Re: 3way 3rd way economics - federalism and stakeholding

David Donald (D.Donald@GCal.ac.uk)
Mon, 27 Jul 1998 12:10:12 +0100

>on the Economics of the Third Way
>
>but first, the principles:
>
>There are two political philosophies in this world:
>
>The Right, which believes in individual decision making (and hence free
>markets), recognising the value of flexibility and individual initiative as
>circumstances demand.
>
>& the Left, which believes in central, or collective decision making, which
>recognises the value of coordination, synergies of collective action and
>the interdependent nature of the economy (especially interesting to note
>between different routes in a metropolitan public transport network), and
>the fact that sometimes people will only favour a decision if everyone else
>pays their fair share (because the action will benefit all and
>"free-riders" are not wanted).

I think we need to pause before we accept this as the most significant set
of distinctions between left and right? We can agree that - historically
at least - 'rightists' have often been 'collectivists' and 'centralists'
(eg fascists) and 'leftists' have been 'individualists' and
'decentralisers' (eg left liberals and progressives). There are many
political and moral philosophical systems and we often engage in the
attempt to classify them as 'right' or 'left'. But what is 'left' in one
context (time, place circumstance) can be 'right' in another. Liberal
individualism is a good example. And we cannot rely on the dimensions of
'radical' and 'conservative' to sort this out. Protection of a status quo
health service might be left yet radical reaction to assert new priviledge
in the supposed name of some old equality of rights is not unknown (species
of American Frontier ideologies spring to mind). This last gives us the
clue. 'righ't and 'left' as we normally use them are about the excercise
of power in relation to 'ins' and 'outs' in terms of economic and social
priviledge. And aspects of sets of curent debates are still very much
about these issues - albeit in a quite transformed political, social and
economic context.

So in our recent world context organisational means and community values
have not been good indicators of 'left' and 'right'. For the last 30 years
or so (in the economic sphere) the Japanese and the Germans have tended to
be more collectivist and to act in ways which treat the interests of their
perception of their 'national community' as dominant. British and
Americans have been more cosmopolitical and less inclined to see the direct
pursuit of national interest as maximising welfare - indeed Bentham might
be seen as the guru. (This would be less true of Heath Mark II but true of
Thatcher and much less true of Macmillan: today young Mr Hague emerges as
the new fount of Social Toryism and celebrates community.) Mr Blair (so
Andrew Marr - I think rightly - tells us) is the firts liberal (Liberal?)
in No 10 since the war and is thus often seduced by his instincts to
individualist solutions. Dr Brown has more communal instincts... So
'means' say little about left and right - accept in context of the
distribution of circumstances of life. All of this is fundamental to the
'Third Way Debate' and especially to its economics. What always
distiguishes left from right is its attitude to relative priviledge and
relative under-priviledge. Exclusion and inclusion is contemporary parlance
but if we are not careful that ends up with a division in which the many of
modest means secure the power and priviledge of the few of immodest meams
supposedly to secure the minimal 'inclusion' of an 'underclass' who have a
morally repugnant paucity of life chances and status (standard of living).

The right always believe and assert that the good of all is best achieved
by securing priviledge. At different times they have different formulas
and different rhetoric. But always - and even at times of great change -
the preservation of extant or the reassertion of eroded priviledge is their
underlying strategy for securing the good society. This extends to their
policies for coping with the least and less well off. It can be
'collectivist' even to the extent of 'caste'. Thus "a place for everyone
and everyone in their place" but its a poor and foolish officer who does
not look as a priority to the welfare of his company and a poor master who
does not look to the (appropriate) education of his servants and his
servants' children. Or it can be individualist. The poor must be motivated
by removing their dependancy and the rich must be motivated by maximising
their rewards. This last is a central part of an egregious Thatcher ethic
which pays scant regard to the orginating predicament of the actors
concerned and to the conditions and limitations of advancement by those who
are individually 'successful' and upwardly socially mobile. Aspects of
these Thatcher values turned out to be morally repugnant to large sectors
of the electorate - which in my opinion accounts rather directly for size
of the New Labour majority. Unfortunately these values continue to
strongly appeal to other sections of the electorate which are also
important - but not as important - to the electoral coalition which took
Tony Blair to No 10. A Third Way economics will I assume not be divorced
from political mobilization: it must secure the acceptance of people both
as economic and political actors if it is to succeed. If it has to succeed
as a 'leftist' project it must woo them from their beliefs (enthusiastic or
reluctant) in the efficacy of 'rightest' policies and values and it must
provide them with alternative policy concepts and prescritions which are
efficatious and appear efficient.

But efficient for what? As Kenneth Boulding was fond of pointing out
economics is at its very base a moral science. Modern economics is at its
root a moral concern. And the objectives of the Third Way must be a better
society on its way to securing as good a life as possible for those engaged
in 'economising' (is that the approriate active verb?) in the societies
influenced by its values and policies. To the degree to which it is 'left'
it must be concerned to alter structured priviledge and especially the
processes which create and sustain structured priviledge. It must change
motivations and re-allocate the resources which create the distribution of
status, power and wealth. It must surely be radical and it must be willing
to act directly on the issues which affect the distribution of life
chances: the functions and competences of the individual participants and
the nature of political and economic communities must be the central
themes. It must always be suspicious of 'solutions' which assert the
rights of the 'haves': that when it comes to 'economising' the first
concern must be to safeguard the piviledges of the priviledged; or that the
way to greater welfare is to produce less for the many whilst maintaining
'standards' for the few. And, in our present context, it must define and
assert community and the role of community in wealth creation. If I change
the terms and conditions of some trust or partnership agreement and realise
millions for the present trustees where does that value come from? If I am
a 'self-made person' who has 'made' multiples of millions where does that
value come from? Could I do that in the same ways in just any economic
community? Do markets as they operate in the reality of contemporary
economic communities provide a true calculus of value? I think those who
are - even slightly - on the left must tackle these difficult issues in
their 'economics' and they must accept what it is to be 'left'. If a Third
Way is a possible, desirable and efficatious idological framework for
progressive left forces then it must distinguish its leftness as the
standard of beliefs against which to judge the effects of its policies and
the value framework which they promote. In the context of the late 20th
century these must be different from the policies and policy values of the
mid-century but the ends must take priority and the experice of the
century illustrates how the means-values must never be separated from the
belief-values which legitimate them.

In general our objective should be to provide New Labour with a "New
Political Economy of Citizenship" which wins votes by securing a communal
lifes which use politics to maximise the social, psychological and economic
good of the members. I know that begs almost everything in this brief
form. But I will indulge myself further by a more full statement of that
elsewhere or at some other time. At present I merely wish to stress that a
concept of leftness which allows evaluation in context is a necessary tool
for the development of the debate.

David

****************
David Donald, Political Science
D.Donald@GCal.ac.uk (+44) 141 331 3167
Division of History and Politics, Glasgow CALEDONIAN University
Scotland
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