Will the left focus on what money can't buy, or on what money shouldn't buy?

Alex Hern speaks to Michael Sandel about morality in politics and the markets.

Once acquired, stereotypes can be hard to overturn, and it's hard to think of a more enduring stereotype of the British political divide than a hard-headed Conservative making "difficult decisions" which the left decry as immoral. Those of us on the left, we are told over and over, must fight the stereotype by pushing for policy which is efficient on its own terms, and not just "moral". So the argument against forced unpaid work cannot just ride on the obvious truth that that is an unpalatable policy for 21st (or 18th) century Britain; it must also address whether such work succeeds in getting people jobs.

But, argues Michael Sandel, Bass Professor of Government at Harvard University and author of What Money Can't Buy: the Moral Limits of Markets, the can pendulum swing too far the other way. "I think that left-wing politics is diminished and impoverished when it tries to limit itself to efficiency arguments alone," he tells me when we sequester ourselves inside the New Statesman's offices on a sunny bank holiday Monday. "The result is a managerial, technocratic kind of public discourse that ultimately fails to inspire."

Sandel knows about inspiring people. What Money Can't Buy has made a splash in the British political scene since its publication: After the Guardian said it should be "the bedside companion of every Miliband aide", the Labour leader himself pronounced it "a powerful argument for change", and invited the philosopher to speak at the party conference last autumn.

The strength of its message comes from linking arguments about what money can't buy – the ones the left grudgingly feels it ought to make – with arguments about what money shouldn't buy. One of the book's case-studies is of some Israeli nurseries which introduced cash penalties for late pick-ups; counter-intuitively, the number of tardy parents actually increased as a result. But even if it hadn't, it would still have turned late pick-ups from something parents felt guilty about to something they could treat as a service they bought.

"So there are these two separate, overlapping arguments," Sandel explains. "One is that the the cash incentives may backfire as a practical matter; the other is, even if they don't backfire in terms of producing less of the behaviour being sought, they may crowd out attitudes and norms, non-market values, worth caring about."

Sandel blames this crowding out on the tendency in social sciences, all across the spectrum, to seize on things that can be weighed and measured, to the exclusion of other areas on import. "When economics was invented by Adam Smith, he conceived it, rightly I think, as a branch of moral and political philosophy. In the 20th Century economics and the social sciences tried to establish themselves as autonomous disciplines, as value-neutral sciences, and I think much has been lost as a result."

"One of the ways I've tried to challenge economistic ways of thinking about social life is to show how, even within efficiency terms, ignoring norms ignores something important."

But doesn't bringing morality into the debate risk being seen as a capitulation? After all, we've spent so long fighting political battles on the basis of narrow claims of efficiency that to abandon them now might be seen as an admission of defeat.

"I disagree," Sandel says when I put it to him. "I think one of the reasons that there is such wide-spread frustration with the existing terms of public discourse, and with the alternatives on offer from the major parties, in democracies around the world, is that there's too much focus on managerial and technocratic concerns, and too little vision."

The left has seized on that message, but there's another nut for Sandel to crack before he can claim victory. "Some strands of Conservative political thought want to bring ethical questions to bear on politics. And so I was hoping to connect with that strand as well." Has he? "I think it remains to be seen."

A woman gives blood in Germany. Research has found that paying for blood can lower the amount offered. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

Photo: Getty Images
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There are risks as well as opportunities ahead for George Osborne

The Chancellor is in a tight spot, but expect his political wiles to be on full display, says Spencer Thompson.

The most significant fiscal event of this parliament will take place in late November, when the Chancellor presents the spending review setting out his plans for funding government departments over the next four years. This week, across Whitehall and up and down the country, ministers, lobbyists, advocacy groups and town halls are busily finalising their pitches ahead of Friday’s deadline for submissions to the review

It is difficult to overstate the challenge faced by the Chancellor. Under his current spending forecast and planned protections for the NHS, schools, defence and international aid spending, other areas of government will need to be cut by 16.4 per cent in real terms between 2015/16 and 2019/20. Focusing on services spending outside of protected areas, the cumulative cut will reach 26.5 per cent. Despite this, the Chancellor nonetheless has significant room for manoeuvre.

Firstly, under plans unveiled at the budget, the government intends to expand capital investment significantly in both 2018-19 and 2019-20. Over the last parliament capital spending was cut by around a quarter, but between now and 2019-20 it will grow by almost 20 per cent. How this growth in spending should be distributed across departments and between investment projects should be at the heart of the spending review.

In a paper published on Monday, we highlighted three urgent priorities for any additional capital spending: re-balancing transport investment away from London and the greater South East towards the North of England, a £2bn per year boost in public spending on housebuilding, and £1bn of extra investment per year in energy efficiency improvements for fuel-poor households.

Secondly, despite the tough fiscal environment, the Chancellor has the scope to fund a range of areas of policy in dire need of extra resources. These include social care, where rising costs at a time of falling resources are set to generate a severe funding squeeze for local government, 16-19 education, where many 6th-form and FE colleges are at risk of great financial difficulty, and funding a guaranteed paid job for young people in long-term unemployment. Our paper suggests a range of options for how to put these and other areas of policy on a sustainable funding footing.

There is a political angle to this as well. The Conservatives are keen to be seen as a party representing all working people, as shown by the "blue-collar Conservatism" agenda. In addition, the spending review offers the Conservative party the opportunity to return to ‘Compassionate Conservatism’ as a going concern.  If they are truly serious about being seen in this light, this should be reflected in a social investment agenda pursued through the spending review that promotes employment and secures a future for public services outside the NHS and schools.

This will come at a cost, however. In our paper, we show how the Chancellor could fund our package of proposed policies without increasing the pain on other areas of government, while remaining consistent with the government’s fiscal rules that require him to reach a surplus on overall government borrowing by 2019-20. We do not agree that the Government needs to reach a surplus in that year. But given this target wont be scrapped ahead of the spending review, we suggest that he should target a slightly lower surplus in 2019/20 of £7bn, with the deficit the year before being £2bn higher. In addition, we propose several revenue-raising measures in line with recent government tax policy that together would unlock an additional £5bn of resource for government departments.

Make no mistake, this will be a tough settlement for government departments and for public services. But the Chancellor does have a range of options open as he plans the upcoming spending review. Expect his reputation as a highly political Chancellor to be on full display.

Spencer Thompson is economic analyst at IPPR