Wednesday, November 11, 2009
Last Wednesday evening I attended a lecture by Will Hutton at the LSE titled 'Them and Us: How Capitalism without Fairness is Capitalism without a Future' [podcast]. Though some did not like it, I appreciated the talk, but I got the sense that it was, as Hutton said at the outset, the first time he was discussing in public the topics he intends to put into his next book and he was therefore not as structured nor as well-articulated as I expect him to be once he has the book done and dusted.
Hutton covered several broad areas of interest ranging from a theory of justice based on fairness and equality of opportunity (relating to an open access society as he articulates it), improved democracy, a better functioning market, increased government investment in innovation and technology, and improved regulation of financial markets. That was a lot to cover in one lecture, and I think he lost a few people because of being a bit all over the place. Nevertheless, I have rarely come across a lecturer who so closely mirrors my own position on things.
Second, to reform contemporary politics and capitalism we need to embrace this human inclination to interpret others' behavior relative to ourselves and to our intuitions about fairness. Thus, partisans on the left and right need to re-conceive their thinking on phenomena such as CEO pay - what value do they really provide? are their paychecks accurate representations of their productivity or grotesque arms-race style rewards? - of single mothers on benefits - at what point are they responsible? at what point is it bad luck? - and progress from here to redress the function of the political system in the UK (and, I hope, abroad). This reminded me of some of the prescriptions in Eric Beinhocker's The Origin of Wealth in which Beinhocker argued for a role of complexity economics, social preferences and advances in theoretical biology that seem to better approximate how people think and act rather than the polarized partisan positions that people take on issues independent of the evidence.
Third, Hutton goes on to argue that, at their best and most competitive, markets are the optimal way to elicit the value of contributions that people make to society. But the competitiveness of markets has been undermined by political shenanigans, rent-seeking, monopoly power, and the connections of political interests to corporate interests rather than the interests of the citizenry - our democratic votes are in no way as powerful as the money of the capitalist elite. Consequently, though, value has been corrupted, the notion of just reward undermined, and our sense of rightness and fairness has been contravened by the actions of commercial oligarchs acting in their own interests to the detriment of the population at large. *Applause* I couldn't agree more. The problem relates to how we conduct policies in modern democracies, to lobbying and to political clientelism that pervades both the developed and developing worlds. What can we do about it? I favour grass roots collective action. To some extent Obama's presidential campaign showed the power of such tactics and I wish that more people would adopt such action for other important causes, reforming democracy itself for example. On this, Hutton advocates diminishing the power of the executive in the UK, delegating more power to local authorities, and increased participation by citizens.
Hutton made several additional points, but I thought that these three general areas were the most interesting and relevant. I believe, particularly, in a system that better approximates equality of opportunity and does allows people to move beyond the context in which their parents were born - a system of zero intergenerational transfer of inequality of opportunity. Unlikely, but at the moment it is something towards which I am inclined. I am not entirely sure how to get there, but the ideas that Hutton conceived seemed, to me, at least a contemporary utterance in a conversation that needs to continue.