Rethinking Development and the State: Reflections of the Late Tony Judt

August 16, 2010

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Ill Fares the Land

April 29, 2010

by Tony Robert Judt FBA (January 2,1948 – August 6 2010)

Something is profoundly wrong with the way we live today. For thirty years we have made a virtue out of the pursuit of material self-interest: indeed, this very pursuit now constitutes whatever remains of our sense of collective purpose. We know what things cost but have no idea what they are worth. We no longer ask of a judicial ruling or a legislative act: Is it good? Is it fair? Is it just? Is it right? Will it help bring about a better society or a better world? Those used to be the political questions, even if they invited no easy answers. We must learn once again to pose them.

The materialistic and selfish quality of contemporary life is not inherent in the human condition. Much of what appears “natural” today dates from the 1980s: the obsession with wealth creation, the cult of privatization and the private sector, the growing disparities of rich and poor. And above all, the rhetoric that accompanies these: uncritical admiration for unfettered markets, disdain for the public sector, the delusion of endless growth.

We cannot go on living like this. The little crash of 2008 was a reminder that unregulated capitalism is its own worst enemy: sooner or later it must fall prey to its own excesses and turn again to the state for rescue. But if we do no more than pick up the pieces and carry on as before, we can look forward to greater upheavals in years to come.

And yet we seem unable to conceive of alternatives. This too is something new. Until quite recently, public life in liberal societies was conducted in the shadow of a debate between defenders of “capitalism” and its critics: usually identified with one or another form of “socialism.” By the 1970s this debate had lost much of its meaning for both sides; all the same, the “left–right” distinction served a useful purpose. It provided a peg on which to hang critical commentary about contemporary affairs.

On the left, Marxism was attractive to generations of young people if only because it offered a way to take one’s distance from the status quo. Much the same was true of classical conservatism: a well-grounded distaste for over-hasty change gave a home to those reluctant to abandon long-established routines. Today, neither left nor right can find their footing.

For thirty years students have been complaining to me that “it was easy for you”: your generation had ideals and ideas, you believed in something, you were able to change things. “We” (the children of the Eighties, the Nineties, the “Aughts”) have nothing. In many respects my students are right. It was easy for us—just as it was easy, at least in this sense, for the generations who came before us. The last time a cohort of young people expressed comparable frustration at the emptiness of their lives and the dispiriting purposelessness of their world was in the 1920s: it is not by chance that historians speak of a “lost generation.”

The Young  are at a loss

If young people today are at a loss, it is not for want of targets. Any conversation with students or schoolchildren will produce a startling checklist of anxieties. Indeed, the rising generation is acutely worried about the world it is to inherit. But accompanying these fears there is a general sentiment of frustration: “we” know something is wrong and there are many things we don’t like. But what can we believe in? What should we do?

This is an ironic reversal of the attitudes of an earlier age. Back in the era of self-assured radical dogma, young people were far from uncertain. The characteristic tone of the 1960s was that of overweening confidence: we knew just how to fix the world. It was this note of unmerited arrogance that partly accounts for the reactionary backlash that followed; if the left is to recover its fortunes, some modesty will be in order. All the same, you must be able to name a problem if you wish to solve it.

I wrote my book Ill Fares the Land for young people on both sides of the Atlantic. American readers may be struck by the frequent references to social democracy. Here in the United States, such references are uncommon. When journalists and commentators advocate public expenditure on social objectives, they are more likely to describe themselves—and be described by their critics—as “liberals.” But this is confusing. “Liberal” is a venerable and respectable label and we should all be proud to wear it. But like a well-designed outer coat, it conceals more than it displays.

A Liberal and A Social Democrat

A liberal is someone who opposes interference in the affairs of others: who is tolerant of dissenting attitudes and unconventional behavior. Liberals have historically favored keeping other people out of our lives, leaving individuals the maximum space in which to live and flourish as they choose. In their extreme form, such attitudes are associated today with self-styled “libertarians,” but the term is largely redundant. Most genuine liberals remain disposed to leave other people alone.

Social democrats, on the other hand, are something of a hybrid. They share with liberals a commitment to cultural and religious tolerance. But in public policy social democrats believe in the possibility and virtue of collective action for the collective good. Like most liberals, social democrats favor progressive taxation in order to pay for public services and other social goods that individuals cannot provide themselves; but whereas many liberals might see such taxation or public provision as a necessary evil, a social democratic vision of the good society entails from the outset a greater role for the state and the public sector.

Understandably, social democracy is a hard sell in the United States. One of my goals is to suggest that government can play an enhanced role in our lives without threatening our liberties—and to argue that, since the state is going to be with us for the foreseeable future, we would do well to think about what sort of a state we want. In any case, much that was best in American legislation and social policy over the course of the twentieth century—and that we are now urged to dismantle in the name of efficiency and “less government”—corresponds in practice to what Europeans have called “social democracy.” Our problem is not what to do; it is how to talk about it.

The European dilemma is somewhat different. Many European countries have long practiced something resembling social democracy: but they have forgotten how to preach it. Social democrats today are defensive and apologetic. Critics who claim that the European model is too expensive or economically inefficient have been allowed to pass unchallenged. And yet, the welfare state is as popular as ever with its beneficiaries: nowhere in Europe is there a constituency for abolishing public health services, ending free or subsidized education, or reducing public provision of transport and other essential services.

Taking on Conventional Wisdom

I want to challenge conventional wisdom on both sides of the Atlantic. To be sure, the target has softened considerably. In the early years of this century, the “Washington consensus” held the field. Everywhere you went there was an economist or “expert” expounding the virtues of deregulation, the minimal state, and low taxation. Anything, it seemed, that the public sector could do, private individuals could do better.

The Washington doctrine was everywhere greeted by ideological cheerleaders: from the profiteers of the “Irish miracle” (the property-bubble boom of the “Celtic Tiger”) to the doctrinaire ultra-capitalists of former Communist Europe. Even “old Europeans” were swept up in the wake. The EU’s free- market project (the so-called “Lisbon agenda”); the enthusiastic privatization plans of the French and German governments: all bore witness to what its French critics described as the new ” pensée unique.”

Today there has been a partial awakening. To avert national bankruptcies and wholesale banking collapse, governments and central bankers have performed remarkable policy reversals, liberally dispersing public money in pursuit of economic stability and taking failed companies into public control without a second thought. A striking number of free-market economists, worshipers at the feet of Milton Friedman and his Chicago colleagues, have lined up to don sackcloth and ashes and swear allegiance to the memory of John Maynard Keynes.

This is all very gratifying. But it hardly constitutes an intellectual revolution. Quite the contrary: as the response of the Obama administration suggests, the reversion to Keynesian economics is but a tactical retreat. Much the same may be said of New Labour, as committed as ever to the private sector in general and the London financial markets in particular. To be sure, one effect of the crisis has been to dampen the ardor of continental Europeans for the “Anglo-American model”; but the chief beneficiaries have been those same center-right parties once so keen to emulate Washington.

No Re-thinking the State

In short, the practical need for strong states and interventionist governments is beyond dispute. But no one is “re-thinking” the state. There remains a marked reluctance to defend the public sector on grounds of collective interest or principle. It is striking that in a series of European elections following the financial meltdown, social democratic parties consistently did badly; notwithstanding the collapse of the market, they proved conspicuously unable to rise to the occasion.

If it is to be taken seriously again, the left must find its voice. There is much to be angry about: growing inequalities of wealth and opportunity; injustices of class and caste; economic exploitation at home and abroad; corruption and money and privilege occluding the arteries of democracy. But it will no longer suffice to identify the shortcomings of “the system” and then retreat, Pilate-like, indifferent to consequences. The irresponsible rhetorical grandstanding of decades past did not serve the left well.

We have entered an age of insecurity—economic insecurity, physical insecurity, political insecurity. The fact that we are largely unaware of this is small comfort: few in 1914 predicted the utter collapse of their world and the economic and political catastrophes that followed. Insecurity breeds fear. And fear—fear of change, fear of decline, fear of strangers and an unfamiliar world—is corroding the trust and interdependence on which civil societies rest.

All change is disruptive. We have seen that the specter of terrorism is enough to cast stable democracies into turmoil. Climate change will have even more dramatic consequences. Men and women will be thrown back upon the resources of the state. They will look to their political leaders and representatives to protect them: open societies will once again be urged to close in upon themselves, sacrificing freedom for “security.” The choice will no longer be between the state and the market, but between two sorts of state. It is thus incumbent upon us to reconceive the role of government. If we do not, others will.

The Way We Live Now

All around us, even in a recession, we see a level of individual wealth unequaled since the early years of the twentieth century. Conspicuous consumption of redundant consumer goods—houses, jewelry, cars, clothing, tech toys—has greatly expanded over the past generation. In the US, the UK, and a handful of other countries, financial transactions have largely displaced the production of goods or services as the source of private fortunes, distorting the value we place upon different kinds of economic activity. The wealthy, like the poor, have always been with us. But relative to everyone else, they are today wealthier and more conspicuous than at any time in living memory. Private privilege is easy to understand and describe. It is rather harder to convey the depths of public squalor into which we have fallen.

Private Affluence, Public Squalor

No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable. —Adam Smith

Poverty is an abstraction, even for the poor. But the symptoms of collective impoverishment are all about us. Broken highways, bankrupt cities, collapsing bridges, failed schools, the unemployed, the underpaid, and the uninsured: all suggest a collective failure of will. These shortcomings are so endemic that we no longer know how to talk about what is wrong, much less set about repairing it. And yet something is seriously amiss. Even as the US budgets tens of billions of dollars on a futile military campaign in Afghanistan, we fret nervously at the implications of any increase in public spending on social services or infrastructure.

To understand the depths to which we have fallen, we must first appreciate the scale of the changes that have overtaken us. From the late nineteenth century until the 1970s, the advanced societies of the West were all becoming less unequal. Thanks to progressive taxation, government subsidies for the poor, the provision of social services, and guarantees against acute misfortune, modern democracies were shedding extremes of wealth and poverty.

To be sure, great differences remained. The essentially egalitarian countries of Scandinavia and the considerably more diverse societies of southern Europe remained distinctive; and the English-speaking lands of the Atlantic world and the British Empire continued to reflect long-standing class distinctions. But each in its own way was affected by the growing intolerance of immoderate inequality, initiating public provision to compensate for private inadequacy.

Over the past thirty years we have thrown all this away. To be sure, “we” varies with country. The greatest extremes of private privilege and public indifference have resurfaced in the US and the UK: epicenters of enthusiasm for deregulated market capitalism. Although countries as far apart as New Zealand and Denmark, France and Brazil have expressed periodic interest in deregulation, none has matched Britain or the United States in their unwavering thirty-year commitment to the unraveling of decades of social legislation and economic oversight.

In 2005, 21.2 percent of US national income accrued to just 1 percent of earners. Contrast 1968, when the CEO of General Motors took home, in pay and benefits, about sixty-six times the amount paid to a typical GM worker. Today the CEO of Wal-Mart earns nine hundred times the wages of his average employee. Indeed, the wealth of the Wal-Mart founder’s family in 2005 was estimated at about the same ($90 billion) as that of the bottom 40 percent of the US population: 120 million people.

The UK too is now more unequal—in incomes, wealth, health, education, and life chances—than at any time since the 1920s. There are more poor children in the UK than in any other country of the European Union. Since 1973, inequality in take-home pay increased more in the UK than anywhere except the US. Most of the new jobs created in Britain in the years 1977–2007 were at either the very high or the very low end of the pay scale.

The consequences are clear. There has been a collapse in intergenerational mobility: in contrast to their parents and grandparents, children today in the UK as in the US have very little expectation of improving upon the condition into which they were born. The poor stay poor. (See Figures 1 and 2.) Economic disadvantage for the overwhelming majority translates into ill health, missed educational opportunity, and—increasingly—the familiar symptoms of depression: alcoholism, obesity, gambling, and minor criminality. The unemployed or underemployed lose such skills as they have acquired and become chronically superfluous to the economy. Anxiety and stress, not to mention illness and early death, frequently follow.

Income disparity exacerbates the problems. Thus the incidence of mental illness correlates closely to income in the US and the UK, whereas the two indices are quite unrelated in all continental European countries. Even trust, the faith we have in our fellow citizens, corresponds negatively with differences in income: between 1983 and 2001, mistrustfulness increased markedly in the US, the UK, and Ireland—three countries in which the dogma of unregulated individual self-interest was most assiduously applied to public policy. In no other country was a comparable increase in mutual mistrust to be found.

Even within individual countries, inequality plays a crucial role in shaping peoples’ lives. In the United States, for example, your chances of living a long and healthy life closely track your income: residents of wealthy districts can expect to live longer and better. Young women in poorer states of the US are more likely to become pregnant in their teenage years—and their babies are less likely to survive—than their peers in wealthier states. In the same way, a child from a disfavored district has a higher chance of dropping out of high school than if his parents have a steady mid-range income and live in a prosperous part of the country. As for the children of the poor who remain in school: they will do worse, achieve lower scores, and obtain less fulfilling and lower-paid employment.

Inequality is corrosive

Inequality, then, is not just unattractive in itself; it clearly corresponds to pathological social problems that we cannot hope to address unless we attend to their underlying cause. There is a reason why infant mortality, life expectancy, criminality, the prison population, mental illness, unemployment, obesity, malnutrition, teenage pregnancy, illegal drug use, economic insecurity, personal indebtedness, and anxiety are so much more marked in the US and the UK than they are in continental Europe. (See Figures 3, 4, and 5.)

The wider the spread between the wealthy few and the impoverished many, the worse the social problems: a statement that appears to be true for rich and poor countries alike. What matters is not how affluent a country is but how unequal it is. Thus Sweden and Finland, two of the world’s wealthiest countries by per capita income or GDP, have a very narrow gap separating their richest from their poorest citizens—and they consistently lead the world in indices of measurable well-being. Conversely, the United States, despite its huge aggregate wealth, always comes low on such measures. We spend vast sums on health care, but life expectancy in the US remains below Bosnia and just above Albania. (See Figure 6.)

Inequality is corrosive. It rots societies from within. The impact of material differences takes a while to show up: but in due course competition for status and goods increases; people feel a growing sense of superiority (or inferiority) based on their possessions; prejudice toward those on the lower rungs of the social ladder hardens; crime spikes and the pathologies of social disadvantage become ever more marked. The legacy of unregulated wealth creation is bitter indeed.¹

As recently as the 1970s, the idea that the point of life was to get rich and that governments existed to facilitate this would have been ridiculed: not only by capitalism’s traditional critics but also by many of its staunchest defenders. Relative indifference to wealth for its own sake was widespread in the postwar decades. In a survey of English schoolboys taken in 1949, it was discovered that the more intelligent the boy the more likely he was to choose an interesting career at a reasonable wage over a job that would merely pay well.² Today’s schoolchildren and college students can imagine little else but the search for a lucrative job.

How should we begin to make amends for raising a generation obsessed with the pursuit of material wealth and indifferent to so much else? Perhaps we might start by reminding ourselves and our children that it wasn’t always thus. Thinking “economistically,” as we have done now for thirty years, is not intrinsic to humans. There was a time when we ordered our lives differently.

—This essay is drawn from the opening chapter of Tony Judt’s newly published book, Ill Fares the Land (Penguin).

1. The best recent statement of this argument comes in Richard Wilkinson and Kate Pickett, The Spirit Level: Why Greater Equality Makes Societies Stronger (Bloomsbury Press, 2010). I am indebted to them for much of the material in this excerpt.↩

2. See T.H. Marshall and Tom Bottomore, Citizenship and Social Class (London: Pluto, 1992), p. 48.↩

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