Liberals need to challenge inequalities of economic power

To recover from the longest crisis of living standards in memory, we must address fundamental questions around ownership and democracy.

As the citizens of Egypt, Syria and Brazil struggle for control over their lives, it may seem a bit rich to suggest that the UK's economic troubles stem from an unequal distribution of power. Seen from Tahrir Square, Homs or Sao Paulo, the inequalities within British society probably appear moot. Nonetheless, as the Social Liberal Forum will discuss at our third annual conference this week, to recover from the UK's longest depression and crisis of living standards in recent memory, we must address fundamental questions around ownership and democracy, ultimately asking, "Where does power lie?"

So, let us ask: with whom does the power to ensure that finance serves the wider economy more than its own interests - and to prevent the sector from abusing its dominant position in the economy - rest? What about the power to rid politics of the corrupting effects of big money; the power to demand that the press, police and those in positions of influence uphold standards of decency – where does that power lie? To say nothing of the power over the positive capabilities we need to live the lives we have reason to value. How does the ownership of capital, companies, utilities and resources affect the social and economic freedoms we seek? In whose hands is power in each of these domains concentrated, and how can we ensure a more effective, equitable distribution?

Generations of liberal thinkers from Mill and Smith to Beveridge, Keynes and Hutton have acknowledged that the exercise of power by third parties can infringe our freedom. Indeed, liberalism is a political movement dedicated to eradicating the concentration and abuse of power – witness our (almost) unified rejection of state surveillance or of illiberal 'secret justice.' But some aspects of modern liberalism focus almost exclusively on the state as the greatest threat to our rights and liberties when a host of institutions, practices and systems can encroach on our freedom. Our vigilance against the concentration of power must extend to any aspect of society where we find it - with financial capitalism in disarray, electoral politics captured by vested interests and corporations failing to pay their dues while living standards fall for so many, now is the time to unpick the issue of ownership, democracy and power.

Take the question of power over earnings, of particular relevance given the unprecedented decline in the value of wages for millions of low and middle earners. To many, a 'democratic focus on pay' equates to a Living Wage - specifically, to ways in which government can take the lead in paying its own staff enough to live on, and legislate and/or regulate so that companies do the same - thus ending the subsidy for low pay. While these are tools social liberals would welcome, we should go further, democratising the workplace.

Low pay is at least in part a function of the lack of voice, of power, that most employees have over their pay and conditions. As Deborah Hargreaves and Janice Turner will debate at our conference, workplace democracy and a reformed role for unions have a huge part to play in empowering employees to secure a decent salary - democratically, from the bottom-up, in a way that's sensitive to the side-effects that higher wages might bring. In a globalised, competitive, technologically advancing economy, such effects cannot be ignored, and might lead us to ask "how do we unionise [or more broadly, empower] the unemployed?", because empowering those in work at the expense of those without will not do. The answer may lie in radical things like a minimum citizen's income or by expanding mutual friendly societies, perhaps on a sector-by-sector basis, which could provide a range of options to smooth the bumpy journey many face in the labour market - salary insurance, training, apprenticeships and so on.

Applying mutual ownership, widening democratic participation and a redistribution of power to the labour market is simply one example of a social liberal approach to the political economy - the conference will feature discussions on adapting this approach to public services, finance and banking, local and regional government, the welfare state and national economic strategy. The last two are key, and will be addressed in Steve Webb MP's William Beveridge Memorial Lecture, and a keynote speech by Vince Cable, respectively.

Beyond agreeing that we need to reform our political economy, we should ask ourselves whether we can implement said reform and how - answering a question put by Evan Davis in a panel discussion at the Manchester International Festival, "Are we Powerless?" How can we use our collective power as citizens to challenge received wisdom, and to move beyond securing protections against the abuses of power detailed above to fostering the positive power to live fulfilling lives? I suggest two necessary but insufficient conditions must be met.

Firstly, we must take a step back and frame policy, politics and economics differently- as if people mattered, to coin a phrase. The past 30 years - arguably longer - have focussed on growing output, on the assumption that higher living standards would follow. For some, this came true - for the many, the median salary being worth what it was a decade or more ago, not so much. So instead of asking "how do we grow the economy from here?" (which distorts how we address the crisis, hence Osborne's inflation of yet another property price bubble, for instance), we should ask how the government, private enterprise and society as a whole can empower citizens to secure for themselves the capability to live fulfilling lives. We should proceed from there, rather than assuming that growth of output, however achieved, is our goal. Framing the discussion in this way will put deficits, investment, ownership, democracy and power into balanced perspective - and permit the freedom of thought needed to satisfy the second condition, that of formulating detailed policy to meet the challenges we face.

In answer to Davis's question of powelessness, panelists Owen Jones and Judith Shapiro lamented the lack of a coherent alternative to, for want of a better word, neoliberalism. Remember this lesson from history: that even as the post-war economic settlement, with its Bretton Woods institutions and sustained growth in living standards, reached its apogee in the 1950s, 60s and 70s, the likes of Hayek, von Mises and their pals in the Mont Pelerin Society met to tear down brick-by-brick the intellectual edifice of Keynesian social democracy. Where is today's Mont Pelerin group that can build a real alternative not only to austerity but to the concentration of power that hinders progress? Where is the political movement that can integrate grassroots activism with bold leadership to put such an alternative into action? This is not a nostalgic call for a return to some golden past, but an appeal for a coherent vision as to where tomorrow's sustainable, equitable prosperity will come from.

Returning to first principles, it falls to social liberals across the political spectrum to consider aspects of ownership, democracy and power in ensuring our political economy provides shelter from poverty, ignorance and conformity, takes on Beveridge's five evils, and secures the freedom and capability for all to live fulfilling lives - nothing short of tireless endeavour to this end will suffice.

Vince Cable will be the keynote speaker at tomorrow's Social Liberal Forum conference. Photograph: Getty Images.

Prateek Buch is director of the Social Liberal Forum and serves on the Liberal Democrat Federal Policy Committee.

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Boris Johnson is right about Saudi Arabia - but will he stick to his tune in Riyadh?

The Foreign Secretary went off script, but on truth. 

The difference a day makes. On Wednesday Theresa May was happily rubbing shoulders with Saudi Royalty at the Gulf Co-operation Council summit and talking about how important she thinks the relationship is.

Then on Thursday, the Guardian rained on her parade by publishing a transcript of her Foreign Secretary, Boris Johnson, describing the regime as a "puppeteer" for "proxy wars" while speaking at an international conference last week.

We will likely never know how she reacted when she first heard the news, but she’s unlikely to have been happy. It was definitely off-script for a UK foreign secretary. Until Johnson’s accidental outburst, the UK-Saudi relationship had been one characterised by mutual backslapping, glamorous photo-ops, major arms contracts and an unlimited well of political support.

Needless to say, the Prime Minister put him in his place as soon as possible. Within a few hours it was made clear that his words “are not the government’s views on Saudi and its role in the region". In an unequivocal statement, Downing Street stressed that Saudi is “a vital partner for the UK” and reaffirmed its support for the Saudi-led air strikes taking place in Yemen.

For over 18 months now, UK fighter jets and UK bombs have been central to the Saudi-led destruction of the poorest country in the region. Schools, hospitals and homes have been destroyed in a bombing campaign that has created a humanitarian catastrophe.

Despite the mounting death toll, the arms exports have continued unabated. Whitehall has licensed over £3.3bn worth of weapons since the intervention began last March. As I write this, the UK government is actively working with BAE Systems to secure the sale of a new generation of the same fighter jets that are being used in the bombing.

There’s nothing new about UK leaders getting close to Saudi Arabia. For decades now, governments of all political colours have worked hand-in-glove with the arms companies and Saudi authorities. Our leaders have continued to bend over backwards to support them, while turning a blind eye to the terrible human rights abuses being carried out every single day.

Over recent years we have seen Tony Blair intervening to stop an investigation into arms exports to Saudi and David Cameron flying out to Riyadh to meet with royalty. Last year saw the shocking but ultimately unsurprising revelation that UK civil servants had lobbied for Saudi Arabia to sit on the UN Human Rights Council, a move which would seem comically ironic if the consequences weren’t so serious.

The impact of the relationship hasn’t just been to boost and legitimise the Saudi dictatorship - it has also debased UK policy in the region. The end result is a hypocritical situation in which the government is rightly calling on Russian forces to stop bombing civilian areas in Aleppo, while at the same time arming and supporting Saudi Arabia while it unleashes devastation on Yemen.

It would be nice to think that Johnson’s unwitting intervention could be the start of a new stage in UK-Saudi relations; one in which the UK stops supporting dictatorships and calls them out on their appalling human rights records. Unfortunately it’s highly unlikely. Last Sunday, mere days after his now notorious speech, Johnson appeared on the Andrew Marr show and, as usual, stressed his support for his Saudi allies.

The question for Johnson is which of these seemingly diametrically opposed views does he really hold? Does he believe Saudi Arabia is a puppeteer that fights proxy wars and distorts Islam, or does he see it as one of the UK’s closest allies?

By coincidence Johnson is due to visit Riyadh this weekend. Will he be the first Foreign Secretary in decades to hold the Saudi regime accountable for its abuses, or will he cozy up to his hosts and say it was all one big misunderstanding?

If he is serious about peace and about the UK holding a positive influence on the world stage then he must stand by his words and use his power to stop the arms sales and hold the UK’s "puppeteer" ally to the same standard as other aggressors. Unfortunately, if history is anything to go by, then we shouldn’t hold our breath.

Andrew Smith is a spokesman for Campaign Against Arms Trade (CAAT). You can follow CAAT at @CAATuk.