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- The Observer,
- Sunday May 20 2001
But how is New Labour to reconcile its new faith in markets and capitalism with its old faith in justice? The trouble with markets Anglo-Saxon style is that whatever their virtues in wealth generation they are blind to justice. Nor should they be expected to be any different. Not even the stoutest defender of capitalism advocates it because he believes it is fair.
In a sense, Tony Blair's leadership of the Labour Party has been a quest to find an intellectual and ideologically coherent answer to the question, and one of the intriguing aspects of this election campaign is that the outlines of his response are becoming ever clearer. The deal is to provide a social floor while promoting meritocracy. Citizens should not be considered equal, so opening the Pandora's box of demands for redistribution of income. Rather, they should be seen as being of equal worth, meaning they have the more modest entitlement to some minimum living standard with no upper limit to their incomes.
This allows Mr Blair to view a good society as one in which a means-tested social safety-net is erected as high as it can be, consistent with the current level of taxation. Market capitalism, meanwhile, can do largely what it will as long as it acknowledges some duty to be socially responsible.
This is, of course, the classic Christian democratic or old One-Nation formula. It is the minimalist position before becoming outright conservative. But that does not mean it is content-free or distinct from conservatism, as a glance at the Government's record will show. The social floor has been solidified with the adoption of the minimum wage, an improvement in the supply of decent houses for low-income families and a rise in retirement incomes centred around the minimum retirement income guarantee and belatedly, and begrudgingly, the state pension. In the efforts to improve the incomes and life chances of poor children, notably through Surestart and the working families' tax credit, there are the tentative beginnings of more meritocracy. The number of 11-year-olds failing their maths and English tests has fallen by a quarter over the last four years, while in the wake of the Laura Spence affair, even Oxford is (marginally) improving its intake of state-school students. As the spending increases on education kick in over the next three years, the improvement is likely to continue.
Mr Blair does not acknowledge his new guru, but it is not hard to detect the long shadow of the American philosopher, John Rawls, in his current thinking. The famous Rawlsian theorem is that the just society is the one we would have rationally chosen if we were ignorant of our own natural assets and capacity for personal effort and if we wanted both to avoid the worst possible outcomes for ourselves while preserving the chance of the best. This society would have a high social floor, offer social mobility to the meritocratic and not worry about high incomes at the top.
But this proposition simply has not worked in practice. In the US, after decades of indifference to incomes reaching stratospheric levels, income inequality is now the highest in the industrialised world, and there has been an implosion of meritocracy and social mobility. Americans travel more freely from one part of their country to another in search of work, but this geographical mobility is confused with social mobility. For example, the chance of American workers in the bottom 20 per cent moving to the top 60 per cent of workers has been lower than in any country in Europe - and less than half that in Britain.
This rarely reported collapse in American social mobility is because the rich have become ever better at ensuring their children reach the upper echelons, and because the virtual absence of inheritance tax has meant an explosion in well-to-do people living on unearned income - up by 50 cent over the last 20 years. The network of privileged private American schools, together with the now commonplace $30,000 (£20,000) a year coaching in examination and interview techniques, has meant the American upper-middle class has gained a suffocating stranglehold on entry into the best universities. The much criticised British system looks near Utopian in comparison. The dynastic Bush and Gates families are only the tip of an iceberg; allegedly democratic America has an aristocracy of the rich. Not to care about incomes at the top, in short, is to kiss goodbye to any notion of meritocracy.
And it is also to kiss goodbye to establishing a political consensus over a high social floor. The American rich, and even those on average incomes, see no reason why they should be taxed to support those who have failed in the meritocratic race, even if it is so vastly rigged in the rich's favour. A political dynamic is created in which the social floor becomes progressively lower and meaner, while those at the top entrench their position. Britain is already threatening to follow the American example.
If Britain wants to sustain and increase the combination of a good social floor and meritocracy, it needs to do more of the things it was doing before the Thatcher years - progressive taxation, free university education and universal welfare benefits. The postwar social democratic consensus had a more politically effective notion of justice, because it tried not only to create the chance for everyone to do well, but to redistribute income so that there was a fairer distribution of opportunity and risk.
You can see why Millbank wants to believe in the new formula, avoiding all talk of the R word, but better a smaller majority and the chance to build the society New Labour says it wants than a landslide which leaves the chance of building a genuine meritocracy profoundly compromised.
My generation's once-in-a-lifetime opportunity to create a better country is slipping by.
