The benevolence of the butcher, the brewer or the baker: The politics of happiness

By David Wearing, Le Monde diplomatique, July 2006

The Conservative party leader, David Cameron, made waves in the United Kingdom with his new focus on happiness. Should government concentrate on economic growth as an end in itself or should it also consider whether it is making people happier?

Professor Andrew Oswald (1), an economist at Warwick University who worked for years on the importance of happiness, is suddenly popular amongst journalists and politicians. There is also, he says, “some interest from the current government. The Labour party has released a document on life satisfaction in the UK, which talked a lot about our work here at Warwick.” He cites research showing that “happiness levels have remained flat, while incomes have been rising sharply. In other words, although the majority of people within western societies have become infinitely richer over time, we haven’t become any happier.”

What does Oswald think these findings imply for the idea that self-interest is the prime motivating factor in human behaviour? We are often told that human beings need the incentive of material reward as a spur to hard work. In fact, much of the politicians' faith in the market system is based on their conception of how people seek to maximise material gain for themselves within that system. In the words of the celebrated 18th century economist Adam Smith: “It is not from the benevolence of the butcher, the brewer, or the baker, that we can expect our dinner, but from their regard to their own interest” (2).

But the more you read Adam Smith, the less you believe in the popular understanding of his ideas. On self-interest, he said: “How selfish soever man may be supposed, there are evidently some principles in his nature which interest him in the fortune of others and render their happiness necessary to him though he derives nothing from it except the pleasure of seeing it.” But the idea that seems to have taken hold among apologists for capitalism's many failures is that human beings are more or less purely motivated by self-interest—and specifically by the drive for personal material gain.

This seems a narrow understanding of the human psyche. Do parents care for their children because they expect some material reward? As Adam Smith says, it is evident that selflessness and empathy play their part in influencing human behaviour as well, along with myriad other factors. Self-interest—or greed—routinely, often catastrophically (3), collides with the common interest; the accentuation of this particular and least endearing of human qualities is bound to have a corrosive effect on society.

The problem Oswald poses is that material gain only serves self-interest to a limited degree. So even if a mechanism in which everyone acted purely in their own interests would ultimately benefit the common good, it does not appear certain that a mechanism for distributing material reward would necessarily be the ideal one to use.

‘How selfish soever man may be’

How do these notions of self-interest, material rewards and incentives manifest themselves in politics? We are told that raising income tax for the wealthiest would remove the material incentives that they require in order to best perform their productive role in society. But we hear less of this point when discussing the incomes of the less well off. Apparently the non-wealthy do not require the incentive of ever-greater material rewards in order to properly play their part in the market economy. The poorer you are the higher proportion of your income is taxed. The British Chancellor of the Exchequer, Gordon Brown, has called for a public sector pay freeze in order to maintain “vigilance in the fight against inflation” (4). This brave stance apparently need not be taken on pay for top private sector executives, which rose by an average of 16.1% in 2004—four times faster than average earnings and eight times (5) the rate of inflation.

Where does the new interest in happiness fit in to all this? If, as Professor Oswald says, people's general state of happiness may level off even as their income rises, then how efficient is it to use vast material rewards to incentivise those on six-, seven- or eight-figure incomes? Wouldn’t it be more productive to redistribute these resources amongst those who earn far, far less? After all, there are only so many luxury yachts that one person can realistically make good use of. So should it not be those at the bottom of the income scale, rather than those at the top, whose incentives we primarily concern ourselves with?

Gordon Brown doesn’t think so, and neither does the number two to the new British Conservative leader, David Cameron. The shadow chancellor, George Osborne (6), set out to win the hearts of the business community, proffering policies starkly at odds with the current popular image of a new, revolutionary, almost centre-left Tory party. Whilst Cameron tells the rest of us that money isn’t everything, Osborne promised yet lower corporation tax (in spite of the fact that corporate tax avoidance is estimated to cost those of us who pay our taxes £100bn (7) each year). He promised the City “simpler taxation, the right regulations and better infrastructure” and made clear that by “simpler taxation” he meant less (or less of the fraction that is actually being paid); and that by the “right regulations” he meant reducing yet further the accountability of profit-making organisations to the democratic will of society. As for better infrastructure, it seems that the state has its uses after all, although in terms of accountability, or of paying its fair share for this assistance, reciprocity will be in short supply.

Osborne's admission of who is in charge of this policy agenda is almost superfluous: “Major companies can pack up and move anywhere in the world if faced with damaging regulations” — in other words, if governments do not govern in their interests. Nurses, teachers, firefighters and others do not have that power over governments. This fundamental tension between capitalism and democracy renders theoretical discussion of incentives and free markets of secondary relevance.

For all the talk of a move in British politics to concern for people's wellbeing, materialism remains the enduring concern. As long as the global economy is dominated by large private organisations legally obliged to maximise profit to the exclusion of other concerns, rhetorical flourishes such as the current discussion of happiness should be understood as little more than attempts to rebrand the groups of manager-politicians who formulate policy, either actively to serve those interests or at least not to conflict with them.

The themes adopted in these slick, carefully planned advertising campaigns are, however, of note: compassion for others, concern for the environment, human rights and democracy abroad. They show that those tasked with understanding the public mind realise that people are not primarily, let alone exclusively, concerned with greed, competition or narrow self-interest. The sharp difference between public policy (and the interests it serves) and the assessment of human nature made by those employed to understand it shows that a new social and economic and political settlement, in which public policy reflects the interests of the public, is still a realisable goal. And it is feared by those in power.

Notes

(1) [”Andrew Oswald: Ode to joy”, Guardian, 6 June 2006.

(2) See The Library of economics and liberty

(3) “Clouds of Injustice: Bhopal disaster 20 Years on” (Amnesty International).

(4) “Brown calls for public sector pay freeze”, Guardian, 6 June 6 2006.

(5) “Chief executives' pay rises to £2.5m average”, Guardian, 4 August 2005.

(6) “Personal view: ‘We promise simpler taxation, the right regulations and good infrastructure’” , The Telegraph, 5 June 2006.

(7) “Accountants: a threat to democracy”, Guardian, 5 September, 2005.