THE BLOG
03/12/2013 05:17 GMT | Updated 01/02/2014 05:59 GMT

State and Market: Will the Autumn Statement Help Clear Up Current Confusion?

Recent events in British politics have shown how confused our public is on the issue of the role of the state versus that of the market and indeed of society, something that political leaders and officials at local and national level probably experience every day.

On the one hand people are angry with electricity companies that seem to fleece them - but there is some ambiguity at least as to what should be done.

Some commentators including some of the my fellow economists - are deeply worried about the consequences of Ed Miliband's projected energy price freeze; what does it mean for the concept of independent regulation and therefore the cost of capital and future investment?

But while poll after poll shows the public distrust politicians and think government is incompetent and uncaring, the same public are over-whelmingly up for direct, top-down intervention from the state to protect them against market activity the consequences of which they don't like. No wonder the Coalition government have been searching around for actions to take in this area.

The same comes through with regard to payday loans. The public are pretty strong on wanting to be able to borrow what they want when they want but also itch to put caps on the amount of interest that can be paid by those offering loans- even if that is bound to have an effect on the supply of such loans. Again we see a largely free market government recently bowing to the pressure to do something here.

And then what about the sale of the Royal Mail? Most opinion polls have the public saying it should stay in public hands, worried that the drive for dividends and a rising share price will erode the universal service over time one way or another. But give them a nicely under-priced share offer and, as we saw recently, they pile in to try and make a quick buck.

Perhaps most confused at present are attitudes to the housing market. A public terrified- at least in London and the South East- that house prices are way beyond the reach of normal mortals and never achievable by their kids, however middle class they be, nevertheless can't get enough of policies to bolster that very market and kick-off a new and dangerous price bubble all over again.

Of course that is one of the great things about being involved in democratically accountable policy making - the public do not have to pass a 'consistency test' to be allowed to vote!

Some believe that we could create a better form of democracy that can overcome some of these issues and more besides. The great philosopher and social theorist Robert Unger passed through these shores recently talking about how to create an empowered democracy. Much seemed a bit utopian but as a former Minister in the successful Lula government in Brazil he at least has some claim to have been involved in the 'dirtier' end of politics not just theorising from the top.

Certainly his argument that in many advanced democracies our institutions only change in response to a crisis, when they in fact need to evolve constantly to help us find better ways forward, seems right on the button. Some of what Unger suggests as a solution is more bottom up pressure and an opening up to local social forces, something many localists have always pushed for.

But as we in Britain move towards a rather more localised centre of gravity in our democracy - either through a belief that this is a way to re-stimulate democracy or, more pragmatically, as a consequence of an austerity that leaves a more community led approach as the only way forward - we again see all sort of contradictions and tensions emerge.

Local councils will be familiar these days with giving assets such as libraries, parks and community centres to local groups to run - as well as the issues that emerge. While many welcome the end of the dead hand of council bureaucracy, issue of accountability often emerge - sometimes from the same people who condemned the council before. One hears for instance of voluntary groups with appropriate governance for the type of organisation they are (charity, mutual etc) nevertheless being harangued by 'locals 'and other users who wish it were still run by the council so that they had someone formally to complain to and to vote out if they did not like them. Councils will be also be familiar with the pleas to do up an area or estate but then having to face the criticism from the community when that means that the area becomes unaffordable or gentrified.

In truth we all want our cake and to eat it. Democracy is a way to try and negotiate through this fact, especially if it is porous and open enough to let different forces and social movements play; to explore solutions - as Unger wants - and for us to discover better ways forward.

But it has never been an easy ride and there is no sign that that is going to change.

Article originally published in the Municipal Journal.