What makes societies healthy?

By Don Young, with thanks to Henning Sieverts for his major contribution.

A society is a body of people tied together and involved with each other through persistent relationships, usually sharing a common geographical territory, subject to the same governmental authorities, with compatible dominant cultural influences and expectations. A healthy society enables its members collectively and individually to benefit in ways that would not otherwise be possible; both individual and social (common) benefits can be identified. Often those benefits overlap and are mutually of value. Sometimes they are in conflict; a healthy society is a tolerant society that provides channels to resolve conflicts peacefully and reasonably. Healthy societies are amongst the most significant achievement of human beings.

SOME UNDERLYING VALUES

• The economy is an integral part of any society; the economy of a healthy society is governed by democratically developed principles.
• A society should be judged in terms of the well-being of all its members.
• A healthy society protects the weak while creating opportunities for the strong to flourish; it respects the cultures and human rights of all sectors. The dominant culture of a healthy society promotes co-operation and collaboration as checks and balances on competitive forces.
• A healthy society needs robust laws and their fair enforcement, as well as creatively governed autonomous institutions that function to promote well-being. It uses law both to deal justly with those who cause harm or threaten the peace, and to protect freedom of expression and assembly.

Therefore, the performance of every element of a society can be judged by the degree to which it contributes to the well-being of all of its members.
If any element - political, military, economic, religious, ethnic - is manifestly serving only the unique interests of a small part of the society, or is damaging the overall well-being, action needs to be taken to achieve changes so that its contribution to the whole can be made positive.

Equally, to argue that the interests of individuals take precedence over those of the society they are members of is likely to result in behaviours by some which could seriously damage the overall interest as well as the interests of many. A healthy society has robust social values to assure that such behaviours are dealt with justly and fairly, with a high tolerance of diversity.

The above propositions are completely compatible with, and indeed supportive of, a strong belief in democratic capitalism.

The anatomy of societies

Different interests

Every society is rich with complexity, much of which is caused by different elements having different needs, agendas and priorities. The varying interests for example, of political parties, religions, ethnic groupings, businesses, financial institutions, educational institutions, cultural institutions, public services, and hospitals, as well as poor people and rich people, are likely to differ - sometimes radically. Some see this as a threat to social harmony; in a healthy society a range of beliefs and priorities across the population is seen as a prime contributor to cultural richness and vibrancy.

Power

"Power tends to corrupt, and absolute power corrupts absolutely. Great men are almost always bad men." Lord Acton

A fundamental element in every society is power. Societies need to be governed and orderly, otherwise anarchy and chaos is likely to ensue. This applies to all organisations, from small companies, sports clubs and churches, through to large corporations and nation states and supranational bodies such as the UN, the EU, and NATO. What differentiates societies is how power is used and distributed amongst the different interest groups. Healthy societies have found collaborative means to ensure that key stakeholders all have genuine influence on policies affecting their interests and those of society as a whole.

In other societies, power is concentrated in the hands of a single interest group. This could be the military, police, the rich, a religion, a political party, a tribe or the functionaries of the state.

Power concentrated in the hands of a few will always result in favoritism, frequently in corruption, and often in oppression of those with different interests. Powerful bodies will claim that they are acting in the interests of all, but this is rarely the case. Notions such as the “dictatorship of the proletariat” as a necessary first step towards the perfect communist state, or race-based dictatorship as the way to a harmonious society, have resulted instead in oppression and misery. Those who have exercised near-absolute power will never happily hand it over. Just as monopolies and monopsonies are seen as undesirable in an economy, great concentrations of power in few hands invariably leads to damaging societal consequences. Lord Acton was right.

In a healthy society, how are conflicting interests resolved?

1. Will the Market will fix it?

The prevailing wisdom in much of the developed world is that free market forces, left unrestrained, will over the long run enable differences to be reconciled and economic growth to be assured. When governments try to intervene in markets to achieve social aims, this view insists, they usually just make matters worse.

The free-marketeers believe that when marketplace entry is unfettered, and competitive entities are encouraged to maximise their own gains, prosperity is guaranteed and freedom will prevail. As all players have access to the same information, if all pursue their own interests, these will balance out over the long run and wealth and well-being will spread to all. Society should limit government to a limited number of facets, usually just law and order, internal security, and national defence. Even basic social goods such as education, health care, and social care are best left to private enterprise.

Is there any convincing evidence that flourishing unrestrained market forces can deliver on any of its professed goals: broad-based prosperity, social harmony, and efficiently produced and distributed consumer-focused goods and services? Where?

2. Collaboration between stakeholders

Some societies are based on different premises. Whilst private enterprise needs to be encouraged and stimulated, competition requires a common set of rules. Stakeholders are enabled to collaborate to reconcile their differences and to find consensus on what will optimise wealth creation and general well-being. Nordic societies and some northern European countries have evolved elaborations to the free market model; they are based on the premise that it is better that business, finance, labour, localities, regions, and the national government should all have voices. Germany in particular is doing very well with its strong tradition of employee representation in corporate management and governance.

Variations on the Nordic model are not the only way. Other countries, with Singapore and South Korea as two quite different examples, have combined substantial competitive freedom with democratic governmental involvement in assuring shared power, with interestingly successful outcomes.

Outcomes, Social Market and Free Market societies

Collaborative Social Market Societies

Healthy societies that emphasise collaboration between key societal stakeholders, including central and local governments, in determining economic and social policy have combined economic success with social health and justice. The key element is a climate of trust which enables conflicting interests to agree on approaches for the good of all - and to give up a modicum of short-term self-advantage to achieve this end.

This seems to have resulted in the achievement of a “Happy Coincidence”, enabling such healthy societies to be economically successful and socially viable, with relatively better health, education, and social services. This leads to lower levels of inequality and public malaise, a healthier well-educated population, and full employment through flexible labour markets, while achieving relatively low crime and incarceration levels. This has been achieved without repressing or punishing enterprise. In fact, many Swedes, Norwegians, Finns and Danes claim that a strong social security system based on a democratic consensus encourages people to be entrepreneurial and take risks. This assertion seems to be borne out by the facts. In addition, such societies seem to have been able to make difficult decisions without excessive conflict and to make change stick even with quite radical changes of government.

Free Market Societies

By contrast, those societies that have emphasised unfettered competition and the primacy of the Market to “float all boats”, to create wealth at the top with “trickle down” effects to create a broad-based standard of living satisfactory to all, have had a quite different experience.

Over the last 30 years or so, the real earnings of a substantial portion of the work force in the US, the UK, and many countries in Europe have stagnated or declined, and inequality has soared. The wealthy few have become enormously well-off, whilst a significant minority exist in or near poverty. Employment has become more and more insecure. Banks and large corporations have used their marketplace freedoms to exploit customers, suppliers, and their own rank and file workers, while not infrequently conspiring with putative competitors to restrain free trade. Inequality of opportunity and outcome have soared. And social safety nets have frayed.

The creation of substantial pockets of poverty and social exclusion with poor education, ill-health, high crime stands in contrast with the capture of wealth, power and privilege by a tiny minority. Women and ethnic minorities are especially hard hit, and the young are left behind. Trust between different interests and trust in authority have suffered and politics has become increasingly confrontational. With government patently unable and even unwilling to enforce marketplace rules and social justice, cynicism and pessimism have flourished.

Why?

It would seem that the theoreticians who conceived of a perfect market failed to factor basic human nature into their equations. In the absence of either social constraints or effective government, the most successful players in the market use their power to enrich themselves, establish privilege, subvert democratic rule, and exploit the public. In the UK and USA in particular, it is evident that powerful interests have trumped the majority and undermined democracy.

In effect, one group of interests has triumphed and has defeated the processes that would have reconciled competing interests. These societies have become plutocracies - and the majority of stakeholders have been excluded from the top table.

Such societies manifest the plethora of malaises previously described; but also experience a much more serious manifestation: a lack of trust between most parts of society and those in authority. We can observe shrill political conflict between apparently irreconcilable sides. This freezes any possibility of consensual strategies to move to a better place - witness the Republican/ Democrat standoffs in the United States Congress and the bear-pit of the UK House of Commons, with sadly little evidence of reasoned problem-solving in the public interest in national governments of both of these countries.

Collaborative and Conflictual societies - the key difference.

Healthy societies have institutions for co-operation

Collaborative societies invariably have institutional frameworks that support co-operative working amongst different interests. In Germany, there are structures of co-determination in industry; supervisory boards enable the interests of employees, owners, managers and communities to be represented in formulating strategy and responding to events. It is interesting that the British and American academics who designed the co-determination system seem to have believed they would hold German Industry back!!

In Sweden, trades unions, employers, local and national governments all participate in the formulation and execution of national policies. One of us recalls the surprise (and outrage!) of a British management team that made a takeover bid for a Swedish company when they realised that the views of the workforce had to be taken into account before the deal could be consummated. All the Nordic countries and the Netherlands have some form of co-determination that enables varied interests to be represented at local and national levels.

So What?

This is a vital factor, because these systems flourish, no matter which political party is in power. So Sweden has changed between relatively left and right wing governments, but there has never been any suggestion that the valued institutions for collaboration should be weakened.

Contrast this with Britain and America!

In both countries, the dominant mode has been conflictual. Witness the physical lay-out of both Houses of the UK parliament, which has the opposing parties confronting each other full-on, as opposed to many European, pan-European, and international legislative bodies, which have a circular or semi-circular chambers.

Then tune into Prime Minister's Questions, a weekly British ritual. The two opposing champions, the prime minister and the leader of the opposition, backed by braying and jeering Members of Parliament; enact a weekly ritual that would disgrace a kindergarten school. Points are scored, each one cheered by one mob or the other. This is conflictual politics in its purest form. Such an institution would seem to be incapable of collaborating over anything at all, even if there might be much common ground between the parties. Perhaps the growing influence of cross-party special committees offers a faint glimmer of hope of a better way.

Poisonous Parties

In both the UK and the US, government is dominated by two political parties. Historically, political parties grew their strength out of their members, primarily at local and regional levels. The rise of mass media, the 24-hour news cycle, and the take-over of party leadership by ambitious men (and a few women) with little or no local regional roots have fundamentally changed the parties. As the party system is not underpinned or constrained by either broadbased memberships or any effective collaborative frameworks, they have become largely representative of special interests. This is a tragedy, because as each party's base becomes narrower and less diverse, the processes of government are more and more bent to serve the interests of the powerful at the expense of the whole people.

Party funding in the UK and the US

The Conservative Party is nearly entirely funded by finance, industry and super-rich individuals; and the Labour Party by trades union bosses supposedly representing their members. Both parties have lost the bulk of their grass-roots memberships. Few members of Parliament have had any significant careers outside of Westminster; their leaders are largely drawn from much the same small pool of party interns and graduates of elite schools or universities; with women's and ethnic minorities' barely represented. Membership subscriptions have become insignificant, and both parties rely on special interest donations.
Smaller parties seldom get a real chance of attaining power. The electoral system also prevents a wide range of interests from being represented. Britain's current attempt at coalition government has been characterised by internal conflict and increasingly poisonous relations between the Liberal Democratic party and the right wing of the Conservatives. The Labour Party is now in conflict with union bosses, who believe that their members' subscriptions should give them the right to appoint Labour Party candidates for safe parliamentary seats. The small regional parties merit barely any attention on the national scene, and the three major parties each face a nation with large geographical areas where they are barely to be seen.

In the United States, Republicans and Democrats seem to be fighting to the death in Congress, preventing most legislative action, even that which could be beneficial to the nation as a whole. The Republicans in particular, are in thrall to extremist forces that oppose whatever the President and his party proposes. In effect, the government is paralysed.

The prevailing politics in both the UK and US, funded by massive lobbying interests and powerful commercial institutions, has become a negation of democracy. The interests of the rich and powerful trump the common interest. This has become evident to the wider population, who have lost trust and faith in politicians, big business, big unions, and in particular investment banks, hedge funds, private equity houses, and other financial institutions.

The consequences

As a consequence, it is almost impossible for political parties to come together to agree on issues of extreme national importance. Even when they might agree in principle, many politicians emphasise differences to satisfy increasing number of extremists who make up the rump of party membership. There are no powerful counter-weight institutions to bring together the interests of the work force, business, and regions. The result has been serious economic decline and a widening of the gap between the privileged and the less fortunate. Without national consensus, especially about the nature of a healthy society, it is hard to see how either Britain or America can re-build healthy societies with economies and public services that support the interests of all.

By Don Young, with thanks to Henning Sieverts for his major contribution.