Clive Parry wrote in the comments on this blog yesterday that:
We need to reverse the line argument “We can only have public services if we have a strong economy” to become “we can only have a strong economy if we have functioning public services”.
I agree. I argued as such in my 2011 book, The Courageous State. In that I explained the importance of the mixed economy, saying that there is a necessary balance between the state and private sectors, each having a very real role to play in the economy. To explain this I suggested that the economy is a bit like a cappuccino.
The state is the cup. The productive economy exists within it for the purposes of this example. (Of course it extends beyond it, but that is for another blog; just think about the coffee shop if you want to anticipate the direction travel, and also imagine the saucer as the social safety net if you want to take the metaphor in another direction).
The espresso that goes into the cup first, and so appears to initially sit on the bottom, is the government and the activity that it undertakes. It is fundamental to the whole thing. It underpins everything else. Without it then the cappuccino is not a coffee. And if it is good then pretty much the whole thing will be, and vice versa. Despite that, it is virtually lost to view in the final product, when it is presented.
The hot milk comes next and is the private sector that builds on the foundation of the state.
On the top is some chocolate or nutmeg, which is the thing we all see, and which we, as a result, think defines the cappuccino. This represents the bits of life that we tend to think most fun, because they're what we want when all the basics have been dealt with. And because the private sector produces most of these fun things we tend to value what the private sector does most when in fact none of these fun bits would be possible without the state and the mundane, and even rather boring things, that much of the market also does.
The cappuccino helps us understand that. The reality is that in practice a cappuccino stands or falls as a whole. It's hot frothy milk without the espresso. It is just an espresso without the milk. The chocolate or nutmeg are optional. Now I admit, all are acquired tastes for some: we should not ignore that. But the reality is that many think that the compromise — with the fun bits on top — is best. And most importantly, when drunk you can't tell the component elements apart. Each integrates to make a whole.
That, I suggest, is also the case with a mixed economy: the parts are interdependent and make a whole and without each other that whole could not exist.
Let's not push the metaphor too far, but the task we face in our political economy is to find politicians who, like a skilled barista, can blend the right product for our economy that delivers the appropriate mix of the state and private sectors where each recognises the role of the other and is willing to support the role that the other has to play.
I would suggest that we are short of those skills. Far too few politicians appreciate the fundamental role of the state. And we have a private sector, or at least its proponents, who refuse to recognise that they can only exist in a partnership relationship with government. Ideology gets in their way of appreciating that fact.
I might also add that those on the left who think we can do without the private sector are just as guilty of this failure to appreciate the need for that partnership relationship.
My aim has always been for a cappuccino economy: one where state and private sectors both flourish because each is allowed to do what it does best. We're a long way from being there right now.
In my opinion there are two reasons for that. The first is that the espresso has been too weak for too long. We need definitely need an extra shot of government spending.
And on the other hand, shareholder capitalism has withdrawn all the resilience that companies have needed to survive the type of stress we're now seeing. It's as if they thought they could get away with semi-skimmed milk when full fat (which has been skimmed off by speculators) has always been needed to ensure that companies have the strength they need to be good employers, reliable suppliers and players for the long term, able to fulfil their commitments to all in society. That's just about the opposite of what modern capitalism is giving us.
You'll note that it's not one side that needs a boost right now: both do.
When will we get politicians who appreciate that fact, for fact I think it is?
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So many so called “self-made men” (and it is usually men) truly believe that their wealth is all down to their brilliance/hard work etc.. But none of them (except perhaps warlords/gangsters) could operate and succeed without the infrastructure that has been developed over centuries (both physical and non-physical). Why are so many of the worlds millionaires in the “developed economies”? Well, someone (Bill Clinton is where I heard it first) said “talent is equally spread but opportunity is not”…. and that “opportunity” starts with a stable society. Truly “self-made men” are as rare as hens teeth.
Only once that is understood can we advance the debate about fair taxation of wealthy folk.
The corollary to this is that the infrastructure that is so essential but so often ignored by the powerful must be nurtured – it does NOT just take care of itself. Great civilizations have come and gone because this failure… are we the next?
Maybe
Funnily enough perfectly describes my Saturday
Went to Bournemouth International Centre (Publicly Owned) – the Coffee
To take youngest son (13) to Beachead 2024 https://beachheadshow.co.uk/ which is a ‘Private Sector’ event – the milk
He then proceeded to thrash an adult in a demo game (Voluntary) – the Nutmeg and I was very very bad and had a Caramel Shortbread (Private Sector) – literally the Chocolate
Our politics is becoming increasingly polarised as an election looms in front of us and politicians try to magnify the tiny differences between their tawdry policies.
Public services take many forms, not all of them as efficient as they should be and the private sector, too, has many manifestations. We need to demand that all enterprises (private and public) subscribe to values that are for the public good and that they invite constructive criticism to help them improve. The current level of “debate” is puerile and needs to change.
It is nothing but dogma to see an economy as a battle ground between private and state interests instead of mutually beneficial.
As a developer of social housing, we use our rent income to pay private companies to supply materials and build houses on local authority land to be used as social housing – a model that goes back years. Could the way things really work actually be any clearer?
It goes to show you that those who present the economy as a battle ground must have ulterior motives.
They don’t like playing by rules.
They make an exception for themselves.
They want more power.
They want ‘in’ on what is going because they sniff more money to be made out of it.
They want to dominate and call the shots.
They hate any idea that sovereignty is for collective benefit; for them sovereignty is for personal use and competitive advantage.
The list could go on and we could call these people all sorts of names and name them in the hierarchy – the rich, the establishment, fascists.
But what the basis of their lies is, is that put simply, they are anti-social.
And the state needs to put them in their place.
You reap what you sow.
People are the producers and wealth providers of the nation, and should be supported to do.
People who don’t have, can not contribute to the economy.
This reminds me of Finding the Mother Tree by Suzanne Simard, an engaging story of a forest researcher’s lifetime spent gradually uncovering the immense and subtle co-operative dynamics of forests. Yet all along she was opposed by conventional foresters who believed that everything is based on competition and dominance. They refused to accept that co-operation and mutualism involving many unseen layers of support, from the lowest to the highest, is the fundamental underpinning of a healthy and robust ecosystem. All the layers are needed, especially the ones that can’t be seen, just as with a cappuccino. Or an economy.
It would help at least to have a slogan which conveys that NHS and public services ARE the economy , rather than something we have to ‘spend on’ ‘throw money at’ – out of ‘the economy’ .
‘Investment’ in health and education etc. is probably the best way of conveying it, people accept that getting people back to work means curing and/or preventing sickness – and that a productive ‘economy’ needs the skills …
“The function of an ideology is to provide answers before you know what the question is.”
I can’t remember where I found this aphorism, but it does fit the neoliberal cast of mind.
Very good
‘I argued as such in my 2011 book, The Courageous State. In that I explained the importance of the mixed economy, saying that there is a necessary balance between the state and private sectors, each having a very real role to play in the economy. To explain this I suggested that the economy is a bit like a cappuccino.’
I loved that book!
Thank you
“Far too few politicians appreciate the fundamental role of the state.”
It’s willful ignorance. How many of our politicians have even the slightest understanding of, or curiosity about, the basic precepts of a well-ordered society? Precious few. But they’re usually well-versed in the manners, customs and shibboleths of the rarified world they inhabit, all of which mean diddly-squat to real humans. This ideologically-driven socio-political tunnel vision is like a terrible disease whose sufferers choose to be infected with.
I would vote for a Cappuccino Party.
Roll on proportional representation, where we could support such a party, which could then challenge the dominant economic orthodoxy in parliament.