Book review: Them and Us by Will Hutton

Will Hutton’s latest book on British political economy is uncannily of its time. In arguing that ‘fairness’ should be the measure of all political and economic relations, writes William Davies, he has performed a crucial service in erecting some principles by which the ‘fairness’ of coalition policies might be judged.
William Davies
3 November 2010

Will Hutton’s latest book on British political economy is uncannily of its time.  In arguing that ‘fairness’ should be the measure of all political and economic relations, writes William Davies, he has performed a crucial service in erecting some principles by which the ‘fairness’ of coalition policies might be judged.
Will Hutton, Them and Us: Changing Britain – Why We Need a Fair Society, Littlebrown, £20


Every orthodox economics education begins with a lie. This is that, in the vernacular of neo-classical economics, we can and must split questions of ‘equity’ from those of ‘efficiency’. To put this another way, economics begins by ignoring moral philosophy, arguing that it is still possible to analyse, model and criticise social and economic relations without resorting to the language of values or justice. 

There are various responses to the Lie. The brighter and cockier members of the classroom gobble it up, internalise its implications and run off to make vast amounts of money in financial services. Let’s, for the sake of argument, call them ‘Them’. The more thoughtful and impassioned ones taste it, spit it out in disgust, and go on to write books like Them and Us. Let’s call them ‘Us’. 

Will Hutton’s new book is angry, unashamedly moralistic and demanding in its policy implications. Yet again he has produced a book that is uncannily of its time. It is also his first book to address directly the UK’s domestic political economy since his 1995 landmark The State We’re In, thereby creating a neat symmetry of works either side of the New Labour regime.

Like Polly Toynbee and David Walker’s The Verdict: Did Labour Change Britain?, part of the function of Them and Us is to offer a final audit on the Blair/Brown years. One depressing aspect of Hutton’s agenda, or rather of Britain’s failure to grasp it, is how many of his prescriptions, especially on constitutional reform, media ownership and corporate governance, seem no less urgent today than they did 15 years ago. 

But the justificatory framework is bolder and more philosophically complex than the ‘stake-holding’ ethos he advocated in The State We’re In. Against the core fundament of neo-classical economics (dating back to the 1870s), Hutton intends to make fairness the measure of all political and economic relations. Not only that, but he suggests that this concept can do real work in distinguishing correct from incorrect policy measures in the years ahead, in areas such as welfare reform, immigration and education. 

Fairness, for Hutton, is tied up with a concept of just desert and proportionality. He investigates this philosophically, with a journey through the writings of Locke, Smith, Rousseau, Marx and Rawls, seeking the pieces he needs to build a twenty-first century defence of just – and critique of unjust - desert. He also investigates it scientifically, by examining the burgeoning body of psychological evidence from behavioural economics regarding the role of procedural and normative criteria in individual decision-making. 

The philosophy provides him with sturdier ground than the psychology. His repeated claims that a sense of fairness is psychologically ‘hard-wired’ into us runs into a number of obstacles. For one, it would be equally possible to point to a darker body of psychological evidence that suggests that obedience to power or instinctive preference for ethnic homogeneity are ‘hard-wired’ into us. It is surely the function of politics to elevate us above our natural instincts, or (as Aristotle argued) to stretch the capacity of natural inclinations through education and argument. In any case, Hutton himself cites examples (such as popular opposition to inheritance tax and enthusiasm for talent shows) of the British public behaving in ways entirely opposed to the sunnier leftist evidence that he extracts from psychology labs. 

The philosophical arguments are far more intriguing. The task Hutton sets himself is to disentangle what is deserved from what is undeserved in economic life. And while he eventually distances himself from Rawls, it is difficult to ignore the Rawlsian character of this enterprise. What is most interesting about Them and Us, and what distinguishes it from an abstract liberal constitution, is the extent to which it remains a work of economics embedded in twenty-first century capitalism. 

Reward must be proportionate to effort, skill and contribution to the collective, and separated from sheer luck. This is Hutton’s underlying principle. And in many respects, this represents a return to the pre-1870 classical political economy of Smith, Ricardo and Marx. The Lie of mainstream economics, that it is entirely separate from moral reasoning, only dates back to the ‘marginalist revolution’, which transformed economics from the sociological study of production and wealth creation to the mathematical study of consumption and exchange. The dormant moral resonance of words such as ‘value’, ‘debt’ and ‘earnings’ indicates how this revolution might be reversed. When Hutton demands that rewards become proportionate to the input of the rewarded, he is all but reasserting the ‘labour theory of value’ that classical political economy was founded on. This is an exciting and plausible ambition. 

It does, however, grate with certain contemporary norms. As he points out, it might trouble the left to discover that welfare and immigration policy should not offer people unconditional support, regardless of contribution. There must be some applied principle of desert. And he certainly hopes that it will trouble ‘Them’ in the financial sector, to hear that they have not truly earned their vast bonuses after all. What he does not quite consider is the implicit asceticism of his argument, the extent to which it revives capitalism’s famous Protestant ethic. In a society addicted to sport, gambling and X Factor, it is almost radical to reassert hard graft as the primary mode of evaluation. Flying in the face of so many other meritocrats (especially those who frame everything in the endless, dreary metaphors of sport), Hutton even goes as far as dismissing innate talent as a ‘fair’ basis for reward.

His ire is directed at hedge funds, CEOs who preach the creed of ‘shareholder value’ and private schools that do most to block fairness in the UK. His enthusiasm is fuelled by everything that is creative and open within capitalism: patient business-builders such as Steve Jobs, inventors such as James Dyson, and the democratic-capitalist spirit of the European Enlightenment. If there is a thinker that Hutton has embraced the most since The State We’re In, it is Joseph Schumpeter, the great theorist of innovation and entrepreneurship. Schumpeter provides him with both his individualist ethic (the truly inspired businessman deserves to make a lot of money) and his collectivist one (ideas, and their combination, are products of whole societies). Indeed, it may only be the rugged individualism of Schumpeter which prevents his argument ending up where the original labour theory of value did, namely with Karl Marx. 

As with any good polemicist, he can be highly selective with his evidence, especially when arguing for capitalism’s necessary grounding in fairness. One passage refers to the growth of the ‘Atlantic economy’ in the eighteenth century, a term that immediately raises the spectre of slavery in the history of Anglo-American capitalism and its legacy in contemporary American society. Instead, Hutton attributes this growth only to the openness of Enlightenment culture. Elsewhere, he refers to colonialism in a list of positive achievements enabled by the printing press, thereby inadvertently pointing towards Giovanni Arrighi’s thesis that empire (primarily occupation of India) was the main driver of Britain’s early industrial supremacy. Yet still he insists that capitalism thrives most on fairness. 

I also wonder whether it is safe to trust technological innovation to the extent that Hutton does. Dyson vacuum cleaners and iPhones are easy things to love. But scientific advances, especially in the life sciences, are generating ethical dilemmas and discomforts faster than they are relieving them. It is not clear how well fairness stands up in the face of prosthetic enhancements, genomics and the investment and patenting strategies of the pharmaceutical industry. For one thing, these advances problematise core meritocratic distinctions such as that between ‘nature’ and ‘nurture’. Private schools might seem benign in comparison to the technologies of elite selection 50 years from now. 

There are times when the book spirals off in so many directions that I found myself wishing Hutton could write somewhat shorter books (400 pages is his norm), which would distil his forceful moral argument down to its essentials. Them and Us runs the risk of wanting to harness too many intellectual weapons and allies, as if the enemy is so fearsome that every one of 'us' must join ranks. But critical firepower should not be gauged in quantity. 

In among the dozens of intellectual traditions and sources cited in Them and Us, it struck me that there is one philosophical origin that Hutton does not acknowledge, yet which he is curiously close to - 1930s Vienna. He would no doubt be proud to be associated with the work of Schumpeter. And given the book’s running theme around ‘open-access societies’, one imagines that he would be equally happy to carry the flame of Karl Popper, author of The Open Society and Its Enemies

But there is a third Viennese comparison, that would no doubt cause Hutton’s Keynesian stomach to turn: Friedrich Von Hayek. It was Hayek, after all, who wanted to restore the Victorian alliance of capitalism and liberalism. It was Hayek who argued that an aggressive regime of competition policy could achieve this. And it was Hayek who promoted justified inequality in society as the ethical alternative to bland egalitarianism and/or bureaucratic oppression. Replace Hayek’s loathed over-bearing planners with Hutton’s loathed over-bearing bankers, and you have a very similar project: the resuscitation of liberalism via a reformed market economy. 

The common historical thread would be the postwar design of the German ‘social market’ economy, which combined free market principles of competition and tight money supply with co-operative industrial relations. Yet the question still has to be asked – is Will Hutton a neo-liberal, in the original, moralised meaning of the term? 

When he wrote this book, Hutton cannot have known that the word ‘fairness’ would, in the mouths of Britain’s coalition government, attain the same anti-logic of the words ‘I’m like whatever’ in the mouth of a stroppy teenager. It certainly isn’t his fault. If anything, Them and Us performs a crucial service in erecting some principles by which the ‘fairness’ of coalition policies might be judged. Let’s hope David Cameron, George Osborne and Nick Clegg read it. Whether any of the millionaire CEOs, hedge fund managers and the rest of ‘Them’ will read it, who knows? It would be a shame if lines such as ‘bankers are exceptionally greedy with over-inflated opinions of their talents pegged to an exaggerated sense of their importance in the economic scheme of things’ were wasted only on ‘Us’. Most importantly, the book should be read by anyone about to step into an economics classroom for the first time, so that they are never duped into believing the guiding methodological Lie that got us into our current predicament in the first place.

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