Growth won't deliver redistribution of wealth. We need to challenge the old hierarchies
All over Europe, social democratic parties are on the ropes, shedding votes to populists on the left and right. Even the mightiest of them, Germany's SPD, governs as a junior partner in a coalition, notching up barely more than a quarter of the vote. The death notices of social democracy are being written again, just as they were in 1980s when the industrial working class started to head east, taking with it the political ballast of the Labour movement.
But social democracy is a pragmatic tradition that has proved itself capable of renewal throughout its history. Faced with a choice between defence of the status quo and political change to equip it for new times, it has eventually chosen the path of reform. Today it is called upon to do the same again.
The financial crisis has forced social democrats to rethink their economic assumptions, even while austerity in the eurozone has crippled their electoral prospects. Less thought has been given to the challenge of building a stronger society in a fiscally constrained era. Gone are the days when economic growth could generate enough resources to redistribute income without making painful choices. Even with a different economic agenda, there is little prospect of any government elected in 2015 spending its way to greater equality.
A business-as-usual path would tax a little more and cut a little less, leaving the architecture of the state untouched and the current framework of services and social security in place. In a new IPPR report, The Condition of Britain, we set out a different approach. We argue for a more democratic account of equality, relying less on Whitehall spreadsheets and more on people's everyday struggles to achieve a better society. Equality doesn't consist of the distribution of a single good, such as wealth, but in overcoming unjust hierarchies of power, esteem and standing. Social equality and how we relate to each other as citizens matters as much as material equality and closing the gap between rich and poor.
Our starting point must be to challenge concentrations of power, whether in the market economy or the state, and to distribute resources and accountability more widely across society. In England, that means giving more power to cities and counties, and passing down from Whitehall big areas of policymaking such as housing, welfare-to-work, childcare and youth offending. The "big society" may have limped out of fashion, but the critique of centralisation in the state must not. Only where power is devolved can we better integrate services, make real savings, not just cuts, and engage individuals and civil society in shaping what the state provides. The alternative is not a benevolent Fabian government but a Serco state.
Priority in spending decisions must be given to services that support full employment and investment in people's productive capacities: universal childcare, to stop women being forced to give up work and their career ambitions when they have children, a new education and training youth allowance to prevent the drift into adult benefits, and local-authority-controlled welfare-to-work for those who need to be integrated into the labour market.
Support for the welfare state is still strong in key areas such as the basic state pension. But for working-age claimants, it has steadily drained away. Unlike the NHS, social security for the unemployed has become a liability for social democrats. Turning it into a source of strategic strength will require rebuilding the reciprocity that underpins it with a higher contributory jobseeker's allowance rate, better help for keeping up with mortgage payments, and democratic governance for the national insurance system. Fiscal constraints should lead us away from means-tested residualisation of welfare, not further towards it.
A key insight is that social reforms embodied in shared institutions – whether children's centres or the NHS – are more durable than those that rely on transactions. Institutions are places where relationships between people are formed, loyalties accrue, professional practices are nurtured, and traditions take shape. By bringing together people from different backgrounds, they can help to overcome social divisions and strengthen civic bonds. Recognising this, we need to shift spending from income transfers to institutions, and prioritise services and capital investments over increases in benefit expenditure.
A strong society ultimately rests on good economic policy. No amount of social activism can overcome mass unemployment. But a distinct agenda for social renewal is needed.
But social democracy is a pragmatic tradition that has proved itself capable of renewal throughout its history. Faced with a choice between defence of the status quo and political change to equip it for new times, it has eventually chosen the path of reform. Today it is called upon to do the same again.
The financial crisis has forced social democrats to rethink their economic assumptions, even while austerity in the eurozone has crippled their electoral prospects. Less thought has been given to the challenge of building a stronger society in a fiscally constrained era. Gone are the days when economic growth could generate enough resources to redistribute income without making painful choices. Even with a different economic agenda, there is little prospect of any government elected in 2015 spending its way to greater equality.
A business-as-usual path would tax a little more and cut a little less, leaving the architecture of the state untouched and the current framework of services and social security in place. In a new IPPR report, The Condition of Britain, we set out a different approach. We argue for a more democratic account of equality, relying less on Whitehall spreadsheets and more on people's everyday struggles to achieve a better society. Equality doesn't consist of the distribution of a single good, such as wealth, but in overcoming unjust hierarchies of power, esteem and standing. Social equality and how we relate to each other as citizens matters as much as material equality and closing the gap between rich and poor.
Our starting point must be to challenge concentrations of power, whether in the market economy or the state, and to distribute resources and accountability more widely across society. In England, that means giving more power to cities and counties, and passing down from Whitehall big areas of policymaking such as housing, welfare-to-work, childcare and youth offending. The "big society" may have limped out of fashion, but the critique of centralisation in the state must not. Only where power is devolved can we better integrate services, make real savings, not just cuts, and engage individuals and civil society in shaping what the state provides. The alternative is not a benevolent Fabian government but a Serco state.
Priority in spending decisions must be given to services that support full employment and investment in people's productive capacities: universal childcare, to stop women being forced to give up work and their career ambitions when they have children, a new education and training youth allowance to prevent the drift into adult benefits, and local-authority-controlled welfare-to-work for those who need to be integrated into the labour market.
Support for the welfare state is still strong in key areas such as the basic state pension. But for working-age claimants, it has steadily drained away. Unlike the NHS, social security for the unemployed has become a liability for social democrats. Turning it into a source of strategic strength will require rebuilding the reciprocity that underpins it with a higher contributory jobseeker's allowance rate, better help for keeping up with mortgage payments, and democratic governance for the national insurance system. Fiscal constraints should lead us away from means-tested residualisation of welfare, not further towards it.
A key insight is that social reforms embodied in shared institutions – whether children's centres or the NHS – are more durable than those that rely on transactions. Institutions are places where relationships between people are formed, loyalties accrue, professional practices are nurtured, and traditions take shape. By bringing together people from different backgrounds, they can help to overcome social divisions and strengthen civic bonds. Recognising this, we need to shift spending from income transfers to institutions, and prioritise services and capital investments over increases in benefit expenditure.
A strong society ultimately rests on good economic policy. No amount of social activism can overcome mass unemployment. But a distinct agenda for social renewal is needed.
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