Managing the crisis

A new stimulus package in Britain must let the public, not the elite, decide on how it is spent, says author.

Geroge Osborne
The British Defence Forces spent around $935m on advice in the last two years [EPA]

London, UK – The British Chancellor of the Exchequer George Osborne recently announced a major programme of public works and state-directed investment. He explained that ‘we need to have more initiatives and more government plans to help stimulate housing, get homes being built, help construction, help with more infrastructure, help small business get credit’. Government sources are suggesting that the total might amount to as much as £50bn.

It is starting to dawn on Osborne that cutting the public sector won’t prompt a boom in private sector investment. His economic strategy is in total disarray and his political dispositions now look equally unsafe. The occupations around the country are an indication that the British, though patient and long-suffering, are not fools. Osborne and the media-political system to which he belongs would hate to admit it, but he is talking in terms of a stimulus equivalent to thee per cent of GDP in part because he is worried that more of his bungling could prompt hard questions from a people becoming accustomed to finding the answers for themselves. I am sure he remains committed to his core project. He still wants to defend the financial sector and to maintain a steeply unequal structure of class power. But if citizens continue to gather and discuss matters of common concern he won’t be able to get away with the ham-fisted insolence that has been characteristic of his tenure so far.

Osborne knows that something must be done and fast. But he’s not very forthcoming on the details of what he has in mind. He wants to encourage investment in infrastructure and housing and he wants to channel state-backed credit into the economy by some means that bypasses the banking sector. The exact mechanisms he has in mind aren’t clear. The overwhelming impression is of a man making a bonfire of his principles and frantically improvising a sequel, in which he makes a failure of a policy that he previously derided. It is central planning of the most disordered kind, presided over by a man who has no aptitude or appetite for the task.  

This, after all, is a man who was convinced that economic growth would be encouraged by cuts in public sector expenditure. He now tells us that increases in public sector expenditure are necessary. It’s not clear at all that we should leave him to work up the details of this new policy. Doing so would be rather like standing by while a man who has just slashed your tyres takes a look under the bonnet.

There is a, however, a way to ensure that this £50bn is spent sensibly. As a principled opponent of an over-mighty state, Osborne should see its merits at once. The approach I propose has the added advantage of resting on simple, easily grasped principle. Since the money is ours, it is up to us to determine what we spend it on. Ministers, civil servants and their external advisers are, I am sure, terrifically clever. But as Friedrich Hayek never tired of pointing out, they cannot possible manage something as intricate and complex as a national economy, especially when the common good can only be secured at the expense of entrenched and privileged groups – including ministers, civil servants and their external advisers.

The central government needs to give up the pretence of being able to deliver what it cannot ever deliver. It is becoming increasingly obvious that widely shared economic prosperity can only be secured through a new political settlement, in which an informed citizenry plays a speaking part. We should begin with a conversation about how this stimulus is to be spent.

Sensible spending

As a preliminary, let the government assign £1m to each constituency in the country and begin a six-month consultation. The public in each constituency can then meet, in schools, libraries and other public buildings and spend the money allotted as it sees fit in order to develop proposals for investment in the public and private sectors.

The assemblies can commission researchers to provide them with the knowledge necessary to secure superb value for money at every level. Some researchers can establish where derelict council properties are to be found, for example, while others work alongside citizens to develop plans for substantial new residential and industrial developments. People can discuss what kinds of new buildings and new transport links would be most useful. They can also decide which cuts to council services they wish to reverse. Libraries become places where public conversation alternates with silent reflection.

Assemblies could communicate with one another and start work on plans to reinvigorate the productive economy region by region. Crucially, we would have a chance to expand and extend the experiments in direct democracy currently found in the occupation-and-assemblies. Thomas Dewey once remarked that ‘the local community is the medium in which a vast but dormant intelligence can be made articulate and intelligible’. If we are to spend £50bn sensibly we will need all the intelligence we can lay our hands on.

There are 650 Parliamentary constituencies in Great Britain and Northern Ireland, so by my admittedly rough reckoning, this public consultation to determine how the stimulus is spent would cost £650m. This seems like a lot of money until you realise that it is only 1.3 per cent of the estimated cost of the stimulus. A recent report has revealed that the Ministry of Defence spent nearly £600m on advice in two years. That’s a lot of advice. God knows how big a bite they would take out of a stimulus programme. If we spent a similar sum to enable and enliven face-to-publics, the effects would be impressive in themselves and awe-inspiring in their sequel.  

Imagine what a national network of assemblies could do with £50bn, once we had had a chance to discuss how best to spend it. New houses could be built in collaboration with the people who would live in them. Transport projects could be devised that serve the interests of citizens rather those of wealthy investors and their many friends in government. We could have public buildings of unparalleled magnificence at a fraction of the cost that the unreformed private sector would expect to charge. New libraries and labs could make our universities and colleges a wonder of the world. If we need foreign currency, then let’s earn it by becoming a showcase for the achievements of a self-governing people.

All manner of businesses could be founded on co-operative lines. A rough working equality could replace the stultifying hierarchy that characterises so much of the British economy. We are currently wasting the talents of a prodigiously gifted people. It is a perverse kind of opulence, to deprive brilliant engineers and inventors of opportunities to improve our shared life.

We must make do with less consumption, we are told. Very well, then, we shall consume less. But if we are to be responsible for the economy we must have the power to shape it as we see fit. The knowledge and the insight we need are not to be found in the offices of the civil service, much less in those of management consultants. As the makeshift and windswept assemblies around the country are showing, we are perfectly capable of deciding matters for ourselves. If public money must be spent to keep the economy from collapse, then the public can best decide how the money is to be spent. If, in the process of determining that, we discover the need for further rounds of deliberation and decision, then so much the better.

Osborne has, by his actions, admitted that he and the political class to which he belongs were wrong. It is time for the British people to make things right.

Dan Hind worked in publishing for a decade and is the author of two acclaimed books: The Return of the Public and The Threat to Reason. He is also a regular contributor to The Guardian.

Follow Dan Hind on Twitter.

The views expressed in this article are the author’s own and do not necessarily reflect Al Jazeera’s editorial policy.