The state now regulates us instead of the economy

It's amazing how politicians, whatever their party colour, start to behave in the same way as soon as they gain office. Fresh from serving champagne to celebrate victory in the London mayoral elections, Boris Johnson announced that he would ban alcohol consumption on the London Underground.

What is the point of this injunction which, not being backed by law, is unenforceable? Why is this ban acceptable, but not the ban on smoking in pubs, which Johnson opposed? I admit that I dislike people drinking from beer cans on the Tube, but no more than I dislike them eating smelly hamburgers. I can't honestly say either does me harm or that my freedom from unpleasant sights and odours should override others' freedom to enjoy refreshment as they crawl round the Circle Line. It strikes me as an example of the "nanny state" and the sort of headline-grabbing "initiative" that Johnson would have denounced in his Telegraph column only months ago.

But that is what politicians now do. Governments have largely withdrawn from management of the economy and, as the credit crunch crisis has illustrated, from regulation of corporate behaviour.

Instead, they try to manage society and to regulate personal behaviour. Scarcely a week goes by without a new proposal, usually to do with parenting or health or both. The latest suggested that primary schools might refuse to admit children who haven't had the MMR jab. As Duncan O'Leary puts it in the introduction to a Demos report published this month (The Politics of Public Behaviour), the state "is being reshaped around a new set of priorities".

Another report out this month, from the Social Market Foundation (Creatures of Habit? The Art of Behavioural Change by Jessica Prendergrast et al), suggests governments need to be more sophisticated. They have assumed, in accordance with classical economic theory, that accurate information, plus financial incentives and disincentives (a ban, subject to fines, being an example of the latter) will achieve the desired social end. Citizens are expected to behave as rational agents. In fact, the report argues, "people are guided by impulse, habit and social norms as much as by availability of information and desire to minimise cost". Governments need to use the insights of behavioural economics, a relatively new discipline. They should, to adopt a term currently in vogue in Whitehall, do more "social marketing" - using commercial marketing techniques for social ends.

This is surely a more legitimate device, and often a more successful one, than the big stick of legislation. Laws on wearing seat belts are not really enforceable. But most people wear them because of effective marketing campaigns, notably Jimmy Savile's "clunk-click" ads, and the one where the boy hurled from the back seat killed his mother in the front, which led to a 23 per cent increase in the use of rear seat belts in a single year.

A non-interventionist state might be possible if we had a non-interventionist private sector. But as the SMF report puts it, "there is no neutral backdrop". Social norms were once derived from families, local communities, churches, trade unions and traditional workplaces. As these institutions decline, advertising and the entertainment industry create a new set of norms. Billions are spent persuading us to buy gas-guzzling cars, drink as much lager as we can hold, and stuff ourselves with cholesterol-boosting food. We need some non-commercial counter that reminds us of global warming, alcoholism and coronary heart disease. The government may be accused of playing "big brother" but, in reality, it is a rather feeble little brother against the big-spending bullies of the corporate world.

Nevertheless, ministers cannot regulate society adequately unless they also regulate the corporate sector. Ministers seem terrified, in particular, of taking on the supermarkets, though none of the usual arguments against corporate regulation - damage to exports, danger that companies will flee elsewhere - can apply in their case.

Supermarkets bear significant responsibility for many of the social negatives that preoccupy governments: excessive use of motorised transport, bad diet, alcohol abuse, the decline of local communities. Yet their seemingly endless growth is tolerated.

In highly developed societies, "private decisions have public consequences", O'Leary observes. Carbon emissions are one example; in a society that has chosen to make medical treatment a public charge, obesity is another. But there is something perverse in allowing the private sector almost complete freedom to offer bad choices and then beating citizens around the head until they take the good ones. As both Demos and the SMF argue, it is a question of choosing the right tools to tackle the right problems. A ban on swigging lager on the Tube - just because it's not the sort of thing Old Etonians would do - doesn't pass muster.

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