In his introduction to the 1997 Labour manifesto, Tony Blair wrote that he had "no time for the politics of envy". This was an important piece of new Labour positioning. What it meant was: "Labour is not a tax-and-spend party. We have no interest in taking money off people simply because they are rich. There is nothing wrong with being successful or wealthy." Blair's subsequent statements about the UK needing more millionaires reinforced the message. No pips were to be squeaking under his administration. And, apart from the odd raid by his chancellor on the pensions of the rich, he has been as good as his word.
Though Gucci can still sell perfume under its name, envy has been falling out of political and philosophical fashion for several decades. Politicians and policy-makers have followed Kant. He thought it was natural for people to compare themselves with others, "generally with those who are socially not too remote". But he added: "the vice that threatens personal relations, and hence society as a whole, becomes manifest only when the envious man proceeds to act".
Yet the green-eyed monster deserves some historical due. Envy has been the midwife of social justice. Without people making comparisons between themselves and those more fortunate, the clamour for greater equality would never have arisen. One man's envy is another's sense of justice - which is why it has always been the political right that accuses the left of the deadly sin.
Bertrand Russell argued three-quarters of a century ago that envy was the "chief motive force leading to justice between different classes, different nations, different sexes". While he believed that, in the long run, envy was to be discouraged, for that moment it was an excellent solvent for the class system: "[The] lower classes do not envy the upper classes so long as the division is thought to be ordained by God . . . The instability of social status in the modern world, and the equalitarian doctrine of democracy and socialism, have greatly extended the range of envy. For the moment this is an evil to be endured in order to arrive at a more just social system."
It is clear from scores of international studies that relative income matters hugely to people's sense of well-being - that social comparisons count. Research by Andrew Oswald and his colleagues at Warwick University, however, shows that the poorest members of the black South African population compare themselves, in terms of income, not to rich whites, but to those in circumstances similar to their own. This poses a challenge to progressive politics, which wishes to translate envy into constructive political action. If the poor township dweller envies only her neighbour's tin roof compared to her own wooden one, what hope for a mass politics of equality? The catalyst for action would be to get her to see - and envy - the tended lawns of the wealthy.
Envy, as broadly based as possible, has therefore been the historical friend of social progress. It may still be so in poor or very unjust societies. But it is less clear that in affluent nations - those that have solved the problems of material abundance - envy remains a force for good. Indeed, envy could now be a force that reduces the happiness of people who otherwise have little to complain about.
We know that in developed nations more economic growth does not, on average, make citizens any happier. As Professor Richard Layard pointed out in his recent Lionel Robbins lectures at the London School of Economics (extracted in the New Statesman, 3 March), this is at least partly because any rise in income is diminished by comparisons to those with still more money. As he explains, "to a large extent we want things and experiences because other people have them". John Kenneth Galbraith, in The Affluent Society, argued similarly that goods were suffering from "declining marginal utility" because "one man's consumption becomes his neighbour's wish". Layard calls this welfare-reducing phenomenon "rivalry"; other economists, such as B M S van Praag, call it "social reference". But envy - recalling Aristotle's definition of it as "pain caused by the good fortune of others" - is just as good a label.
Envy in these circumstances is regressive. If a man who has worked hard to buy a lovely house finds his happiness diminished by envy at the discovery that his new neighbour has not only a lovely house but also a lovely pied-a-terre, his envy cannot be described as a social good. Envy that results in a rise in material living standards for the poor is politically distinct from envy that immiserates the comfortably-off. Once societies reach a certain level of affluence, envy ceases to be part of the solution - and becomes instead a central part of the problem. Keynes observed that the "needs" of human beings should be separated into "two classes - those needs which are absolute in the sense that we feel them whatever the situation of our fellow human beings may be, and those which are relative only in that their satisfaction lifts us above, makes us feel superior to, our fellows".
Layard, along with Robert Frank, author of Luxury Fever, argues that the wealth of one person has a direct impact on the well-being of another, because it makes that second person dissatisfied with his lot and is therefore "a form of pollution". To discourage excessive pollution, Layard argues, "the polluter should pay for the disbenefit he causes". A tax on the "polluter" is therefore justified in maximising collective well-being.
It is an elegant and progressive argument. It provides solid utilitarian grounds for taxing the rich. There are, however, a couple of technical problems, as well as one possibly fatal ethical flaw.
First, if people generally compare themselves to those of a similar type in similar circumstances, who should pay the tax? A £25,000 income in east Rotherham would certainly be enough to induce some envious comparison among the neighbours - while a similar income in parts of west London would probably inspire only pity.
Layard suggests that perhaps television has altered the reference group: "Where people once compared themselves with the people round the corner, they can now compare themselves with anyone they like, up to J R in Dallas. It would be astonishing if such comparisons were not unsettling." But I know of no evidence to support this contention and, in any case, the envy would be directed at Bobby Ewing, not the loathsome J R.
Second, it is not income causing the "pollution", it is consumption. If my frugal neighbour is a secret millionaire, it is difficult to argue that his invisible money is making me feel worse about my own finances. Conspicuous consumption is what excites envy. Layard's suggestion, then, that "the polluter should lose 30p out of every 100p that he earns" is the policy equivalent of taxing coal rather than the burning of it.
There is, however, a more fundamental objection to the new utilitarian argument for tax- ing the rich. It may be true that Paul's happi-ness is reduced by his envy of Peter's greater wealth. But it is not at all clear that the correct solution lies in reducing Peter's wealth, rather than in reducing Paul's envy.
Layard, like other scholars in this field, anticipates the counter-argument. "Libertarians often argue that the rivalrous person has only himself to blame, and he should not be protected by public efforts to discourage others from earning money," he said in his LSE lectures. "This is to miss the mark. We may be able to modify human nature. But we cannot annihilate our existing nature."
It is not, however, just rabid-eyed Hayekians who might venture the argument: the Downing Street strategy unit, in its recent paper on life satisfaction, discusses luxury taxes but adds that "an equally plausible case can be made for addressing envy rather than consumption".
Even if envy is hard-wired into us from our status-seeking Stone Age days, this is not a sufficient basis for public policy. The philosopher Julian Baggini points out that there is plenty of evidence for other evolved behaviours, too. "These direct comparisons may be a hangover from primate days, establishing a pecking order, and so on," he says. "But it is dangerous to say that because this is how we are, we should build policies around it. Otherwise, why not recognise the evidence for gender differences around sexual behaviour - evolutionary data suggests men are more philandering, but the laws on adultery and divorce don't reflect that."
Once we concede the case for taxing one group of people to lessen the envy of others, we enter dangerous ethical waters. After all, people are also envious of the beautiful - how else to explain the success of a Kylie Minogue-branded underwear line? Few, however, would argue for the society of L P Hartley's novel Facial Justice, in which the good-looking are made to report to a Ministry of Facial Justice for surgery to make them uglier and so reduce the distressing envy of others.
Baggini argues that one of our greatest post-Enlightenment achievements has been to use our intellects to transcend these baser emotions. "It is not the job of ethical politics to embed and reinforce traits that we might wish to discourage," he says. Russell felt similarly, hoping that a sounder basis for social justice than envy could be found. "It is not to be supposed that out of something as evil as envy good results will flow," he wrote in The Conquest of Happiness.
We do urgently need a new politics of well-being - one which recognises that economic growth is yielding diminishing quality-of-life returns. But the principal problems of affluent societies are not economic ones, and it is not to economics that we should turn for solutions.
If we try to reduce envy itself, we may have a greater impact on inequality than if we try to indulge it. Envy is not just a disease of the poor and petit bourgeois. Tracey Emin once said that "the chip on my shoulder hasn't noticed that I'm successful now". Those who are working the hardest to buy a second BMW are probably the people most driven by envy - Aristotle claimed that "ambitious men are more envious than those who are not".
Greed and envy, then, are two sides of the same coin; one commentator has argued that they should be fused as "grenvy".
Rich people are envious of those richer than themselves; and (unless you are Bill Gates) there is always someone richer. At the same time they want to provoke envy in those beneath them - who would want to buy and wear diamonds if nobody else in the world gave a damn about them? Grenvy, then, is what drives people to accumulate income and wealth. An across-the-board reduction in grenvy would reduce the motivation of the merely well-off to become rich much more surely than a higher tax. Envy is a cause of inequality, as well as a consequence.
Where does this leave us? It is clear that we do make relative income comparisons, and that this is one reason higher national income fails to translate into more happiness. But the solution is not to try and tax ourselves into a happier state. It is to alter our system of values such that envy, greed, competition and status-seeking are reduced. The psychologist Oliver James cites studies showing that cultures with lower levels of envy accord less importance to property and other rights.
Recent decades have seen a rise in individualistic attitudes, alongside falling levels of trust and civility. The goal of a new politics of well-being is to reverse these trends, to create a society built on mutuality rather than mistrust, co-operation rather than competition, admiration rather than envy. This is not to say that we can make all our worst characteristics disappear, but that they should not be the starting point for politics or economics.
This is not the sort of political change that is amenable to a bit of spending here or a touch of tax there. But there is still plenty for governments to do. For a start, they can eradicate poverty - which causes unhappiness simply in and of itself, with no assistance from envy. Blair should spend the extra billion a year that, according to the Institute for Fiscal Studies, is needed to lift all our children out of poverty.
More importantly, the government can lead the charge for a culture shift. The envy engine of advertising could be drastically curbed. The education system could be recast: tests, league tables, streaming by ability and school "choice" for parents all add fuel to the grenvy fire. And, given the waning significance of economic growth, it is high time politicians stopped arguing the "business case" for everything from university expansion through gender equality to the reform of non-executive directorships.
Above all, progressive politicians can start to sketch a narrative of what progress looks like now that economic growth has done its bit. There is scope for remoralisation of the political discourse, and for a greater willingness to make judgements about the kind of society we want, the sort of institutions we need, the nature of the good life we seek. The centre-left is often reluctant to engage in the construction of moral frameworks for action, either because it seems to offend against liberal, pluralist principles or because it feels like a mission impossible. But who would deny that Margaret Thatcher, in just 11 years, had a cultural impact?
Building a post-economic progressive politics and shifting the compass of our political goals will require a new language, new philosophies, perhaps new party configurations. There are few policy wheezes to hand. It is big, slow politics. To borrow some biblical language, we are after metanoia - a change of heart, a change of ways. It is certainly utopian, but maybe a bit of utopianism is what we need.
It's Not The Economy, Stupid by Richard Reeves will be published in May by the New Economics Foundation; firstname.lastname@example.org