I see that Peter Costello has been wearing his public philosopher's hat again. He was speaking as the Federal Treasurer, and having another go at broadening his view on the issues of public life beyond the narrow paradigm of the discredited Washington consensus.
Last time it was a speech to Anglicare. (My comments on that speech can be found here.) This time the speech is given to the Sydney Institute. Different places and times but the same topic:---social capital.
Why is a federal Treasurer talking about social capital? Is he going soft? Is the Treasurer trying to undo his reputation as a hared and narrow economics man? Is he trying to soften his image as someone who has a rigid fixation on the big picture of the national economy, and who uses his legal skills to dogmatically defend his own narrow economic position? Is he using his reflections to introduce new policy ideas into public life? Is is he merely recycling the views of the IMF into Australia to develop new modes of global governance?
My interpretation is that Costello's reflections outline the public philosophy behind his politics+economics. On the upside Costello is saying that ideas matter, and that one of the purposes of public debate is to persuade others that good economics and good poiltics matter. This is to be welcomed because much public policy in Australia has been made by economists on the basis of ideology, bad economics, dogma and a hostility to alternative opinions.
On the down side, for all Costello's talk of social capital and civil society, he does not break with the narrow ends of economic development as wealth creation. His speech, for all its talk of social capital and civil society, indicates that weath creation is still accepted as the only end of development behind the closed doors of government.
My own view of Costello is that he is a 1990s IMF man; an economic fundamentalist who is into fiscal austerity, the liberalization of capital markets free trade and trickle down economics. He sings the IMF tune of the global triumph of capitalism and globalization in Australia. He thinks that markets work well and that governments work badly. Yet Costello is the head of a public institution----the federal Treasury. Nor does he have a coherent account of market failure that would justify the existence of his government. In contrast to the openness of a Joseph Stiglitz, there is a resistance to considering that development is something more than economic growth. The Washington consensus is still hegemonic in Treasury.
I do grant that people and institutions do change----even the IMF. The IMF may one day do more than use free market ideology to cover its furthering the interests of financial capital; whilst paying lip service to its old goals of enhancing global stability and ensuring that there are funds for those countries facing a threat of recession to pursue expansionary policies.
So Costello may well change and shed his IMF skin. Is the current speech a step in htis sdirection. It appears so as the speech is entitled Building social capital.
I will go through it slowly because in the discussion that I heard on Radio National this morning, a couple of journalists said that they didn't know what it was about. One of them, Matt Price, thought that the speech was a bit of muddle, even though he'd read it four times.
The speech opens with a remembering of a previous public concern about Australia being a tolerant country. Costello understand this to mean a society that will allow dissenting views and allow ethnic minorities to live in peace and security. "A tolerant society is one that respects differences and allows people to pursue their different aims and ambitions within an overall framework of order."
Such a liberal society is a good thing. A tolerant Australian is better than an intolerant one. So we---ie., those Australians who believe in tolerance--- should be concerned about the x factor that enables and nurtures tolerance in Australia.
Costello then asks:
"How do you promote such a society? Where does the notion of trust and tolerance come from?"
He answers indirectly by turning to Iraq today and the problems faced in rebuilding that country. If we abstract the argument from the examples, then Costello says:
"A prosperous economy takes root best in a society that has institutions and relationships that promote confidence and trust." [And you also] "would need to build a culture of tolerance between citizen and citizen which would allow expression and association within the context of trust. You would need to build trust between citizens and institutions."
How can this be done? Costello picks up the argument of his previous speech. He answers the question by making the turn to the associations and relations outside the state which are:
"... sometimes referred to as civil society. A country that has the experience of the voluntary associations is likely to have a higher level of trust between citizens which can be used to build confidence in public institutions."
And just in case you miss the argument of the first half of the speech Costello sums it up:
"Trust and tolerance, are sometimes described as social capital. In an IMF paper on Second Generation Reform, Francis Fukuyama argued: “Social capital is important to the efficient functioning of modern economies and is the sine qua non of stable liberal democracy.”
Let us accept Fukuyama's argument that trust and tolerance are necessary for both free markets to function efficiency, and for the functioning stability of liberal democracy. What then? If social capital is so important, then what does Costello do with social capital in the second half of the speech? This is a reasonable question to ask because we know that tolerance and trust are on the decline in western liberal societies including Australia.
Well, it has to be said, not very much happens. Presumbly, that is why Matt Price read it four times and still couldn't figure out what was being said. It sort of all falls away.
Costello begins the second part of the speech by doing a bit of social ontology---a clearing away of the rubbish lying on the ground. He situates himself in the middle between the individualists who say there is no society and the communitarians who only see cohesive groups not individuals. Gummo Troktsky has a good post on Costello and Howard on community.
Costello says:
"In reality, individuals have varying connections of varying intensity with others. In the first place there is the family, then maybe the street, the neighbourhood or a town. They might have a religious association through a church they attend and their relationships might extend to involvement in a voluntary association, a sporting club, or a political organisation.These are the networks and associations that give rise to trust between people."
Okay, so we have individuals and connections between them in the form of networks and associations (but no social relations of power). And this is a good thing because these networks and associations produce various voluntary groups. Why is that?
Costello argues that engagement in these voluntary groups produces a direct outcome (eg., the bushfire brigade attending to a fire) and also produces by-products. He says:
"By-products like friendship, belonging, tolerance and trust - and forms the basis for relationships which can be extended to other worthwhile causes."
So it is through voluntary groups that social capital is built. Voluntary groups in civil society are the foundation of an efficiently functioning market and a stable democracy.
However, Costello sees a downside. He notices that:
"...membership [in voluntary groups] is in decline and in that sense social capital is running down. Does it matter if this culture of engagement is running down? I think it does. I think the public laments the fact that engagement is running down...[But]...The majority of the public is not so worried about the issue that it makes them want to change their behaviour and reverse the trend of declining participation."
Fair enough. We all let our participation in civil society slip. But what has that got to do with government? Does it have anything to do with the state? If so, then how does it impact on public policy? As Costello puts it, if we recognise the importance of the non-government sector and the positive values arising from it, then what are the lessons for public policy?
It's a good question considering all the holes in the welfare safety net.
Costello answers this question by pulling out the old utilitarian harm principle of it being wrong to harm someone. He says:
'The first thing is the very important maxim for government, any government, on any issue: “Do no harm.” These social networks are neither established by, nor controlled by government. They are voluntary. That is their strength. So while the Government cannot establish these associations and should not force engagement it should be careful to do no harm. Secondly if Government has a choice between delivering services in a way that enhances engagement and one that does not, then, all other things being equal it should prefer the former. Thirdly Government should be alert to deal with any threats that arise to the voluntary sector.'
So the liberal state is committed to supporting civil society because the vlaues of trust and tolerance embnodied in voluntary practices underpin a liberal society. So how should the liberal state govern civil society?
"On the principle of do no harm, a Government should be careful not to usurp the voluntary sector. It should not take away those things which people can and want to do for themselves. But where it can support the voluntary sector, without smothering it, it should do so. And it must be alert to threats to the voluntary sector, (such as the public liability crisis.)"
In heightening the protection against liability for the voluntary sector the state is defending a very important part of our social infrastructure.
Alas, social capital is declining through decreasing engagement in voluntary activities in civil society. This is not good. So what can be done to increase engagement. Costello returns to an earlier speech----the 2001 Bolte Lecture where he argued that we "could revive the non-government organisations of Australia by spending one hour a week in a volunteer activity."
Costello then defends this from criticism on the grrounds that he merely suggested it to heighten engagement in civil society.
He then sums up his argument:
"The view I am putting is that there are non-monetary things that add to the wealth of a society. Civic engagement and the values which it promotes like trust and tolerance are some of those things. You can call them social capital if that is conceptually easier ...a society which has these things should be careful not to let them run down. Once they are gone it takes a lot of effort to get them back again."
Thats it. After all that work in working through the text it all comes down to that. There is a feeling of let down. Is that all that is being said?
Well, a little bit is given away in reduction in the last paragraph. It says that social capital is instrumental to the wealth of society so we need to protect and nurture them for the sale of wealth creation. Liberal democracy has been forgotten. The end of government policy is wealth creation.
As an IMF man Costello has forgotten about supporting civil society to nurture tolerance and trust to make liberal democracy more democratic. The figure of the citizen has gone. Underneath the rhetoric about ciivl society we have the Treasurer speaking about economic growth narrowly understood. Development is about wealth creation and it has little to do with the environment. Unlike Joseph Stiglitz Costello remains an IMF man.
Costello's speech gives no consideration to the impact of market failure ---slumps, recessions and depressions---on social capital, through leaving many workers unemployed, and then unable to find full time work with economic growth. There is little concern about the impact of poverty on social capital; or the relationship between social capital and social justice when many people have too few resources to do more than get by. There is nothing about the relationships between the limits and failures of markets and civil society; or civil society and the discontents with globalization.
What is even more troubling is that the talk about civil sociey and social capital does not lessen the economic mindset of Treasury. We still have the self-certain belief in institutional infallibility. There is little sense of a wavering of the conviction that its own policies are correct; little sense of understanding the distinction between the ideology and science;
Posted by Gary Sauer-Thompson at July 17, 2003 03:58 PM | TrackBack