Ethics is an objective, metaphysical necessity
of man’s survival.

Now For Change

In a letter to The Sun:

DAVID Cameron plans to return power to the people with a dramatic state revolution.

In an exclusive interview, the Tory chief reveals nurses, teachers and other public servants will be allowed to go it alone and run their own services.

Under his plan for public sector “co-operatives”, staff could axe useless bosses and, if efficient, keep the savings made.

via Tory pledge to give public sector workers power to axe boss | The Sun |News.

For more information, see the policy paper:

We will:

• Create a powerful new right to become your own boss. Staff in the vast majority of front-line public service functions will be able to bid to transfer to independence by creating a co-operative enterprise – there are already legally-recognised organisational forms they can simply adopt ‘off the shelf’;

• Enable shared ownership. Staff in the new co-operative would be genuine owners of the enterprise. Like employees in co-owned businesses, they would all be able to benefit from its financial success and could vote on how things are run;

• Create the freedom to innovate. They would simply be contracted by a relevant government department to deliver the desired outcomes – no more bureaucratic government process targets dictating how to achieve them;

• Allow staff co-ops to bring in the best expertise. To help overcome the barriers to rapid progress that co-ops can experience, they will be able to go into joint-venture with outside organisations. Partners could be offered a share of the revenues in exchange for management and operational expertise;

• Give staff co-ops the freedom to grow. Once successful, staff co-ops will be able to bid for other areas of government activity, or merge with other co-ops if they wish;

• Ban profiteering. While staff will fully own their new organisation, they will not be able to sell off any of the state’s assets they continue to use, like land and buildings. And because we expect them to make big efficiencies and improvements to services, their contracts will ensure any big surpluses they make will be shared with the taxpayer.

Via David Cameron: We can’t go on like this:

A decade of big government and blunt, bureaucratic control has undermined responsibility and made our social problems worse, not better.

We are determined to forge a new direction.

We will use the state to help remake society by encouraging people to take responsibility for themselves and for one another.

We will provide new opportunities for community groups, neighbourhood organisations, charities, social enterprises to help rebuild our civil society.

We will create incentives and use the best technology to encourage and enable people to come together, solve their problems together, make this society stronger together.

As we do this we will redistribute power from the political elite to the man and woman in the street.

Within months of a Conservative victory there would start the most radical decentralisation of power this country has seen for generations.

Government will enter a new era of transparency.

And a strong, unbroken line of democratic accountability will be restored between the people and those that make the decisions that affect their lives.

It is a future barely recognisable from the present, but this party is determined to take us there.

A Conservative Government will send the clearest possible signal to everyone in Britain…

…if you take responsibility, we will back you; if you aspire to a better life for you and your family, we will support you; if you play your part in building the big society, we will reward you.

I recommend the entire speech.

In this article, I make the case that we live in a managerial society, one born in the tragedy of the first half of the twentieth century, and that it is this social system which is failing today. I also set out what can be done about it: the future is hopeful.

This morning, I watched on the BBC a fascinating series of interviews in connection with this story about water pricing:

Average water bills in England and Wales will be reduced slightly over the next five years, regulator Ofwat has announced.

It has ruled that typical bills will fall by £3 to £340 by 2015, before the impact of inflation is considered.

Of course, the interviews were not in themselves fascinating; they were fascinating for what they said about the way we have set up our society.

First, Ofwat’s Chief Executive explained with palpable enthusiasm what the regulator is going to do to the industry: force them to operate their businesses in certain ways, insist that there is a record amount available for investment, hold them to account and so on. Ofwat is of course a quango: its estimated expenditure for 2008-9 was £14,856,000.

At some point we heard the industry’s concerns. In September, Water UK, who are “working on behalf of the water industry towards a sustainable future”, said:

Unless Ofwat thinks again, the draft determinations will:

• put at risk capital expenditure needed for the sustainability of water services;
• delay service improvements consumers have requested and expect to be delivered;
• reduce investors’ confidence in the financial stability of the sector leading to higher prices in the medium-term; and in consequence
• provide a poor bargain for customers and society.

It might be worth reminding ourselves that there was a windfall tax on the utilities but we face an energy crisis: now we find the water industry saying, using jargon, that price controls threaten water supplies.

Returning to the BBC story, after Ofwat, we heard from the National Chair of the Consumer Council for Water, who explained how the Council would be standing up for consumers. Superficially, this is all very well — we would all like someone to stand up for us — but I immediately thought, “Is this a voluntary body of concerned consumers or a government body funded by the taxpayer?”

It is, of course, a government body, one with net operating costs of £5,836,000 in 2007-08.

We now wait for Water UK’s response to Ofwat’s announcement. We see a struggle of Titans in the media, all Titans funded by us: presumably operating Water UK costs the industry — and therefore all of us — a considerable sum every year (their accounts did not come immediately to hand).

So, in a nutshell and leaving aside indirect burdens, it appears the government is spending well over £20 million of our money every year just to deliver a ruling that we shall pay £3 a year less for water by 2015, ignoring inflation.

That will perhaps not come as a great comfort to the gentleman who was telling me recently that, at the age of 74, he is still paying income tax on the modest income he gleans from his savings and state pension. This is a man who worked and saved all his life.

He is right to be angry.

The nature of the system

Now, I have spent enough time with public servants to know that everyone means well. I know from personal contacts that senior civil servants are, on the whole, people of the very highest calibre, people of intellect and talent, good communicators with the best of motivations.

Nevertheless, the system which has been set up is one of conflict. Conflict between “the industry” (represented by Water UK), “the consumer” (represented by the Consumer Council for Water) and the regulator (Ofwat). It spends a great deal of money that we do not have.

Now, I do not propose in this article to prove whether this system is in any sense working or not: I attempt only to set out the pattern of our society and stimulate thought. Plenty of others have set out the case at length: see for example the Institute of Economic Affairs’ Living with Leviathan by David B. Smith. As Smith explains (emphasis mine):

New Labour’s so-called ‘third way’, and the prevalent economic paradigm in much of ‘Old Europe’, appears to correspond to none of these categories [free market, socialist and 'Butskellite' mixed]. Instead, it appears to be a system under which the private sector maintains a nominal legal control over its capital and labour, but the returns on these factors of production are so heavily influenced by tax and regulation that the public sector ends up effectively controlling such returns. This sham form of mixed economy, which needs to be distinguished from the British mixed economy of the 1950s, has traditionally been associated with fascist regimes – for example, the gelenkte Wirtschaft (supple or ‘joined-up’ economy) that Goering implemented in Nazi Germany in 1936. Such systems represent an obvious intellectual attempt to reconcile a socialist-inspired desire for a powerful interventionist state with the wealth-creating force of ‘bourgeois-liberal capitalism’, and tend to be popular with politicians and bureaucrats, because they force all sectors of society to kowtow to the state and its functionaries if they are to remain in business.

This is not a system of freely-chosen mutual cooperation: it is a system of managerial control.

The Managerial Revolution

It is very easy to find polemics against the social changes which were born in the first half of the twentieth century through two world wars and the Great Depression. They include, for example:

• Karl Popper’s The Open Society and Its Enemies: Volume 1: The Spell of Plato and Volume 2: Hegel and Marx;
• Friedrich Hayek’s The Road to Serfdom;
• And, bringing things more up to date, Jonah Goldberg’s Liberal Fascism: The Secret History of the Left from Mussolini to the Politics of Meaning

And it is very easy to find the relevant propaganda. However, it was only recently that I discovered a scholarly attempt to set out, in 1941, “What is happening in the world”: James Burnham’s The Managerial Revolution.

Burnham identifies and examines three theories of the development of society:

• The permanence of capitalism,
• The inevitability of socialism,
• The transformation of capitalism into some non-socialist form of society.

Burnham — previously a Trotskyist — dismissed the first two and explained that society was experiencing a “Managerial Revolution”. Consider (emphasis mine):

Burnham looked around the world for indications of the new form of society which was emerging to replace historic capitalism and saw certain commonalities between the economic formations of Nazi Germany, Stalinist Russia, and America under Franklin D. Roosevelt and his “New Deal.” Burnham argued that over a comparatively short period, which he dated from the first world war, a new society had emerged in which a “social group or class” which Burnham called “managers” had engaged in a “drive for social dominance, for power and privilege, for the position of ruling class.” For at least a decade previous to Burnham’s book, the idea of a “separation of ownership and control” of the modern corporation had been part of American economic thought, with Burnham citing The Modern Corporation and Private Property by Berle and Means as an important exposition. Burnham expanded upon this concept, arguing that whether ownership was corporate and private or statist and governmental, the essential demarcation between the ruling elite (executives and managers on the one hand, bureaucrats and functionaries on the other) and the mass of society was not ownership so much as it was control of the means of production.

So, while Burnham made many incorrect predictions, it does appear that, at last, here we are, firmly entrenched in a managerial society. Ownership is separated from control. We do indeed have a managerial system along the lines Burnham identified: technical managers, executives, finance capitalists and stockholders. We see that the stockholders do not actually control the companies they own and that attempts to motivate managers by making them stockholders seem to fail because the downside is not shared: bank staff were already paid in deferred stock options before the crisis and, in any event, the crisis was caused by government intervention.

It is this managerial system of society which is now failing us. Let me give two further examples.

As I have reported here in respect of the European Union, an organisation whose propensity to issue detailed rules hardly needs a reference:

So we have the bizarre spectacle of socialists who think the EU may be neo-liberal, capitalists who think it is a socialist project and democrats who illustrate the EU’s democratic deficit to the agreement of its supporters and even the EU itself.

And yet Burnham wrote (1941):

The day of a Europe carved into a score of sovereign states is over; if the states remain, they will be little more than administrative units in a larger collectivity.

It seems to me that the European Union is neither neo-liberal, with all its restrictions on external trade, nor is it socialist, with its emphasis on a supposedly free market: the European Union is managerial.

In “The Living Dead: Switched Off, Zoned Out – The Shocking Truth About Office Life”, David Bolchover makes the case that:

The real truth is that there are millions upon millions of people who are actively disengaged from their jobs, who spend months and years sitting in offices doing next to nothing, lost in the cracks of laughably inefficient and abysmally managed large organisations, their talents wasted and long forgotten.

And there is the tragedy: talents wasted and forgotten. No one is arguing against individuals: we criticise the system in which we live and work. Surely the stellar success of Dilbert and The Office speak for themselves? Why not encourage a new system?

The fundamental problem and the route to progress

Society is the cooperative actions of billions of thinking, acting people. It is an unimaginably complex system which is not only beyond complete comprehension at any particular instant, but which remakes itself and its trajectory as people make subjective choices, moment by moment.

In other words, society cannot be managed. It is a self-organising system which must be allowed to do just that: organise itself.

Ironically, the scholastics of mediaeval Salamanca, who first wrote systematic treatises on economics, knew this, as did many of the enlightenment philosophers. Perhaps the “scientific socialists” forced us to forget.

Management is a worthwhile and laudable profession — I would say that, as a manager myself — but to apply a tool to a problem it cannot solve is a mistake. We have been making this mistake long enough. As Professor Jesús Huerta de Soto writes:

To attempt to coordinate society through coercion is an intellectual error.

Thankfully, David Cameron has been setting out, consistently over several years, a vision of a post-bureaucratic age:

We’re living in an age where technology can put information that was previously held by a few into the hands of almost every one. So the argument that has applied for well over a century – that in every area of life we need people at the centre to make sense of the world for us and make decisions on our behalf – simply falls down. In its place rises up a vision of real people power. This is what we mean by the Post-Bureaucratic Age. The information revolution meets the progressive Conservative philosophy: sceptical about big state power; committed to social responsibility and non-state collective action. The effects of this redistribution of power will be felt throughout our politics, with people in control of the things that matter to them, a country where the political system is open and trustworthy, and power redistributed from the political elite to the man and woman in the street.

For all the rough and tumble of contemporary politics, I am convinced that David Cameron and the Conservative Party have the right vision and the right policies to transform our society into a system which will prosper and endure. People need more power over their own lives, more opportunity, more responsibility and a secure environment within which to determine their own destiny.

The managerial revolution is at an end: it is time for change.

Further reading

• The Managerial Revolution
• Political Power and Democratic Control in Britain: The Democratic Audit of the United Kingdom
• Chaos: A Very Short Introduction
• The Pretence of Knowledge, my precis of Hayek’s Nobel lecture
• Human Action: A Treatise on Economics, which sets out the key issues in the first volume (PDF)
• Theory and History: An Interpretation of Social and Economic Evolution (PDF)
• The Boundaries of Order (PDF)
• Moral Markets and Honest Money
• Economic Freedom and Interventionism (online)

Via The Telegraph:

David Cameron, the Conservative leader, has pleaded with his MPs and voters to allow him to concentrate on fixing the fragile British economy if he becomes Prime Minister rather than having “a massive Euro bust up” over the Lisbon Treaty.

Many of us with an international perspective on human cooperation have strong, principled objections to a government that cannot be dismissed at the ballot box. However, David Cameron is right: the clear and present threat to the livelihoods of British people is the state of the economy, not the EU. And George Osborne is right: we need an economy based on save and invest.

Consider the analysis provided by my Cobden Centre colleague, Ewen Stewart:

Equity Strategist Ewen Stewart makes the case that the national debt will within 5 years be over £150,000 per family of 4 with debt repayments of twice the present defence budget, up from £31 billion in 2008/9 to £70 billion in 2013/14. He explains the root causes of our difficulties and indicates a route to recovery.

It’s all over. What a fuss about nothing. The economy will soon be growing again and, look, the FTSE100 is up almost 50% since the March low. Even house prices, according to the Halifax, have risen 6 months in a row. The doom mongers were wrong. Central Banks and Keynesian public spending programmes, together with QE, have worked. Brown indeed has saved the world!

Well that would be one interpretation and a very short sighted one too, for this recovery shows all the hallmarks of a drug addict who claims to be going straight injecting a further mighty dose of the substance that has caused such decay in the first place to prolong the party.

The problem is that the underlying fault lines in the UK economy remain and, thanks to the Government’s response, are even more pronounced.

I thoroughly recommend the entire article: Happy days are here again? Another view from the City » The Cobden Centre.

We simply cannot allow ourselves to slip and let Labour retain power. Everyday British people cannot afford a hung Parliament. We must win strongly and deal with the most urgent and important problem before us: a wrecked economy.

We cannot escape our fate by sticking with Labour’s insensible reactionary fear. We must think.

We cannot keep creating new money: it would eventually destroy the economy completely¹:

Continuously injecting additional amounts of money where it creates temporary demand, together with an expectation of continuously rising prices, draws labour and resources into use in areas which will last only as long as the supply of new money. These policies bring about not so much a raise in the level of employment, but a distribution of employment which cannot last and which eventually can only be maintained by ruinous levels of inflation.

We cannot keep borrowing from future generations: it is just plain wrong and the markets would stop us.

We cannot grow a healthy society by simply seizing the wealth of one and giving it to another. Try doing that with your children’s sweets: you will get little more than screaming, sobbing and tearful mumbling. It is a dead end.

Ewen’s article sets out his policy prescriptions. The way out is the grown-up way: working, saving and investing.

So here is the greatest danger this country faces: a Labour government of childish fantasists who know nothing about creating real prosperity and everything about appearing strong before the camera. They are failing us all: it is tragic.

As my friend Chris Neal — a man with a big heart for the poor and CEO of charity GB Job Clubs — has written of Labour, bringing Cromwell up to date:

It is high time for me to put an end to your sitting in this place, which you have dishonoured by your contempt of our democracy, and defiled by your practice of top down government; ye are a factious crew, and enemies to all good government; ye are a pack of mercenary wretches, and would like Esau sell your country to the Brussels federalists for a mess of pottage and a title; and like a Judas betray your Queen and country for a few pieces of money; is there a single virtue now remaining amongst you?

Is there one vice you do not possess? Ye have no more sense of democracy than my horse; you have sold our Gold; which of you have not barter’d your conscience for the whips? Is there a man amongst you that has the least care for the good of the Commonwealth? Ye sordid prostitutes have you not defil’d this sacred place, and turn’d Parliament into a den of impotent lickspittles, by your immoral principles and wicked practices?

Ye are grown intolerably odious to the whole nation; you were deputed here by the people to get grievances redress’d, are yourselves become the greatest grievance. Your country therefore calls upon me to cleanse this Augean stable, by putting a final period to your iniquitous proceedings in this House; and which by God’s help, and the strength he has given me, I am now come to do; I command ye therefore, upon the peril of your lives, to depart immediately out of this place; go, get you out! Make haste!

Ye venal slaves be gone, not to Brussels by Eurostar but to your shires to beg the forgiveness of the people you purport to represent! So! Take away that shining bauble there, and lock up the doors. In the name of God, go!

Further Reading

• Moral Markets and Honest Money
• Prices and Production
• Huerta de Soto, Jesús: “Money, Bank Credit and Economic Cycles”

1. See The pretence of knowledge which explains how economists come to make astrologers look good. [↩]

Via Suboptimal Planet, a commentary on Karl Hess’ 1969 Playboy article “The Death of Politics”, reproduced by mises.org:

At its limits, the libertarian ideal will no doubt face practical problems of its own. But it will be a long time before we need to worry that our government is too small, and our people too free.

While Hess was optimistic, writing:

A laissez-faire world would liberate men. And it is in that sort of liberation that the most profound revolution of all may be just beginning to stir. It will not happen overnight, just as the lamps of rationalism were not quickly lighted and have not yet burned brightly. But it will happen — because it must happen.

The author is less so, finding it “hard to see a path to Hess’s utopia” and suggesting we are heading in the other direction, but I see a path. No doubt the contemporary Conservative Party still contains many well-intentioned authoritarians, many interventionists, but David Cameron is clear that we are heading towards a “post-bureaucratic age” in which people have more authority over their own lives and more responsibility too.

His recent conference speech repays close reading. Consider for example:

Don’t they see? It is more government that got us into this mess.

Why is our economy broken? Not just because Labour wrongly thought they’d abolished boom and bust. But because government got too big, spent too much and doubled the national debt.

Why is our society broken? Because government got too big, did too much and undermined responsibility.

Why are our politics broken? Because government got too big, promised too much and pretended it had all the answers.

…

But this idea that for every problem there’s a government solution for every issue an initiative, for every situation a czar….

It ends with them making you register with the government to help out your child’s football team. With police officers punished for babysitting each other’s children. With laws so bureaucratic and complicated even their own Attorney General can’t obey them.

Do you know the worst thing about their big government? It’s not the cost, though that’s bad enough. It is the steady erosion of responsibility. Our task is to lead Britain in a completely different direction.

So, I am more optimistic. Look at Conservative Party policy today and you find a central commitment to opportunity, responsibility and security, to “freedom from” and the space to make your own way. As Cameron said:

In Britain today, there are entrepreneurs everywhere – they just don’t know it yet. Success stories everywhere – they just haven’t been written yet. We must be the people who release that potential.

Yes, we are subject to failed institutions and, yes, we do have a maze of bureaucracy and wrong-headed ideas to defeat and sweep away, but we can build a society of free and responsible people cooperating to achieve mutually-beneficial ends. David Cameron plans to do it: we should help.

“I want to update you on a couple of things: what’s happening with the party and the direction of the broader economic debate.

NEW POLITICS

First, the party. Nearly four months ago I went on the TV and said I wanted to throw open the doors of our party so that new candidates would come forward.

I said that if you believe in public service, if you want to help us clean up politics, if you share our values, then you should come and be a Conservative candidate.

The response has been overwhelming.

The sheer volume of interest meant extra staff had to be drafted in to process the applications.

via The Conservative Party | News | Speeches | David Cameron: Labour are trying to rewrite economic history .

Via David Cameron: ‘We will get Britain back on its feet’ – Telegraph:

David cameron is confident, but he tells Benedict Brogan and Andrew Porter that the next election is far from in the bag.

David Cameron is going noticeably grey, which is hardly surprising given the pressures he faces.

He is about to lead his party into battle against a broken enemy on the brink of defeat, yet cannot be sure of victory. The electorate has given up on Gordon Brown, yet refuses to yield to the Tory leader’s embrace. The uncertainty about a man who is so certain about himself must baffle him.

DC didn’t seem baffled last night at West Oxfordshire Conservative Association’s Supper Club. On the contrary, he was energetic, positive and crystal clear about his plans, despite delivering his fourth — I think — speech of the day.

The Anatomy of Revolution by Clarence Crane Brinton repays close study.

We find that:

• Revolutionary movements arise in the discontent of prosperous people who feel “restraint, cramp and annoyance, rather than downright crushing oppression”.
• Successful revolutionaries “are born of hope, and their philosophies are formally optimistic.”
• Pre-revolutionary societies contain “very bitter class antagonisms” of considerable complexity.
• There must be a transfer of allegiance of the intellectuals.
• The governmental machinery must be inefficient under the strain of neglect and new circumstances.
• The old ruling class – those antagonising the remainder – have come to distrust themselves, losing faith in their approach and becoming inept.
• The financial breakdown of the state is often a trigger.

We discover that a working model of society is a network of interactions among individuals with a great many interwoven strands of connection. These connections are set by habit and world view and may sometimes be changed. Moreover, we learn that, when the law and exhortation are used to change behaviour, the effects are not long lasting:

In general many things men do, many human habits, sentiments, dispositions, cannot be changed at all rapidly, that the attempt made by the extremists to change them by law, terror, and exhortation fails, that the convalescence brings them back not greatly altered.

As David Cameron calls for a responsibility revolution, we must hope, on the historical evidence, that the country is poised for such a thing, and we must hope that the New Left’s cultural revolution of state dependency produced by law and exhortation turns out to be reversible.

It seems quite likely.

Great news:

Two weeks after the European elections returned 26 Conservatives David Cameron has fulfilled his controversial pledge to form a new bloc large enough to qualify for full recognition in Strasbourg.

The new grouping brings together centre-right MEPs from eight EU countries under the name “European Conservatives and Reformists Group”, with the UK Tory faction as the biggest single national element.

via Conservative MEPs form new ‘anti-federalist’ group in the European Parliament – Telegraph.

David Cameron writes, in the Guardian, four articles on reforming politics:

The public reaction to the political crisis over MPs’ expenses is far too serious to be assuaged by any instant package of measures, or even the sight of MPs paying the price for unethical behaviour. I think the British people’s fury at politicians today indicates a much deeper problem in our political system, that’s been growing for years. That’s why the Guardian’s A New Politics debate is so important. It’s vital we examine the deeper political problems Britain faces, and consider all potential solutions. And while I think much of the recent excited talk of “revolution” is overblown – we need to keep a cool head and a sense of proportion – we mustn’t let ourselves believe that a bit of technocratic tinkering here, a bit of constitutional consultation there, will do the trick. No, this crisis shows that big change is required. We do need a new politics. We do need sweeping reform. But we’ve got to get it right.

via A new politics: We need a massive, radical redistribution of power | David Cameron | Comment is free | The Guardian .

See also:

• A new politics: Electoral reform
• A new politics: Democratic accountability
• A new politics: The post-bureaucratic age

Time for change? Certainly – it’s past due and this is the right stuff.

Watch the speech: