Get Red Pepper's email newsletter. Enter your email address to receive our latest articles, updates and news.

×

Put public purpose at the heart of government

Victoria Chick stresses the need to restore the public good to economic decision-making

August 22, 2017
4 min read

‘To suggest social action for the public good to the City of London is like discussing The Origin of Species with a bishop 60 years ago … An orthodoxy is in question, and the more persuasive the argument, the greater the offence,’ wrote the economist John Maynard Keynes in 1926, in an essay titled ‘Can Lloyd George do it?’

While the bishops have recovered their wits, the reaction of the City, unfortunately, has spread to the public at large, most significantly to politicians who make decisions on our behalf. Mainstream economic theory has never liked government ‘meddling’ in private sector production. Keynes, in The End of Laissez-faire, traces the negative view of industrial intervention to economic theory with its philosophy of individualism.

Individualism is now foundational. The social dimension, which is the cornerstone of the case for concerted action for the public good, has no place when it is assumed that economic agents are isolated ‘atoms’. This assumption removes not only the social dimension but also the question of power, since these ‘atoms’ are too small to exercise any (this in the face of the giant companies we today observe following programmes of environmental destruction, gouging their clients, manipulating finance and other not exactly powerless activities).

Even worse than this assumption of asocial atoms is the hidden and almost never acknowledged assumption of perfect knowledge. Since it is believed that ‘the market’ has this knowledge into the indefinite future, there is nothing government can do but make things worse. The market knows best; leave it alone. Mainstream economists have been dripping this poison into politicians’ ears for nearly 50 years, and the public that votes them into power believes it too.

The heart of the matter is the public good, for which private profit is an inappropriate criterion. In the late 1920s Keynes spoke of many corporations of his day as paying little attention to the profit motive and, though privately owned, seeing themselves as acting in the public interest. By 1933 he took a different view.

‘The decadent international but individualistic capitalism, in the hands of which we found ourselves after the war, is not a success. It is not intelligent, it is not beautiful, it is not just, it is not virtuous, and it doesn’t deliver the goods,’ he wrote in National Self-Sufficiency. Once again the profit motive roused him to deep anger: ‘The 19th century carried to extravagant lengths the criterion of financial results … The whole conduct of life was made into a sort of parody of an accountant’s nightmare … We are capable of shutting off the sun and the stars because they do not pay a dividend.’

These matters come to a head in The General Theory, published in 1936. Here he advocates the ‘socialisation of investment’, since government can take a longer view, and satirises the Treasury’s insistence on applying the profit criterion when spending money for the public good in the famous, but often misunderstood, passage about digging holes in the ground and filling them in again to stimulate the economy. People forget the punchline: ‘It would indeed be more sensible to build houses and the like; but if there are political and practical difficulties in the way of this, [digging holes] would be better than nothing.’ He blames ‘the education of our statesmen on the principles of the classical economics’. The same is true today.

In the government’s 2017 green paper on industrial strategy there is not a single mention of the public good or public purpose. The only ‘public good’ envisaged is the growth of the economy, though its regional distribution is given prominence. The prime minister, in her foreword, mentions ‘a fairer society’ and pledges to ‘move beyond short-term thinking’ but the ‘ten pillars’ of the policy that follow are entirely about ‘increasing productivity and driving growth across the whole country’.

There is no consideration of the possibility of prosperity without growth, where the economy is organised around our collective well-being, as explored by Professor Tim Jackson in a book originally published as a report for the government’s Sustainable Development Commission. The focus is entirely on successful business (ie. profit) rather than what is for the common good: what will help us live ‘wisely, agreeably and well’. What is to be produced and how is not questioned. Anything will do as long as it turns a profit.

Economics is not the whole of life, never has been, and should not be treated as such. The ‘econocracy’, described in detail by founding members of the Post-Crash Economics Society in a recent book of the same name, must be overthrown and public purpose placed at the heart of government.

Victoria Chick is emeritus professor of economics at University College London

Red Pepper is an independent, non-profit magazine that puts left politics and culture at the heart of its stories. We think publications should embrace the values of a movement that is unafraid to take a stand, radical yet not dogmatic, and focus on amplifying the voices of the people and activists that make up our movement. If you think so too, please support Red Pepper in continuing our work by becoming a subscriber today.
Why not try our new pay as you feel subscription? You decide how much to pay.
Share this article  
  share on facebook     share on twitter  

What is ‘free movement plus’?
A new report proposes an approach that can push back against the tide of anti-immigrant sentiment. Luke Cooper explains

The World Transformed: Red Pepper’s pick of the festival
Red Pepper is proud to be part of organising The World Transformed, in Brighton from 23-26 September. Here are our highlights from the programme

Working class theatre: Save Our Steel takes the stage
A new play inspired by Port Talbot’s ‘Save Our Steel’ campaign asks questions about the working class leaders of today. Adam Johannes talks to co-director Rhiannon White about the project, the people and the politics behind it

The dawn of commons politics
As supporters of the new 'commons politics' win office in a variety of European cities, Stacco Troncoso and Ann Marie Utratel chart where this movement came from – and where it may be going

A very social economist
Hilary Wainwright says the ideas of Robin Murray, who died in June, offer a practical alternative to neoliberalism

Art the Arms Fair: making art not war
Amy Corcoran on organising artistic resistance to the weapons dealers’ London showcase

Beware the automated landlord
Tenants of the automated landlord are effectively paying two rents: one in money, the other in information for data harvesting, writes Desiree Fields

Black Journalism Fund – Open Editorial Meeting
3-5pm Saturday 23rd September at The World Transformed in Brighton

Immigration detention: How the government is breaking its own rules
Detention is being used to punish ex-prisoners all over again, writes Annahita Moradi

A better way to regenerate a community
Gilbert Jassey describes a pioneering project that is bringing migrants and local people together to repopulate a village in rural Spain

Fast food workers stand up for themselves and #McStrike – we’re loving it!
McDonald's workers are striking for the first time ever in Britain, reports Michael Calderbank

Two years of broken promises: how the UK has failed refugees
Stefan Schmid investigates the ways Syrian refugees have been treated since the media spotlight faded

West Papua’s silent genocide
The brutal occupation of West Papua is under-reported - but UK and US corporations are profiting from the violence, write Eliza Egret and Tom Anderson

Activate, the new ‘Tory Momentum’, is 100% astroturf
The Conservatives’ effort at a grassroots youth movement is embarrassingly inept, writes Samantha Stevens

Peer-to-peer production and the partner state
Michel Bauwens and Vasilis Kostakis argue that we need to move to a commons-centric society – with a state fit for the digital age

Imagining a future free of oppression
Writer, artist and organiser Ama Josephine Budge says holding on to our imagination of tomorrow helps create a different understanding today

The ‘alt-right’ is an unstable coalition – with one thing holding it together
Mike Isaacson argues that efforts to define the alt-right are in danger of missing its central component: eugenics

Fighting for Peace: the battles that inspired generations of anti-war campaigners
Now the threat of nuclear war looms nearer again, we share the experience of eighty-year-old activist Ernest Rodker, whose work is displayed at The Imperial War Museum. With Jane Shallice and Jenny Nelson he discussed a recent history of the anti-war movement.

Put public purpose at the heart of government
Victoria Chick stresses the need to restore the public good to economic decision-making

Don’t let the world’s biggest arms fair turn 20
Eliza Egret talks to activists involved in almost two decades of protest against London’s DSEI arms show

The new municipalism is part of a proud radical history
Molly Conisbee reflects on the history of citizens taking collective control of local services

With the rise of Corbyn, is there still a place for the Green Party?
Former Green principal speaker Derek Wall says the party may struggle in the battle for votes, but can still be important in the battle of ideas

Fearless Cities: the new urban movements
A wave of new municipalist movements has been experimenting with how to take – and transform – power in cities large and small. Bertie Russell and Oscar Reyes report on the growing success of radical urban politics around the world

A musical fightback against school arts cuts
Elliot Clay on why his new musical turns the spotlight on the damage austerity has done to arts education, through the story of one school band's battle

Neoliberalism: the break-up tour
Sarah Woods and Andrew Simms ask why, given the trail of destruction it has left, we are still dancing to the neoliberal tune

Cat Smith MP: ‘Jeremy Corbyn has authenticity. You can’t fake that’
Cat Smith, shadow minister for voter engagement and youth affairs and one of the original parliamentary backers of Corbyn’s leadership, speaks to Ashish Ghadiali

To stop the BBC interviewing climate deniers, we need to make climate change less boring
To stop cranks like Lord Lawson getting airtime, we need to provoke more interesting debates around climate change than whether it's real or not, writes Leo Barasi

Tory Glastonbury? Money can’t buy you cultural relevance
Adam Peggs on why the left has more fun

Essay: After neoliberalism, what next?
There are economically-viable, socially-desirable alternatives to the failed neoliberal economic model, writes Jayati Ghosh

With the new nuclear ban treaty, it’s time to scrap Trident – and spend the money on our NHS
As a doctor, I want to see money spent on healthcare not warfare, writes David McCoy - Britain should join the growing international movement for disarmament


10