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Home Opinion Beyond mutualism and towards “The Big Economy”

Beyond mutualism and towards “The Big Economy”

Adam Lent - 24 January 2011


Mutualism may be a useful alternative model for public services and private companies but the left must go wider and deeper than that particular model.  Social democrats need to embrace the Big Society idea and extend it into the economic realm.

In his essay for this series, William Davies makes the observation that while the Government is very keen to roll out the mutual model in public services, they seem uninterested in extending that model into the private sector.  Labour’s response, he argues, should be to embrace mutualism in public services but argue also for the idea to be promoted across the whole economy.

Davies‘s point is important but if the left is to genuinely respond to the right’s intellectual resurgence, we must think beyond the organisational models implied by mutualism.

To explain why, it is important to recognise that the Government’s focus on mutualism arises not because they think John Lewis is a great company nor because, as some critics imply , mutualisation is one step on a path towards full privatisation.

For the Government, mutualism in the public sector is clearly part of their much wider Big Society agenda.  There has, of course, been a great deal of fun had at the apparent vagueness of the concept.  There is also hostility towards the idea with many fearing that it is simply a cover for the cuts programme.  Both of these perspectives are misplaced.  The Big Society concept is simple rather than vague and meaningful rather than cynical. 

The simple idea at the core of The Big Society is that certain functions or aspects of functions we have got used to being carried out by the state on behalf of a passive citizenry should now be conducted by that citizenry themselves.

Far from being a shallow cover for cuts, it is an idea that has strong historical roots in Conservative thinking and was updated in the early 1990s by leading members of the Party such as David Willetts. Indeed, Willetts was worried not just by an over-weaning state but also by the way Thatcherite individualism was apparently sweeping away pro-social activity and the civil society institutions and norms that enabled such activity.

The Big Society idea is important and will probably grow in resonance for a number of reasons. 

Firstly, it does chime with a strong strain in British culture that distrusts the state, and hierarchy more generally, and favours individual and collective autonomy and initiative. The liberal notion that if an individual or group wants to get on and do something then they should have the right to do so is strong in the British mindset.  A politician underestimates the influence of John Stuart Mill at their peril. 

There are of course strong contradictory strands in British culture that exist simultaneously such as the widely held view that the state is simply a service that one can make demands upon in return for payment of taxes. But it is just this mentality that the Big Society idea sets itself against and which few if any social democrats would endorse.

Secondly, it is certainly the case that public spending will shrink considerably over coming years.  The notion that this trajectory can be entirely defeated is wrong.  Even if the Coalition Government were to fall and were replaced by Labour, the new Government would be making close to the same level of cuts over a timescale that was only two years longer at the most.  Of course, the cuts may fall in different places and taxation may take a slightly higher burden but there would still be a significant scaling back of public services. 

Our response to this shrinkage can take three forms.  Either we simply accept poorer and smaller public services. Or we protest and demand that the state continues to do what it always does.  Or we opt for the less apathetic or unrealistic option which is to explore ways in which citizens and services can work together to accommodate the decline in funding.

Thirdly, and most importantly, the ethos of the Big Society picks up on important developments in the wider economy. The spread of the interactive web is rapidly breaking down some of the traditional hierarchies that exist in our economy and are placing once passive consumers at the heart of business practice. 

For example, companies are increasingly relying upon consumer generated innovations to refine and create new products and markets.  Indeed, the very distinction between producer and consumer is blurring in many areas.  The app market and the on-line game Second Life have allowed consumers to transform themselves into producers and generate incomes.  While the early stage technology of stereolithography holds out the promise for consumers to actually become manufacturers of commodities.

As a result, the web has the radical potential to widen the range and number of individuals participating in entrepreneurial activity as they find they have access to the resources for design, marketing and distribution that were previously reserved for an elite group.  In short, like the Big Society vision for the public sector, the private sector also seems to be moving towards an ethos where individuals and groups of individuals take on roles once reserved for the corporate hierarchy.

These trends and values are much wider and more radical than the mutual model alone.  This is not to denigrate this model which, as William Davies shows, has a great deal to offer but alone it does not capture those economic developments which are about a spontaneity in and democratisation of entrepreneurial and corporate activity that stretches beyond internal concerns about governance or organisation.  As a result, the Big Society ideal is a lot closer to the emerging zeitgeist and to new economic trends than mutualism.

As such, I would suggest the left goes further and wider than an enthusiasm for mutualism and instead adopts the Conservative emphasis on the Big Society in the public sector but urges the notion to be extended into the whole economy – a Big Economy maybe.  So just as the Big Society seeks to challenge the established hierarchies of public services by empowering users, so the Big Economy would seek to break down the established hierarchies of corporate Britain by empowering a new breed of online entrepreneur and consumer.

What might such an alignment of social democrats with those transforming our economy mean in practice? 

At the very least, it must mean seeking routes to greater equality and social mobility through policies that promote the creation of the most modern and competitive economy based upon these new business practices.  That requires something of a shift away from the social democratic default position of always looking to tax and benefit models and spending on public services as the only route to a fairer society. 

It means accepting that the state’s role must increasingly be about ensuring that investment flows to the most innovative parts of the economy, making sure we have the right skills to exploit those innovations and pushing British business to compete in the most vibrant and toughest markets. It means championing and supporting those companies, innovators and entrepreneurs with the knowledge and will to use the interactive web to create and reach new markets. 

But this cannot be simply a retread of New Labour’s economic policies.  Indeed New Labour’s greatest failing economically was that while it talked a good game about investment, skills and productivity, it was not nearly forceful enough in taking on the business inertia and complacency that has long hindered the UK economy. Instead we need to combine an unashamedly pro-active state-led industrial policy with a language and tone that reflects the radical spirit of openness, creativity and new frontier entrepreneurialism that characterises the web. 

Mutualism undoubtedly has a part to play in this but it is a supporting rather than a leading role.

Adam Lent is head of the Economic and Social Affairs Department (ESAD) at the TUC

Policy Network will hold an interactive breakfast seminar entitled “Mutualism and social democratic policy in an age of austerity” on Tuesday 15th of February. Read contributions to this essay series from Anthony Painter, William Davies and Michael Stephenson more ≥

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This is a contribution to Policy Network's work on Globalisation and Governance.

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