Give the big society a break

It is striking how many people are still struggling to get their head around what David Cameron's "big society" actually means. For critics on the left it's simply a way to dress up cuts: get volunteers into museums and cut their budgets; get neighbours to look after community centres and reduce grants. It's a smoke and mirrors game to cut the size of the state—an acceptable mask for laissez faire.

But even these critics sense there's more to it than that. At a recent seminar, one ex-No 10 Labour adviser commented: "I just reread our manifesto, and I couldn't believe how statist it was." Labour supporters may be suspicious of the big society but they also know that the big state can't be the only answer in town.

The public has a similar view. One of the most striking findings in my recent book, The Hidden Wealth of Nations (Polity), was the hostility the British people had built up by 2008 to both the market economy and the state. Nearly three out of four Britons agreed with the statement that "the state intervenes too much"—a higher level than almost any other EU nation. Yet Britons were not warmly embracing the market either: just over half agreed that "free competition is best for prosperity"—far fewer than in Germany, Belgium, Sweden, or eastern Europe. For many of the public, their experience is of being trampled under the feet of both state and market. It should give pause for thought that Danes and Swedes feel much more positive about the state and the market, while we languish with the Portuguese and Greeks in our unhappiness about both.

So if it's not more of the state or the market we want, what is it? There seem to be three main elements to Cameron's own thinking, set out in his big society speech in Liverpool: community empowerment, social action and public service reform.

Community empowerment is the part of big society that attracted most attention during the election and the early days of the coalition. But it is also the part most prone to parody: parents setting up schools, even with a bit of help from Michael Gove, sounds like hard work (see Judith Judd, p24). For most, it's something they would rather have the state do, even if they would like it done better and with a greater input from them. As Ben Page, chief executive of Ipsos MORI has noted, while more than 80 per cent of Britons say they support "more community involvement," only around 25 per cent say they personally would be interested in doing so, and just 2 per cent are actually involved.

With the launch of the National Citizen Service at No 10 earlier this summer, the social action part of the government's story has come into focus. Citizen Service will start with an initial 10,000 young volunteers taking part in six-week programmes arranged by voluntary organisations. These will combine mentoring, the social mixing of participants from different backgrounds, and community service. As launches go, it was nicely done, with two young people who had taken part in the pilot scheme talking powerfully about their experiences, and the prime minister and Francis Maude, minister for the cabinet office, challenging those assembled to respond to the tender for contracts, which will be awarded in October. These schemes cost money, so the fact that this is happening at a time of such fiscal tightening is a sign of David Cameron's commitment.

Perhaps the least clear strand of the big society is public service reform. This involves getting the third and private sectors to deliver traditional public sector services, albeit still funded by the state. On the face of it, this looks like what Tony Blair pushed when he set up the office of the third sector (now refashioned into the office for civil society). But what happens when we mix the logic of markets with that of community service? The optimistic view is that we will see a repeat of the vibrant institutional innovation of the late 19th century, with the creation and expansion of new forms of provision funded by the state and powered by the imagination and creativity of its citizens. The pessimistic view is that when you mix markets and altruism, altruism gets squeezed out.

Yet there is a big prize here—and it is one that any of the political parties could have claimed. Modern societies and economies don't only operate by market-based exchange. Avner Offer, the Oxford economic historian, coined the phrase "the economy of regard" to describe the non-market reciprocity that characterises much of our lives, from looking after each other to exchanging gifts or making dinner. If we try to quantify the value of all this—for example calculating how much you would have to pay someone to look after your kids if you didn't—the number that comes out is larger than our GDP. If this seems surprising, note that adults spend, on average, less than a quarter of their waking time in paid work. Most of our time is spent doing other stuff—seeing friends and family, watching television, gardening in retirement and so on. In fact, it turns out that not only is the economy of regard large, it often drives the real economy—not vice versa. Christmas doesn't make much sense from a real economy perspective—buying lots of things and giving them away—but it makes perfect sense from an economy of regard perspective.

We have tended to build public services that are blind to the power and relevance of this "hidden wealth"—of reciprocity, relationships, and trust. Yet this could change. For example, a number of European countries have started to introduce "patient hotels." These look and feel like hotels, but their guests are undergoing treatment for cancer or other chronic conditions. While patients are not treated in the hotel, they stay there for the duration of their hospital treatment. Patient hotels achieve better clinical outcomes at much lower cost than conventional hospitals, and score much higher for patient satisfaction. How can this be? One reason is that at a patient hotel your partner (or friend or relative) stays with you. They are seen as a powerful asset. Patients and partners are shown how to clean wounds, to put in drip lines, and to manage their own treatment.

When you look across the world at innovations in public services that have improved outcomes, and yet reduced costs by 15 to 60 per cent (as documented in a recent Innovation Unit report), they have a common theme. In almost all cases, they have found a way of harnessing the latent capacities of citizens and communities. Viewed through the lens of this hidden wealth, many big and expensive social problems—like care for the elderly—start to look far more tractable.

It would be a mistake for the left, or indeed any of us, to dismiss the idea of the big society as a soundbite we will soon forget. It has the potential to shine a powerful and important light on resources and ways of thinking that traditional public service debates, and much of economics, have often neglected.