Happiness and production

What is progress? Could our societies grow richer but everyone get more miserable? Is output the best measure of a nation's success? Such questions bring OurKingdom and openEconomy together to launch the Happiness Debate, which opens with an essay by Will Davies on the relationship between happiness and production.
William Davies
20 January 2011

This essay opens OurKingdom and openEconomy's Happiness Debate. It will be followed by Gerry Hassan on the rise of psychology in an age shaped by individualism.


When David Cameron announced in November that Britain’s Office of National Statistics was to start collecting data on the nation’s happiness levels, reactions were mixed. A cheap policy fad, cried some critics. None of the government’s business, argued libertarians. You can’t measure ‘real’ happiness, claimed romantics. Some feared that any new statistic automatically invites new policies to improve outcomes, and that happiness indicators would usher positive psychology into Whitehall, with Cognitive Behavioural Therapy and Prozac in its wake.

But it is possible that something rather more politically interesting is going to emerge. For the first time since the collapse of socialism, the importance of production to society and individual dignity is about to receive an objective economic rationale. For beyond the confines of the doctor’s surgery and the family, work  - its quality, quantity, whether we have it at all - is the single biggest influence over measured happiness levels. This potentially enables a shift in our dominant economic discourse, which any canny politician should be looking to exploit. It’s worth standing back and considering the historical context in which this new national performance indicator (and the burgeoning associated evidence) will arrive. A particular epoch of both values and valuation techniques may be drawing to a close.

For thirty years, politicians and policy-makers in Britain have tried to say as little about economic production as possible. ‘Industrial policy’ became a pejorative term. The European Commission has been even more dogmatic in its industrial agnosticism, primarily because its role has been to lean on member states - mentioning no Gallic names – to trust market forces. Governments that became entangled with production were guilty of trying to ‘pick winners’.

Maintaining this conceit has required various euphemisms. The language of ‘national competitiveness’ allowed political leaders to express economic patriotism, without quite tipping into protectionism. The ‘knowledge economy’ represented a nod and a wink to large software and content industries, who depend on governments to defend copyright. And the various political paeans to the financial, ahem, ‘innovators’ in the City of London were scarcely agnostic in their view of which industries should be located where.

But if neo-liberalism offered any explicit and legitimate role for the state, it was as a regulator that defended consumers, not producers. As far back as the 1930s, the intellectual founders of this movement latched on to competition policy as the safeguard of economic freedom. And as neo-classical economists (led by the Chicago School) came to rethink the role of economic regulators, they arrived inevitably at the conclusion that states can only legitimately intervene in markets so as to increase the welfare of consumers demonstrably.

This paradigm was severely rocked by the financial crisis. Competition law was one of the first casualties of the banking meltdown, as the Lloyds-HBOS merger was allowed to over-ride competition concerns. The European Commission had to introduce emergency State Aid guidelines to allow states to rescue their banks, rather absurdly giving the horse legal permission to bolt from the stable.

After 2008, the Brownites, with Peter Mandelson’s endorsement, believed that they were inching towards a more nuanced view of the state’s role in nurturing production, with the notion of ‘industrial activism’. The Coalition’s high-risk fiscal strategy is so dependent on private sector growth, that David Cameron has been touring Britain, celebrating particular growth centres and industries, and pledging to turn East London into a new Silicon Valley.

While this has been going on, the new forces of transparency have been doing even greater damage to the neo-liberal ideal of objective, economics-led regulation. Business Secretary Vince Cable’s secretly-recorded remarks about ‘waging war’ on Rupert Murdoch using competition policy, flew in the face of every mantra about ‘open and competitive markets’ of the last thirty years. Even more farcically, Wikileaks revealed that Prince Andrew, employed as a trade representative, was pouring scorn on anti-bribery investigators who might damage British industrial interests. Despite the best efforts of Chicago economists to neuter political influence over markets, economic realpolitik is clearly alive and well. The pretence that governments only act on behalf of consumers must now be considered finished.

A number of cultural trends have been pulling in the opposite direction for some years. If television executives and book publishers know anything at all, cookery, home improvement and DIY are now national obsessions. While the hipster culture of East London 20-somethings can scarcely be considered much of a weathervane, it is not irrelevant that craft culture, ‘supper clubs’ (in which amateur cooks turn their homes into restaurants) and homemade clothes have become fashionable. The human desire to produce in a meaningful way cannot, it seems, be entirely excluded from the public sphere, even if it can be excluded from political discourse. What Richard Sennett terms ‘craftmanship’ belongs to the human condition, not to any particular policy regime. 

In the early 1990s, it was an interest in the experience of unemployment that spawned the field of economics now known as happiness economics. Work by Andrew Oswald and Andrew Clark showed that the mental scars of unemployment are out of all proportion to the loss of income involved. Unlike gains or losses in income, unemployment is something that individuals do not psychologically adapt to.

It is in the workplace that happiness economics (and the notion of ‘wellbeing’) is proving to have the greatest purchase. Aside from life-changing experiences such as divorce, grief and illness, our experiences at work – and the security of employment – are amongst the most significant determinants of our happiness. Stress caused by bad and unresponsive management, long hours, commuting and a diffuse sense of organisational pointlessness, is now recognised to be a major factor in mental health and happiness levels. The government’s own commissioned research on this topic, led by Dame Carole Black, compiles depressing evidence on the wellbeing of Britain’s working age population, while the Chartered Institute of Personnel and Development confirms that levels of stress and depression correlate closely to working conditions, security and influence over one’s time and tasks.

This is scarcely the basis for a new era of industrial policy or 1970s corporatism. This is a very different way of encountering production. But what is currently an issue of concern to the HR profession will surely attain a far higher political profile, once the question of national ‘happiness’ receives official statistical answers. Aside from the recommendations of positive psychology, economic production – the workplace – is the most illuminating place to look, for anyone seeking to understand our psychological malaises. When evidence on unhappiness begins pouring in, the primary choice will be whether to treat this as a health epidemic or a failure of economic organisation and democracy. The latter has far greater political potential.

Labour leader Ed Milliband would do well to give this some careful thought. New Labour was born partly out of a belief that Britain had become a post-industrial culture, in which people no longer define themselves by what they make between Monday and Friday, but what they purchase on a Saturday and Sunday. Yet as the more thoughtful commentators on happiness, such as Oliver James and Avner Offer, have argued, our right to hedonistic maximisation, constitutionally enshrined in the neo-classical economics that underpins regulation, is actually a source of mania and illness.

Peter Kellner recently wrote of how consumption-based identities are now a permanent feature of Britain’s electoral and demographic make-up. But this rests on the questionable presumption that we either have a class-based, producerist politics, or an identity-based, consumerist one. Is it not conceivable that voters might find some identity in what they do for half of their waking hours? 

While neo-liberalism’s logic appeared unimpeachable, politicians found it difficult to speak about work and employment (other than as macroeconomic phenomena), without appearing to meddle or seem ‘anti-business’. How much did the Labour government – the Labour government – ever speak about the difference between a good employer and a bad employer? Yet a firm that was impeding or deceiving consumers was fair game.

Like a military general, Miliband needs to avoid fighting the next battle on the same terms as the last one. Happiness economics has already cast doubt on our privileging of consumption in the dominant political-economic discourse, but this lacked any ‘official’ statistical endorsement. The government’s happiness indicators will change this, and in doing so will create an opportunity for political leaders to articulate a vision of how we should best produce, both within firms and as a society. Even at a minimum, this represents an opportunity to experiment with a new set of cultural cues: it would be interesting to see how the public reacted to a leader speaking to their frustrations and fears as workers, not only as parents, consumers or home-owners. Would it sound like a throwback to the 1970s? Or perhaps unexpectedly fresh?

Where happiness economics ultimately leads as a policy program is impossible to say. When GDP was first measured during the 1940s, nobody could have anticipated the complex macro-economic analyses, models and policies that would be dedicated to understanding and influencing this single measure. Therapeutic policy interventions could become more extensive, indeed the therapeutic value of work is increasingly recognised. But alternative interpretations of and responses to the data will be possible. As imperfect as they are, happiness indicators offer us some shared basis on which to identify our priorities. And Britain is soon to be reminded that it has misidentified them for far too long.

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