Tag Archives: Speenhamland system

Why economists don’t do happiness

Just last week my daughter told me that she was pregnant and it made me realise that there is a gaping hole at the centre of economics.  Economists state that anything that people value is to be considered as wealth. Yet there is an inconsistency according to this criteria  are missing from the lists of what economists classify as wealth. All those pleasures that mean so much, yet which cannot be ‘monetarised’ are ignored. Even if these many uncounted pleasures add to the well being of an individual. Going back to my daughters pregnancy all an economist can tell me is the cost of bringing a child into the world and then the cost of their upbringing, possibly to be offset by the later productivity as an adult. Only the negatives count, pleasure and happiness are missing from the economists index of wealth.

It is not that economists are unaware of the importance of happiness as part of the make up of an individuals well being, its just that they have no method of quantifying it, they cannot count units of happiness, so they just ignore it.

The government has shown some awareness of this problem and they have produced a happiness index. They conduct social surveys to measure the happiness quotient. However there is always a great deal of cynicism about the project and its claim to have identified the happiest town are generally taken with a pinch of salt. Although the governments attempt to quantify happiness and to measure the overall level of happiness can be justified, as it does need to know the state of the nations well being. Yet it is of limited value, a recent international survey claimed that Norway was the happiest of countries. A survey dismissed by one Norwegian who said how can the introverted and anxious Norwegians be happier that the extroverted Greeks.

Although not a professional economist, George Osborne (former chancellor of the exchequer) he does belong in the category of ‘miserablilist’ economists, he made one of the most infamous statements about how human frivolity impacted badly on the economy. When a national holiday was given to celebrate the marriage of Prince William and Catherine Middleton, he bemoaned the lost productivity due to the people having an extra day’s holiday. He as a typical Gradgrind economist, could even give a spurious figure in billions for the estimated cost of lost output. Economists don’t do happiness or pleasure as it does contribute to a measurable increase in the nations wealth.  If it can’t measured it does not count. Economists have contributed a ‘miserablist’ mentality to the national consciousness.

Although I know of no studies of weddings by economists, they are one of those pleasurable occasions that consume large quantities of wealth and that appear to make little meaningful contribution to the nation’s wealth. Therefore they meet with their disapproval. Earlier this year my daughter got married and we spent a substantial sum of money on the occasion.  Economists would describe this as a  potlatch* like ceremony, a ceremonial practice in which the families give away substantial amounts of their wealth. This mood of disapproval infects the media, there are constant censorious articles about the nation’s excessive spending  on weddings. While I don’t intend to defend the spending of the rich, as when one rich young woman spent £12 million on her wedding, what I do want to defend is the spending of the average family on a wedding.

When I looked up the practice of potlatch on Wikipedia,  it reminded me that the practice was intended to strengthen social bonds within the tribal group. Exactly the same is true of contemporary weddings, they add glue to the social cohesion of society. My family is as so many in contemporary Britain an extended family. Social and economic change has dispersed the family across the country. Only at weddings and funerals do the family come together. Weddings being the more effective glue as they are a happy occasion and people are more willing to come together for such occasions. What such family get togethers do is to counter fissiparous tendencies of the free market. A largely unregulated free market such as that which is destructive of all social bonds. This destructiveness also has a cost but one that is never counted.

If I can give an example of this. Teaching was once a family friendly occupation, parental leave was generous compared to other occupations and the maternity leave was assured. However now the free market has been introduced to the education system, maternity leave is no longer celebrated. Losing an experienced teacher to either maternity or paternity leave is seen as taking a valuable asset out of the classroom. The management in schools are now uniformly hostile in their attitude to new parents. Now there is the obligatory out of school hours working that negatively impacts on childcare. Teachers are expected to put in several out of hours work both in school and out of it. When family life is put under such stress it makes breakdown of the family more likely. When 1  in 3 of new marriages end in divorce, the harsh economic and social system in the UK must be a large factor contributing to this.

Durkheim identified this sense of social isolation, which he called anomie, as significant factor that contributed to the individual committing the act of  suicide. Some doubt has been thrown on his research; but there is evidence that the loss of community is a factor in the development of mental and physical ill health in individuals. There is even some research that suggests that those who live alone are more likely to develop dementia. The cost of family and community break up is never costed. Michael Polanyi stated that the free market is a threat to social order. He wrote that the state should intervene to mitigate the worst effects of the free market. He believed that Britain only avoided revolution in the late eighteenth century, because all those thousands of hand loom weavers made unemployed by the factory system could get money from the parish with which to support themselves and their families. In France of the same period it was the unemployed and hungry poor who provided the muscle to overthrow the royalist system of government. They were the sans culottes who cheered the execution of the king.

While the free market in Britain has not created the misery equivalent to that, which the economic upheaval in the eighteenth century caused, it has wrecked damage on the social fabric. Why I as an economist celebrate the ‘excessive’ spending on weddings, is that it is the push back by families and individuals against the destructiveness of the free market system. Governments have  been complicit in this laying waste, removing employment protection laws and enabling the most unfriendly of family employment practices to become widespread. The government is now being forced to recognise the high cost of the free market unfriendly policies of business. Only recently it introduced a policy guaranteeing thirty hours of free child care at a nursery.  An inadequate and under funded child care programme, but least it’s a belated recognition of the problem. However it still remains hostile to those organisations and groups that resist the worst abuses of the free market.

In such a society when the government does little to prevent the divisive forces of the free market wreaking havoc on the social system, it is essential that there is some countervailing force that resists this most destructive of forces. The family is one such unit and the other is the local community. People need some security that comes from the feeling of belonging, something which a market of freely competing individuals does not offer. Although even the government is careless of the health of the family, doing little to offset the damage done to this social institution by the free market. Unlike the free marketeers of business and government, people see the family unit as being essential to their well being and will constant remake the family unit in whatever mutation. The family survives as an extended family, as family members are able to exploit new technology such as the smart phone to strengthen family links.

Economists fail to recognise that the free market can only prosper in an ordered society. A society of all against all is one that is going to fail. In a society whose raison d’etre is competitiveness and insecurity, it is left to the family to provide that sense of security and personal well being that is so essential of personal well being. This is why I value the wedding, as it celebrates the most essential of social units the family. For this economist long may families go on spending large sums on weddings as is a celebration of social togetherness, and as such it is the one remaining bulwark against the destructive individualism of the free market. Economists’ only  have the tools to celebrate production, they have no means of celebrating human happiness or togetherness. Simply put economists don’t do happiness and given their influence on politicians and policies their input into the political process can be very damaging.

*Potlatch a practice of giving away the families wealth, which could involve the destruction of such wealth. It was a custom practised by the Indians of Northwest USA and Canada. It was a practice designed to strengthen social bonds and to maintain social equality. No one individual was able to accumulate wealth and become the rich and powerful individual who would dominate tribal society.

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Xenophobic and racist behaviours as understood by an economist

Neo-Liberalism or the practice of free market economics is claimed to be responsible for the decline in living standards, but it is not usually blamed for the decline in public behaviours. In the UK ever since the vote to leave the EU there has been an increase in racism and xenophobic behaviours. (A policy decision desired by NeoLiberal and Libertarian politicians.) What I want to suggest is that the adoption by Western European governments of Neoliberalism and in particular by Britain, has been one of the main contributory factors in the increase in racism and xenophobic behaviours.

One of the great economists but who is rarely read today gives an insight into the processes by which the practice of Neo-Liberalism gives rise to anti social behaviours. This economist is Micheal Polanyi and any reader of his book ‘The Great Transformation’ on reading the first chapter would think that he is describing today’s society, whereas in fact he is describing that of the 1930s. The great insight that he reveals in this book is that the unregulated free market is destructive of social order. He demonstrates that this was a fact known to rulers in the past who insisted on regulating the market to minimise its most destructive effects. Although he does not quote this particular example, the biblical story of Joseph shows that the Pharaohs of Ancient Egypt were all to well aware of the destructive effects of an unregulated market. Joseph interprets Pharaoh’s dream to as a warning that there will be seven years of plenty followed by seven years of famine. Then Joseph and the Pharaoh store grain during the good seven years to distribute to the people in the years of need. The Pharaoh’s understood the importance of controlling the market, they knew that food shortages and their exploitation by the merchants who took the exploit the situation to raise prices for the scarce  supplies of food could lead to food riots and possible threats to the rule. A careful reading of folk tales shows that good rulers regularly opened the warehouses of the greedy merchants to the hungry people.

Evidence seems to suggest that the great Greek dynasties of the era of the Trojan wars and Agamenon, were overthrown by internal revolt. One possible cause is the shortage of food caused by adverse climatic changes, a problem worsened a self indulgent aristocratic elite failing alleviate the hunger of the poor and preferring to spend the wealth of their society on conspicuous consumption by creating ever grander palaces.

When reading Polanyi’s book I noted uncanny resemblances between the England of today and that of the 18th century. He writes about the plight of the workers in the cottage based textile industry, as they lost work and income to the large cotton manufacturers who employed the latest technology in weaving and spinning. These people were reduced to a life of misery, having to rely upon handouts from the parish  to feed their families. Their contemporary counterparts are those workers in the so called ‘gig economy’. The development of the mobile phone has made it possible employers no longer to have workers on site or in situ, as its possible to call them in for work when they are needed. No longer does business have to keep a large staff team on site to deal with those busy periods, instead they can be called in when needed.

These workers are also disadvantaged by the lack of employment protection legislation, as ever since the Neo-Liberal revolution of the 1980s, successive governments whether of the centre right or left have seen as it as their task to remove as many as possible of the labour protection measures. These measures it was believed hampered the efficient operation of the labour market. What this legislation did was to leave the worker increasing defenceless against the actions of the exploitative employer. The gig economy is made possible by two things, the mobile phone and the lack of legislation to protect the rights of the worker.

Not surprisingly this was paralleled in the 18th century when legislation removed workers access to common land. Prior to the 18th century workers in the countryside had access to the common land on which they could keep cattle and raise crops. This meant that in time of hardship they could rely upon this as a source of income and food for their family. These people were often the workers in the cottage based textile industry, who when trade was bad could rely on the produce from the common land to keep the family fed. A series of enclosure acts deprived rural residents of their rights to common land. When the collapse of the home based textile industry happened these people were deprived of two sources of income and reduced to abject misery. (These hungry and desperate people were the workforce of the new textile mills willing to endure the most dreadful of working conditions as the alternative was going without.).

When society falls to deliver people look to alternatives. In the 18th century  it was to France where the  revolution had otherthrown the old exploitative landlord class and promised a fairer society. In England many revolutionary societies were formed and the aristocratic government was in constant fear of revolution. They were only able to suppress the revolutionary instincts of the poor through repression and through a system of regional handouts (the Speenhamland system) which prevented workers being reduced to that state of despair that would make them resort to dangerous measures. The Speenlandham system was not unlike our current tax credits system.

The depressed poor not only turned to thoughts of revolution, but also to xenophobia. There is the story of the monkey that was cast ashore from a shipwreck in Yorkshire. This unfortunate monkey was then hung as a French spy. Whatever the truth of this story xenophobia thrives when people are in need and society appears to be failing them. They look for scapegoats to blame for their misery, then it was the French, now its immigrants. When resources such as housing are scarce, its easy to see it as being caused by the foreigner who has taken the house that by rights should have gone to a native born citizen. Politicians have used this xenophobia as a means of winning popular support. They have constantly used the EU as a convenient scapegoat to blame for the nations economic and social ills, ills which were often of there making and so it was no surprise that when people were given a choice they would opt to leave the EU.

Now there is a situation in which a government refuses to acknowledge its culpability for the increasingly dire economic circumstances, and instead relies on scapegoating the other (the foreigner) to distract from its failures of governance. It has boxed itself into a corner and now the only policy measure that it can offer to alleviate the misery of the people is the limiting of  immigration.They promise that no longer will the European immigrant take the council house or job that should have gone to the native born Englishman or woman. What they fail to realise or the brightest and most cynical politicians fail acknowledge, is that their anti immigrant policies will make the situation much worse for the so called ‘just managing class’. Even when the negative effects of abandoning the EU become apparent the politicians will be unable to acknowledge there policies are failing. What instead they will do is to to adopt more and more extremist language to disguise their policy failings. Economic decline will be blamed on those opponents of Brexit who have talked down the economy. Already one Conservative party councillor has suggested that the people and politicians that oppose Brexit should be charged with treason. The only hope for a xenophobic government is to turn up the volume of abuse directed at their opponents in the expectation of silencing them. This of course is the policy pursued by the current government, when any reasoned criticism of Brexit is answered with abuse. The opponents are the ‘Bremoaners’ or whatever catchy phrase of abuse that they can conjure up.

When the government’s sole claim to legitimacy is that it embodies the xenophobic instincts of the people, it language will be that which both implicitly and explicitly gives sanction to racist and xenophobic behaviours. The government will not act effectively to discourage such behaviours or to  condemn them without fear of alienating its most xenophobic supporters. Next year when the negotiations start in earnest and the impact of the uncertainty accompanying those negotiations will cause increasing unemployment, increasing inflation and falling house prices, what can be expected is an increase in the abuse directed at those who dare to suggest that these are a consequence of Brexit. Incidences of racism will increase as the government’s abusive language towards its opponents will seem to give a green light to their extreme behaviours. A government that suggests the actions of its opponents is bordering on the treason will be seen to sanction violent racist actions, as they can be described helping the government cleanse the nation of that element that is responsible for the ills that beset society.