Chris Dillow – On ideological blindspots

There’s a big ideological blindspot in political debate. To see it, consider two quite different recent texts: Conservatism in Crisis (pdf) co-authored by Kemi Badenoch and many others; and Sam Freedman’s Failed State.

Let’s take Conservatism in Crisis first. The authors complain of the “rise of a new bureaucratic class” wherein “increasing numbers of middle-class jobs relate more to government rules than goods and services bought and sold in the market.” The last two decades, they say, has seen a big rise in the numbers of HR managers, financial regulators, university staff, mental health professionals, and so on.

This is not a new observation or a uniquely rightist one; academics have been writing about the regulatory (pdf) state (pdf) for years. What is questionable is this:

The rise of safetyism, stifling of risk and a bureaucratic class to regulate and control us and protect the marginalised is rising steadily. The result of this has been a collapse in average per capita G7 large advanced economy growth rates…Across the Western world in general growth rates have come down while government has grown.

But, but, but. This is an example of what I’ve called Scooby Doo ideology – the notion that the economy would have succeeded if it weren’t for those meddling kids. It overlooks an important possible direction of causality – that it is our economic problems that have fuelled the rise of bureaucracy, not just vice versa.

 

This is obviously true of the share of government spending in GDP. It has long been the case that this tends to rise when GDP growth is slow and fall when it is strong. The early years of the Thatcher government saw it rise whilst the early years of the Blair government saw it fall. This wasn’t because Thatcher believed in a big state and Blair in a small one, but simply because economic conditions are stronger determinants of the share of public spending in GDP than is the ideology of the government. Given the UK’s sclerotic economic performance in recent years, therefore, you’d expect the share of public spending to have increased.

What’s true at the macro level is true of specific sectors too.

Financial regulation has increased because the 2008 financial crisis showed us that banks cannot regulate themselves. Other industry regulators such as Ofgem and Ofwat (which are in effect agents of the industries they purport to oversee) exist because there’s no effective market to regulate the industries. The Food Standards Agency was created in response to fears about food safety: the salmonella and mad cow scares. Universities expanded in the 90s and 00s in part because the career prospects for less educated people looked grim – as indeed they have proved to be. And the growth of HR managers to deal with labour regulation has happened in part because workers are unable to defend themselves through trades unions and so demand protection through legislation: Philippe Aghion and colleagues have shown that weaker unions are associated with greater labour market regulation.

Now, I’m not saying this is the whole story. In some cases, bureaucracy has been created by ideologically-motivated governments as is the case with the Office for Students, which employs over 400 people. And bureaucracy feeds on itself: academic departments need lots of administrators merely to deal with bureaucrats in the rest of the university. And some of us have been decrying the growth of managerialist ideology for years. And it is indeed plausible that all this bureaucracy might stifle growth simply because there’s an opportunity cost: if talented people are pushing paper they are not creating the goods and services that drive a dynamic economy.

The authors of Conservatism in Crisis, however, focus only upon the latter and do not consider even the possibility that the rise of the “bureaucratic class” is at least in part endogenous: it is the product of capitalist failure, not the exogenous cause of it. The inability to even ask this question is an ideological blindspot.

A similar blindspot exists in Sam Freedman’s Failed State, wherein he shows how the UK has a ” crisis of governance” because of excessive centralization; a weak civil service; inadequate parliamentary scrutiny and “a desire to keep the media beast fed.” Worse still, as he is smart enough to say, governments have little incentive to change this: no Prime Minister wants to give away power to local or regional government; or to face tougher oversight from MPs; or to face a backlash from a media not getting what it wants.

Which poses the questions: why are we in this bad equilibrium? Why are there so little external pressures for change? Why has the right (which dominates the agenda) focussed on non-solutions such as Brexit rather than on policies that might improve the quality of governance?

It’s because our bad government serves the rich quite well. As the FT has shown, the rich in the UK are doing as well as anywhere: it is the incomes of the median and poorer households that are so low by western standards. Insofar as there is a crisis of governance, it is a crisis for the working class. And it does not have sufficient power to force change.

Let’s put this another way. Freedman’s description of the failures of outsourcing is in many ways brilliant. But he doesn’t ask: failures for whom? He’s bang right that outsourcing probation services, care homes or children’s homes is brainless if you want decent public services. What it does do, however, is generate profits for a capitalism that is unable to thrive on its own two feet. And that’s what counts.

Similarly, Freedman is also right to partly blame the “media beast” for bad governance. Which only poses the question: whose interests does it serve?

Freedman and Badenoch are therefore making similar mistakes. They’re not seeing that what they complain about – the “bureaucratic class”, bad governance – are endogenous, the product of a capitalism that is failing millions and which grants political power to those opposed to useful change.
Now, I’m not accusing either of being stupid. We all have blindspots. Even Nobel prize-winners*. In Deaths of Despair, Angus Deaton makes much the same mistake as Freedman. Both fail to see that good policy isn’t merely a matter of intellect and know-how. It requires the right material conditions, the right power bases. And it is these that are lacking in 21st century UK capitalism**.

Yes, capitalism. And there’s the thing. Politicians and commentators do not call capitalism into question, any more than fish question why they are wet. The issue is so far outside the Overton window that even somebody as smart as Freedman doesn’t raise it.

But we should, because so many of the problems of which we complain – not just excess bureaucracy and bad government but also things as otherwise different as the housing crisis and rise of right-wing extremism – are the result of a failing capitalism.

There used to be a crude version of Marxism which tried to claim that all social and political developments were caused only by the “economic base“. Non-Marxists today have fallen into the exact opposite error, of believing that economic conditions have absolutely no impact upon politics. Such a view surely at least warrants examination. And that’s what Marxism asks us to do. You don’t all have to be Marxists, but an awareness of Marxian insights would greatly improve the quality of political discourse.

* Yes, including me.

** Those qualifiers “21st century UK” are important. I’m not claiming a universal tendency for capitalism to always produce bad government. Instead, as Edmund Burke wrote, “the circumstances are what render every civil and political scheme beneficial or noxious to mankind.”