I am looking forward to Conference, this time in Manchester (like it was in 2010). I know Manchester Central Hall very well from previous meetings there of the Fabian Society, and again I am hoping to go to all of LabourLeft’s events and some of the events of the Fabian Society predominantly.

I am not sure what to expect of the ‘Fringe’ this time – no doubt it will feature some regular talking-points such as whether we should renationalise the railways or the NHS, whether the left-or-right debate still serves any function in modern politics, and what Ed Miliband really meant in his conference speech. I feel it would be less helpful for Ed Miliband to set out details of policy, which can wait for the outcome of our policy review, but it would be very helpful for him to establish what sort of society he is striving for and why.

I think ‘top of the list’ must be a need to define the relative importance of the markets. Coincidentally in timing, Stephanie Flanders is mid-way through a series on the BBC called ‘Masters of Money’, and so far the analysis has centred around a comparison of those titans John Maynard Keynes and Frederick Hayek. Unfortunately, our view of the markets is as relevant now as it was in the run-up of the Great Depression in the autumn of 1929, and Ed Balls is or was aware of that. There has always been a notion of the ‘free market’ as liberalising people, ‘unchaining workers’, and this idea had been bastardised by Margaret Thatcher. The language of liberalisation is still seen in the supporting documents for Monitor, the new sector-specific regulatory body of the NHS. However, there are inherent problems with this approach, taken by Dr David Bennett from Monitor, from the Tony Blair ‘stable’ from the perspective of an advocate of a free market. A true true market advocate would simply let private entities fail (this in fact has been the criticism of the global response to the financial crisis, describing the Keynesian stimulus of adding more credit to credit as being akin to pouring petrol on the fire); however, part of Monitor’s functions is to bail out failing trusts, in as much European law allows it (it is unlawful for the State to provide state-subsidies in such a way that competition in a private market is distorted.) The other problem of this approach is that  it is an approach which most favours accounting technocrats; rather than looking at value in pricing in a sophisticated behavioural economics fashion, the discussion is heavily based in number-crunching and methods such as activity-based costing.

Prof. Michael Sandel is a political philosopher who has been lecturing on the seminal ‘Justice’ course at Harvard. In the Reith Lectures 2009, Sandel gave his final lecture on “A new politics of the common good”. The governing philosophy for the last three decades both here and the US has been an era of ‘market triumphalism’, but both the UK and US have had difficult in reaching at a new consensus of what government should do. Sandel proposes ‘market mitigating governance’ at the first port of call where governments correct market failures through policy. You can easily apply this, for example, in measures to ‘correct’ excessive profits but poor value for shareholders and directors of privatised utilities companies. In fact, Miliband has latterly proposed a mechanism which could possibly do this, called “predistribution”. Predistribution, if called by any other name, is quite a nice but radical idea. It offers a practical solution for tackling poverty – for example a policy which restricts the amount of profits which a shareholder of a utilities (sic) company is allowed to make (some of this revenue could be ploughed back into returner better value for the customer), or effecting the national minimum living wage (the idea being that people who are being paid a decent living wage are in a position to invest for their futures more easily, and be giving an ability to further their own career.) This is potentially a policy which could be attractive to Unions, as indeed Prof. Jacob Hacker from Yale himself envisaged.

Sandel, however, admits that these rather technocratic approaches fail to ‘capture value’ of what is really going on. For example, the Philip Morris study in the former Czech republic shows that smokers die early, pay lots of taxes, and do not need a pension, and therefore are of great benefit in a purely cost-benefit analysis. This caution could easily be applied to the newly privatised framework of the Health and Social Care Act, where public services have become commodified and monetised, in maximising consumer welfare. Sandel’s main objection is that such approaches do not lead to democratisation of services for the “public good”, and more ambitious goal of civil virtue through redistributive justice may be more welcome. The public appetite for this might be greater than we first suspect, in that the famous UK MP expenses scandal has led to a growing bitterness and resentment of voters towards their ‘political class’, and indeed the public are generally sick of examples of alleged corporate misfeasance in journalism through exposure in the Leveson Inquiry.

A better approach would therefore for people in society to be included and engaged in decisions about their society, with a general belief of solidarity and citizenship. Of course, a dichotomy between markets and society would be a false dichotomy, and this is appreciated by Prof. Michael Porter in his seminal article called ‘Strategy and Society‘ for the Harvard Business Review.  This thesis is more than familiar to Ed Miliband, who first described his thesis of ‘responsible capitalism’, a political version of corporate social responsibility, where all businesses contribute value to the rest of society. And yet this is entirely consistent with Ed Miliband’s concept of the UK economy as not being factional but being unitary. In such a framework, everyone contributes to the economy, not just the ‘wealth creators’ as bankers, but also less well paid people in the public sector doing extremely valuable jobs, such as nursing or teaching, who do need employment rights protection of the Unions.

In Sandel’s framework, we are less ‘consumers’ and more ‘citizens’. And this is a very practical problem. Consider for example excessive pay of some CEOs. It can be easy to criticise whether such salaries are justified, in other words the extent to which they are representative of a contribution to society, whether we should just allow the market to find an equilibrium for what people are willing to pay for, or the extent to which these people have ‘worked to get where they are’.  Politicians find it difficult to talk about inequality or redistribution, but you will never find that people with very incomes bringing up of their own accord topics of the ‘politics of envy’. Redistribution or social justice has become a taboo subject, but it may be necessary to revisit this if excessive pay can be tackled in the tax system. Whilst ‘punishment’ engenders a notion of a personal hate campaign, which is clearly undesirable, it may be ‘good policy’ that intervention against truly excessive salaries not only deters a trend of unreasonable undeserving salaries, but also encourages a marketplace where an appropriate salary can (for want of a better word) “incentivise” employees and workers appropriately.

As for the idea that people with excessive salaries will leave the country, it is worth noting that these people are often employed by multinational companies who can easily find replacements; therefore there will always be a corpus of such people contributing such taxes, even if a proportion of them emigrate (the point is that people who emigrate will be replaced.) Whilst aspiration has traditionally been a New Labour or Thatcherite policy plank, Ed Miliband latterly has cited aspiration as a reasonable goal of policy. I think that this is entirely consistent with aspiration that acknowledges an ‘equality of opportunity’.  Dr Tim Soutphommasane, a lecturer at Monash University, is also a political philosopher whose writings are clearly relevant here. Soutphommasane’s warning is probably more poignant here in the UK with a cabinet stuffed full of millionaires than it is in his home country, but he recently writes, “It is the mark of a good society that careers be open to all talents. Individuals should be able to transcend the position of their birth or upbringing through ability and effort. By the same token, the state shouldn’t reward those who have the fortune of being born into good circumstance.”

By that virtue, the political philosophies of Sandel and Soutphommasane present Miliband with a serious problem. How can Ed Miliband realistically frame a policy for government which consolidates the relative positioning of the markets and the community? I think Ed Miliband’s best bet is to frame the question is to think what sort of society do we want to live in which brings greatest civic virtue and citizenship of all members? As it happens, the consumer clearly has not benefits as recipients of the privatised utility industries, but Ed Miliband has indeed challenging decisions to take about the future; for example one mechanism might be to bring some services under state control. There is much political appetite for repealing the Health and Social Care Act, which indeed nobody voted for as such. The last year or so has seen Conservative polticians and their management consultant friends engaged in a retrospective ‘policy-based evidence’ to justify their marketisation of the NHS, but the NHS could be just the trojan horse that Ed Miliband needs to bring the political pendulum back away from the totally unfettered market. It’s a tough balancing act, as he will be keen not to present the State as too bulky or interventionist, but likewise, if he can pull off a discourse about why ‘looking after each other’, i.e. solidarity, say for example in protecting the health and welfare of disabled citizens in society as well as further ‘individual choices’, Ed Miliband will have pulled off a remarkable political contribution.