Why the Third Way failed

Economics, morality and the origins of the 'Big Society'

Jordan, Bill

• Publisher: Policy Press
• Year: 2010
• ISBN:
  9781447300779
• Topic: Politics & International Relations
• Subtopic: Public Policy
• Index: Politics & International Relations

In the wake of the economic crash, public policy is in search of a new moral compass. This book explains why the Third Way's combination of market-friendly and abstract, value-led principles has failed, and shows what is needed for an adequate replacement as a political and moral project.It criticises the economic analysis on which the Third Way approach to policy was founded and suggests an alternative to its legalistic and managerial basis for the regulation of social relations.

Part I

A moral order?

ONE

Value, virtue and justice

The questions raised by ‘The benefits busters’ example in the Introduction are ones of political and social justice, equity and fairness among members of a society. But they concern the expression of such moral and social principles through the operation of law and policy, within such institutions as property ownership (including the firm, profit and government contract), employment (wages and salaries, working conditions) and the tax-benefits system (government arrangements for raising revenue from and dispensing income to citizens).

By reference to the example of the Israeli nursery (pp 3-4) in the Introduction, I have already endorsed Michael Sandel’s approach to justice as concerned with what members of society value, and the virtues that government seeks to promote, as well as with individual freedom of choice and overall welfare (Sandel, 2009b, p 9). Justice deals in issues about the best way for communities to live together, and what is due to members, both collectively and individually.

Sandel’s approach is particularly useful in examining issues of justice in the middle ground between interpersonal relations and ones that concern governments and citizens. Through vivid, telling and memorable examples, he shows that questions about whether profiteering in the aftermath of a natural disaster is justified, whether bankers whose greed caused the economic crash deserve bonuses or whether a professional golfer with a circulatory disorder should be allowed to ride around the course in an electrically-powered buggy, cannot be satisfactorily answered by calculating the utilities at stake among protagonists, or by reference to their individual rights and entitlements. What matters in these examples is the deserts of people who share in certain common risks and advantages of their spheres of life, and who have strongly held views over what they value about these activities and relationships.

Where Sandel’s approach is less immediately helpful is in analysing the rights and wrongs of larger-scale issues, concerning the overall benefits and burdens of society’s membership, or the role of government, or relationships between societies. For example, it is not obvious how to apply his ideas of virtues, or how to live well together, to questions about climate change, rogue states, terrorism, mass migration or even the tax-benefits issues posed by ‘The benefits busters’ example.

In this chapter I argue that this is because we first need to understand the role of institutions in fixing the type and scale of value at stake in any set of interactions between members, citizens or strangers. Institutions such as property ownership, markets, tax-benefits systems or even religions, the armed services and sports exist in order to provide ways in which the value attached to people, activities and social units can be identified, produced and distributed according to certain standards. These are moral questions, which institutions are supposed to enable us to resolve, thus reducing conflicts, saving time and improving our quality of life.

One of the most damaging failures of the Third Way has been its attempt to impose a number of overall rationales across the spheres of activity governed by diverse institutions, dealing in very different forms of value. These rationales have dealt in utility maximisation, in individuals’ rights, entitlements and choices, in the primacy of employment-derived income as a measure of contributions by citizens and in the corresponding shame and stigma attaching to those who do not contribute in this particular way, or who reject the goals of ‘independence’ and self-realisation as standards for assessing their life projects.

I argue that these rationales, presented as principles based on ‘values’, and leading to laws, regulations, detailed targets and standards, rewards and punishments, serve to confuse and obfuscate many of the most important questions at stake in our present moment of development, and especially in the post-crash environment. ‘The benefits busters’ programme was an example of how these questions are obscured rather than clarified by Third World thinking about social justice.

Because institutions are diverse, and have been derived from different periods of our development as societies, they co-exist in tension, sometimes in contradiction. Because they define, produce and distribute different kinds of value, according to a variety of standards, there are questions that arise in the hinterland between them that are difficult to resolve. Part of the point of public policy is to identify and reason about such questions, ideally to resolve them through the application of principles that allow new institutional developments.

Already this seems to be happening in the post-crash environment, because the consequences of the crash have put intolerable strains on the operation of organisational systems, discrediting the institutions they are supposed to uphold. Here again, an example concerns the tax-benefits system. In September 2009, The Centre for Social Justice (CSJ), a think-tank founded and presided over by the former leader of the Conservative Party, Iain Duncan Smith, recommended a radical integration of the schemes for distributing income to working-age UK citizens with those for raising revenue through deductions from pay (CSJ, 2009). Although its proposals were careful to avoid spelling out all the moral implications of the changes proposed, they do, in fact, address a set of contradictions that were apparent in ‘The benefits busters’ programme (see pp 15-17).

The real test for any such proposal is whether it promotes a convincing set of standards of behaviour, to which all citizens can hold each other to account in morally defensible ways. If there are issues of value at stake in a particular set of activities and relationships, the institutions in question should clarify both what actions and relationships are valued and why, and how people should respond to and engage with each other across a range of situations.

In this chapter I investigate how moral issues have been obscured rather than clarified by Third Way institutions and discourses, but how in spite of this, underlying ethical questions emerge and demand debate. These include examples from the political, financial and social spheres, where the attempt to regulate in line with contract theory and the incentives facing self-interested and self-responsible individuals have failed to establish a viable order.

Missing the point: justice and MPs’ expenses

If democracy is meant to be self-rule–government of the people, by the people, for the people–then the legislature is a supra-institution, presiding over all the other institutions which order the collective life of a democratic society. It is concerned with far more than simply making laws and regulations; it also addresses the relationship between the spheres of social life, and which ways of life should be protected and promoted, and how. It is concerned with standards in public life, and the whole cultural basis for relations between citizens, as well as between officials and citizens.

In the UK, these broader issues are symbolised by the standards and norms of behaviour in parliament itself–rules about parliamentary language and behaviour, modes of address and so on. This is supposed to reflect the venerable traditions of the ‘mother of parliaments’, but also to be an exemplar of the way in which, within the British democratic culture, citizens are expected to contest and dispute with vigour, but also with respect. Parliamentary procedure and standards are part of what the UK claims to represent in a world of fragile democracies, as the longest uninterrupted democratic legislature to govern over the collective life of a large nation.

But in the summer of 2008, and under a Third Way regime, the UK parliament was overtaken by a crisis over MPs’ expenses claims, as The Daily Telegraph published a leaked list of most of these, in advance of a sanitised version, due for official publication in the wake of disquiet about numbers of inappropriate items claimed by certain individual members. MPs were shocked by the fury, not just in the media but also among their constituents, over the fact that many had profited by ‘flipping’ second homes, by switching between first and second homes and by making large claims for gardening and cleaning, quite apart from the more outrageous items such as duck houses and moat clearing, or continued claims for mortgages which had been redeemed.

Then, in October of the same year, the first of several independent inquiries into the expenses system reported its findings, requiring a large number of MPs, including ministers and party leaders, to repay sums claimed for gardening and cleaning. There was considerable outrage among members about the fact that much of this money had been claimed ‘within the rules’, and approved by the House of Commons authorities at the time. This, it was argued, was unjust, because it applied new rules retrospectively, implicitly penalising members for actions that conformed to the relevant current regulations.

For several weeks the row continued, with some MPs very reluctant to repay the sums demanded, despite their party leaders’ insistence that this should be done. Why was there such a gap between the views of the public and those of parliamentarians over the fairness of these rulings?

A number of considerations might be advanced in support of the public’s moral intuitions about the justice of these demands for repayment:

•	There was always an overriding principle governing expenses claims that they should all be wholly and necessarily incurred in pursuit of members’ duties as MPs.
•	Sir Thomas Legg, who wrote the report, was not, as parliamentarians sought to represent him, an anonymous civil servant and an outsider to the Westminster system, but a longstanding member of the parliamentary committee on expenses, who had been warning for several years that the system was corrupt, and heading for trouble.
•	In the case of cleaning and gardening expenses, no receipts were required by the authorities for payments to be made. It was quite possible ‘within the rules’ to make these claims without any cleaning and gardening being done.
•	Public outrage was not so much against the specifics of each claim as against the prevailing acceptance among members of standards over expenses which were seen as corrupt, and as lacking in respect for voters, and for parliament itself.
•	By extension, the public was calling for a public recognition by MPs of their failure to live up to the standards expected of them, and to set an example of how behaviour in public life should be conducted.

More generally, therefore, since parliament symbolises the collective life of the nation, its members should be expected to show proper regard for its honour, reputation and even sanctity. If the UK’s place in the world rested partly on the esteem due to its system of parliamentary democracy, then their behaviour had brought the country into disrepute. After all, both World Wars were supposed to have been fought in the name of parliamentary democracy and the rights it upheld.

In other words, ‘keeping the rules’ was not the appropriate standard to apply to parliamentary behaviour, especially when MPs made these rules for themselves. Justice demanded that they set an example, and conduct themselves in a way that upheld decency, honour and respect for institutions in public life. This was especially applicable to New Labour government figures, much given to pontification about lack of self-responsibility and diligence among benefits claimants, residents of deprived districts, parents, young people and so on.

Above all, the scandal indicated that Third Way methods of regulating public life, through detailed codes and categories, was fundamentally flawed; without the spirit of regard for the sanctity of institutions, and without a culture in which members collectively upheld standards perceived as morally binding, this approach was bound to fail. The public recognised that both of these features were absent from Westminster’s collective life.

Also in October, a damaging scandal developed around the Attorney General, Baroness Scotland, who had employed a housekeeper from Tonga without fully checking her immigration status. Not only was Baroness Scotland the chief government law officer, she had also been the Home Office minister responsible for steering through parliament the Act requiring employers to carry out these checks, taking photocopies of documents to verify this had been done. In Lady Scotland’s case, it was obvious that the detailed regulation of these matters was not seen as morally binding, even on the instigator of the legislation. If democracy is supposed to be self-rule, then clearly the Third Way version of law making was not effective, even among members of the legislature itself.

Justice demands that some institutions commit members of their sphere of activity (in this case, politics) to a set of moral standards, that is, to the moral regulation of those activities. The legislature is one such institution; although it makes the laws that impose contractual regulation on other spheres of collective life, it should order itself by principles of probity and honour, sustained through debate, public reason and the sanctioning of lapses from the cultural code. The public recognised that, under the Third Way regime, the moral regulation of parliamentary standards had broken down.

In their own defence, some MPs argued that the system was really one of ‘allowances’, not ‘expenses’, and that it had developed to compensate for the fact that parliamentary pay had not risen in line with the salaries of comparable occupations. On this account, public outrage had been stoked up by the media, and was based on a misunderstanding of the significance of the disputed claims. But these arguments have been considerably weakened by subsequent revelations about the actions of MPs, including prominent New Labour ex-ministers.

The underlying issue is whether elected representatives (and those given legislative powers as peers) have been conducting themselves (as they are required to do under their ethical code) in ways that put the public interest before their own. Practices which had become part of the routine fabric of daily parliamentary life, because they mirrored the Third Way approach to government, looked shabby or worse when they were exposed to public scrutiny. This was most obvious when the public relations methods used by New Labour to manage communications with the electorate spilled over into the legislative process, in the form of lobbying by commercial interests, and especially when parliamentarians were seen as profiting from attempts to influence the details of legislation–an example of ‘the expansion of markets and market-orientated reasoning into spheres of life traditionally governed by non-market norms’ (Sandel, 2010, p 1).

On 22 March 2010, the Channel 4 television ‘Dispatches’ episode ‘Politicians for hire’ showed MPs, including the former New Labour ministers Stephen Byers, Geoff Hoon and Patricia Hewitt, responding to invitations to join the board of a bogus firm of US ‘consultants’. They were seen to boast about how they could help companies and interest groups influence legislation and policy, through their knowledge and contacts, including introductions to ministers and to Tony Blair, in exchange for remuneration of £3,000 to £5,000 per day.

Stephen Byers, former Transport Secretary and Business Secretary of State, described himself as “a bit like a sort of cab for hire”. He already held consultancies with the transport company National Express, and with the mining group Rio Tinto. He claimed that he still met Tony Blair regularly, and that he had influenced the Transport Minister Lord Adonis to fix the terms on which National Express got out of one of their mainline train contracts without major penalties while retaining two others. He also said he had, on behalf of Tesco, enlisted the Business Secretary, Lord Mandelson, to amend proposed new regulations on food labelling. Stephen Byers later stated that these claims were untrue, and they were denied by the ministers and firms mentioned, but the evidence that he attempted to use them for his material advantage could not be denied.

Geoff Hoon, who had more recently been Secretary of State for Defence, said that he was looking for opportunities to translate his knowledge and contacts into money. He claimed that his continued involvement in British and European strategic defence planning put him in a position to advise companies seeking procurement contracts. He argued that the parlous state of public and business finances made many European companies vulnerable to takeovers by US firms keen to expand their market shares. He said he would consider a post as chair of the board of directors of the consultants.

Patricia Hewitt, formerly Secretary of State for Health, who held positions at British Telecom, Barclays Bank, Boots the Chemist and the private health insurance organisation BUPA, claimed she still had access to government and could arrange meetings. Baroness Morgan, a 10 Downing Street insider in the Blair years, who was paid by the Lloyds Pharmacy group, boasted of her intervention in the House of Lords debate about the treatment of children’s diabetes.

The three former ministers were suspended from the parliamentary Labour Party immediately after the programme was broadcast, amid fury from their own party’s MPs; the former Secretary of State for Justice, Jack Straw, said that they had brought the party and parliament into disrepute. But the former Deputy Leader, Roy Hattersley (2...

Table of contents

• Front Cover
• Title Page
• Copyright Page
• Table Of Contents
• Acknowledgements
• Introduction
• Part I: Choice and consumerism
• Part II: Choice and the life cycle
• Part III: Conclusions
• References