Relationships, institutions, action: A relational approach to poverty and politics

In the first of a series of essays on Poverty in the UK, commissioned by the Joseph Rowntree Foundation and Prospect magazine, Maurice Glasman argues for a new kind of statecraft which incentivises virtue and vocation

The debate around poverty, its causes and remedies, defines a political consensus. By making a distinction between necessary and unnecessary suffering it permits or forbids certain kinds of state action. If it is the case that redistributing wealth worsens the conditions of the poor and merely brings relief to educated administrators then to persist with such action would be perverse. If, however, it can be shown that redistribution creates flourishing individuals capable of participating in society then it is rational and desirable to pursue these ends. The distinction between necessary and unnecessary suffering thus defines the limits of political rationality. In delineating a domain of pain which is amenable to concerted public amelioration from a sphere of grief that is immutable, it defines the power of society to respond to the miseries of life.

The enforcement of slavery laws and denial of medical care to the poor are causes of suffering which have been overcome by political action. The insistence on an education for each child, irrespective of parental preferences for child labour is the result of state interference in what was once considered a familial prerogative, as is the case of the regulation of employment conditions within the private enterprise.

Few claim that unemployment is good, but if it is understood as necessary to keep inflation down, reform incentive structures and encourage foreign investment, then it is an unavoidable fact of life. It can only be exacerbated by political action. Unemployment may lead to the destruction of inherited skills, local practices and may cause a sense of worthlessness and isolation in the unemployed person. If both economic growth and liberty are threatened by its diminishment then the individual and society will have to find ways of absorbing the dereliction that unemployment brings. It is necessary suffering. What for some is a painful dislocation is for others an unavoidable cost of economic improvement. Whether it is one or the other depends on the political consensus that prevails.

A political consensus is an understanding of the world shared between dominant political actors that results in durable institutions which structure the distribution of power and goods within society. It is built around those aspects of the world that are held to be unalterable. The significance of a consensus shift in politics, such as the election of the Labour government in 1945 or the election of the Conservatives in 1979, is that it redefines the scope of public agency by establishing a new framework within which political success or failure can be judged.

Politics is here understood primarily as a public struggle over the definition of sanity. It is through the successful definition of alternatives as insane that the power of consensus is established and maintained. At the heart of technical policy disputes are philosophical arguments concerning the relationship between rationality and politics, the definition of what can be done. In our society a consensus defines what people can do through democratic partnership and what has to be left to the co-ordination of the price system. The distinction between necessary and unnecessary suffering defines the power of politics to improve the human condition.

The underlying assumption in this essay is that what is required is a new political consensus that recognises the weaknesses of both state and market based approaches and argues for the necessity of decentralised self-governing institutions that uphold a notion of humanity, virtue and reciprocity in the governance of the economy and the state. Both the state and the market are absolutely necessary. If, however, they are not embedded in an institutional system that constrains centralisation and unilateral self-interest, they will flounder due to a lack of accountability in their governance and a lack of virtue in their reproduction. The result is impoverished human beings, in terms of the relationships, institutions and knowledge that could promote their flourishing.

The financial crash of 2008, in which money managers controlled the inherited assets of the nation without any kind of effective oversight is the market form of the predominance of vice, narrow self-interest and a lack of democratic accountability. The managerial cover-ups in neglectful hospitals and the stubborn lack of transformation in the lives of the poor is the statist form. It may be said, with some justice, that under the present system, many are cold but few are frozen, but this is hardly an endorsement of the status quo. The new consensus around how we care for each other and sustain the reproduction of good practice and virtue in our relationships, institutions and politics will have to have a reckoning with 1945 as well as 1979. And this will require a radical retrieval of the Labour tradition, which was born as much in opposition to the Poor Law state as it was to a free-market economy.

The Fabian idea that there are causes of poverty that require scientific research and public policy, informed by this data, has limited leadership and research by neglecting politics, relationships, institutions and action as necessary ingredients of a new political consensus built around the alleviation of poverty. What we have had, effectively, is utilitarianism combined with a Quaker inspired desire to give ‘voice to the voiceless’, as if poor people can’t speak. A politics of the poor in which the poor play very little role in its leadership, formulation or enforcement is a bad politics.

I am going to suggest, by way of beginning the conversation, that poverty should not be isolated and addressed in a discrete way in relation to its causes and remedies. On the contrary, it is an extreme from of a generalised poverty in economics and politics that has demoralised society. Virtue, and incentives to virtue, are what is required and these can only be enforced by institutions that challenge both state and market power.

In order to address the issues of virtue and institutions, tradition and good practice, it is necessary to say a bit more about capitalism and the administrative state and the consequence of relying on these two systems for growth and order.

First, we should recognise that capitalism is both the most creative and most destructive system of economic organisation. Built upon the maximum returns on investment for capital and the maximisation of self-interest on behalf of economic individuals, capitalism has three major consequences. The first is that it exerts a tremendous pressure to turn human beings into commodities. This means that that things that were not produced for sale are made available at a price on the market. Human beings and nature are primary examples of this in the form of labour, land and food markets. The second consequence is that there is a neglect of institutions, relationships and inheritance in such a system, leaving individuals and the collective state that enforces private property law as the two dominant systems. The third is that capital, particularly in its financial form, has a tendency to centralisation that deprives regions and other sectors of the economy of investment. This is manifest in the denuding of entire regions of the country of local financial institutions that could sustain local businesses. None of the building societies demutualised in the 1980s and 1990s today exists as an autonomous entity. In other words, a market system rationalises, centralises and individuates, weakening the role of tradition, institutions and relationships in the constitution of the person and the effective functioning of the system.

It is also necessary to recognise that the administrative or ‘welfare’ state, built upon principles of neutrality and fairness, is similarly based upon the unmediated relationship between the individual and the collective and gives precedence to administrative impartiality, subordinating relational particularity to procedural homogeneity. Justice, fairness and universality are allied with efficiency here, and relationships, institutions and tradition play no role.

The consequences of the domination of the state/market dichotomy over the past 150 years are hard to exaggerate. Approaches to poverty have been built around state policy as the instrument of delivery, or around the market system as the ‘disciplinary matrix’. Commodification and collectivism have been the two dominant approaches and neither, alone or in combination, offers a meaningful way to transform the lives of the poor.

The missing third item in the puzzle, society, is either neglected or understood as entirely lacking in institutional identity. This is particularly hard to understand within the socialist tradition, which has become almost entirely statist in its approach, particularly where welfare is concerned.

Back To Speenhamland
Perhaps the best place to start in understanding how the market and the state came to dominate the understanding of poverty is to return to an analysis of its origins in the ‘Speenhamland’ system which shaped British welfare policy between 1795 and 1834. On 6th May 1795, at a time of great economic distress, the justices of Berkshire met at the Pelikan Inn in Speenhamland, near Newbury. They decided that subsidies in aid of wages should be granted in accordance with a scale dependent on the price of bread, so that a minimum income should be assured to the poor irrespective of their earnings.

Superficially, Speenhamland appears as a means through which the material poverty of the rural poor could be resisted by defying the market system and establishing an 18th- century equivalent of a citizens’ wage in which each subject was given an unconditional payment sufficient for the satisfaction of their needs. When the gap between wages and the price of bread widened, poor relief funds were used at the parish level to supplement the wages of workers and their families. However, it did not succeed in relieving rural poverty, which became worse. The Speenhamland system was replaced in 1834 by the new Poor Law, which, in place of relief based upon prices, introduced means-tested benefits organised around the workhouse.

What has been called the ‘shadow of Speenhamland’ helped to scupper the two most serious modern attempts to establish a basic income as a means of addressing family poverty. In 1970, president Richard Nixon’s ‘family assistance plan’ was defeated in the Senate on the basis that it would turn a minimum income into a maximum and erode the work ethic. Similar arguments were used to derail prime minister Jean Chrétien’s initiative in Canada in 2001. It was argued that employers would take the opportunity provided by income tax relief for the poor as an excuse to lower wages. A similar debate is taking place in Britain in relation to the use of tax credits by new Labour in a period of wage stagnation.

The debate around Speenhamland is the first instance I have found of an exclusive stress being placed on state welfare provision as a ’cause’ of poverty, with no reference to labour market institutions and the reproduction of knowledge and practice. The Elizabethan Poor Law of 1601, for example, insisted upon the national enforcement of the statute of artificers of 1563 which required a seven-year apprenticeship and yearly wage assessments. The report of the 1834 Royal Commission on the Poor Law was very different and argued that poverty was the direct result of state intrusion into self-regulating labour markets. Poor relief was the cause of the perverse incentives that led to destitution, declining productivity and personal responsibility and a generalised culture of entitled indolence.

This was also the first time that public policy had been based on social science and the systematic collection of data which served as the basis for state action. Almost a century later, the founders of the Fabian Society, Beatrice and Sidney Webb, were very impressed by the sheer scale of the empirical evidence provided to the 1834 Royal Commission: ‘Their voluminous reports, together with their equally voluminous other statements, were printed in full, comprising altogether no fewer than twenty-six folio volumes, containing in the aggregate over thirteen thousand printed pages, all published during 1834-1835, being by far the most extensive sociological survey that had, at the date, been undertaken.’

Although the Webbs quibbled with some parts of the interpretation, they generally supported its analysis, but drew different conclusions. For them, Speenhamland marked the end of locally administered and personal systems of poor relief and their replacement by centralised state administration. We have been working within that framework ever since, one in which we are forced to choose between the state and the market, liberal political economy and Fabianism. Although there may be differences between Malthus and the Webbs about the balance to be struck between carrot and stick in the administration of welfare or ‘poor relief’, both sides agreed that human beings should be treated like donkeys. There is no role in this framework for intermediate institutions, tradition or relationships.

The unity of the new discipline of political economy as defined by Joseph Townsend’s Dissertation on the Poor Laws (1786), as well as by Malthus and Ricardo, derived from the assumption that the right to life undermined the vitality of society. The application of ‘nature’s penalty’ of hunger was considered the most effective means of changing behaviour to effectively secure the satisfaction of needs. A biological foundation was found for the political order. Malthus did not doubt the intensity of grief caused by the establishment of starvation-driven incentives, but this was, in his view, necessary suffering. Poverty was not amenable to positive public intervention. The abolition of Speenhamland meant that those who wished to serve could find food, while the poor ‘should be taught to know that… they have no claim of right on society for the smallest portion of food, beyond that which their labour could fairly purchase.’

The causes of poverty could only be overcome through the imposition of a new incentive structure. The importance of the Poor Law Amendment Act of 1834 is that it created the first national free market in labour. Aid in wages for outdoor relief were abolished. The Bank Act of 1834 stipulated that there could be no bailout for the rural banks, 240 of which went bankrupt between 1814 and 1834. The Anti- Corn Law Bill of the same year established a free market in agriculture. The earlier anti-combination laws of 1799-1800 were neither repealed nor amended and this made worker association a criminal offence. The repeal of the apprenticeship clauses of the Elizabethan Statute of Artificers in 1814 meant that knowledge and skills no longer had any status in the labour market outside designated professions. Guilds for manual trades were also abolished. Through the withdrawal of status in the economy for any institutions that upheld a non-pecuniary logic, combined with the confiscation of land by enclosure and the virtual elimination of local financial institutions, the labourer became dependent on either the market for wages or the state for relief. This has been missed by both liberal and Fabian accounts of the period. A cultural catastrophe took place, manifested in the loss of status, land and institutions that isolated and impoverished the rural poor.

The reduction of the person to the status of a dependent pauper deprived of responsibility and recognition was partly the work of Speenhamland, but it was continued by the new Poor Law. The most decisive argument for the unprecedented creation of a free market in labour and land was that welfare destroyed the virtues necessary for the survival of society and was particularly injurious to the poor themselves. in the organisation of the economy, ethics was abolished as injurious to the common good.

One of the more remarkable aspects of the Speenhamland debate is that the establishment of the workhouse and abolition of poor relief was supposed to enhance the ‘independence’ of the labourer. The refusal of relief and the widespread fear of the workhouse and family separation created the conditions in which precarious employment at low wages was accepted. But poverty wages do not generate autonomy.

The Speenhamland debate prepared the ground for the emergence of the Poor Law state and the free market. In the account I am proposing here, it is clear that there was a problem with severing the link between wages and apprenticeships when it came to sustaining an ethic of work and responsibility. Furthermore, the destruction of rural banks led to a drying up of capital, the abolition of guilds to the proletarianisation of work and forced enclosure to the disappearance of previous sources of food income and habitation.

In other words, the generation of systematic poverty was the result of a political economy, based on an animalistic conception of human nature, in which self-organised knowledge and interest representation was outlawed and finance capital tightened its grip. Freehold title subordinated customary practice across the board. The City of London was neither reformed nor subordinated to Parliament, though all other institutions were.

It follows that poverty is not best understood as being exclusively the result of a particular welfare system, although this is an important factor. It should be conceived instead as the effect of an economic system that generates perverse incentives and diminishes virtue, something we witnessed in the financial crash of autumn 2008.

Defining the new consensus
I have discussed the Speenhamland debate for three reasons. First in order to establish the inadequacy of a discourse in which the welfare system, separate from the general economy, is seen as the principal source or cause of poverty. We need a new political economy in which value and incentives to virtue are established in both the economy and in the state through the strengthening of civic institutions. It is simply humiliating to build a system around work when there are not enough jobs, when there is a lack of meaning in those jobs and when the economy itself gives incentives to vice. Second, I wanted to show that the causes of Speenhamland’s failure were exacerbated by the new Poor Law and its continuation of a separation between the poor and the rest of society and its refusal to allow the democratic organisation of interests. Third, I have emphasised that the methodological assumptions of the social sciences have a profoundly political effect on welfare policy and that neither the liberal and utilitarian approaches have been able to generate the remedies required.

What remains elusive today in the debate around welfare reform is an understanding of relational poverty (how people find themselves isolated and powerless), institutional poverty (the lack of belonging and participation in institutions that uphold a specific good and practice) and knowledge poverty (where people are cut off from inter-generational traditions of skilled work).

Vocation, virtue and value
If poverty is to be addressed in practical terms, three changes to the political economy are required.

The first is the establishment of a vocational economy in which apprenticeships and skills are sustained and recognised through democratic institutions that regulate labour market entry. One of the successes of the German economy is that vocation has a legal status which conditions labour market entry. Vocation is defined by a notion of work that is not defined exclusively by external rewards or demands, but is characterised too by internal goods rooted in a tradition of practice. A vocation requires discipline and judgement, and constrains vice through the concept of good practice, institutionally enforced. Honour, skill, loyalty and dedication are necessary for the preservation and renewal of value, which is judged by other practitioners and not exclusively by the price system. What academics call ‘peer review’ is built into the vocational system. It allows for an inheritance to be received, renewed and passed on. It conceives work not exclusively as the immediate fulfilment of a task, but as something that is received from the past and orientated towards the future. Vocational institutions valorise labour, constrain capital and promote virtue. The internal goods preserved by vocational institutions are a direct threat to the domination of capital, but necessary for its successful reproduction since they act as a constraint on its tendency to commodify knowledge, human beings and assets.

We need to address the failures of an exclusively academic framework for further and higher education in which there is tremendous working-class and immigrant disengagement. The most important structural change would be to close down half the universities and transform them into vocational colleges which are jointly run by local businesses, unions and local political representatives. Vocation facilitates inter-generational relationships through the apprenticeship system, also bringing older and retired workers into a constructive relationship with younger people and the economy.

The second fundamental economic reform required is the endowment of regional banks to be funded by using five per cent of the 2008 banking bailout. One of the most important causes of contemporary poverty is debt and the emergence of usurious financial institutions that exacerbate it. The decimation of rural banks was responsible for farm bankruptcies and the impoverishment of households during the Speenhamland period. Regional banks would resist the centralising power of capital, allow more stable access to credit for regional and smaller businesses and encourage relationships in order to constrain the demand for higher rates of return that has destroyed the mutual banking sector in Britain.

The third change is corporate governance reform to ensure that workers can exercise a balance of power with capital in the governance of firms. Corporate governance representation for labour would supply a form of accountability that does not claim all advantage for one side and would restrain cheating, greed and avarice in working life. This is a form of relational accountability, in which the real physical presence of the workforce on boards requires the sharing of information regarding the firm and the sector and a negotiation of modernising strategy not set exclusively on terms beneficial to capital. It would also have a serious effect on wage differentials.

It is the absence of relational accountability, the lack of internal constraint on capital, and the absence of the labour interest that provides the fundamental explanation for the crash of 2008. The financial crisis was generated by the concentration of capital and a lack of accountability which allowed money managers to lie, cheat and exaggerate in the absence of specialist interests with knowledge of the internal working of the firm that could challenge them. The crash was a crisis of accountability in which ‘incentives to vice’ were entrenched in the form of bankers bonuses and unilateral self-remuneration. It was also a result of the disentangling of capital from its origins to such an extent that it was unconstrained and exerted relentless demands for higher rates of return. These turned out to be speculative and fantastical. There was no vocation or virtue in the governance of the financial sector. The remedy for this lies in the expertise and interests of labour holding unvirtuous elites to account. Responsibility and power needs to be shared in order to be effectively exerted. in this way, the workforce is entangled in a wider set of reciprocal relationships that further generate trust and a common interest.

Relationships, reciprocity and responsibility
In welfare reform a similar move away from the unilateral domination of management towards a balance of interests in the governance of institutions such as schools and hospitals is required. The corporate governance of such institutions should be divided three ways, between funders, the workforce and users. This would initiate the workforce and users into the complexity of running large institutions, create a greater sense of ownership, constrain fantasies of relentless restructuring and create an ethos or common good within the organisation.

Then there is the need for what I call ‘relational’ welfare. Human beings should be understood not as either selfish or altruistic, but in terms of self-interest broadly conceived. This is based philosophically on an Aristotelian account of persons in which human flourishing is understood as bound up with the well-being of family, friends and colleagues. David Brooks’s book The Social Animal: The Hidden Sources of Love, Character and Achievement gives a good account of the extent to which many different forms of academic research, in both the natural and the social sciences, are focusing on the propensity of things to move into a relationship with other things. This is especially true of human beings— we are social beings who find meaning in relationships with others and it is these relationships, rather than qualifications or formal status, that are the source of our flourishing and power. One of the problems with the previous political economy was its tendency to neglect relationships. Relationships are a source of power insofar as they generate trust and the sense of a shared destiny between people who would otherwise be estranged.

A significant part of the working class has come to see the existing means-tested benefit system as unfair, since they think it rewards those who have not contributed and inhibits virtue by rewarding irresponsibility and indolence. There is a loss of trust in unmediated state provision, which echoes a further loss of trust in politics and political leadership. A meaningful structural reform that could renew support for mutual rather than exclusively individual solutions would be to generate four contributory mutuals within the national insurance system. These would be owned and administered by those who make a contribution in the areas of social care, pensions, health and social security. It is important that those who care for their parents and children would be viewed as giving so that there would be incentives to strengthen relationships. This would also provide an incentive for participation and engagement, as interests would be involved.

A fourth reform that would renew a sense of ownership and power among people who consider themselves administered would be to revive the idea of the Roman Tribune for the appointment of top administrative posts in the welfare system. in a system that lasted for about five hundred years in the Roman Republic, the Consuls, or leading administrators of the political system, were elected by the ‘plebs’ at public assemblies. One way of reviving this system would be to stipulate that instead of five people in a room interviewing candidates for these jobs, 5,000 people would vote on the identity of the successful candidate. Machiavelli, in the Discourses, argues that this was one of the glories of the republic in that it made the elites accountable to the people and guarded against corruption. In the vast majority of cases people were chosen from within the ruling elite, but they had to be answerable to the people they ruled over. Introducing a similar system would also avoid endless demands for meetings and committee work. A local assembly held every two years in which the heads of social security, police, health and education submit themselves to popular ratification would engage local people in the common good. it would strengthen relationships and give people power over their lives and an incentive to responsibility and engagement.

It is clear where we need to start. In asserting the priority of the social, the primacy of people to things, the centrality of relationships and the superiority of work to welfare, people of good will should champion the introduction of a living wage, so that each worker can feed their loved ones. It is also necessary to limit the power of money, particularly in relation to debt and usury, so that the rich do not prey upon the misfortunes of the poor. A living wage and an interest rate cap are the floor and ceiling of the new political economy, but they need to be complemented by a new kind of statecraft that cherishes and strengthens civic institutions which allow virtue and vocation to flourish without the domination of the market or the state.

• This essay is one of a collection including contributions from AC Grayling, Leanne Wood, Roger Scruton and Rowan Williams,  published in partnership between the JRF and Prospect Magazine. To read other essays or download the full report, please click here