“An adequate economic discourse for the Europe of our grandchildren”
Institute of International and European Affairs, 16th October 2014
I am delighted to be here with you all at the Institute of International and European Affairs. May I thank Tom Arnold, Director General, and Brendan Halligan Chairman of the IIEA for organising what will, I hope, be a fruitful debate on ethics, economics and the significance of the interplay between both for the future of Europe.
I would like, most of all, to welcome Robert and Edward Skidelsky to Dublin, and to thank them for agreeing to discuss the implication of some of the ideas outlined in their thought-provoking book –How Much is Enough? Money and the Good Life – from the perspective of the European project.
For those of you here who have not read the book, it might be useful to start by introducing very succinctly its core argument. The starting point for How Much is Enough is a lecture entitled “The economic possibilities for our grandchildren” delivered by John Maynard Keynes in 1928 and published as an essay in 1930. In that text, Keynes argued that by the year 2030, the economy of developed countries would have “lifted mankind to a state of sufficiency” whereby their people would be 5 to 8 times better off and, therefore, would not have to work more than about 15 hours a week.
Keynes was right on the former prediction – growth of real income per capita in industrialised Western countries has been in line with his forecast – but he was proved wrong on the latter. According to Robert and Edward Skidelsky, Keynes’s expectation that future generations would work only enough to live “wisely, agreeably, and well” – that is, to enjoy what the Skidelskys call “the good life” – was based on a confusion between ‘wants’ and ‘needs’. Indeed, they argue, in conditions of capitalism, there is a satiability of basic needs but an insatiability of wants: “capitalism, especially in its modern ‘turbo’ form, has released the expression of insatiability from its previous restraints”, so that the demand for free time has not increased proportionately with income, but well-off people instead tend to work much more than they ‘need’ to
How Much is Enough? offers a substantive account of the concept of ‘the good life’ as a means of fettering such insatiability of wants. In Robert and Edward Skidelsky’s view, the problem has two dimensions. The first is intellectual: we must, they contend, recover a sense of what money is for rather than pursue it as if it were an end in itself. Money is desirable insofar as it allows one to lead ‘the good life’, which, in their account, is made up of seven basic constituents – namely health, security, respect, personality, harmony with nature, friendship, and leisure.
The second dimension is political, relating to the need to organise our collective existence so as to enable people to live the good life. The Skidelskys thus refute that notions of the good are essentially subjective, i.e., predicated ultimately on individual preferences, and they raise the question of the role of the state, seen not as neutral arbiter, but as ethically-engaged party.
The question of the source of ethics has long been matter to debate – is it to be located in the reformable person, in the shared values of interdependent members of societies, or is it possible to avoid a choice between these two, one that seeks a balance between the good person and the ethical citizen. David Thunder’s recent Citizenship and the Pursuit of the Worthy Life is an example of a scholarship that pursues this balance.
One might, and indeed many of us will, take a different view on the account of the good life put forward in the book. We are also likely to have diverging takes on the relative roles of the individual, the market and the state, in delivering the adequate conditions for this good life. These are all matters for political debate, which it is not for me to arbitrate.
Of greater relevance to my introductory remarks this afternoon is the fact that, as a conversation between a political economist and a philosopher – a joint exercise between a father and a son – How Much is Enough? offers a stimulating starting point for any discussion of the great challenges that face contemporary Europe.
Indeed the reading of Keynes proposed by Robert and Edward Skidelsky brings home to us a time when Western political economy was grounded in philosophical and ethical thought, and economic policy conceptualised primarily in relation to the social objectives at which it was aimed – in particular, in Keynes’ case, the objective of full employment.
In preparing my remarks for this afternoon I was struck by the sense of fragmentation that characterises the contemporary discourse on the future of our European Union. Many of the issues addressed by our distinguished visitors this afternoon reveal this problem with language itself. There is in fact a problem with every one of these three words – “Our European Union”. The words ‘Our’ and ‘Union’ have become difficult to grasp when distinctions between the strong and the weak, between debtor and creditor members, between Northern and Mediterannean economies, are so easily tripped off the tongue. Again, the word “European” conjures up questions on whether we are speaking of the Eurozone, the wider Union, the European space in general, with its proximity to so many conflicts, some of which have been exacerbated by the absence of any common position that might have suggested such a dialogue as might have eroded fear.
The European project, we must remember, constituted a promise that sprang from a desire for an alternative to conflicts sourced a hundred years ago in the ambitions and the detritus of imperial pretentions. The European Community was a pragmatic attempt at co-operation rather than any simple aggressive neo-mercantilism, and in its best expression, it was an invitation to the peoples of Europe to construct a tapestry of varying colours, textures and images that would make the Europe of the 21st century a Union of peace, prosperity and solidarity.
Europe has had its visionaries in the years that followed. Jacques Delors, whose portrait occupies a place of honour on the walls of this Institute, was among them. He spoke of a ‘Europe of the Citizens’ and we must reflect on what happened to that vision. Have we lost it? Is the disconnect between the shards of our broken vision revealing a deeper malaise at the centre of our intellectual and moral lives? Is citizenship still attainable in a form that might be shared in a Europe that once valued its rich set of sources in diverse cultures? Are integrated models of economic, social, cultural and political forms slipping beyond our horizons? The ‘Europe of the Citizens’, if it is to be achieved, requires more, I believe, than a revision of thinking by those who are privileged to be given the space for intellectual work. The new thinking has to be informed by the experience of an empowered citizenry who have been given the space, not just for existing within the economy, but for reflecting and deciding on what, for them, is a sufficient, secure, fulfilling and ethical life. If they are to have that opportunity, ensuring the basic household’s capacity to participate in society, with all the implications for housing, health, education and participation in the public space, must be the vital issue.
Social Europe is a project that held together the aspirations of so many potential citizens – but so much has changed. The founders’ hopes were crafted before the pressure for a minimal state held sway; before the endless pressure towards the commodification of existence itself, as Zygmunt Baumann and others would put it; and certainly before the current manifestation of a globalisation defined by financialisation rather than trade between real economies. It was also before a Nobel Prize winner in economics could declare an open hostility to welfare economics and to theories of distribution, as Thomas Lucas, a distinguished macro-economist, stated in 2004:
“Of the tendencies that are harmful to sound economics”, Lucas said, the most seductive and, in my opinion, the most poisonous, is to focus on questions of distribution.”
It is my conviction that the current disjunction between mainstream economic theory and ethical reasoning is one that undermines our intellectual capacity to adequately address the ‘crisis of legitimation’ which has been facing the European Union for several decades now. Responding to this ‘democratic deficit’, as it is sometimes called, is rendered all the more pressing by the centrifugal forces unleashed by the global financial meltdown of 2008 and the vulnerabilities it exposed in the Eurozone.
The consequences of recent events have been succinctly stated by Jürgen Habermas in his reply to the first question of an interview that was published as the final chapter of his Europe. The Faltering Project. Habermas had this to say:
“What worries me most is the scandalous social injustice that the most vulnerable social groups will have to bear the brunt of the socialised costs for the market failure. The mass of those who, in any case, are not among the winners of globalisation now have to pick up the tab for the impacts of predictable dysfunction of the financial system on the real economy! Unlike the shareholders, they will not pay in money values but in the hard currency of their daily existence. Viewed in global terms, this avenging fate is also afflicting the economically weakest countries. That is the political scandal. Yet pointing the finger at scapegoats strikes me as hypocritical. The speculators, too, were acting consistently within the established legal framework, according to the socially recognised logic of profit maximisation. Politics turns itself into a laughing stock when it resorts to moralising instead of relying on the enforceable law of the democratic legislator. Politics, and not capitalism, is responsible for promoting the common good.”
Of course, the reasons for the European democratic deficit are complex, manifold, and run much deeper than the recent crisis. The EU is a highly unconventional political object, characterised by institutional complexity, shared sovereignty and competences, intricate political negotiations and decision-making procedures that involve 28 different polities. This makes the task of articulating a European common good to which a majority of European citizens can subscribe particularly challenging.
More fundamentally, the very notion of a common good is one which Western modernity has rendered problematic: to some extent, the legitimation crisis currently facing the EU has to do with a much broader crisis of politics and democratic representation, which has seen overarching hierarchies of values and master narratives about the good life fading away from contemporary liberal public discourse, in favour of highly individualised conceptions of the good.
This was very well captured by Max Weber when he described the modern condition as resulting in two closely interrelated developments: the process of ‘rationalisation’, of ever greater knowledge specialisation and technical mastery which, in late modernity, peaks in an ‘iron cage’ of bureaucratic routine and ‘mechanised petrification’; and the process of ‘disenchantment’, concluding with the individual’s abandonment to a radical ‘polytheism’ of conflicting values, none of which can claim rational superiority.
Such process of individualisation of value is intensified by the dynamics of contemporary global capitalism, which nurtures social atomisation and market-based utility maximisation. Yet, however bold and demanding the exercise may be, I believe that it is of the utmost importance that we reflect on the possibilities of moral-ethical enquiry in making a contribution both to the public economic discourse and to the deepening of democratic practice in Europe. As Jacques Delors put it:
“Rekindle the ideal, breathe life and soul into it, that is the essential imperative if we intend to give shape to the Europe that we so dearly wish for”.
This should not be seen as a purely voluntarist exercise, aimed at selling a new opium to the masses. Europeans can draw on a rich tradition of pluralist scholarship; they can draw on a model of society based on a particular vision of the balance between the state and the market, between the individual and society, and a conception of international relations predicated on negotiation and the recognition of interdependency rather than forceful intervention. Indeed from the outside, the ‘European model’ is often identified, not just as an ‘economic model’, but as a way of life. And we must be mindful that the current policy of ‘firefighting’ – however essential the securing of the Eurozone’s financial stability may be – does not end up in a social race to the bottom.
The European Union will shortly see a new Commission, a new Parliament, a new President of the European Council and a new High Representative take up their functions. It is to be hoped that this change of governance will be an opportunity, not just to stimulate economic growth, but also to ground more firmly the strategy for growth in an ethical reflection on the social goods which we want this growth to deliver.
One of the questions raised by How Much is Enough? is precisely that: What is growth for? Has growth become an end rather that a means? The book is not part of the post-productivist argument: growth remains central to the Skidelskys’ analysis, but they elevate the debate by encouraging us to define the kind of growth that is best able to deliver the basic goods necessary to the good life – that is, to sustain an economic agenda that is socially useful and ethically justifiable.
This also raises the issue of the need for public policy to make more ample use of those indicators which, perhaps more adequately than GDP, are designed to measure social well-being. My own suggestion, which I outlined at the Small Firms Associations’ Annual Lunch, last week, is that, in seeking new indicators for the welfare of their citizens, member states of the European Union might well assess the vulnerability of their economies to predatory asset stripping by speculative funds who are neither transparent nor democratically accountable.
As we consider the social aims and ethical grounds of European economic policy, I believe that a focus on the future of work must be central to our discussions. It is another great merits of How Much is Enough? to place work – its nature in capitalism; its future possibilities; and its connection with other areas of life – at the heart of the argument.
Indeed the question of ‘good work’ remains one of the defining issues of our times: are workers to be seen as isolated units of labour, or can work be conceived of as a wholesome activity within a social context? Can the life of a worker be reduced to labour cost whose fluctuations are ever more defined by casualisation and precariousness? How do conditions of work under contemporary capitalism impact on the sharing of employment among the wider population, and on demand in the wider economy? What should the respective roles of the state and the market be in regulating working hours? What is the social impact of arrangements that encourage employers to hire fewer people working longer hours? Or is there a risk that ‘work sharing’ might end in people just living on the basic income?
All these questions are complex, and I hope that we will get an opportunity to discuss some of them during our debate later on. And whatever the answers to them may be, I believe that the Skidelkys make an important claim in relocating the issue of work within the wider frame of ‘the good life’. Indeed, can a worker hope to lead a flourishing life, to whom, as the philosopher Simone Weil put it, “no good is proposed as the object of his labour except mere existence?”
At our best in Europe we have seen how a healthy balance between competition and cohesion, an economic policy serving agreed social aims as an instrument of popular will, can achieve prosperity and harmony. Such necessary balance between economic competitiveness and social and territorial cohesion is present in Jacques Delors’s famous triptych: “Competition that stimulates; cooperation that strengthens; and solidarity that unites”.
We should never forget that the single market and cohesion policy were launched almost simultaneously as a policy dyad designed to re-launch European integration in the mid-1980s. The creation of the cohesion policy was presented by Delors as a vital counterpart to the “four freedoms”. This was underpinned by Delors’s philosophical acquaintance with social catholicism and the personalist movement, for whom people are not atomised individuals – abstract and easily transferrable units of labour – but “persons” engaged in active relationships with others, and situated in actual, distinct social and territorial communities.
Today, this “Cohesion pact”, which for several decades has been one of the foundations of the affectio societatis between European citizens, is under threat, both for complex reasons of policy design, and because the current crisis has abruptly called into question the principle of solidarity between the various regions of the EU.
European integration is now on a fragile path, torn between the requirements of fiscal adjustment and increasing social discontent. We must all be concerned by the widening gap, described by Paul Gillespie in a recent paper, between deeper financial, regulatory and economic integration on the one hand, and the social solidarity required to give these policies popular legitimacy on the other.
I personally believe that the current encroachment of expertise and technocracy over democratic debate is a perilous one for the future of European democracy. There is nothing wrong with technical efficiency, rather the contrary. The danger arises from a conception of economic policy and technocratic administration that are governed chiefly by the instrumental criteria of ‘efficiency’ and ‘success’ and are thus immune to moral-normative considerations.
We need, I contend, to locate the role of expertise within an accountable system where its function is to clarify choice, not serve as substitute for the collective deliberation of citizens who are dismissively assumed to be economically illiterate. To achieve this, one possible option might be to endeavour to devise a policy frame that is grounded in pluralist scholarship, rather than drawing too heavily on a narrow version of economics that has severed all of its ties with its ethical and philosophical sources, except for those deriving from the utilitarian tradition.
The portrayal of ethics as “soft”, in contrast to the “hard science” of economics is but poor theoretical work. Indeed the invitation to view the world as rational, calculating utility maximisers has inflicted deep injuries on our moral imaginations, on how we conceive our relations with others, and with our natural environment. And the recent economic and financial upheavals have also thrown a glaring light on the shortcomings of the intellectual tools provided by mainstream economics and its key assumption regarding the sustainability of self-regulating markets.
Responding to this intellectual failure requires more than an adjustment of the modelling techniques and forecasting tools used by most economists, or, at an institutional level, a tightening of banking supervision.
It requires, I suggest, the formulation of a public discourse on such issues as the possibility of having a pluralism of responses that would enable the member states of the European Union to address their citizens’ concerns on unemployment, and growing inequality is both urgent and important.
I believe that there is a unifying force in an appeal towards making a fresh beginning in the crafting of our shared European space. We will inevitably have to discuss, in coming decades, not just integration, in its fullest sense, but also such issues as what we will regard as work itself. I have already quoted Simone Weil, let me quote her words again, in Gravity and Grace (published 1947):
“Man’s greatness is always to recreate his life, to recreate what is given to him … Through work he produces his own natural existence. Through science he recreates the universe by means of symbols. Through art he recreates the alliance between his body and his soul. It is to be noticed that each of these three things is something poor, empty and vain taken by itself and not in relation to the others. Union of the three: a working people’s culture (that will not be just yet) …”
Those words were written 70 years ago; now we must take our responsibilities. We must do our work in our different ways – in intellectual, manual and artistic work; in politics and science. How much is Enough? makes a significant contribution towards the formulation of a renewed economic discourse for Europe, one that does not lose sight of ethical ends. With such a discourse, it is possible, I believe, to overcome Habermas’s melancholic remark that, “today all that remains of Enzensberger’s eulogy to European diversity – Europe, Europe! – is the sighing tone.”
On such grounds, we can start a fresh discussion on the kind of prosperity we wish to bequeath to future generations of Europeans, so that their possibilities may live up to the hopes Keynes had for his ‘grandchildren.’
 Robert and Edward Skidelsky. 2013. How Much is Enough? Money and the Good Life. Penguin Books. (First published by Allen Lane, 2012).
 Ibidem, p.xi.
 Jürgen Habermas. 2009. “Lessons of the Financial Crisis”. In Europe. The Faltering Project. Polity, p.184.
 Ibidem, p. vii