Waiting For the Great Leap Backwards?

I had been wondering exactly what the Coalition now expects to happen. They've pushed through the budget, they've handed down the pain to the operational bits of the public sector in eye wateringly-tight financial settlements and they've (just about) got through the first really tricky Commons vote, the one on tuition fees.

Were they, I mused, now hoping a spirit of grim, 'post Dunkirk-like determination in adversity' to take over the country and we all pull together through these straightened times till the sunny uplands of a private sector led recovery are reached? That we collectively roll up our sleeves and build the Big Society out of whatever happens to be at hand?

Andrew Rawnsley says not: they want to unleash revolutionary cultural change on the country, and especially its public sector. He makes a rather far fetched analogue with Mao,

"I have heard one important figure in the government talk of unleashing a "cultural revolution" in the public services and another hailing devolution of power away from the centre using Mao's old slogan: "Let a thousand flowers bloom."

.... I have actually heard more than one member of the cabinet explicitly refer to the government as "Maoist".

Just about anywhere you look in Whitehall, there is a secretary of state unleashing upheaval. Ken Clarke challenges two decades of orthodoxy about the criminal justice system. Michael Gove battles the educational establishment to create his "free schools". Iain Duncan Smith has ambitions to be the man who definitively reformed welfare. Chris Huhne is dramatically recasting energy pricing. Nick Clegg wants to rewrite large parts of the constitution. Over at health, Andrew Lansley proposes the greatest upheaval in the NHS since its foundation. They are urged on from within Number 10 by the prime minister's principal strategist, Steve Hilton, who is probably the most Maoist person in the government. He has been heard to tell colleagues: "Everything must have changed by 2015. Everything."

Rawnsley manages to weave into his case the blurted out remarks of one Nick Boles MP , who claimed that chaos in local government is not only coming but is to be welcomed, as it is an alternative to intrinsically impossible planning. (In other news: Tim Worstell manages to work this up into a moment of Hayekian purity, somehow implying an obscure linkage between butterflies flapping their wings in the Amazon and the socialist calculation debate. Or something like that.)

Rawnsley's wrong. He's looking in the wrong bit of Marxist history for his analogies. I think I'm coming round to the view that what this lot are doing is much more akin to Stalin's scorched earth policy in WW2. They're not engaged in a 'regressive modernisation' as Stuart Hall so famously called Thatcherism. They're simply trying to lay waste to territory they don't expect to occupy for very long, to make it unusable by their opponents.

I suspect, deep down, they know their moment is passing, that the political and economic conditions which allowed neoliberal economics to become the default consensus of governments throughout the Anglo-American world have come to an end. The Great Moderation is over, it went down the pan in the Credit Crunch. The systemic default modes of managerial and political thought based on neoliberalism continue for want of a positive alternative, but the old certainty is gone. This may be their last chance to shrink the state for a long, long time. They're going to take it, come hell or high water.

Two Things Worth Browsing Today

The graphic is from here: it shows the changes in relative compensation between executives and average workers in the US over the last fifty years. Click on it to get an enlarged picture.

Keeping that image firmly in mind trot on over to Will at Potlatch, and consider his sharp eyed linkage of bankers compensation and last night's student protests.

"If bankers had just managed to keep a limit on their already-extreme levels of personal appropriation, then the financial crisis may not have turned into a fiscal crisis. Banks may even have remained a private industry, independent of the state. If George Osborne were just willing to treat higher education as a public good amongst many - in need of a harsh squeeze, but no more (he is, after all, a Tory) - then Churchill's statue may not be dawbed in graffiti this morning. But at a certain point, you have to consider the possibility that going too far is an economic and political strategy in its own right."

The Student Revolt Against Tuition Fees and the Limits of Public Choice Theory

For what seems like decades the Right has claimed that markets or quasi markets in social goods and services protect the interests of consumers, and that public services are inherently subject to being run in the interests of the producers rather than the people who use them unless they are subject to such external discipline. These assumptions have been hard-wired into policy debate to such an extent that they have become all but invisible. In other words, they've become hegemonic.

The problem is defined as the constant danger of 'rent seeking' by public sector providers - exploitation of a monopoly position to rip off or under serve 'consumers'*. The implication is that we need 'contestability'.

Much of the middle level policy debate that takes place around 'public sector reform' in either its New Labour or Coalition manifestations can be boiled down to an argument about which services should be subject to which different kinds of such contestability; how immediate or regular such threats should be; and the degree to which the boundaries between third sector not for profit alternatives and the private sector itself can be blurred in defining potential alternative managers of public services.

Political and policy 'creativity' gets defined as thinking up new ways in which this basic underlying default assumption can be packaged as empowering consumers. Hence the change of emphasis from direct efforts at privatising state services such as we saw in the 1980s to more nuanced emphases on consumer choice of services, as evident in the drift of schools policy over the last decade or the shift to user controlled (a misnomer) budgets in social care. This social care development has the added 'advantage' of blurring another key boundary: between what the state should pay for and what each individual should pay for.

The Browne report is shot through with this kind of thinking, as Stefan Collini so tellingly analyses in the LRB,

"Browne proposes to scrap most of this. In its place, he wants to see a system in which the universities are providers of services, students are the (rational) consumers of those services, and the state plays the role of the regulator. His premise is that ‘students are best placed to make the judgment about what they want to get from participating in higher education.’ His frequently repeated mantra is ‘student choice will drive up quality,’ and the measure of quality is ‘student satisfaction’.....even in its own wildly optimistic terms, this report proposes a hefty cut in funding. In suggesting that the standard fee should initially be set at £6000 (which particular institutions might choose to exceed, though there will be various disincentives, including a ‘levy’ which would claw some of it back), Browne acknowledges that this would not fully replace the value of the block grant even for the most successful institutions. .....‘The purpose of starting the levy at a lower point is to instil a focus on efficiency throughout the system.’ Lots of courses may have to be closed and lots of people sacked, but that must mean, by definition, that they weren’t offering a product the consumer wanted, so good riddance."

This is, of course, manifest nonsense: ask the students. They seem to have a fairly good grasp of the fact that it is the providers - especially the Russell Group - not themselves, the putative 'customers', who benefit from the tuition fee rises. In fact the whole tuition fees plan arising from the Browne report could be seen as a form of provider capture: but one based on introducing quasi markets and 'consumer choice' - the very mechanisms which so called Public Choice theory tends to recommend as antidotes to provider capture. So here we a have an apparent case of the empirical/practical dog eating its own theoretical tail as it were: the whole approach collapses into incomprehensibility, at least when applied in this particular circumstance.

All theories have limits to their applicability. It may yet prove to be the Coalition's regret that public choice theory in Britain reaches its' limits just at a time when they're committed to slashing the state. But then that would leave them 'ideologically naked' as it were, simply cutting for cutting's sake. & that's not a good place for any government to be.





*Does this ever actually happen? Yes. I have direct personal experience of it happening. But does it happen often enough to be thought of as a structural problem which demands wholesale 'public sector reform'? No, I don't think this is proven in any sense, despite various Public Choice theorists having won the Nobel Prize for Economics. So I suspect we dealing with one of those 'true but trivial' issues which have engaged Chris Dillow in recent weeks - but one which is being used, systematically, for directly political ends.