Reinventing Civil Society

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Book: Reinventing Civil Society. David Green. 1993


Markets generate more prosperity, but `more goods' do not make a good society.

The challenge we face today is to identify a sense of community or solidarity that is compatible with freedom. Competitive markets coordinate the efforts of people who may be self-interested, even selfish, but they do not create solidarity.

Contrary to the view attributed to Mrs Thatcher, that there is `no such thing as society', there is indeed such a thing. But it is not synonymous with the state. It is the realm of `activity in common', which is at once voluntary and guided by a sense of duty to other people and to the social system on which liberty rests.


The author's motivation:

"This book began as an attempt to consider the lessons the former communist countries of Eastern Europe might be able to learn from Western experience of voluntary welfare provision. But, as the study proceeded, it quickly became obvious that we in the West have done almost as much harm to our own voluntary associations as the communist countries, not as part of a deliberate effort to create a mass society of individuals ruled by an elite, but as a result of the inadvertent displacement effect of the welfare state. By narrowing opportunities for personal idealism in the service of others, the welfare state has eroded the sense of personal responsibility and mutual obligation on which a resilient civil society rests.

As I began to think about how best we could re-invigorate our once rich and varied voluntary, communal life it also became obvious that the economic philosophy which had come to dominance in the 1980s did not provide intellectual tools adequate to the task. This inadequacy was particulary reflected in the social policies of the Thatcher years, which were dominated by a hard-boiled economic rationalism which failed to do justice to human character and potential.

We only have to look at our own language to discover the rich variety of virtues that make a free society work and which describe the obligations we all owe to one another. Good character, honesty, duty, self-sacrifice, honour, service, self-discipline, toleration, respect, justice, self-improvement, trust, civility, fortitude, courage, integrity, diligence, patriotism, consideration for others, thrift and reverence are just a few. Yet many of these words cannot readily be used today in ordinary talk. To the modern ear, they have a ring of either antique charm or total obsolescence.

The leading voices of Thatcherite philosophy invariably saw the Thatcher revolution in moral terms. They hoped to restore what Shirley Letwin, in her excellent book The Anatomy of Thatcherism, called the `vigorous virtues' of self-sufficiency, energy, independent mindedness, adventurousness, loyalty to friends and hardiness in the face of enemies. The Thatcherite emphasis on the vigorous virtues was of central importance in halting the pace of Britain's genteel economic decline. And today, the superiority of robust market competition compared with socialist planning is accepted across the political spectrum. But, Thatcherism suffered from a missing ingredient. It is the thesis of this book that the missing dimension was its inadequate emphasis on the `civic virtues', such as self-sacrifice, duty, solidarity and service of others.

Over twenty years ago in 1971 the IEA's Editorial Director, Arthur Seldon, commissioned The Morals of Markets2 by the philosopher H.B. Acton to examine the moral questions raised by competition. In the heat of the subsequent battle to improve public understanding of economic problems, the issues raised in that book were put to one side but now, in recognition of its continuing relevance, the Liberty Fund has republished The Morals of Markets. Reinventing Civil Society is an attempt to refine and develop further our thinking about the moral dimension of a free society."


The tradition of Communal Liberalism

"Liberty rests on people taking personal responsibility for the maintenance of the institutions, morals and habits fundamental to freedom.

This tradition of `communal liberalism' is not a utopian ideal of the imagination, it was the lived reality of liberty for many long years until well into the twentieth century. Most of this book is an attempt to describe the day-to-day character of this tradition by re-assessing the voluntary social institutions that had emerged under its influence by the end of the last century, when their incomplete evolution was prematurely halted by the march of socialism."

The historic role of Friendly Societies

"For liberty was not only an intellectual ideal, it was the guiding philosophy of the common people who acted out its values in their everyday lives. This reality is nowhere better exemplified than in the work of the friendly societies, those organisations for mutual aid which flourished in the eighteenth, nineteenth and early twentieth centuries and which were joined by the vast majority of working men, far exceeding the membership of the other characteristic organisations of the working classes, the trade unions and the co-operative societies. (In 1910 there were 6.6m registered members of friendly societies; 2.5m members of registered trade unions; and 2.5m members of co-operative societies.)

The friendly societies are of additional interest for two other reasons. First, the record of the friendly societies contradicts the wide perception today that, although a market society is undoubtedly the best way to generate prosperity, it provides inadequately for the health and welfare of its citizens. As Chapters 3-10 relate, the historical reality turns out to have been the opposite of the legend of welfare before the welfare state widely believed today.

And second, the experience of the friendly societies shows that we have under-estimated the displacement effect of the welfare state. Thatcher Governments thought it an adequate response to defects in the health service, for example, to introduce competitive tendering within the state system. But this was to misunderstand the true character of a free society. Competitive markets are a necessary but not sufficient condition of freedom. The welfare state did not only suppress the incentive system of the competitive market, it also suppressed those institutions which served as proving grounds for men and women of good character and which provided outlets for idealism, service and achievement. We must therefore find new ways to re-energise `civil society'."

The role of Civil Associations

"If Oakeshott is correct in identifying the absence of overwhelming concentrations of power as the essence of liberty, how can we account for the peculiar character of the state in Britain? According to Oakeshott, modern European states can best be understood as torn between two contradictory methods of association which are the legacy of the medieval age. The first mode of association he calls `civil association' and the second `enterprise' or `purposive association'.

An `enterprise association' is composed of persons related in the pursuit of a common interest or objective. In the pure form of such an association there are not several purposes, but one sovereign purpose. The task of leaders is to manage the pursuit of this goal and to direct individuals as appropriate. A nation might comprise many such enterprise associations, including business corporations, but here I am concerned with nation-states which take on this character. In a nation of civil associates people are related to one another, not because they share a concrete goal, or are engaged together in a substantive task, but in that they acknowledge the authority of the jurisdiction under which they live. Respect for the authority of the law does not imply that every person supports every law. The law is a changing phenomenon, and so what commands respect in a civil association is both the law as it stands and the law-reforming process. The laws specify the conditions to which every person subscribes as each pursues his or her self-chosen life style. This type of association is therefore a system of law and its jurisdiction. People are associated, not because they share the same substantive wants, but because they accept the same conditions in seeking to pursue their own goals as they believe best.5 Each is under an obligation to act justly towards others, and each person enjoys equal status under the jurisdiction. The character of the laws is central. In both an enterprise association and a civil association people are subject to rules of conduct, but in an enterprise association the rules are instrumental to the pursuit of the common aim. In the pure form of civil association, the laws are moral stipulations, not instrumental commands.

Under a system of civil association the sense of solidarity of the people as well as the legitimacy of the government derives from the shared sense that the social system gives everyone their chance to do the best they can in their self-chosen sphere of life and also from popular awareness that the continuance of liberty depends on everyone doing their bit. The sense of solidarity in an enterprise association, however, derives from the belief that each person is part of a single grand scheme, in practice either to modernise or develop the nation's resources or to mould human character in a new direction. Thus, in a nation organised as an enterprise association, individuals are instruments of the government; whereas in a civil association the government is an instrument of the people, charged with keeping in good order the institutions which allow people to pursue their self-chosen ideals. Historically, Oakeshott characterises the two types of association as outcomes of medieval thought and practice. The enterprise association approximates to `lordship' and the civil association to `rulership'. In medieval times kings were lords of their domain or estate, and therefore managers of their people. Kingship in the age of lordship was, therefore, estate management. The King was lord of the manor."

Civic Capitalism

"This seventeenth-century antipathy to over-mighty government developed in two directions, not always clearly distinguished. The first, which I will call civic capitalism in the hope of avoiding confusion with other related ideas, can be understood as an effort to prevent the king from reverting to `lordship', in Oakeshott's language. The civic capitalist ideal was a nation united as civil associates, not as instruments of the king's will. This antipathy to the king was based on a sense, entrenched since at least the thirteenth century, that English subjects were governed by a ruler not by a lord, and that the law was a moral and prudential code for living which no person, and certainly no king, ought to defy. The Stuart kings were seen as usurpers meddling with the centuries-old rights of subjects. Classical liberalism, or civic capitalism, was therefore respectful of history. It saw England's civilisation as worth preserving.

The other leading liberal tradition is commonly called rationalism. It did not see the struggle against the Stuart monarchs as a restoration of historic rights, but rather saw all tradition as suffocating, and barely distinguished between custom and superstition. This tradition originated with Descartes and, in its search for `clear and distinct' truth, over-estimated the capacity of governments to re-arrange human affairs.

How did the civic capitalists see the human condition?

Essentially, they saw it as a struggle against human imperfection. Two particular shortcomings concerned them, sinfulness and ignorance, and consequently the practical task of the civic-capitalist thinker and activist was to develop human civilisation by discovering or improving those institutions which encouraged the opposites of sin and ignorance, namely goodness and learning. The moral ideal underlying civic capitalism is that human relations should, as far as possible, be based on free mutual consent rather than force or command. Classical liberals favoured this ideal because they believed it was more consistent with human nature than rule by the `lord of the manor'. But it was also an ideal in the sense that it challenged human character by setting a standard to be aimed for. It presented people with an ideal way to live. The particular combination of institutions that came to be supported had taken reasonably mature shape by the time that liberals like David Hume, Adam Smith, Josiah Tucker, Edmund Burke and William Paley were writing in the eighteenth century. The character of civic capitalism was elaborated further during the American constitutional debates of the 1780s, not least by the authors of the Federalist Papers, by Immanuel Kant and Wilhelm von Humboldt in Germany, by Montesquieu in France and during the nineteenth century by Tocqueville, J.S. Mill and Acton. During this century the tradition has been developed still further by Friedrich Hayek and Michael Novak. It is important to avoid one major source of modern confusion.

Liberty under law is not a doctrine which sees liberty as the absence of all restraint, or freedom from all obstacles to our desires. The classical liberals did not want `power', they wanted `liberty', that is they did not seek the `power' to achieve their particular ambitions, they sought a social order—a civilisation—which allowed every person the liberty under law to contribute to their own good and the good of others as each believed best. To repeat Acton's words: they treasured the liberties of others as their own.

The ideal was liberty under law, not liberty to do as anyone pleased. It was liberty guided by conscience rather than naked wants. Nor was it relativistic. Liberty was valued, not because civic capitalists thought that any individual's views or values were as good as anyone else's, but because it is not possible for any authority to identify in advance who will turn out to do the most good, or benefit humankind to the greatest extent, or to judge which values, habits or institutions will ultimately prove most conducive to human co-operation. Consequently, they thought that every one should be free to contribute as each thought proper, in the belief that we will recognise real progress when we see it.

The view of thinkers such as Acton and Tocqueville must also be sharply distinguished from another attitude often associated with liberalism. It is the view, which derives from Rousseau, that people are essentially good and that they are made bad by institutions, such as bad laws or bad governments.

The law is intended, not only to punish wrong conduct, but also to smooth the path of voluntary co-operation. Roughly speaking, criminal law punishes moral wrongs, and civil law is the body of rules that makes it easier to work with other people, as buyers or sellers, employers or employees, and consequently to create wealth more readily.

Thus, civic capitalism was a political philosophy based on a belief in the possibility (but not the inevitability) of progress and how it could best be achieved. In essence, civic capitalists have taken the view that progress is the result of trial and error. As the distinguished turn-ofthe- century economist Alfred Marshall argued, collectivism might seem in the short run to deliver benefits, but this was only because it lived off the fruits of earlier private initiative. In Marshall's view, if the springs of progress were not to dry up, there was no substitute for the bearing of risks at one's own expense.

The civic capitalists were first and foremost concerned to discover those common institutions, both private and public, which, on the one hand, encouraged individuals to become better citizens and which, on the other, reduced the harm that would result when human behaviour fell short of the ideal. Individuals are capable of great self sacrifice and many have laid down their own life for the good of others, but they are also capable of great wickedness. The civic capitalists were idealists whose vision was tempered by their awareness of human fallibility. As Professor Alfred Marshall wrote, `progress mainly depends on the extent to which the strongest, and not merely the highest, forces of human nature can be utilised for the increase of social good'.2 Unlike some conservative thinkers who have celebrated established authority per se, civic capitalists did not forget that authority is a means and not an end."



"The founders of civic capitalism saw the state as the protector of the people from crime and oppression as well as the facilitator of human ingenuity. They saw individuals as each struggling to understand the world around them and to make the most of their own lives in mutual concert with others. No less important, they saw people as united, not in pursuit of a uniform goal, since all were free to pursue their own objectives, but by the particular sense of solidarity that results from a shared awareness of belonging to a civilisation that gives everyone their chance. Solidarity is a term generally associated with egalitarianism, or with the creation of cohesion through compulsory transfers of cash—as exemplified by the European Community's `cohesion fund'—but the solidarity associated with liberty is the sense of unity that flows from being part of a culture that respects persons as fully entitled to make the most of the opportunities available to them and which expects each individual to uphold the values on which freedom rests. To feel love for their country has been typical of free citizens, as demonstrated by the high morale of the allied soldiers of World War


Also central to the thinking of civic capitalists has been a commitment to personal responsibility, partly for prudential and partly for moral reasons. They thought it prudent for people to be free to pursue their own lawful ends as their judgement dictated and at their own risk, because better results in the interests of all were more likely. This view was taken partly because, when decision makers spend other people's money, they do not exercise the same care as when they personally bear the cost of failure or reap the reward of success. In addition, classical liberals believed that the personal bearing of risk gave individuals a powerful reason to improve their knowledge, skills and character. Morally, their view was based on the argument that freedom will not work unless we all accept an obligation to treat others with the respect due to fellow moral agents."

The role of the medical establishment in destroying mutual aid

David Green:

"The freedom to experiment during the period before the 1911 National Insurance Act allowed consumers to protect themselves from the demands of organised medicine and to encourage higher standards of care. First, liberty enabled medical consumers to organise themselves against the efforts of the medical profession to force up pay and free doctors from accountability to patients for the standard of care. Second, the absence of a public sector monopoly before 1911 enabled different methods of paying for medical care to be attempted and threw up valuable lessons from which others could learn and on which future progress could be based. The 1911 Act led to the dismantling of these arrangements by the state at the behest of the doctors, as Chapter 9 describes."

From chapter 9:

"The friendly societies were so successful that their arrangements for social insurance and primary medical care formed the model for the early welfare state.1 But this, ironically, was their undoing. The 1911 National Insurance Act was originally seen by Lloyd George, who charted it through Parliament, as a way of extending the benefits of friendly society membership to the whole working population. But on its way through the House of Commons the original Bill was radically transformed by powerful vested interests hostile to working-class mutual aid. The organised medical profession had long resented the dominance of the medical consumer, and particularly disliked working-class control of medical `gentlemen'. The BMA was equally anxious to obtain more pay and higher status for doctors. No less important were the commercial insurance companies, which had long disliked the competition of the non-profit friendly societies and saw the 1911 National Insurance Bill as a threat to their business. They were organised in a powerful trade association, called the `Combine'.

The BMA and the Combine formed a temporary alliance to extract concessions from the Government at the expense of the friendly societies. The essence of working-class social insurance was democratic self-organization, but amendments to the Bill obtained by the BMA and the Combine undermined it. Doctors' pay had been kept within limits that ordinary manual workers could afford, but under pressure, the Government nearly doubled doctors' incomes and financed this transfer of wealth from insured workers to the medical profession by means of regressive flat-rate national insurance contributions.

The friendly societies had for many decades encouraged doctors to improve the standard of their services through competition. In addition, the friendly societies also evolved complaints procedures to keep doctors on their toes.

The government also provided complaints machinery under the 1911 Act, but it was much inferior. As Professor Rudolf Klein has argued, the 1911 Act `marked a giant step forward in the emancipation of the medical profession from lay control'. The complaints machinery of 1911 was introduced `not as an attempt to fortify the position of the consumer but as a salvage operation designed to save something from the wreck of lay control over medical services'. The 1911 deal represents `the first rung in the ladder leading to the syndicalist system of professional control over the health services'.

The friendly society tradition was based on the rules of natural justice. There are two main principles: audi alteram partem, `hear the other side'; and nemo judex in causa sua, `no man may be a judge in his own cause'. Underlying this philosophy was the belief that both sides had an equal right to have their case heard and that essential to the process was the independence of those judging the issue. Friendly society rules therefore provided for the appointment of arbitration committees comprised of individuals with no axe to grind. The view of the doctors was the opposite: no one should judge professional conduct except the professional. Doctors have often asserted that this notion is in the public interest, but without exception it has been accompanied by an ethic of professional loyalty which strongly frowned upon criticism of one's fellows." (

1948: The Eradication of Mutual Aid

From chapter 10:

The role of the medical establishment:

"The legislation of 1911 had incorporated the friendly societies into the state national insurance scheme. The virtue of voluntarism is that a variety of methods of provision can develop to meet the differing needs of individuals and families. The affiliated friendly societies provided one approach but they were not everyone's cup of tea and many preferred the different systems of the more centralised societies like the Hearts of Oak or the National Deposit Friendly Society. This very variety, however, became a problem under the state scheme, for voices began to complain that it was unfair that different benefits were received for the same compulsory contribution.

The Beveridge Report of 1942 described what these differences had come to mean by the late 1930s. Under the approved-society system each society was valued at five-yearly intervals and after providing for reserves a surplus or deficiency was calculated. The surplus could be spent on additional benefits for members. The fifth valuation in 1938 allowed societies with 88 per cent of the insured men and 81 per cent of the insured women to pay additional benefits. The surplus was £5,850,000 when total expenditure was about £35m. Of this £5,850,000, £2,200,000 was paid in additional cash benefits and £3,650,000 in benefits in kind, largely dental and ophthalmic care, medical appliances and convalescent homes. Additional sickness and disablement benefits were paid by societies representing 63 per cent of insured men. About £250,000 was spent on maternity benefits.

The Beveridge Report recommended a single contribution and a single benefit agency to administer the scheme. However, Beveridge was keen that friendly societies should be allowed to act as agents for the payment of state benefit and to offer additional services to members purchased with voluntary contributions.2 To Beveridge's great disappointment his proposal was rejected by the Government. The result was a monolithic state system for benefits and medical care. The remainder of the chapter is devoted to an example of what this meant in practice for the medical institutes and the medical aid societies of the Welsh miners, which had proved their pioneering worth despite the prolonged antipathy of organised medicine.

It is a detailed case study, but it is worth examination because it reveals the mentality of the period, and in particular it shows how the intellectual leaders of the day failed to understand the value of diversity in allowing room for human progress. Beveridge himself warned in The Times before the second reading of the National Insurance Bill in February 1946, that it would be a costly mistake to refuse the friendly societies a continuing role. To set up an `allembracing State machine will be final', warned Beveridge, whereas to admit the friendly societies would `leave room for experiment and trial'. But his words were ignored.

Throughout the 1920s and 1930s the medical institutes had exercised a restraining effect on medical fees to the advantage of the consumer. The BMA seized the opportunity offered by the new National Health Service to wipe out the medical institutes for good."

The choice for collectivism:

"Three very closely related, but unspoken, notions seem to have been at the root of the Government's thinking. The first was a simple faith in the superiority of government provision over market provision. Even though developments in the health-care market outside the government scheme were considerable, and often provided a model for reformers intent on forcing everyone into a single government scheme, freedom from government interference continued to be poorly valued. By the 1930s, after some years of government intervention, all improvements were taken by progressive opinion to be the result of the government scheme and all problems the result of the continuing inadequacy of the market-place or the unsatisfactory (but easily remediable) nature of previous government intervention. Early mistakes were not seen as inherent in government intervention as such, but rather as arising from failures of personnel or programme. No satisfactory effort was made to appraise the market as an alternative to intervention. If the market was compared, it was the market before intervention—as if no change would have occurred without government interference. Nor was there any recognition that government might inadvertently have stifled some beneficial changes.

Enthusiasts for a state monopoly passionately believed that the new scheme was going to be the best, and therefore to allow any other kind of organisation to continue in being was pointless. It was inconceivable that any alternative would be better.

Closely allied to this simple faith in the superiority of government was a second notion which Hayek has called the `synoptic delusion'.14 The notion is that a single person can hold in his mind all the facts relevant to some social problem.

The third notion was that progress was inevitable. All thought was being directed to creating what was intended to be the best health service attainable. That some institutional structures are more amenable to progress than others was not on the agenda in 1945 and 1946. Even though the pioneering work of the medical institutes was freely acknowledged, it appears to have been assumed that there would no longer be any need for pioneering institutions. The state scheme would take care of progress."


"Before 1948 friendly society medical institutes and medical aid societies provided much-needed competition in the supply of medical care. This helped to contain prices in the non-government sector. Perhaps more significant was the innovative role of medical institutes and medical aid societies. As Aneurin Bevan acknowledged, they had pioneered new services which it was hoped the NHS would make standard. Yet, under the illusion that the political process can provide for innovation as effectively as the market, all alternatives to the NHS monolith were excluded. Due partly to government efforts to satiate professional demands, but also to a misguided faith in the omniscience and organisational capacity of government, the final vestiges of competition in the supply of health care were driven out of existence." (