “Was wollen Sie nun, Shauspieler” (What do what now Actor.) One has the feeling that both David Cameron and Nick Clegg would reply to Hutton’s suggestions – “What do want now, Scribbler”.