Thursday, 11 December 2014

Liberator Review Unlocking Liberalism tackling the grotesque disparity of wealth, authentic alternative Liberal ideas

Unlocking Liberalism: Life after the Coalition, published by Liberal Futures. 

Taking a leaf of out Lord Bonker's diary, and there is no shame in copying the Liberal blogfather, I will post my review of the book which has appeared in the most recent edition of Liberator in instalments. This is the second instalment, the Introduction can be found here 
There is a grotesque disparity of wealth and income in our society and that directly impacts on people’s opportunities to fulfil their potential; or as the 1928 Yellow Book asserted; the end of all our policies was that men and women ‘may have life and have it more abundantly’, take your pick but economic disadvantage undermines that aspiration for too many of our citizens. In line with Dower’s essay this is identified as a key barrier to building a liberal society. Time and again the writer return to this issue. 

In the section ‘The Financial Crash and its Aftermath’ the full extent of our economy’s failure to deliver prosperity for all is laid bare. Liberator readers will be familiar with the SLF Plan C for the economy and that approach is advocated here. The failings of the banking system and the continuing need for radical reform are rehearsed with ideas for establishing a network of regional banks ‘arranged as mutual or co-operatives’. These ‘would have close links to local businesses and a stake in their success’ -very similar to the Basque Caja Laboral Popular Cooperativa de Crédito which impressed Grimond and which he saw as a model for the Highlands.

The maldistribution of income is repeatedly challenged. Wages for Super Managers have surged ahead far beyond the point that is justified by the contribution they make to the enterprises they head up. They sit on each other’s remunerations committees ratcheting up the ‘going rate’.  For large numbers of other people wages have stagnated or fallen in real terms.

Liberals in the post war years predicted this development.  The Unservile State, a collection of essays that helped launched Grimond’s radical ideas and was the first major Liberal publication since the Yellow Book, drew on ideas of decentralisation and Distributism. In it Peter Wiles essay ‘Property and Equality’-discussed the growing divorce between legal ownership and management control. In ’56 Anthony Crosland in the Future of Socialism had looked at the significance in both practical and ideological ways. For him it underlined the irrelevance of the traditional socialist plan for state ownership. Wiles thought differently, absentee ownership through limited liability meant ‘the absentee shareholder in a modern limited company was the possessor of a mere scrap of paper which entitles him to a certain payment by a remote and unknown agent’. Shareholders rarely exercised power and control it had passed to managers separate from owners. This may have meant, as Crosland said, that state socialism was dead but it also precluded the Liberal aim widespread employee ownership and industrial democracy.

It was on these authentic Liberal ideas that Liberal Leaders from Grimond through to Ashdown built. In his 1985 book David Steel set himself the task of winning the intellectual argument against Thatcher’s new free market Conservatism. Like the Nobel Prize Winner James Meade, who contributed a chapter to the book, Steel recognised that wages were not growing as fast as the dividends received by the owners of capital. The fear was abroad that cheap labour from new economies, the impact of automation holding down wages and the consequent reduction of the bargaining power of workers would lead to unemployment and insecurity. Steel advocated a ‘substantial part of the average person’s take home pay should not be expressed as a regular wage but as a share of profits or value added in the company to which he or she has contributed’. Meade argued another way to redistribute income from property was for the state acquiring a share and distributing the income either as a citizen wage or through ‘the payment of social benefits on more generous terms’.  When these ideas are added to long standing Liberal proposals to break up concentrations of wealth through levying inheritance taxes on those who receive bequests rather than on the estate, we are approaching the goal of ‘Ownership for All’ and the economic security and independence that results.

In the published Liberator review I did not have the space to explore how those authentic alternative liberal ideas could be developed. I have long been concerned that we have concentrated too much on redressing poverty and insecurity by handing out doles rather than addressing the underlying problem- the misdistribution of ownership. To significant extent since Paddy stepped down as Leader these ideas has lost out to the assertive and well funded policy coup led by what is popularly, if not accurately, known as the Orange Bookers.  

Despite the indifference of our party to effectively pursuing Ownership for All there has been some academic interest. Stuart White has summed up the contribution that could be made to mainstream politics by that alternative liberal vision in a recent article . The ideas are further fleshed out in the free ebook 'Democratic Wealth' and readers may find chapter 10 of particular interest.

As a Young Liberal 40 plus years ago I was used to hearing Richard Wainwright tell Liberal Assemblies that  the end objective of our economic/industrial policy was that labour should hire capital. Paddy in his book Citizen Britain took up that idea writing that 'in some cases, the present situation will be reversed…with workers employing capital and even hiring their own management’

White points out in his article that 'Liberals argued that capital’s authority in the firm ought to be limited by workers’ rights to consultation and participation in structures of co-determination. The right of capital to control the firm is not absolute. The right to invest in a firm is conditional, on this view, on accepting workers’ rights to share in authority at various levels of decision-making. Participation rights here can include representation on works’ councils and on firms’ governing bodies. The rationale for this was again in part about alleged work relations and productivity, but also about inherent justice. In the words of one Liberal party report from the 1960s' ( which I am guessing was Wainwright's one and only published pamphlet):
Just as there is a difference between a citizen and a mere subject, so there is a difference between an employee who is simply hired by his company and one who shares, officially and formally, in the ultimate power to determine the company’s aims and call its directors to account.

At every Glee Club we sing The Land, the essence of the Georgist plan is explained by White as

'One strand in the liberal philosophical tradition, for example, argues that natural resources such as land are fundamentally the property of all. If individuals wish to use those resources for private purposes, they may do this. But they must pay the community for the privilege. Taxes, e.g., a land value tax, can be used to ‘charge’ natural resource users for their appropriation of part of the commons. The funds can then be recycled to citizens as a basic income, reflecting their right to an equal share of the underlying resources.'

 I was critical of Stephen William's idea of handing out bank shares when the state owned banks are sold off. My preference was for them to be established as mutual. The experience of privatisations and de mutualisation of Building Societies is that it does nothing redistribute ownership in the long term. In pretty short order the shares were hovered up by the usual suspects. Professor Meades ideas od establishing a citizen share as an option is still very attractive. We have bank privatisation, fracking licences and who knows what else coming along. There is now some practical experience with these ideas from Alaska where the citizen dividend is working 

The writers of the Unlocking Liberalism identified the big issue of social inequality. We now need to come up with a plan that permanently redresses the unbalanced way that ownership is understood in Britain. This is the big debate we have not had. The ideas of Professor Meade and other Liberal like Elliot Dodds have much to teach us.

Order Unlocking Liberalism, cheques for £11 (incl p&p) made payable to Liberal Futures 4 Church Road, Bo'ness, EH51 0EL

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