The New Statesman Essay - A wrong turning on the Third Way?

Samuel Brittan queries fashionable attacks on individualism

The distinguishing feature of Tony Blair's new Labour is that it has fully accepted competitive markets, private enterprise and the profit motive as the motor of the country's economy. It has done so in conjunction with a commitment to sound money and fiscal stability, going beyond what most Conservative governments achieved or even aspired to.

The newly elected European social democrat governments have not gone anything like that far. They will probably come partially to terms with the market system, but rather in the way that British Labour governments grudgingly did in the 1960s and 1970s - as a result of the pressure of events rather than from conviction.

Indeed, in his embrace of business leaders Tony Blair has actually gone too far. To regard businessmen as the authorities on economic policy is like asking chauffeurs to design motor cars. Their virtue lies in their ability to operate the vehicles rather than to design them. On the couple of occasions when corporate heads have given helpful advice it has been because of their personal qualities rather than their specific business experience.

Nevertheless, modern Labour leaders are searching for some doctrine that could distinguish them from the "neo-liberal" doctrines associated with conservative leaders such as Margaret Thatcher and Ronald Reagan. In fact, the neo-liberalism of Thatcherite governments was often more a matter of rhetoric than of practice. They frequently failed to follow market principles because they feared middle-class reactions: subsidies to homebuyers, agricultural policy, feeble anti-monopoly measures and refusal to countenance an independent Bank of England, for example.

I do not think that this government has found a Third Way either between capitalism and socialism or even between Anglo- American and Rhineland capitalism. Nor does it need to do so. We already have the concepts we need. A book of my own is called Capitalism with a Human Face (HarperCollins, 1996). A broader and well-established concept is Karl Popper's "open society". But if presentation and publicity dictate some excessive product differentiation in economic policy, this is something with which we could easily live.

It is far too early to draw up an overall balance sheet for the Blair government. On the welcome side, we have constitutional reform and the fumbling for an ethical foreign policy, both taken from the heritage of the Gladstonian Liberal Party. There is also a greater toleration of alternative lifestyles. There are many other aspects of Labour policy with which I am less happy, such as obsessive centralised curriculum control, or the American-style attempts to impose "healthy" living, so that smokers are almost criminalised.

My views on these matters are influenced by the political philosophy with which I have most natural affinity - classical liberalism. Unfortunately, classical liberalism has fragmented. Its political ideas - covering, for instance, a toleration of personal diversity, open government or the rights of suspects against the police - have been taken over by the left, while concern for economic freedom has been taken over by right-wing economic intellectuals whom their opponents delight in calling "neo-liberals". The result is impoverishing to both sides.

This split may help to explain why so many contemporary free-market advocates have a strange emphasis. They agree upon personal freedom, but they fail to see that we lack a liberal theory of just property rights. They take the prevailing distribution of wealth and income as sacrosanct and regard the alleviation of poverty mainly as a matter of voluntary insurance or private benevolence. One is met with a resounding silence if one talks about redistribution (not equality), and even more so if one talks about a national minimum income (not wage).

Yet some left-wing responses are equally peculiar. There is a widespread view that something called "globalisation" makes it impossible to redistribute income. Not so. Labour is still much less mobile than capital and more could be raised for redistribution if enough voters favoured the idea. The degree of international labour mobility, outside the top managerial and professional grades, is still quite low. What is true, however, is that the bulk of the resources required to level up the income of the poor, the old or the sick can only come from the mass of citizens and taxpayers. Globalisation has come to be an excuse, either to cover up a much-needed rethinking of egalitarian ideals or - less commendably - as a pretext for not undertaking redistributive measures which might alienate floating middle-income voters.

Winston Churchill was correct to argue that governments should aim to provide both a ladder and a safety net: a ladder of opportunity for all and a minimum below which no one can fall. How high the safety net should be is inherently a subjective matter on which people of goodwill may disagree.

I disagree with the radical right when its leaders scoff at market failures which have been known to economists for generations - such things as pollution, urban blight, destruction of urban and rural amenities and so on. But I also think that government failure can be as bad or worse than market failure. Many of the attempts to correct the market are made by politicians and officials on the basis of inadequate knowledge. Moreover, it is well known that the interests of producer groups, because they are heavily concentrated, weigh far more heavily than the dispersed interests of citizens and consumers. The classic example is the European Common Agricultural Policy.

Overall, there has probably been too much rather than too little regulation. But the appropriate moral to draw is not to scoff at all policy correctives, but to try to balance the failures of the market with the failures of government in our imperfect world.

Why, then, do I not just say that my form of liberalism is one variant of the Third Way, and leave it at that? Unfortunately, there is something worse than vagueness about much of the Third Way talk. I dislike the awful communitarian rhetoric with which new Labour launched the Third Way concept before the last election. Having accepted much of the economic counter-revolution of the past decade and a half, the main issue on which Blairites dug in their heels was opposition to supposed Thatcherite individualism.

This is precisely the wrong place to make a stand. It is based on a false chain of reasoning which identifies individualism with self-interest, and self-interest with selfishness. The last is a howler, as can be testified by anyone who has laboured for a charity, for a good cause or any of the arts or religion or merely to improve the lot of his or her own family and intimates.

An example of what I have in mind is the new Clause Four of the Labour constitution. In place of the old common ownership of the means of production, we have the assertion that "by the strength of our common endeavour we achieve more than we achieve alone". By itself this is just a banality which applies not merely to human beings but to most other mammals as well. But it risks giving sustenance to the dreadful Hegelian view that collective entities have a superior value over and above the individuals who compose them, and which reached its apotheosis in the state worship of the Nazi and Communist regimes.

Modern communitarians, who have been most articulate in the USA, would admittedly run a mile from such conclusions. They are more clearly defined by what they are against than by what they favour. Nevertheless, their highest common factor is the belief that many of the ills of our time are due to individualistic liberalism. Typically, communitarians wax lyrical about neighbourhood, churches or school authorities, and have thereby also gained the sympathy of some American "neo-conservatives" who want to distinguish their creed from classical liberalism.

The softer version of US communitarianism can be found in the writings of commentators such as Amitai Etzioni, who is pictured with Vice-President Al Gore on the dust cover of his book The Spirit of Community. Its harder version can be found in the Republican religious right, with its support of compulsory religious practices (of which school prayer is but a symbol), belief in savage punishment and paranoid nationalist fears that foreigners are taking away American jobs.

The two kinds of anti-individualists come together in their advocacy of compulsory national service to knock some patriotism and civic virtue into the American young. Another tell-tale symptom was propaganda for so-called Asian values and admiration for the Singaporean leader Lee Kuan Yew, who justifies his brutal punishments by saying, "To us in Asia, an individual is an ant".

In response, I would quote a leading thinker from between the wars: "If we say that goodness consists of serving the community, then everybody must serve. If I want to serve other people, I can't do it unless they are willing to be served. If everybody is to be served, then there is nobody to accept the service. We can't be unselfish if nobody is prepared to be selfish. If a friend and I are out walking and I have one cigarette left and he has none, then I can't act unselfishly and give it to him unless he is prepared to be selfish enough to take it from me."

Then again: "Serving society or humanity always means in practice serving institutions - serving the state or your business or your trade union."

And: "We have got to stop the false idea that it is a good idea to serve society and its institutions. The goodness of a man's life is its own quality, its integrity, not in any service it may do to other people or to the state or the church or the future."

You may think these quotations come from someone like Friedrich Hayek, the free-market philosopher who influenced Margaret Thatcher. In fact, they come from the left-wing Scottish religious philosopher John Macmurray, whom Tony Blair has acknowledged as a big influence on him when he was formulating his outlook in his student years at Oxford in the early 1970s.

To communitarians, selfishness is the most hideous of sins, and sometimes the only one. An individualist-liberal does not celebrate selfishness; but he believes that there can be worse sins, such as the sacrifice of individual human beings for the sake of some abstract doctrine or religious or other belief. Those who have homosexuals shot in the name of the Islamic revolution cannot be accused of antisocial individualism or base self-interest.

The kind of individualism for which I would fight in the last ditch is ethical individualism. In its minimal form, it is the belief that actions should be judged by their effects on individual human beings. It is individuals who feel, exult, despair and rejoice.

My kind of individualism would not, for example, romanticise the small group. It can be very oppressive and stultifying. I would put in an unfashionable plea for a certain amount of centralisation. If you are suffocated or repressed by self-important local nobodies who cover up for each other, your main hope is inspection by, or appeal to, higher authority.

It is not an accident that the worst abuses in children's homes have occurred under local authority jurisdictions, where all too often officials and councillors cover up for each other. The government has very rightly announced that it intends to bring in some central control and regulation as a check.

I would also query the pious belief that professional values are invariably superior to commercial ones. If left to themselves, professional bodies often try to keep out new people and ideas and enforce restrictive practices. It was no free-market fanatic, but Paul Samuelson, the Democrat Nobel prize-winning economist, who long ago said that he preferred "good clean money" to "bad dirty power".

The worst thing about groups is their hostility to outsiders. This long predates modern nationalism. Byzantine emperors divided their citizens into arbitrary groups of blues and greens and thus succeeded in generating artificial hostility. From here it is but a short distance to the bitter struggles in places like Bosnia, where people who had previously lived at ease with each other for generations, and indeed intermarried, went in for the barbarities of ethnic cleansing.

An attachment to personal freedom leads to one very specific difference with the Third Way. The prevailing view on both the centre-left and the centre-right is that cash transfers through the social security system are a diversion of resources which ought to be devoted to state services such as medical treatment and state education. A redistributionist who values freedom should take exactly the opposite view: that cash transfers are positively preferable to services in kind. Such services, worthy though they may be, reduce the income that citizens can spend at their discretion; taken to extremes, they would leave us with nothing but pocket money to spend. Cash transfers, however, do not reduce personal choice at all, but simply redistribute the counters with which that choice is exercised.

I am not advocating the rundown of state health or education. It is a question of whether we look for improvement in these services from ever higher direct state spending or whether we look at ideas such as school vouchers which give citizens more opportunity to shop around.

The ideal way to provide a general top-up for those without sufficient resources would be a negative income tax. This would allow people who didn't want to be complete wage slaves to opt out of the economic struggle, provided they were willing to live on modest means. Alas, public opinion is not yet ready to make such transfers to those whom it regards as work-shy. However, Gordon Brown's forthcoming top-up for those in low pay, known as the working person's tax credit, could provide the nucleus of a negative income tax, especially if it is ultimately extended to include voluntary work or activity in the arts or sports.

To recapitulate: I have dwelt on the American communitarians because they have taken the anti-individualist rhetoric furthest. Some people may say that this is unfair and that the Third Way doctrine is still being developed in the UK.

But recent pronouncements do not allay my fears. The four values stated at the outset of Tony Blair's pamphlet The Third Way, published by the Fabian Society in September, were: equal worth; opportunity for all; responsibility; and community. Fine, so long as community arises from voluntary individual choice. But it is disconcerting that the extension of personal freedom does not figure as a headline objective either here or in other new Labour statements.

It is too early to say whether the semi-authoritarian strain in new Labour will remain a sideshow, left to the speech-writers, or whether it will ultimately corrupt the substance of policy. Looked at with a cold eye, the job of government is to provide those services which are best provided collectively through the tax system, rather than by private enterprise or by voluntary co-operation. The fashionable spin-doctoring view of government points to a different function: to provide so-called moral leadership. (Some of us still remember Dick the Vicar from Beyond the Fringe.) Governments should also, in this view, reflect the more optimistic trends "in our society", as Tony Blair does when he talks about Britain being "a young country".

There is undoubtedly a place both for role models and for preachers. But these are not functions of government. There is a lot to be said for Harold Macmillan's remark that, if people are seeking a moral lead, they should look to the archbishops rather than to politicians.

Sir Samuel Brittan's "Essays: moral, political and economic" is published by Edinburgh University Press, £9.95. This article is an abridged version of a lecture given at the University of Kent. The full text is available from the author at the "Financial Times"