Thatcher: An unintended transformation

So Margaret Thatcher has passed into history. She's seen as someone who transformed Britain according to her vision. One day we will understand her real legacy; that actually, she failed to do so

I expect we’ll remember where we heard the news. I was in the living-room of my New York apartment on Monday morning, waiting for my partner to finish with the shower; in the meantime I sat in front of my laptop, quietly e-pottering. As she stepped out of the bathroom, I could hear the morning news programme on the local public radio station, WNYC.  Something about the former British Prime Minister having died in the night. A plummy English voice was interviewed.

“I’m finished with the bathroom,” called my partner. Then: “Are you there? Did you hear me?”

“Yes,” I said. The sunlight streamed through the blinds; the first day of spring finally with us, after a very long winter.

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Of course everyone had plenty to say. The current Prime Minister assured us that she was a “great Briton”. Parliament was recalled so that MPs could trot dutifully into the Chamber and utter paeans of praise. (An allowance of up to  £3,750 was payable to those Members who had to return from abroad.)  Singer Morrisey, by contrast, said that she was "barbaric" and "without an atom of humanity", and "every move she made was charged by negativity".  Billy Bragg, on tour in Canada, posted a message that was, typically, more thoughtful. “This is not a time for celebration. The death of Margaret Thatcher is nothing more than a salient reminder of how Britain got into the mess that we are in today... of why cynicism and greed became the hallmarks of our society. Raising a glass to the death of an infirm old lady changes none of this,” he wrote.

For me, Monday was a reflective day, as it will have been for many people of my age whose working lives began as Thatcher came to power, and are now nearing their end; and who, surprisingly often, have felt the need to leave the country she created. Bragg is right. There is nothing to be gained from pouring vitriol on someone who has died at a great age after a long illness; the more so because, despite the ghastly results of her career, she was by all accounts capable of great kindness and charm in her personal life. What is more important is to understand who she was, the world she found, and the one she wanted in its place; and why, contrary to popular belief, she did not bring it about. 

 

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Far too early on the morning of Friday, March 1, 1974, a small grey Morris car chugged north from Oxford to Banbury. It was barely light and the skeletal trees along the road were just beginning to resolve themselves against a dull grey sky. I was sitting in the passenger seat, wearing a dun-coloured raincoat and smoking. I smoked a lot then.

Robin was smoking too. He was a teacher at the college I attended; another of the teachers had just stood as Liberal candidate for Banbury in the general election that had been held the previous day. We had volunteered to act as scrutineers at the count. Then as now, most constituencies began their count as soon as polls closed, and declared overnight; but Banbury was and is largely rural, and the sealed ballot boxes were driven in the night to the Town Hall and opened in the morning.

The scene that we saw in the Town Hall on that day in 1974 was probably much as it was when the reforms of the 1870s ushered in the secret ballot. The hall was lined by 15 or 20 shaky trestle tables; at each there sat a civil servant – most were middle-aged men, soberly dressed in suits and ties despite the early hour. Beside and opposite them sat the scrutineers for the three parties, all volunteers, who observed the votes as they were sorted, and would stop the civil servant if a vote for their candidate landed in the wrong pile. In fact, we simply watched for mistakes; if a Labour vote fluttered into the Liberal pile by mistake, I politely told the teller, and my companions did likewise. All were friendly; the Conservative scrutineer, an elderly man, was warm and chatty, the Labour man quieter but pleasant enough. Now and then two more civil servants would come to the table with another ballot-box. These were of green-painted tin; I should not be surprised if they too had been made for that first secret vote. One was resolutely jammed shut and it took the efforts of three civil servants and a chisel to prise it open.

The count took five or six hours and we declared at midday. Our candidate, Geoff Fisher, came third but had done well to increase the Liberal vote; at least one village, as I recall, appeared to have voted Liberal en masse. (I have long forgotten which one, but in any case, it would be illegal to say.) Victory went to the Conservative, Neil Marten, a distinguished war hero. Someone (Marten, I think) lit a cigar below the No Smoking sign, there were polite speeches, and Robin and I started for home, bleary-eyed but not displeased.

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I am looking back at another world. It ran at a slower pace.  Telephones had heavy circular dials; wait a minute or so as the exchange clicked and whirred; a trunk call was costly, not lightly made. I can remember the excitement later that year when my sister spoke to me from Dunedin, her voice echoing over 12,000 miles with a time lapse so that I had to wait some seconds after speaking before she replied. The little Morris that took us to Banbury still had a starting handle for emergencies; the rear axle rode on glorified cart-springs. In the summer I left college and started my first job, and used a typewriter with heavy keys and a bell that clanged as you reached the margin and returned the carriage, and carbon papers that smeared your fingers black.

But change was coming. Less than five years earlier, my family had crossed the North Atlantic on a Canadian Pacific liner; it was still an economic choice. By 1974 the wide-bodied jets had ended that forever. Concorde prototypes from Fairford flew over our house daily, and in two years they would carry the rich to New York in just three hours. The computers that would replace my typewriter had arrived, although they were still disguised as calculators. Colour TV had arrived too, in a form we were assured was “much better than the American system”. (Actually it was. BBC engineers referred to the US system, NTSC, as “Never the Same Colour”.)

It was also becoming clear that Britain was not prepared for the changes ahead. Nothing exemplified this so much as the motor industry. Long shielded behind high tariff barriers, it had from 1960 finally faced real competition with the first-duty-free imports – Volvos from Sweden, which was in the European Free Trade Area (and at that time drove on the left, like us). From 1973, when Britain joined the misnamed Common Market, the forerunner to the EU, competition got very hot indeed. Herein was the triumph and tragedy of British industry. Britain’s Austin-Morris had pioneered the mass production of cars that were transverse-engined and front-wheel drive, as most cars under two litres now are. The British arms of Ford and General Motors had led the way in unitary construction, belt-driven camshafts and more besides. But quality was dire. A 1972 Morris Marina I bought some years later was so crudely built that the door-handle assemblies moved around in their housings. Unit profitability was also low, through a combination of poor accounting and labour troubles. The latter were blamed for much of the problem although they can only have been part of it. In any case, the unions themselves were not an accident. I remember that when I was 16, the local newspaper carried an item about a man who had retired from the Morris works after 50 years. “Surely the unions have ruined everything today?” he was asked by an eager journalist. “No, it’s a good thing. Back then you could get picked on,” he said. Union activists probably often were irresponsible, but the industry had made its own hell over many years.

While the motor industry suffered a special problem with quality, other sectors also suffered; the shipbuilding industry, in particular, faced harsh competition from Sweden and Yugoslavia and later from Korea. The aerospace industry, too, faced the consequences of poor decisions; the Vickers VC10 was in most respects one of the finest airliners ever built, but had been designed to serve the “hot and high” airfields of the Empire and Commonwealth, not the high-volume routes where the future lay. In the home, one’s radio had been built by Morphy Richards or Dynatron; by 1974, it came from Grundig or, increasingly, Hitachi.

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The political establishment could not respond to the changes. The practice of politics, then, was oddly amateurish; the scene in Banbury Town Hall must have been pretty typical. And neither major party had any real sense of direction.

The Conservatives, in 1974, were an odd coalition. In the 19th century they had represented the aristocratic and landed interest, but in the 1870s their greatest leader, Benjamin Disraeli, had transformed them, introducing the idea of the patrician party that cared for the people; he introduced reforms such as the Artisan’s Dwellings Act, thus establishing that a government could take active measures to help its people. It was a strange precedent to be set by Tories, perhaps; but it was so – a transformation wonderfully described by Edgar Feuchtwanger’s 1968 monograph Disraeli, Democracy and the Tory Party. In the mid-20th century this spirit was far from dead in the party; in particular, it made strenuous efforts in the 1950s and early 1960s to provide sufficient working-class housing, although not always with happy results. Conservative governments were also not afraid, at times, to interfere in industrial policy, and Midland motor manufacturers were encouraged to replace shipbuilding in the West of Scotland, again not always with success. Thus the Tory Party was not really a free-enterprise party; rather, it was a coalition of businessmen, landowners, and country gentry, presided over by a bunch of amiable toffs who had distinguished themselves in Churchill’s wartime administration but had little real idea of what to do with the peace.

If voters sought a cohesive ideology in Labour instead, they did not get one. Labour had always been a seething mass of internal contradictions and stabbed backs. Between 1945 and 1951 it had pursued, in government, policies of nationalisation and social welfare, but there had been a long-running leadership conflict between socialists on the one hand and moderate social democrats on the other. The latter prevailed in the shape of Hugh Gaitskell, but his early death in 1963 left the leadership to Harold Wilson, who many remember today as a member of neither faction; simply an operator. Throughout the 1960s and early 1970s he led a party balanced on a knife-edge between union-driven, socialist and occasionally out-and-out Marxist policies, and centrist managerialism.

It was these two ill-defined forces that faced each other in the election of 1974. The big figures were the two main party leaders and the big beasts of their parties, plus the centrist Liberal leader, Jeremy Thorpe, a flamboyant individualist later charged with (but not convicted of) conspiracy to murder. Few thought of the little-liked Education Secretary, Margaret Hilda Thatcher. But in 1975, in the wake of the party’s defeat, she ran for the leadership and, to everyone’s surprise, including her own, she won. In the meantime, the minority Labour government lurched from one crisis to another, winning a fresh election in the autumn of 1974 with a tiny majority that it could not keep.  In 1979, widely blamed for unemployment and industrial trouble, it lost an election. Thatcher became Prime Minister. 

 

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 As former Development Minister Clare Short pointed out on Radio 4’s PM programme on Monday, Thatcher was not a conservative; she was a radical right-winger. But no-one realised it. They were simply voting out a government they felt had failed, and choosing the alternative. They were wrong. Ideology had arrived on the right of British politics.

Thatcher was driven by a curious mixture of anti-Keynesian monetarist economics and a homespun work ethic. The former was a current of the times, led by the Chicago economist Milton Friedman. It should be seen in context; Europeans were still haunted by the German hyperinflation of the early 1920s, and in Britain inflation of over 20% in the 1970s had eaten into savings and had also driven the wage claims of powerful unions. At the same time, Thatcher was also driven by a deep belief in self-reliance and enterprise. Her father had been a successful shopkeeper; in her view, everyone could be, if they would just get up early enough. Mixed up with half-digested economic theory was a dream of a nation of self-reliant Britons where everyone had their own business and owned their own house, and the state had no role in the economic lives of men and women. As someone wrote the other day in another context, it is a common phenomenon: nostalgia without memory.

I said earlier that, contrary to popular belief, Thatcher did not bring about the change she wanted. Nothing exemplifies her failure so much as this fantasy of a nation self-reliant burghers and prosperous artisans. Subsidised industries went, along with the unions that defended them. If their business was out of date, held Thatcher, it should close. Many did. Mining was old-fashioned, coal was old-fashioned, the mines were a hotbed of unionism. So they went, after one of the bitterest industrial disputes in British history. The shipyards went. The printing industry went. Some car plants also did not survive.

Not all of this could have been prevented. The print unions, in particular, were resisting change that was both inevitable and beneficial. But the wholesale deskilling of a workforce was a blunder on two profound levels. First, we lost the structure of craft apprenticeships and industrial training that allowed German industry to move upmarket and adapt to a changing world. In Britain it was allowed to die, and we were left to make a living by selling other countries' products to each other. Second, a skilled working class with a sense of identity and history was replaced, in many places, by a lumpenproletariat, in which some families have now not worked for two generations. Aspiration and enterprise were not encouraged. They were destroyed along with the pride and sense of self that drives them.

In another, completely different, way, Thatcher’s drive for individual self-reliance backfired equally badly. The sale of public housing was part of a burgeoning property market that people eventually felt obliged to enter whether they wished to or not, and the average householder was burdened with a lifetime financial commitment that constrained their enterprise and mobility as surely as a pair of concrete boots. When the housing market faltered in 1989, a million British houseowners found themselves in negative equity (in US parlance, under water). As we now know, far worse was to follow 17 years later. The “property-owning” democracy is not about self-reliance. It is a prison.

But nothing illustrates Thatcher’s miscalculation so much as the decline in democracy. In a 2008 Guardian article, Vernon Bogdanor pointed out that when Thatcher became leader of the Conservative Party in 1975 it had a membership of about 1.5 million; 30 years later it was down to 145,000. Labour underwent a similar decline between 1996 and 2008, from 400,000 to 150,000. In the 1950s one Briton in 11 had belonged to a political party; now just one in 88 did. Voter turnout, well over 80% in 1974, dropped to just 59% in 2001 (it has since recovered a little). One must be very careful about oversimplifying these phenomena; they’re not confined to Britain and besides, they do not always indicate a simple disengagement from politics – many who no longer vote are engaged in other ways, on single issues or through social media. But the fact remains that there is an increasing disinclination to take part in the mainstream democratic process. 

This would hardly please Thatcher. She was often called a fascist, but anyone who believes she was one of those should meet a real one. In fact she had a profound commitment to democracy; her admiration of Karl Popper’s later works, and her feelings about the Soviet bloc, were evidence of this. But her definition of democracy seems to have been very narrow; its only instrument was the ballot box, and a government so elected might do as it wished. The notion that the governance of Britain would be negotiated between different forces, all of which had a role in giving people an equal voice, would be quite alien to her.

In particular, she would have claimed that her adherence to free enterprise made her an advocate of economic democracy, but that cannot exist without free collective bargaining as well; if it does, a minority will hold the reins of power. This is effectively what happened to Britain after 1979, as the power of trade unions to represent their members was steadily squeezed. But the suggestion that there was any contradiction there would have left her puzzled at best. She would have pointed out, quite sincerely, that her privatization of the public utilities was meant to give ordinary people, as small investors, genuine ownership of national assets.

The world does not work like that. Popular capitalism is a dodgy concept, simply because anything that is of value and for sale will be sold by those who need the money to those who need it less. Shares in public utilities were no different in that respect. So her reforms did not give us those assets; they removed them from us. But that was genuinely not the intention.

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Neither did Margaret Thatcher really create the strong, united Britain that she wanted.

Asked on Tuesday about his successful advertising campaigns on the Iron Lady’s behalf, Lord Saatchi insisted that it was not his marketing; it was the product. “She wanted Britain to be great again,” he told Channel 4’s John Snow. He was not wrong. In 1979 many British people were genuinely affronted by what often seemed like the despondent management of decline. Thatcher seemed to promise, if not a resurgence, at least a certain pride; a Unionist who believed in a very united Kingdom, proud in the world. To many who admire her, Thatcher achieved exactly that; she helped destroy Communism, defended Britain from the Brussels menace and re-established Britain’s place in the world. 

Did she? Four points might be looked at here. The first three concern her greatest foreign-policy triumphs: her part in the destruction of the Eastern bloc, her resistance to a creeping power-grab by Brussels, and her victory in the Falklands war. The fourth point is the unity of the United Kingdom itself.

First, there is the notion that Thatcher, in concert with Ronald Reagan, won the Cold War and brought the Soviet Union crashing down. Where on earth does this idea come from? The bureaucratic centralised structure of the Eastern bloc was riven with internal contradictions that had nothing to do with either Reagan or Thatcher, however warm Thatcher’s relations with Gorbachev may have been. The latter relationship, in any case, cannot have counted for much inside the USSR; Gorbachev’s agenda had little to do with Thatcher. As he came to power, he is alleged to have said to his beloved wife, Raisa: “We can’t go on like this.” But his wish was to reform a sclerotic system, not to transform it into capitalism.

In any case, upheaval within the Soviet bloc was nothing new. The most spectacular instance had been in 1956, when Polish Communist leader Władysław Gomułka broke the absolute link with Moscow – up to a point; in the same year the Hungarians tried to go farther, and were invaded for their pains. But 14 years later Gomułka himself was overthrown. When Solidarity deposed Wojciech Jaruzelski in 1989, they will have welcomed Thatcher and Reagan’s support, but they scarcely needed it; the Polish shipyard workers had already brought down Gomułka in 1970 and his successor, Edward Gierek, in 1980. None of this is to say that Thatcher and Reagan played no role in the downfall of the Eastern Bloc. But it is hard to see that that bloc would still exist today, even if they had not.

What about Thatcher’s heroic resistance to European domination? This, too, holds little water. Her noisy Euroscepticism has drowned out the fact that it was she who signed the Single European Act in 1986, creating a single market that bound the states of Europe together in very much the way that European leaders had intended when they created the European Coal and Steel Community 36 years earlier. To be sure, Thatcher very publicly said “No, no, no” to Jacques Delors’s dreams of European federalism. But would those dreams ever have come true? Current events in Europe suggest not. The creation of the single market bound us to Europe far more firmly than anything Delors had had in mind. 

There remains the Falklands war. It is true that Thatcher acted with great courage when she insisted on mounting a very dangerous mission to retake the islands from the Argentines. But it might have been even better if she had not lost them in the first place. Before March 1982 her administration seems barely to have been aware of the islands, and casually withdrew the patrol vessel that served them, Endurance, as a cost-cutting measure. The Argentine junta interpreted this as a sign of indifference. It was a tragic misinterpretation. Yet when they landed, they must have thought their optimism was justified; they found just 70-odd troops, 20 of whom were only there because they were changing shifts. Nothing can detract from the resolution Thatcher showed through that crisis. But the crisis had arisen from her own government’s neglect. The resulting nasty little war distresses people to this day, dividing British people from Argentines and from each other.

Last but not least, under Thatcher, the great nationalist, the United Kingdom was weakened from within. The conflict in Northern Ireland was not of her making, and was then at its zenith; it would be unfair to blame Thatcher for a cycle of violence that began before her birth. Nonetheless, there seems to have been little will to see shades of grey. One wonders whether things might have been different, not least because, within a few years of her departure, they were.  But perhaps Thatcher’s greatest blow to the unity of the UK was to introduce the deeply unpopular poll tax in Scotland a year before the rest of the country. Many Scots would date the beginning of the likely break-up of the United Kingdom to that tactless and inexplicable decision.

Margaret Thatcher wanted a country of hard-working, aspirational Britons who owned both homes and shares. She created a country where people have been crippled by the debt they have incurred in trying to own their own homes, and where wealth has been concentrated in the hands of those with an eye for the main chance. She wanted a strong, united Britain; she left a country on the verge of disintegration, and wholly at the mercy of market forces. She believed profoundly in democracy, or so she thought; she left an apathetic and cynical people deprived of the means to influence their future.

Nothing so much exemplifies Thatcher’s legacy as the manner of her death – in the Ritz Hotel. It must have been a very different departure from that of the residents of Hillcroft nursing home in Lancaster or Ash Court in London, where the abuse of Alzheimer’s patients has been alleged; or from the 250,000 vulnerable pensioners said by the Equality and Human Rights Commission to have been receiving “poor or very poor” standards of care from private contractors. It is an odious contrast. But it is one that Thatcher, who was neither cruel nor selfish, would genuinely not have relished. The real message here is of hubris, of a misplaced sense of one’s country and its people, and of the pursuit of ideology in place of common sense. 

On Wednesday, the current British Prime Minister, David Cameron, described Thatcher as someone who "defined and overcame the great challenges of her age". In fact, more than almost any other British prime minister of the 20th century (except, perhaps, Ramsay MacDonald), she was an abject failure in almost everything she tried to do.

  

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One day in 1987, I was sitting in a pub in London’s Farringdon, then a district of repro houses, platemakers, commercial photographers and other artisans. My companion, now a well-known journalist working in Scotland, was then a colleague of mine on Fishing News, the weekly journal of the fishing industry. She was a frequent drinking partner. I was trying to articulate something that I did not quite understand. The atmosphere in London, I felt, had changed steadily during the 1980s; not something one could define; a change in the way people thought and felt and behaved towards each other. 

“Greed,” she said. 

“Yes,” I said.

A few months later, I left. I went to work as a development volunteer in the east of Sudan. It was the start of a 25-year journey that was to take me to the baked-earth plains of the Horn of Africa, then the Eastern Himalayas, the Atlantic Forest of Brazil, the Amazonian headwaters of Ecuador, Moscow and Kyiv, the emerging nations of Soviet Central Asia, and Rome, Brussels and Washington. Finally, in August 2008, I came to rest in the oddly rootless yet rooted cosmopolitanism of New York. 

On Monday morning I left my sunlit flat and walked along the north edge of Central Park. It really was the first day of spring. The day before, we had walked through a cutting wind; today there was a gentle warmth to the sun and a green haze on the trees, but I wasn’t there. I can’t say why, but I suddenly remembered the Banbury road on a winter’s day, peering out through the small windscreen of a little Morris car at spectral trees that loomed through the early morning mists of a late-winter morning, a fug of cigarette smoke around us, a bare metal dashboard with no radio, the collar of my long coat turned up against the cold. I began to wonder if it was time to begin the long journey home.

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Robbins's novel The Lost Baggage of Silvia Guzmán (Third Rail) is available as a paperback (ISBN 978-0-9914374-0-5, $16.99 USA, or £10.07 UK) or as an eBook in all formats, including Amazon Kindle (ISBN 978-0-9914374-2-9, $2.99 USA, or £1.85 UK).

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Civil society and social capital

Three weeks into a new year; it's been a mild winter in New York so far, but now it's cold and getting colder. Time to stay indoors and finish the thoughts on democracy that I began with my last post.

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That post (December 31 2012) started with the premise that democracy, so often regarded as automatically a good, ought to have to defend itself. It concluded that democracy is indeed A Good Thing but needs to be based on much more than the right to vote if it is to be meaningful.

I argued that there were three essential dimensions to democracy, of which the right to vote out a government was only one. The second is the right to organise;  if that dimension isn’t there, people may be as poor and miserable under democracy as they are under any other system. But even that does not in itself create a world in which people can reach their full potential and can not be bullied. What’s needed is a third dimension for democracy – a society in which horizontal, as much as vertical, links between people are the norm.

 Many people would look for evidence of those horizontal norms in a vigorous civil society. What does that consist of? And does it necessarily imply democracy for all? In this post, I’m going to argue that it can – but not on its own.  I will also look at whether it is possible to create that third dimension of democracy.  Can we?

What is civil society?

Civil society is often too loosely defined. The World Bank has described it thus: “Civil society consists of the groups and organizations, both formal and informal, which act independently of the state and market to promote diverse interests in society.” This is clear enough, but rather broad. A 1998 concept paper developed for the Ford Foundation defined it thus: “An intermediate realm situated between state and household, populated by organized groups or associations which are separate from the state, and are formed voluntarily by members of society to protect or extend their interests, values or identities.”  (This seems to exclude non-government organisations, or NGOs, that promote the interests or identities of others; but in so doing, they are promoting their own values, so perhaps they fit in.) This is still a very inclusive definition. Indeed, this could cover everything from Greenpeace to amateur choirs to the guilds of medieval Europe.

Still, the American sociologist Robert Putnam (of whom more later) has argued that the existence of even a stamp-collecting circle may indicate the health of an economy and society. So let us accept that we are stuck with broad definitions, at least for now. (I am not including political parties as part of civil society. If it is seen as the space between the household and the state, then bodies that might themselves become part of that state should be excluded.)

Does civil society as normally understood – that is to say, NGOs and interest groups – enhance democracy?

The simplest way to answer that by asking about its effect on people’s welfare.  On the face of it, it must do. Civil society in this sense is the instrument through which the people ensure that the state is acting in their interests and not against them. Without it, they have only the sanction of the vote at (usually) predetermined periods, and that is not enough. Amartya Sen, perhaps the greatest modern intellectual proponent of democracy, has acknowledged this very clearly. “Democracy does not serve as an automatic remedy of ailments as quinine works to remedy malaria,” he says in his much-read 1999 book, Development as freedom. “The opportunity it opens up has to be positively grabbed in order to achieve the desired effect.”

Sen sees participation in public affairs as an intrinsic good. But he also sees a utilitarian justification for participation, both for economic policymaking – and in setting values for society; if one is corrupt it is not necessarily because one is evil, but because one perceives such behaviour as the norm. If such norms are set by everyone in society, including the victims as well as the perpetrators, then it is less likely to be acceptable. This suggests that the participation in society indicated by a lively civil sector may limit corruption.

This is a tangible benefit, because corruption lowers living standards. In a 2001 speech in Mumbai, the economist Nicholas Stern pointed out that in those Indian states regarded by businessmen as a bad place to operate, enterprises were visited roughly twice as often by public officials as in those states with a good investment climate. While not explicitly connecting this with corruption, he does mention elsewhere the “extent and nature of regulation… and the corruption associated with it.” In the ‘good’ states, wages were rather higher, suggesting that the real losers may often be the workforce. Corruption lowers living standards – even, perhaps, for the corrupt. The implication of this, through Sen’s eyes, would presumably be that a strong civil society protects people from poverty.

How else might civil society help people besides limiting corruption – if it does?

In developing countries, the role of civil society is most obvious at ground level. While international NGOs such as Oxfam and MSF attract attention, their work may be supported by a number of much smaller international and national NGOs. An example is Sudan, where the 1984-1985 crisis saw many Eritrean, Ethiopian and Tigrayan refugees arrive in the refugee settlements in the Eastern Region.  A 1988 inventory of the settlements that I helped prepare two years later showed that although much of the relief and development work in the region was funded by UNHCR, implementation on the ground – that is, basic health services and the like - were run by NGOs, sometimes international but often indigenous. UNICEF does the same; its work around the world for children is through implementing partners, often government but also NGOs, including small local bodies as well as international ones. It sounds obvious to anyone involved in development, but direct interventions on the ground by huge international bodies are doomed to failure; however much money is available, some sort of civil society is needed to get it to people on the ground.

Moreover, in developing countries civil society does far more than enable outside intervention. It often take the form of less formal community-based organizations through which people organise themselves for mutual benefit. These can include rotating savings and credit associations that provide collateral-free credit and are also social safety nets. Or they might be burial societies or even brewing or drinking circles. In a 2001 paper, researcher Diana Mitlin quoted studies that had found large numbers of grassroots organisations in (for example) Quezon City, where 22 were identified in an area of 8,000 households; Bangkok, where there were over 30 associations in one low-income settlement; Mumbai, where there were 42 organizations spread over 3,500 households; and Nairobi, where 27% of women belonged to some sort of organization – usually either brewing or rotating credit associations.

Civil society...  A good thing?

The implications so far seem to be that civil society is a good thing; it’s a space between the household and the state that lets the former defend itself from the latter and from corruption, it channels development aid and it promotes self-help. It is, in short, the vehicle for the horizontal interactions that I cited, in my previous post, as the essential third dimension of democracy.

But civil society is not in itself evidence ofthis third dimension. Mitlin, for example, warns that grassroots organizations are not always positive; they may be dominated by one group or individual, reinforcing local feelings of powerlessness. They may involve few of the community, or their membership may be skewed; or groups may conflict with each other. NGOs, too, do not automatically command respect of their target groups. Visiting EU-funded development projects in the former Soviet Union some years ago, I was told that “indigenous” NGOs were sometimes poor partners, being seen by the locals as organisations whose main aim was to secure foreign development funds rather than to help their own people.

This is of huge significance in planning development policy. International organisations and national development ministries in developed countries have adopted working with civil society, particularly grassroots organizations, as a norm. This cannot be wrong in itself. Top-down projects are often founded on false assumptions and in any case, civil society can mobilise resources in a way that the state alone cannot. Besides, people have a right to participate in their future. But if grassroots organizations or NGOs behave in a top-down manner to their own members, might it be safer to do without them?

Perhaps the way civil society bodies behave is a reflection of a country’s broader polity. Mitlin seems to think so. She argues that the power structures linking people to the state can also define this behaviour to a great extent. “Problems of leadership and participation within grassroots organizations cannot be separated from the broader context of state officials’ and politicians’ relations of patronage with community leaders,” she says. It’s a reminder of de Tocqueville’s view, quoted in my last post,  that it “is unreasonable to suppose that local liberties can be created at will, or maintained for any length of time, when general liberty is extinct.”

De Tocqueville was thinking of formal state-level power structures, but this is also about the relationships between people – whether their nation consists of 10 million individuals, to each of whom the state belongs; or two million families that distrust each other, and between which an unloved state keeps the balance by force. The latter description could certainly be applied to some countries that are widely seen as democracies, and in such a situation a strong civil society should perhaps not be seen as an automatic good.

Francis Fukuyama, in his 1995 book Trust: Social Virtues and Creation of Prosperity, wrote: “Cartels, guilds, professional associations, unions, political parties, lobbying organizations, and the like … seldom serve the broader economic interests of society as a whole… Many economists regard the proliferation of such groups as a drag on overall economic efficiency.” This is not an isolated view. In a controversial 1982 book, The rise and decline of nations, economist Mancur Olson argued that the growth of such bodies has been responsible for the decline in some Western economies, notably Britain’s. “The gang fight is fully as rough as the individual duel, and the struggle of special-interest groups generates no magnanimity or altruism,” he wrote.

Civil society, then, can be a sign of a healthy society – but it isn’t always, and doesn’t prove the existence of that elusive third dimension of democracy, the network of horizontal rather than vertical links that make the state a servant and not a master. So there is a need to find a link that causes civil society to enhance the quality of a democracy. The Harvard political scientist and thinker Robert Putnam has long seen such a link, and his 1993 book Making democracy work: Civic traditions in modern Italy has been seminal.

Civil society and social capital: the Italian experience

In 1970 authority was devolved to new local governments in Italy. This enabled Putnam and his associates to compare the performance of these institutions, all of which were starting, on paper, from the same base – and see which ones did better, and why.

The task took over 20 years. Putnam and his colleagues used a number of ruses to test government performance – for example, writing to the local administration to ask how one could be reimbursed for medical costs incurred abroad, and comparing the speed and quality of the reply. Relative punctuality in fixing the annual budget was also revealing. Taken together with public’s own perception of the region’s efficiency, there was a startling difference between the wealthy north and relatively poor south. Clearly, the richer a region was, the better its government was likely to be; but why?

Putnam found a correlation not just with per capita income, but also with ‘civicness’ – a tendency to associate in groups. The range of groups he accepted for this analysis was very broad, including for example choral societies. The number of such groups varied from one per 1,050 inhabitants in Trentino-Alto Adige to one per 13,100 in Sardinia. Newspaper readership was also much lower in impoverished regions. So Putnam did not conclude that wealth alone created civil society. The evidence seemed to suggest a more complex link; the south had then been, if anything, more industrialized and wealthier than the North. ‘Civicness’ earlier in the century seemed to indicate more economic development now. “Economics does not predict civics, but civics does predict economics,” Putnam wrote.

It is of course one thing to find a purely correlative relationship, which of itself proves nothing. It is quite another thing to find causality. But Putnam claimed he had. His argument, briefly stated, was this: in the Middle Ages, the collapse of existing power structures all over Italy led the north and south to diverge. The South and Sicily found themselves part of a strong Norman empire: “As the centuries passed, the steep social hierarchy came to be ever more dominated by a landed aristocracy endowed with feudal powers,”  wrote Putnam. In the north, however, no-one imposed order; rather, there was a dark chaos against which townspeople were forced to unite: “The solution… was quite different, relying less on vertical hierarchy and more on horizontal collaboration. …The extent of popular participation in government affairs was extraordinary.”

Putnam compared preference voting and local-government patronage to demonstrate that the south continued to have a system of vertical social relations, whereas those in the north were based on horizontal relationships and, crucially, trust in others outside the family. He regarded this as historically determined, and although he stopped short of saying that that there was no escape, he did strongly imply it. “The fate of the Mezzogiorno [midday – e.g., south] is an object lesson for the Third World today and the former Communist land of Eurasia tomorrow, moving uncertainly towards self-government… Palermo may represent the future of Moscow.”

To Putnam, what was lacking in the south was social capital.

Social capital: The missing link?

As researchers Narayan and Pritchett put it some years ago, “Social capital… is many things to many people: it is the proverbial elephant felt by the five blind men.”  Francis Fukuyama, in a paper prepared for an IMF conference in 1999, commented that: “While social capital has been given a number of different definitions, many of them refer to manifestations of social capital rather than to social capital itself.” The definition he chose was: “An instantiated informal norm that promotes cooperation between two or more individuals.” This fits well with the description given by the sociologist James Coleman in the 1988 paper in which he is sometimes said to have ‘invented’ the term.

Broadly, it is the existence of a relationship with or trust in others that lowers transaction costs in such a way as to make economic or other interaction much easier. Coleman cited the community of Jewish diamond merchants in New York, who can lend each other gems for inspection without huge investment in security and insurance; and traders in Cairo’s Khan el-Khalili market, who cooperate so closely that unrelated enterprises function in effect as a huge department store. From my own observation, the great souk of Aleppo in Syria functioned in a similar way  before the awful current conflict. Moreover traders in similar commodities tended to work in the same alley, and may have shared mosques and baths. Access to such social capital may have a profound effect on living standards, although much research remains to be done on why.

Clearly we are talking here of horizontal linkages – whereas, as we have seen, civil society organizations are sometimes part of a series of vertical linkages between the individual and the state, and may themselves be based on clientelism and patronage. After all, all sorts of organizations constitute civil society, from Greenpeace to the Ku Klux Klan. We should therefore not confuse social capital with civil society although it is often done, either overtly or by implication. Is it the prevalence of social capital that is the elusive third dimension of democracy?

We should be careful here. Social capital is a young concept. Having arisen from academia, it was seized upon in the 1990s by the World Bank, which in 2000 published Social capital: A multifaceted perspective – a collection of  papers that further refined and defined the concept and its place in development. It’s an absorbing and distinguished volume. But it is easy to see why the Left saw social capital and its place in development becoming a new orthodoxy if unquestioned, rather as neo-liberalism did in the 1980s. Professor Ben Fine of SOAS warned in 1999 that although the Bank was apparently abandoning the pure neo-liberal consensus, it was smuggling social capital into its position instead.

There were some problems (for me) with Fine’s argument, but he was surely right to warn that a causal link between social capital and living standards should not be established on the basis of a few studies. One should be equally careful of assuming that it is the essential third dimension of democracy, and somehow gives people ownership of the power structures that define their lives. Moreover, Fine, Fukuyama and others have suggested that social capital may manifest itself through membership of groups with objectives that are either totally negative, or clash with someone else’s. These groups could include terrorist organizations, or they could be criminal.

But while membership of such groups may confer personal advantage, is it social capital? The term ‘social’ capital implies a public good – that is to say, something from which individuals in that society can profit although they have not contributed, like clean air, civil security and fiscal stability. A culture of trust, in which transaction costs are lowered and productive cooperation made possible, is surely another. What some have called perverse social capital is not social capital, just personal capital.

Moreover if the term ‘social’ implies a public good, an organization that uses or augments social capital must be open to anyone who could reasonably hope to profit by it. Thus if I wish to join a choral society, I will be admitted (unless I truly have a voice like a corncrake; but in that case, would I wish to join?). The same applies to a local housing association or community group. But if I wish to join the Mafia, I cannot drive into Corleone and ask for an application form at the post office. Social capital, then, is a series of horizontal linkages with positive outcomes.

But can it both be created (or recreated), and be converted into civil society elements that enhance both living standards and participation in democracy? If not, then whether it is the ‘third dimension’ or not might be moot. This is important, because what is at issue is whether society can be improved.

Converting social capital

Trust cannot easily be created.  Putnam argued that an individual’s most rational response to collective irrationality is to join it: “Individuals responding rationally to the social context bequeathed to them by history reinforce the social pathologies.”

But several commentators have found Putnam’s determinism too much. Moreover there are examples of the apparent creation of social capital. The highly-regarded Cornell academic, Professor Norman Uphoff,  has used the example of the Gal Oya irrigation scheme in Sri Lanka, which mobilised latent social capital. In a 1988 paper, James Coleman described how residents on a new housing estate united against the contractor over building defects – and remained together afterwards as an informal housing association. He also recalled that New York print workers formed a social club that evolved into a specialist labour exchange and later provided facilities for a political party.

Can the state, or development projects, encourage this process? Maybe. The aftermath of the Soviet bloc’s breakup provides some examples. In Kyrgyzstan, where landholdings were severely fragmented by the post-1991 land reform, the EC’s Tacis programme brought farmers together for marketing and credit provision. The programme also helped municipal governments in the European Union work with counterparts in the former Soviet bloc, and several of the resulting schemes – for example, for multiply-handicapped children and a crisis centre for women – were run by and for the community. But an influential ‘champion’ for these projects was generally needed on the CIS side, indicating that vertical power structures were still in place. And in any case,  was social capital being created, or simply enabled?

A useful analytical tool here is Norman Uphoff’s division of social capital into two types: cognitive and structural. The former covers norms, values, attitudes and beliefs that create and “reinforce positive interdependence and ...mutually beneficial collective action.” Structural forms, by contrast, are the roles, rules, procedures, precedents and networks that assist such collective action “by lowering transaction costs, coordinating efforts, creating expectations, making certain outcomes more probable, providing assurance about how others will act, and so on.”

It seems that structural forms help cognitive forms express themselves. A good example may be found in the creation of agricultural service cooperatives in the former Soviet Union after 1991. Agricultural output declined by more than 35% between 1990 and 1996, largely because the end of the collective farm had deprived farmers of inputs such as fertilisers and cut them off from their markets. In Ukraine in the late 1990s, smallholders, many of whom had taken a cow as part of their share of a dissolved collective, produced 65% of the milk, but only 10% of their production was reaching dairy plants. The EU’s Tacis programme helped farmers fight back through an agricultural cooperatives project. The new cooperatives provided alternative sources of inputs and marketing. They did not always take root, but there were notable successes.

Crucially, the state had contributed structural social capital, in the form of appropriate legislation and policy. But in doing so, had they created the cognitive social capital from scratch, or simply allowed latent networks of trust and cooperation to reassert themselves? Maybe the latter. In 1917, before the Revolution, there had in fact been about 11,500 agricultural cooperatives in the Russian empire, with about 1.1 million members. Norman Uphoff, in his discussion of the Gal Oya scheme, reports that there was residual social capital in the form of cultural practices.

None of this proves that cognitive social capital can not be created from scratch, and the jury is still out. But there is scant evidence of it. What is clear is that it can be recreated, with judicious support from the state or from development agencies – for example, legislation that protects those who take part in joint enterprises, or a guarantee that no-one will be penalised for collective action. There also seems to be sufficient evidence that social capital, seen as horizontal networks of trust, will eventually manifest itself in the form of civil society organisations that have their roots in a society in which relationships are based on trust and not on patronage and power structures.

So – back to the questions I began with. Does the existence of civil society imply a healthy democracy, complete with that third dimension? Not necessarily. Can that third dimension be created? Yes, in a manner of speaking, through the creation of structural social capital. And it’s here that we should see a very large danger sign.

The creation of structural social capital should be confined to enabling mechanisms; good standard statutes for co-ops, for example, or mutual savings systems. At no time should the state believe that it can create cognitive social capital. Should it try, we would be back in the era of the utopian belief systems that made the twentieth century such a dodgy place to be.

Which takes me right back to the thought with which I began the first of these two posts a few weeks ago  –  the imposition of democracy upon the unwilling or disinterested.  A country may have little social capital, either because it has a harsh economic system in which people are forced to compete for survival, or because they are divided along ethnic and religious lines. I have lived in examples of both types of country. In both cases, social relations were vertical; the horizontal structures were not there, and there was scant trust between people. One cannot create social capital from above or outside, because a horizontal society is about what people do of their own free will. All one can do is hope that they do it. The third dimension of democracy is essential; it can be encouraged; but by definition, it cannot be created by anyone other than the people themselves.