20 February 1998 - 22 February 1998

Social Justice in National Economies: Tensions between Social Priorities and Market Pressures

Chair: The Rt Hon Baroness Williams of Crosby PC

In May 1997 we had held a conference on the fact that the triumph of open-market concepts across most of the globe had thrown into sharp relief the poverty of a minority of countries.  We now addressed the comparable phenomenon within developed countries.  On both sides of the Atlantic vigorous debate had sprung up about whether current socio-economic structures were generating unacceptable results.  Was poverty widespread, or inequality severe, in a degree that simply could not be tolerated in the long run?  If so, what could be done?

We considered at length, though consensus eluded us, just how far inequality per se should be regarded as a problem for public policy.  In Britain, for example, only the lowest decile of the population was absolutely worse off than a decade or two ago;  but inequality had widened.  Some argument held that the latter mattered little, that helping the poor was the key need, and that undue focus upon redressing inequality risked damage to the employment and prosperity of all.  Others however, while recognising awkward economic trade-offs, held that poverty was in some degree a matter of relative standards and perceptions - that beyond a certain point wide disparity weakened social cohesion, fostered resentment and undermined self-respect and responsibility.  The effect was all the more telling as social change and fluidity undermined older factors such as family and religion, less measurable than income, which provided support, participation, connectedness and a sense of personal interdependence.

The dominant patterns of deprivation had shifted significantly;  for example, the elderly (save perhaps in extreme old age) were a smaller proportion of the problem than before, and difficulty had swung over to such categories as the workless household, the long-term sick and the lone parent, which had often multiplied severalfold (at least in official classification) within the last quarter-century.  The family, we knew, was a key dimension of both problems and solutions;  material for another whole conference, indeed, but we noted the importance of not seeming to penalise it through the tax system, or to downgrade its importance as the prime social module.  Deprivation among children - sometimes reflecting lack of parental concern and skill as much as of money - was a grave concern;  perhaps changes in tax structures might help?  It was commented also that in many countries unskilled young males - what were they for in society, now that soldiers were less needed? - posed an increasing conundrum.

Among categories of special disadvantage we were minded to contrast the physically handicapped - fairly readily identified, recognised by most societies as deserving support, increasingly well understood and helped by technology, and so for the most part a comparative success story - with other groups such as - the examples were many - ethnic minorities (still beset by suspicion and sometimes lingering racism) and, more yet, the mentally ill about whom neighbours and employers felt uneasy and who might not be able to identify or help themselves.

The changing characteristics of labour markets occupied us a good deal.  Different countries - most evidently, the European Continent as against North America and (in recent decades) Britain, evinced divergent approaches, reflecting different social values and yielding widely different outcomes and trade-offs.  But common factors included the declining propensity of public sectors, driven by public-expenditure-related demands for tauter efficiency, to act as employers of last resort;  and, still more, the increasingly rapid shift in skill requirements away from the stable and well-paid manual jobs which had once marked what was now rust-belt industry.

We were not sure whether this pointed to the prospect of a growing number of individuals never likely, for reasons of inherent capacity, to find full employment amid the demands of a modern economy;  some participants feared so.  But most of us agreed anyway on the need to recognise and value social contribution outside the boundaries of “standard” employment, for example in the voluntary sector (which schools might perhaps encourage).

The case was vigorously argued for some sort of “citizen income”, whether for the formally-unemployed or for those in work yet poorly waged.  The arguments for this related to human dignity and social cohesion;  but dissenters adduced the possible drying-up of labour supply for unattractive jobs, and the difficulty in most countries of securing popular acceptance of taxpayer-funded remuneration unrelated to work.  The latter point in turn triggered vigorous but inconclusive debate about how far public subvention ought to be strictly conditional upon willingness for some form of work.  We agreed more readily upon the importance of education - life-long, but especially in the years of childhood, where failure in literacy imposed handicaps hard ever to recover.  We heard scepticism however about the value of training (as distinct from general enabling education, especially in “soft” personal skills and motivation-reinforcement) that was not closely geared to specific work in early prospect.

Our attention was much engaged by the problems of particular areas where multiple disadvantage was concentrated, for example by the inward gravitation of the less and the escape of the more fortunate.  In such areas community sense and involvement was typically weak and effective leadership hard to come by (though perhaps it could be trained for?) so that downward spiral intensified, perhaps made still worse by unintended local consequences of wider policies on matters like roads, transport, housing and zoning.  It was however powerfully urged that despair was never necessary;  modest piecemeal improvement, pragmatically implemented, could lift morale more swiftly and dependably than grand masterplans.  There was a cogent case - a constant theme, this, at Ditchley “social-issue” conferences - for locally-focused programmes of action bringing together under cross-functional judgement the various instruments of policy even where this cut across profession-oriented lines of national policy and government.  We did however acknowledge that - especially in environments where nationwide media and patterns of public organisation predominated - all this, and the discretion to differ and experiment that it implied, was not easy to square with pressures for consistent standards and perceived “fairness” from place to place, and so for intrusive supervision or constraining regulation.  And we observed also that effective remedial action often required a patient duration of commitment and support that did not always fit easily with political timeframes.

Did improving matters call for more public expenditure?  By no means necessarily, some argued.  No-one believed that current welfare structures spent all their money well;  sometimes they failed even to deliver formal entitlements effectively;  there was certainly scope to spend existing resources more fruitfully through better-targeted individual-focused discretion.  But then more “buts” : more discretion - especially where the purposes of policy reached beyond basic safety-net provision to wider social-solidarity purposes - almost certainly meant more complex official accountability and higher administrative costs.  Though wiser spending might in the long run yield real savings in other fields - as in the cost of providing prisons or remedial childcare - the near-term result of almost any redirection of resources was to generate some category of “losers”, large in numerical terms, and their protests were typically amplified by the temptations to political opposition to exploit them.

Were public expenditure levels hard up against tolerable limits?  Again, we found divergent views;  but at least one group strongly maintained that society was entirely capable of choosing to spend more if social priorities were seen as compelling enough, even - perhaps especially - in periods of cyclical economic downturn.  The best facilitator was of course, however, continued economic  growth, for its effects both on employment available and on taxable capacity;  and good strategies would not lose sight of that.  In a properly benign context the things that ought to be done surely could be done;  the opportunities for investment in doing them were evident, and the availability of successful models for how to shape and implement the investment was more and more widely recognised.

This report reflects the Director’s personal impressions of the conference. No participant is in any way committed to its content or expression.

Chairman: The Rt Hon Baroness Williams of Crosby PC
Life Peer (Liberal Democrat);  Director, Project Liberty, Harvard University


Professor Charles M Beach
Professor of Economics, Queen’s University, Kingston, Ontario
Professor John F Helliwell OC
Professor of Economics, University of British Columbia
Dr Chaviva Hošek
Director of Policy and Research, Office of the Prime Minister

Madame Béatrice Majnoni d’Intignano
Professor of Economics, University of Paris XII

The Hon John Bruton TD
Leader of Fine Gael;  Prime Minister of Ireland, 1994-97

Mr Tony Atkinson FBA
Warden, Nuffield College, Oxford;  Professor of Economics, London School of Economics and Political Science, 1980-92
Mr Peter Barnes
Government and Society Editor, The Economist                                                               
Dame Ann Bowtell DCB
Permanent Secretary, Department of Social Security
Lord Gillmore of Thamesfield GCMG
Director, Prudential Corporation;  Head, HM Diplomatic Service 1991-94
Mr Andrew Haldenby
Director of Studies, Centre for Policy Studies
Sir Terry Heiser GCB
Permanent Secretary, Department of the Environment 1985-92
Professor John Hills
Centre for the Analysis of Social Exclusion, London School of Economics and Political Science
Mr Alan Howard CBE MP
Parliamentary Under Secretary of State, Department of Education and Employment
Mr Graham Mather MEP
Member of the European Parliament (Conservative), Hampshire North and Oxford;  President, European Policy Forum
Ms Pamela Meadows
Director, Policy Studies Institute 1993-98
Dr Anne Power
Reader in Social Policy and Administration, London School of Economics and Political Science
Mr Philip Stephens
Political commentator, Financial Times
Ms Moira Wallace
Head of Social Exclusion Unit, Cabinet Office

Ms Linda McGoldrick
Managing Director, Financial Health Associates Limited

Mr H Brandt Ayers
Editor & Publisher, The Anniston Star, Anniston, Alabama
Professor James K Galbraith
Professor, LBJ School of Public Affairs, The University of Texas at Austin
Mr Pete C Garcia
President/CEO, Chicanos Por la Causa
Professor Richard E Neustadt
Douglas Dillon Professor of Government Emeritus, John F Kennedy School of Government, Harvard University
Mr David R Riemer      
Director of Administration, City of Milwaukee

Justice Frank Sullivan Jr
Justice, Supreme Court of Indiana
Ms Cheryl G Sullivan
Vice Chancellor for External Affairs, Indiana University-Purdue University Indianapolis
Mr James T Sykes
Associate Director, Institute on Ageing, University of Wisconsin-Madison