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Looking back on the Third Way

Tuesday, September 28th, 2010

This post is about Tony Giddens, not Tony Blair.

In other words, it’s about the intellectual foundations of the ‘Third Way’, rather than an assessment of how political parties that described themselves as ‘Third Way’ did in government.

And Anthony Giddens is probably the writer most strongly associated with the ‘Third Way’ as an theoretical project. His 1998 book The Third Way: The Renewal of Social Democracy provided an intellectual justification for, and both reflected and influenced the practice of, New Labour in the UK and its overseas counterparts. (I’ll discuss the impact of ‘Third Way’ thinking on the Clark government in New Zealand in an upcoming column.)

Giddens is an academic sociologist who, by the time he came to write The Third Way, had already been working and publishing for over 25 years, starting with Capitalism and Modern Social Theory. An Analysis of the writings of Marx, Durkheim and Max Weber in 1971. Much of his work was heavily theoretical rather than closely related to contemporary political debates. An Australian collection, Social Theory: A Guide to Central Thinkers, published in 1991, described his career up to that point:

Over the past two decades he has published more than twenty books and established himself as a central thinker. Giddens’ writings combined a detailed exegesis of the classics with a sensitivity to the issues at the forefront of contemporary social theory. He brings these concerns together under the rubric of an overarching project. This project involves identifying and criticising the shortcomings of traditional thought and developing a way of theorising issues that are obscured or ignored within that framework.

. . . This involves a reconceptualisation of the concepts of action, structure and system in order to integrate them into a new theoretical approach. Giddens calls this new approach the ‘theory of structuration’.

Giddens has been heavily involved with the UK-based Policy Network over the last decade, and this year he has published two essays for them reflecting on New Labour and his book The Third Way. These essays provide a useful insight into which features of his mid-90s project he feels are likely to endure.

‘The Third Way’ as a phrase is not one of them. In his essay “The Third Way revisited” Giddens expresses some regret that he didn’t stick with his orginal (if less flashy) choice, The Renewal of Social Democracy, rather than relegating it to a subtitle: “If I had published the book under the original title, it would have been clear that it was rooted firmly in social democratic traditions.”

Giddens insists that for him ‘the Third Way’ was never about “a ‘middle way’ between left and right, socialism and capitalism, or anything else, but a left-of-centre political philosophy, concerned with exactly what was stated in my original title, the renewal of social democracy. It was NOT a succumbing to neo-liberalism or market fundamentalism.”

I’d just about be ready to buy this, and accept that that fateful title was just an unfortunate phrase that was doing the rounds at the time (thanks to the Swedish Social democrats and Bill Clinton). Except that Giddens’ previous book, where he began his exploration of some of the themes of The Third Way was entitled Beyond Left and Right — the Future of Radical Politics (1994).

Moreover, we then come to this:

On the contrary, I argued that social democrats had to move beyond two failed, or compromised, philosophies of the past, one being neo-liberalism, the other being “old-style social democracy,” characterised by a top-down state ownership of the “commanding heights of the economy” and Keynesian national demand management.

And we are back to ‘equidistance’. Despite his earlier denials, Giddens instinctively depicts his ‘Third Way’ as being as far away from traditional social democracy as it was from neo-liberalism.

Similarly, in “The rise and fall of New Labour”, Giddens again tries to have it both ways. Early on, he states: “A different relationship of government to business had to be established, recognising the key role of enterprise in wealth creation and the limits of state power. No country, however large and powerful, could control that marketplace: hence the ‘prawn cocktail offensive’ that Labour launched to woo the support of the City.” But towards the end, he admonishes: “It was a fundamental error, however, to allow the prawn cocktail offensive to evolve into a fawning dependence and turn the UK into something like a gigantic tax haven.”

Giddens’ positions about both the Third Way’s relationship to traditional social democracy and its relationship to wealth are not inherently contradictory, but in both cases they require a delicate balancing act. And I’m not sure that he provides sufficient guidance about how to achieve that balance.

Giddens and his ‘Third Way’ project have attracted many critics over the years, including some extended and detailed rebuttals. But, from my perspective, the most effective challenge came when he debated Will Hutton, another reformist social democrat who had an early influence on Blair, in their co-edited volume On the Edge (2000). At one point Hutton says to Giddens:

Well, which is to be — regulation because capitalism can be destructive now that communism has left a gap or starry-eyed faith in capitalism’s boundless creativity? Don’t traduce Schumpeter. Your argument and his are essentially the same: capitalism may be ruthlessly destructive but it is also creative. At one moment you want to celebrate capitalism, at another you’re wary of it, but without — unlike Schumpeter — offering an integrated view of how both propositions could be true.

Giddens was right that social democracy needed renewal. The ascendancy of neo-liberalism, and the faltering of progressive thinking in the face of it, suggested that new ideas were required, which took into account new social and economic contexts.

And the changes that he identified in 1998 (and restates in “The Third Way revisited”) still seem convincing as new elements a modern progressivism needs to take on board, perhaps even moreso today. These were: the intensifying of globalisation; expanding individualism; the growth of reflexivity; and the increasing intrusion of ecological risk into the political field.

But in the end the failure of the Third Way was its inability to repeat the task that Weber and Keynes, between them, had achieved a generation before. This was to set out a compelling account of, not only the need for but also the effectiveness of, state action.

That theoretical failing was to be reflected in the limitations of early-21st century progressive governments in practice. And it is this that a new wave of progressive leaders and progressive thinkers need to remedy.

Links

Further Reading

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Further thoughts on welfare and the state

Tuesday, September 14th, 2010

1. Today’s post will be a bit more fragmentary than my usual column. I’m writing this after getting back from presenting at a Fabians seminar on child poverty with Sue Bradford. It’s the first time I’ve done a formal public presentation of that type, so getting it right has been my main focus over the past few days. (The powerpoint slides will be available on the Fabians website and/or here before too long.) It was a satisfying experience  - I felt the presentation was well-received and it was a pleasure to follow Sue (whose credentials in this area are unrivalled). The questions were well-considered and thought-provoking, too. A big thank you to everyone who attended!

2. I’m looking forward to part 2 of “Reconceiving the welfare state” arriving from David Craig in the very near future. I hope you’ve all had the chance the read part 1, which was published here last Thursday. It’s a great piece of work, with some really cutting-edge conceptual thinking. David’s one of the very top academic brains writing on these sort of issues in New Zealand, and it’s really great to have him contributing to Policy Progress.

His post raised the pretty provocative idea that maybe, when confronted by ideas like David Cameron’s ‘Big Society’, progressives (while justifiably suspicious as to hidden agendas) shouldn’t just reactively “spring to the defense of the state’s role”.

Instead, perhaps we should accept there is some genuineness and maybe some merit in attempts to “see what can be leveraged from wider elements of the social, local government, communities: elements imagined to be ‘closer’ to individuals and families, and as more flexible and people-oriented than ‘the welfare state’ . . . there’s a real will to see “communities” take up aspects of the social contract that the state has had.”

At the risk of misjudging where David is headed in part 2, I’d like to just add a few brief comments in response to this.

I certainly think there are merits in an honourable effort by progressives to engage with the things like the Big Society in good faith. A case in point is Matthew Taylor, who used to be an advisor to Tony Blair and is now chief executive of the RSA. He’s outlined his critical engagement with the Big Society on his blog in a number of posts including Big Society – ideas but no washing line, The Big Society – news from Downing Street, Big Society – Fair Society and The night watchman state?

And let’s not forget it was critics on the progressive side of things in the 1960s and 1970s who first pointed out the statist and disempowering tendencies of the postwar welfare state.

But I have a big reservation whether going ‘beyond the state’ really offers a way forward on the big issues. I don’t disagree that sometimes community-based service providers can meet people’s needs better than a government agency, but that’s still the state providing the financial resources. It’s just a matter of the state thinking differently about who it uses as its delivery agent (and maybe engaging/consulting more on what should be delivered and how.)

On the resourcing side of things, however, I just don’t see any other actor in society — not business, not communities, not social networks — that has both the will and the wherewithal to take responsibility for a prominent role in providing the resources for areas such as health or education or income support.

But maybe I’m missing something, or have misconstrued what this is all about. Anyway, I look forward to seeing where David Craig takes his line of argument next.

3. And while we’re talking about welfare state issues, I might just add a brief coda to my Understanding the purpose of the welfare state post from last Tuesday. One of the historical ideas I discussed was “decommodification”, which involved important services like health and education being taken outside the logic of the market. I ended by arguing:

If progressives are to recapture the debate, however, and both secure and further advance the institution of the welfare state, then we need to turn back to ideas such as the social wage and decommodification. We should look at both of these concepts again, and consider whether some version of one or both of those can serve to underpin a revitalised 21st century welfare state. And if so, we would need to think about what changes to the current practice of the welfare state that would imply.

On further reflection, and after engaging with David Craig’s post, I still think that it can be useful to conceptualise the welfare state as a ’social wage’, but I do wonder to what extent decommodification works even as an aspiration in the 21st century.

I alluded to this last week when I wrote that “the logics and practice of private market activity have increasingly been seen as something to emulate, even for non-traded services provided by the public sector, and even within the core Social Democratic regions such as Scandinavia.”

Do we really still seek to expunge market logics from, say, our school system, or do we rather seek to control which market dynamics to give free rein to and which to restrain? For instance, we might seek to incentivise innovation, but regulate competition between schools for pupils. I’m reminded of John Kay’s “disciplined pluralism”, as outlined in this post, back in April.

As always, your thoughts are welcome!

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Understanding the purpose of the welfare state

Tuesday, September 7th, 2010

Despite its association with the name of economist John Maynard Keynes, the most important achievement of the mid-twentieth-century period of progressive ascendancy across the advanced capitalist countries was not Keynesian economic management. Rather, it was the consolidation of the welfare state.

By ‘welfare state’, I don’t just mean the social welfare system of pensions and benefits, but the whole range of areas of social expenditure. That includes public spending on health, education and housing.

The early development of the welfare state began in the 19th century. In New Zealand a key milestone was the set of reforms by the Seddon administration in the early 1890s, led by William Pember Reeves. But in most cases it was either in the 1930s (as with New Zealand under the First Labour Government) or immediately after World War II that the full range of expenditures and entitlements took their modern form. And, perhaps even more importantly, this was when the idea of the modern state as a ‘welfare state’ reached a point of legitimacy as a normal and desirable arrangement.

That legitimacy has been under assault for the last thirty or so years, and is now somewhat diminished. ‘Welfare state’ is now as often a complaint or accusation as a term of praise. Despite this, though, what is perhaps surprising is how resilient the institution has been. No major country has ever divested itself of ‘welfare state’ status (indeed one could argue that the US with its recent health reforms has just made a major step towards becoming a fuller welfare state). And indeed even the fiercest self-declared scourges of the welfare state, Reagan and Thatcher, made scant impact on its scale of expenditure or major entitlements. (Which isn’t to say they didn’t hurt a lot of people in their attempts.)

Nevertheless, proponents of the welfare state these days often have a somewhat defensive, even apologetic, tone. So it is worth restating what the welfare state is for, as part of our current efforts to instill renewed confidence into the theoretical underpinnings of the progressive movement.

There are two important concepts that progressives ought to become familiar with, in this regard: the ’social wage’ and ‘decommodification’. Both represent ideas that had largely been developed after-the-fact, and yet both can claim to say something meaningful about the intent of those progressive who pioneered the welfare state. And each speaks to a competing, although not mutually exclusive, vision of the purpose of the welfare state.

The idea of the welfare state as a ’social wage’ that sits alongside and complements the private wage that workers earn through their labour has been put forward in a range of settings, often by trade unionists. In this conception, welfare state expenditure across areas such as health, education and income entitlements can be seen as something to be fought for and secured through collective action, often in exchange for moderation of demands for increased private wages. The social wage is thus somewhat exchangeable with the private wage, and can be seen in effect as part of a worker’s income. Cuts to the social wage are an attack on workers’ material well-being in much the same way as attempts to cut their private wages.

Implicit in the idea of a social wage, however, is the recognition that it is not an undifferentiated amount ‘paid’ out to everybody at the same rate. Indeed, to large extent, the social wage represents transfers within the working class, mediated by the state. Part of this is the extraction of income from those in paid employment to support what Marx called the lumpenproletariat and John Key described as the underclass. Another part reflects the fact that some expenditures, such as tertiary education, go more to some people than to others, and indeed are often ‘captured’ disproportionately by the middle class.

It is the existence of these sorts of transfers, and the resentments they can often give rise to, that have been used by non-progressives to undermine public support for the welfare state. Rather than a shared social wage, they seek to create the sense of a discrete series of unearned privileges. It is not surprising therefore that it is in areas of broad-based participation such as schooling and in the aspects of health that evoke the strongest sense of ‘it could happen to anybody’ that popular support has remained the strongest.

The idea of ‘decommodification’ seeks to inspire a more transformational sense of the potential of the welfare state. It is most strongly associated with the work of the Danish sociologist Gosta Esping-Andersen and his seminal work The Three Worlds of Welfare Capitalism (1990), which sought to understand the difference between what he called the Liberal, Corporatist- Statist and Social Democratic welfare states.

For Esping-Andersen, decommodification ‘occurs when a service is rendered as a matter of right, and when a person can maintain a livelihood without reliance on the market’. A key purpose of the welfare state is not only to provide people with the basics of life irrespective of their employment status, but also to place certain essential services such as health and education outside the logic of the market.

The extent to which this occurs differs from place to place and forms the core of Esping-Andersen’s distinction between the different types of welfare states.

But, in general, it has tended to decline in recent years, as the logics and practice of private market activity have increasingly been seen as something to emulate, even for non-traded services provided by the public sector, and even within the core Social Democratic regions such as Scandinavia. Thus we see even the aim of decommodification tending to fade from view.

If progressives are to recapture the debate, however, and both secure and further advance the institution of the welfare state, then we need to turn back to ideas such as the social wage and decommodification. We should look at both of these concepts again, and consider whether some version of one or both of those can serve to underpin a revitalised 21st century welfare state. And if so, we would need to think about what changes to the current practice of the welfare state that would imply.

That’s what I think. What’s your view?

Further reading:
http://esping-andersen.com/
Chris Holden, Decommodification and the Workfare State (2003)
Moudud and Zacharias, The Social Wage, Welfare Policy and the Phases of Capital Accumulation (1999)

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The state, market and society out of balance [re-post]

Friday, September 3rd, 2010

Originally posted on 6 May 2010.

In the middle of last year, James Purnell almost brought down Gordon Brown.

His resignation as Work and Pensions Secretary and his call for Brown “to stand aside to give Labour a fighting chance of winning the next election” precipitated the nearest thing to a coup that Brown has faced.

Shortly afterwards, Purnell reinvented himself as the head of Open Left, “a project aimed at renewing the thinking and ideas of the political Left”, hosted by the Demos thinktank.

I was in London at the time of Open Left’s launch, and was struck by the fact that at 39 (about the same age as me) Purnell had already worked for a thinktank (ippr), as a Downing Street staffer, and begun and finished a career as a senior Cabinet minister. Now he was off to rethink the progressive movement!

(New Zealand seems quite stately by comparison — here even a politician like Labour MP Grant Robertson can hope for a successful political career, despite being such a late-comer to Parliament!)

When I saw Purnell on the BBC’s Newsnight programme, though, I wasn’t that impressed. He seemed on the back foot, and his call for a focus on pursuing “equality of capability” came across as either incoherent or a way to avoid a commitment to any real redistributive agenda. I wasn’t alone; there were a lot of negative responses.

So, while I was intrigued by the promise of Open Left, when I came across a podcast of Purnell’s lecture at the London School of Economics (LSE) entitled Renewing the Left’s ideology: what should be the principles and goals of the centre-Left today?, I didn’t have high hopes.

My mistake – it’s an impressive presentation. Some of the themes are familiar from Newsnight, but not only does Purnell have the scope here to do justice to his borrowings from Richard Tawney and Amartya Sen, he has also learnt from previous missteps and thought carefully about how best to communicate his ideas in crisp and direct terms:

I think a better way of translating [Sen's] ideas is to talk about power. His idea of capability is what most people would understand as having the power to do or be something. His idea of a functioning would be what people actually decide to do with that power.

There follows a rich and inter-connected argument about the need for balance between the state, market and society:

. . . we need to create the conditions for people to take power and for society to be reciprocal . . . With state, society and markets in balance, each is less likely to crowd the other out and then, and only then, can people flourish.

I want to just pick up on a particular strand of this, which is the discussion of a particular way in which things have got out of balance:

If you believe in open markets but are not prepared to tolerate that injustice, you also need a strong state to alleviate the consequences of the market. That is the story of New Labour – trying to harness the best of markets, then correcting their failures through the state.

The consequence of these good intentions is that the state has been too strong in respect of society, and not strong enough in respect of markets. Our unwillingness to be more hands on with the market has required us to be too hands on with the state.

Some of the most interesting points come up in the question and answer segment. However, while the LSE has helpfully provided a transcript of Purnell’s speech, which is a valuable reference, this segment is only found on the audio.

In reply to one question [at 47.19 minutes], Purnell talks about how New Labour fell into this imbalance:

I’d say we came into power actually with a quite bold set of reforms for restructuring market power: trade union legislation, the minimum wage most obviously, four weeks paid leave. But we didn’t actually renew that. So we came in with good democratic reforms, good market reforms, but over time we came to rely more and more on public services and redistribution. And that’s I think because of this point that we became hands off with the market and therefore we had to be too hands on with the state . . . You end up having to put very, very much more pressure on the state and I would say that can be self-defeating.

Purnell traces this [at 103:01 minutes] back to :

. . . what happened to Labour after 1945, that we were sort of the victims of our own success. The creation of the welfare state was so successful, in practice and also in politics, that actually we forgot the other things that we had, and we became to a certain extent sceptical of them . . . Certainly the ‘97 [Blair] government became pretty reluctant to alter market outcomes. It wasn’t impossible, but the starting point was the market outcome, and you then had to prove the case against it. And certainly became less confident about how you could use society to achieve those changes.

(Note the parallels with Kay’s critique of New Labour’s reliance on the ‘market failure doctrine’.)

Against this Purnell argues [102:21]:

. . . that we should recapture that Croslandite idea that inequality is clearly something that undermines people’s ability to be powerful, and our society to be reciprocal . . . but also that, in trying to achieve that, we should not try and do it all through the state nor do it all to people. . . . People can’t just be passively equal, . . . you can’t just do it through redistribution. People have to take their own power if it’s to actually feel real to them and feel just to everybody else.

There’s some really fascinating ideas there (and others I haven’t even touched on here). I’d encourage everybody to read, or listen to, this lecture for themselves. I’m particularly interested by the tension it highlights between redistribution after the fact on the one hand, and intervening to alter the initial market outcomes on the other. In Thursday’s post [published 6 May] I’ll explore how that relates to the New Zealand experience.

In the meantime, what do you think of James Purnell has to say in this lecture, and about the whole Open Left project?

Note – the ideas in Purnell’s lecture are explored further in the Open Left/Demos publication We mean power: ideas for the future of the left.

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Outline for a report on Theoretical Foundations

Tuesday, August 10th, 2010


I’ve always maintained, right from my very first set of posts, that while being a blog was an important part of what Policy Progress was about, it wasn’t the whole thing.

Now, nearly six months in, we’re getting to point where the other main product of the operation — a series of reports — is coming into view.

A lot of the contents of these reports will be familiar to regular readers of the blog, but I think that the material might read somewhat differently all combined together in one place. (This might also make more sense of the odd post that may have been a bit hard to follow on its own.)

In today’s column, I want to set out an outline, or ’skeleton’, for the first report on the Theoretical Foundations topic, which I’m aiming to release within the next few months. It will provide an historical context for the wider Theoretical Foundations discussion, tracing the ebbs and flows over time of progressive thinking about how and why collective action can be effective.

I’m envisaging four main sections. The first sets out the overall broad sweep of history. The second focuses on the high point, or ‘golden age’, of progressive thinking, when Keynesianism and related ideas seemed to dominate across the political spectrum. The third covers the period of the neoliberal ascendency and the attempts to regroup via ‘the third way’ (this is the section I’ve posted least on so far). And the fourth covers a range of thinkers taking stock of where we are at, and looking towards the future.

The ‘chapters’ in the skeleton below will be fairly short, equivalent to one or two blog post. Hopefully, they will add up to a report which is substantial enough to do justice to the subject, but short enough to be accessible.

INTRODUCTION

1. An historical overview – this will be based on the post Progressive theoretical foundations — an introduction and potted history.
2. Some general thoughts on the trend towards moderation – based on Towards accommodation with capitalism?

THE ‘GOLDEN AGE’
3. How progressives at the time of the Great Depression were paralysed by the lack of a usable theory of state action (within capitalism) – based on Know your economics before you get into power (with some material added in from the short posts The use of theory as pretext and Listening responsibly to the experts).
4. Why Keynes’s economic theories were so important for progressives – based on How Keynes gave the ‘go-ahead’ for the Welfare State (plus Underlying the Keynesian success story (wonkish))
5. The complementary role of pre-existing attitudes towards the State, partially shaped by the thinking of Max Weber – based on Bring on the State (and the accompanying short ‘out-takes’ posts).
6. A look at two theoretical concepts underpinning the ‘Keynesian welfare state’: ‘decommodification’ and ‘the social wage’ – based on a forthcoming column.
7. A brief account of the evolution of thinking in New Zealand during the ‘Golden Age’ – based on a forthcoming column.

DECLINE AND REGROUPING
8. A short description of the economic challenges of the 1970s.
9. How progressives retreated before the tide of neolberal thinking  - based on Are progressive theories different from theories followed by progressives?
10. An outline of the ‘Third Way’ Project, as per the reflections of Anthony Giddens – based on a forthcoming column.
11. New Zealand’s ‘Third Way’, with particular reference to the approach of Steve Maharey and to the book The New Politics: a Third Way for New Zealand - based on a forthcoming column.

BEYOND THE THIRD WAY
12. James Purnell on the Third Way and the State – based on The state, market and society out of balance and Redistribution v altering market outcomes.
13. John Kay on the limits of the ‘market failure doctrine’ – based on The Failure of Market Failure and The lesson the left needs to learn from the right
14. A look at the Amsterdam Process and the attempt to renew the ‘Third Way’ – based on Is the Left guilty of the “Politics of Evasion”?
15. Tim Jackson on ‘prosperity without growth’ – Jackson’s ideas have been discussed briefly in Climate change isn’t our biggest environmental problem and will be covered further in a forthcoming column.
16. Joe Stiglitz and Amartya Sen’s work (commissioned by President Sarkozy of France) on the adequacy of Gross Domestic Product as a measure of progress – based on a forthcoming column.

(I might also do something based on Geoff Mulgan’s work for the Center for American Progress on innovation in the public sector.)

That’s my current thinking on what the report will look like. But I’d be very interesting in your comments and suggestions.

(And, yes, there will also be a report being pulled together based on my work on the ‘Identifying the Problem’ stream of the Progressive Path to Prosperity topic.)

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Weber Out-Takes 3: Max and the Austrians

Friday, August 6th, 2010

This week’s column discussed Max Weber’s theory outlining the strengthens of bureaucratic administration (in both the public and private sectors) and also mentioned the much more negative tract Bureaucracy by Ludwig von Mises of the Austrian school of economics. (As mentioned previously, the Austrians were particularly sceptical of the efficacy of state action.)

But I didn’t have space to explore the links between the two men. This is from Wikipedia:

[Weber's] “action sociology”, as they called it, was a frequent topic in the “Mises Circle”, an influential group headed by Ludwig von Mises, a key figure in the Austrian School . . . [Austrian school co-founder Freidrich von] Hayek also frequently attended these discussions, and the subjective method advanced in his The Counter-Revolution of Science: Studies in the Abuse of Reason (1952) reflects these influences. Ludwig Lachmann, a later member of the Austrian School, made explicit the Austrian School’s indebtedness to the Weberian method.

Interestingly, given their methodological and sociological differences, Weber and Mises were not only acquainted, they shared an admiration for each other’s work. Mises considered Weber a “great genius” and his death a blow to Germany. Likewise, Weber comments that Mises’s Theory of Money and Credit is the monetary theory most acceptable to him[66]. Weber accepted Ludwig von Mises’s criticism of socialist economic planning and added his own argument. He believed that under socialism workers would still work in a hierarchy, but that now the hierarchy would be fused with government. Instead of dictatorship of the worker, he foresaw dictatorship of the official.

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Weber Out-Takes 2: Max and Maynard Keynes

Thursday, August 5th, 2010

Another aspect of the discussion that I wasn’t able to fit into this week’s column was Weber’s politics, and the resulting link between him and the other two influential thinkers mentioned in the column, Keynes and Beveridge, who were both liberals rather than coming from the socialist/social democrat/Labour tradition.

This is from Peter Beilharz’s entry “Max Weber” in Beilharz (ed) Social Theory: A Guide to Central Thinkers (1991) (pp. 228-9):

Was Weber, then, a socialist? The answer to this question is no, but it raises another, more interesting question about the relationship between liberalism and socialism. Weber was in some ways a cultured bourgeois like Keynes, but this did not prevent either from being a reformer. The logic of his social theory, however, was that the prospect of a qualitative break between capitalism and socialism was simply inconceivable. The day after the revolution — here he would agree with Gramsci and Durkheim — it would still be necessary to have bread in the shops and to get the children to school. In this regard Weber’s distaste may be said to be for certain socialists more than for socialism, which he viewed as an historic form of economic organisation.

This tends to reinforce Sassoon’s point, quoted in the column, that “Socialist theorists contributed very little to an understanding of how to institute social reforms under capitalism, or of how to run the system”.

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Weber Out-takes 1. Max on Tammany Hall

Wednesday, August 4th, 2010

I was intrigued, reading Weber’s Politics as a Vocation (1918-9) for this week’s column, to come across an extended serious discussion about the corrupt party machines like Tammany Hall that dominated US city politics in the 19th century and into the 20th century. For reasons of space I didn’t make more than a passing mention of this in the column, but here’s what Weber wrote:

What does this spoils system, the turning over of federal offices to the following of the victorious candidate, mean for the party formations of today? It means that quite unprincipled parties oppose one another; they are purely organizations of job hunters drafting their changing platforms according to the chances of vote-grabbing, changing their colors to a degree which, despite all analogies, is not yet to be found elsewhere . . .

In America, the spoils system, supported in this fashion, has been technically possible because American culture with its youth could afford purely dilettante management. With 300,000 to 400,000 such party men who have no qualifications to their credit other than the fact of having performed good services for their party, this state of affairs of course could not exist without enormous evils. A corruption and wastefulness second to none could be tolerated only by a country with as yet unlimited economic opportunities . . .

Thus there exists a strong capitalist party machine, strictly and thoroughly organized from top to bottom, and supported by clubs of extraordinary stability. These clubs, such as Tammany Hall, are like Knight orders. They seek profits solely through political control, especially of the municipal government, which is the most important object of booty. This structure of party life was made possible by the high degree of democracy in the United States — a ‘New Country.’ This connection, in turn, is the basis for the fact that the system is gradually dying out. America can no longer be governed only by dilettantes. Scarcely fifteen years ago, when American workers were asked why they allowed themselves to be governed by politicians whom they admitted they despised, the answer was: ‘We prefer having people in office whom we can spit upon, rather than a caste of officials who spit upon us, as is the case with you.’ This was the old point of view of American ‘democracy.’ Even then, the socialists had entirely different ideas and now the situation is no longer bearable. The dilettante administration does not suffice and the Civil Service Reform establishes an ever-increasing number of positions for life with pension rights. The reform works out in such a way that university-trained officials, just as incorruptible and quite as capable as our officials, get into office. Even now about 100,000 offices have ceased being objects of booty to be turned over after elections. Rather, the offices qualify their holders for pensions, and are based upon tested qualifications. The spoils system will thus gradually recede into the background and the nature of party leadership is then likely to be transformed also–but as yet, we do not know in what way.

P.S. Matthew Yglesias’s appreciation of Politics as a Vocation from late last year is also worth reading.

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Bring on the State

Tuesday, August 3rd, 2010


This follows on from the 6th July 2010 column How Keynes gave the ‘go-ahead’ for the Welfare State.

We have seen how Keynesian economic theories had a wider impact on the theoretical foundations for post-World War II progressivism than simply a prescription for how to deal with crises of ‘underconsumption’. They helped provide progressives with the sense that the state could manage capitalism’s tendency towards crisis and achieve prosperity within a capitalist economy in a way that the private sector left to its own devices was unable to.

This was in contrast to previous social democrat thinking that held that the state could do little good in a capitalist economy and only hope to manage the transition to socialism. It makes sense then that both Keynes and William Beveridge, who wrote the blueprint for the postwar welfare state, were liberals rather than social democrats. Donald Sassoon argued that, “Socialist theorists contributed very little to an understanding of how to institute social reforms under capitalism, or of how to run the system” (pp. 140-1).

It is also worth remembering that at that time even many mainstream economists (who generally opposed state intervention) were less than sanguine about capitalism’s ability to deliver self-sustaining prosperity. Looking back from 1964, the Scottish economist Alec Cairncross explained,

Long after Adam Smith, the literature of economics is strewn with prophecies of a stationary state in which growth would finally cease under the influence of some limiting factor such as population growth, the law of diminishing returns, a fuel shortage or a chronic tendency to over-save . . . The main shift of public opinion did not take place until the war and the post war years. (quoted in Sassoon, p. 245)

On top of that came the impact of the experience of a Great Depression and a World War, and thus:

The spirit of the time was on the side of social reformism . . . This reflected the amazing unpopularity of capitalism everywhere in Europe immediately after the war. These years constituted the nadir of capitalist ideology. Everyone was in favour of state intervention and structural reforms; no one wanted to return to the bad old days of the 1930s. Thus, the Italian Christian democrat leader Alcide De Gaspari, in a speech on 23 July 1944, claimed that Karl Marx and Jesus Christ, ‘a Jew like Marx’, shared the same message of equality and universal brotherhood, ‘the true image of redemption.’ (p. 140)

In all respects, then, the time was ripe for the state to play an active role in advancing the causes assigned to it by progressives.

But this is not to say that prior to that time, the efficacy of the state as an actor had been in doubt; it was more that these new ideas widened the provence of its activities.

Indeed, it is important to understand that, in contrast to our own time when the inherent inefficiencies of the state have been theorised in exquisite detail by neoclassical economists and others, the modern state was already regarded (even before the Depression and War) as fairly formidable.

The theorist who had done the most to explain why it should be so regarded was Max Weber. Indeed, his description of the features of the ideal-type bureaucracy, set out in his Economy and society : an outline of interpretive sociology (1922) is still taught in public administration courses today. Weber himself was not an advocate of bureaucratic administration (as is sometimes believed) but was rather seeking to analyse changes in society. He envisaged an historical process where the type of authority in society evolved from:

  • charismatic authority (based on the personal charm or strength of an individual personality); to
  • traditional authority (the source of authority for monarchies); to
  • rational-legal authority, based on “a belief in the legality of pattens of normative rules, and the right of those elevated to authority under such rules to issue commands”.

Rational-legal authority is associated with a bureaucratic system of administration, the features of which included: fixed salaries, hierarchy, being bound by rules, and appointment on merit. This is in contrast with much of the way the system operated in the pre-modern state (or in the 19th century US under ‘clubs’ like Tammany Hall).

Moreover, these systems are to be found in both the public and private sector. Weber wrote:

In public and lawful government these three elements constitute ‘bureaucratic authority.’ In private economic domination, they constitute bureaucratic ‘management.’ Bureaucracy, thus understood, is fully developed in political and ecclesiastical communities only in the modern state, and, in the private economy, only in the most advanced institutions of capitalism.

That shared ‘modern’ identity for the public service on the one hand and the new managerial stata on the other is important. This was also the era of Taylorism, or ’scientific management’, in industry. The private sector too was trying to organise activity in a planned and mechanised way. Bureaucratic forms of organisation were not seen as a weakness of the state but a strength.

Even a 1944 tract Bureaucracy by Ludwig von Mises of the Austrian school of economics (whose analysis of the market’s superior dynamism was later to prove important to the critique of the state) had little to say about the inefficiency of bureacracy and focused more on how it undermined individual liberties

That made perfect sense. In the 19th and first half of the 20th century the state was something to be fearful of, not to deride as insufficiently energetic.

It was only after years of living with bureaucracies (public and private) in daily life, that the idea of the state as banal, mundane and lethargic — which we in New Zealand identify with the sitcom Gliding On — took root in the public imagination. That idea has of course now become central to the conservative critique.

For this reason, the kind of theoretical counter-arguments today’s progressives seek to mount about the efficacy of the state do not have direct parallels in the era of Keynes and Beveridge that we can draw upon, and a confident theory of “state effectiveness” is probably still to be fully developed.

To the extent that progressives of the 1930s and 1940s did have an implicit understanding that the state would be a capable actor, however, the “Weberian civil service” (though intended as a descriptive rather than normative model) is likely to have furnished a template in their heads. It may be that, despite all the changes in society and in our thinking about organisations since then, some of the essential elements of that template are still useful for that purpose today.

Links

Further Reading

  • Peter Beilharz, “Max Weber” in Beilharz (ed) Social Theory: A Guide to Central Thinkers (1991).
  • Michael Hill (ed), The Public Policy Process. Fourth edition (2005), Chapter 10 (on Weber and bureaucracy).
  • Donald Sassoon, One Hundred Years of Socialism. The West European Left in the Twentieth Century (1997), Chapter 6 and Chapter 10.

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Listening responsibly to the experts

Thursday, July 22nd, 2010

I’ve recently had the opportunity to retrieve a few of my old books from storage and have been browsing through Parliamentary Socialism: A Study in the Politics of Labour (1973) by the Marxist economist Ralph Miliband — father of two of the current contenders for the leadership of the UK Labour Party (David and Ed Miliband).

Miliband presents a parallel account of Labour’s early rejection of Keynes to that of Donald Sassoon, as discussed in my recent post entitled Know your economics before you get into power. He writes (p. 163):

But the alternatives, in 1929 and 1930, were not between socialism and inertia. The idea of stimulating consumer demand by ‘pump-priming’, which came to be associated with the name of Keynes, had long formed part of the programme not only of the Labour Party, but also of the Liberal Party. Nor did Ministers lack informed advice from friendly sources. Labour and the Nation [the party's programme] had proposed the establishment of a National Economic Committee, which would be the ‘eyes and ears’ of the Prime Minister on economic questions . . . The Committee was duly set up, and included Keynes, Bevin, Cole and Tawney. But it also included industrialists, to whom proposals for large-scale schemes of economic development under a national plan for economic expansion appeared, in Mr Bullock’s words, ‘the raving of wild and irresponsible extremists’. Their view was also shared by the Treasury. What they wanted was wage reductions and cuts in the social services and unemployment benefits. And responsible Ministers were at all times more ready to listen to advice from industrialists and Treasury officials than from their own friends.

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