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Bookmark and ShareWritten by Aleksi Knuutila and Eilis Lawlor from the Valuing What Matters team

It does exist after all. Apparently it has been broken for a while and now requires enlargement. Delivering the 2009 Hugo Young lecture at the Guardian, David Cameron stated that he wanted a “big society”, in place of Labour’s “big state”. He believes that the “growth of the state has promoted not social solidarity, but selfishness and individualism”. The alternative is to “help families, individuals, charities and communities come together to solve problems”.

Cameron’s calls for cuts in the scale of government are obviously pandering towards the fiscal conservative wing of his party. To some extent he continues the tradition of earlier conservatism, defined by Thatcher, in which the state was blamed for the moral degradation of society. The state fosters a dependency culture, discharges people from their responsibilities, and displaces families as the proper purveyor of moral values.

Cameron’s true volte face is in coming up with new victims for the state’s malice. Cameron blames government for worsening many of the themes that have traditionally been the concern of the left: the gap between the rich and the poor and material deprivation. The large size of the state, he claims, is “inhibiting, not advancing, the progressive aims of reducing poverty, fighting inequality, and increasing general wellbeing”.

This appears to be a canny political move. Issues such as poverty and particularly inequality would traditionally be far from the conservative agenda. Cameron believes that by naming big government the culprit, he can mobilise conservative support even for traditionally lefty topics. He can move into Labour’s territory without losing his party’s base, as long as a smaller state is presented as the solution. So far his political gambit seems successful.

In Cameron’s view, society consists of individuals, families and communities. Government is external to society and engaged in a zero-sum game with it: The expansion of the state can only be to the detriment of society.

Third sector organizations and social enterprise are put forward as the vehicle for delivering on social goals. Cameron believes these institutions to be almost like an extension of communities, accountable to their will and able to engage them in “self-improvement, mutuality and responsibility”.

The premise that third sector organizations would be representative of community is often false. Many charities that have been tasked with delivering public services have grown so large they are as unresponsive to the needs of their clients as state departments but devoid of any formal accountability. With a large size they also acquire monopoly-like power over the services that they deliver, and can begin to work for an interest of their own. In that sense they have more in common with large corporations. The opening up of competitive markets in public services to third sector organisations has explicitly encouraged this development.

Conversely, the government providing things need not be opposed to citizens taking responsibility. Ideas of design such co-production can make sure that the clients have an active role in the delivery of services. The interface between government and civil society is what matters. Cameron forgets that the state is a part of society too, and that a good society requires strong public investment to maintain public goods and collective solutions. This philosophy makes no provision for preventative services, or long-term solutions of the kind that we now need. In spite of the rhetoric about outcomes, he has reverted with the Conservative obsession with the mode of delivery.

Cameron’s emphasis on decentralization and active citizenship is commendable. Who would not want people holding power and being actively engaged in shaping their lives? As means for delivering the changes in society the “progressive conservatives” are after – social mobility and reductions in poverty – they are blatantly insufficient.

To reduce inequality we must make a political topic of another forgotten part of society – the economy. All major parties today regard the economy as a sphere with its own natural laws and best left to its own devices. The role of government is merely to correct market failures and fix some of the resulting unjustness after the free reign of economic forces. The question all of the parties fail to ask is whether the economic system itself, with its gross inequalities and individualistic bent could be the root of the problem.

Labour’s measures such as the minimum wage and tax credits have obviously mitigated some of the growing disparities in the economy. The Tory promises to lift the threshold of the inheritance tax and cut unemployment benefits can only aggravate them and don’t fit well for Cameron’s newly found interest in the poor.

What is needed is a society of many parts: a fair economy, an effective state and a committed community – all of appropriate size.

Bookmark and ShareEilís Lawlor is the acting head of the Valuing What Matters team at nef.

SROI

Yesterday saw the launch of the new Social Return on Investment guide, co-authored by nef staff and backed by the Cabinet Office. This is good news for organisations and institutions that wish to account for their performance across the triple bottom line. It is also timely in the current economic environment when the pressure is on to cut costs and make immediate savings. Taking an SROI approach involves thinking about value in a different way – beyond costs and financial savings and over the longer-term. This is in sharp contrast with the recent budget proposals to claw back funds through efficiency savings; these are essentially cuts which will ultimately jeopardise frontline services. Where these services are delivering value, cutting back will lead to poorer outcomes and greater long-term costs.

A guide to Social Return on Investment

SROI promotes the idea of ‘social value’, a concept that is gaining increasing currency across the political spectrum. In some ways its legitimacy is indisputable; few people would argue that things that are bought and sold and have an ‘economic value’ are the things that matter most, yet in our daily lives we generally unwittingly accept that to be the case. What people have resisted is the notion that this type of value is measurable and quantifiable. While concerns about this are understandable they are misguided and ultimately unhelpful. Somehow we have convinced ourselves that what we pay for goods and services equates with some intrinsic value. Instead, what the market does – in fact what is effectively for – is to bring together people whose valuations happen to coincide. This ‘coincidence’ is called ‘price discovery’ but it is not uncovering any ‘true’ or ‘fundamental’ value, rather it is matching people who agree on what something is worth. Calculating social value is the same as this in virtually every way. The difference is that goods are not traded in the market and so there is no process of ‘price discovery’. This does not mean, however, that these social goods do not have a value to people.

Why does this matter? It matters because it is about more than the logic of an abstract philosophical debate. By ignoring value that is created and destroyed outside the market we have given far greater significance to things that are bought and sold than they perhaps merit. This has grave, practical implications that have helped to lead us down the shaky and unsustainable path we are now on.

The debate that has raged about the efficiency of the Post Office network encapsulates this well – people feel that there was a value to it beyond what can be measured financially, and yet decisions about its future are made largely on a financial basis. Measuring and quantifying social value will never be an exact science; the subjectivity of value makes that impossible. This did not prevent us creating markets and developing accounting practices to enable us to carry on the business of everyday life. Neither should it prevent us seeking to reduce inequalities and improve the health of the planet by bringing onto the balance sheet the real and costs and benefits of the decisions and trades that we make. SROI is the most developed and robust methodology available for doing this. It is now being mainstreamed in the third sector, which has led the way on innovative measurement but its potential is much greater than that. We need to get to a stage where our actions and behaviours are judged and rewarded by the extent to which we create or destroy value in its broadest sense, if we are to find an equitable and sustainable way through the many problems we currently face.

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nef employees blog in their personal capacity. The opinions expressed here do not necessarily reflect those of the new economics foundation.