What's wrong with inequality? New Labour is not sure. It has given up the old social democratic view without yet formulating a new one. In its economic policies and its recognition of the need to reform the welfare state, Blair's government is clear that it aims to establish a successor to the postwar settlement. It has not yet succeeded in developing a conception of social justice which fully matches the needs and aspirations of Europe's first post-social democratic society. New Labour continues to defer to ideals of equality in which it does not truly believe. Until it has shed these remnants of a defunct world view it will be unable to develop an understanding of social justice in tune with the sentiments of Britain's liberal majority.
Social democrats understood inequalities of income and wealth as necessary evils. They were justified-in terms given a philosophical gloss by John Rawls-solely by their contribution to the wellbeing of the worst off. Fairness demanded a narrowing of the difference between the worst off and the best off to the minimum necessary to preserve incentives; Rawls's famous "difference principle." Equality of income and wealth remained the ideal. This understanding of social justice underpinned the "tough-but-tender" policies of David Owen's Social Democrats. Roy Hattersley's campaign against the Labour leadership is an extended defence of this Owenite-Rawlsian philosophy.
Gordon Brown's response to Hattersley is a reformulation of the ideal of equal opportunity, using the language of inclusion and exclusion. Traditional social democratic egalitarians, like Hattersley, focus on giving people equal educational opportunities and then correcting later inequalities through redistributive taxation. Brown sees this as an anachronistic approach. It stems from a time when occupations were chosen for life and education ended (for a few) with a university degree. When the social division of labour is in flux, as it is today, it makes no sense to think of equal opportunities in the static terms of providing equal access to a fixed range of goods at the beginning of a working life.
As Brown understands it, the attempt to promote equal opportunity must be life-long. It must also stress inclusion. Inclusion means being connected with the mainstream of social life. Nothing promotes inclusion better than work, and no kind of social exclusion is more disabling than the long-term lack of it. The excluded need access to the productive economy, not a little extra income redistributed from the better off.
The ideal of inclusion points to the worst divide in late modern societies such as Britain-between those who are in the labour market and those outside it. Here it is worth marking a contrast between social inclusion and social democratic notions of equality. Exclusion is wrong because of the injuries to human wellbeing and the weakening of social cohesion that it entails, not because it violates principles of equal distribution. Rawlsian egalitarianism has been profoundly harmful in focusing the centre left's concern on the overall pattern of distribution of goods in society, when what matters is the wellbeing of individuals.
Equal opportunity is not a simple value. It can promote inclusion, but it also serves another ideal-reward according to merit. Meritocracy has never had a good press in Britain. It has been scorned as uncaring by the egalitarian left, while both neo-liberal and patrician Tories have repudiated it as a mean-spirited conspiracy of arrivistes. In rejecting meritocracy, Michael Young, FA Hayek and Roger Scruton are-for once-at one. Yet when social positions are neither fixed in traditional hierarchies nor levelled into egalitarian indifference, there is no alternative to meritocratic distribution. It is the only efficient way of allocating unequally attractive positions which can be defended as fair.
Inclusion and meritocracy can conflict. Inclusion widens the scope of open competition, but it does not ensure equal chances of success. In some contexts, such as the "winner-take-all" global markets in talent which have opened up in sport, popular entertainment and management over the past decade or so, meritocratic competition widens inequalities. When winners in these markets separate themselves from the rest of society by using private hospitals and schools, meritocracy can work to promote exclusion.
So equal opportunity creates tensions between the distinct ideals that it serves; but it also leaves out something which should be central in a modern conception of social justice: the satisfaction of basic human needs. There are many people whose welfare cannot be furthered by equal opportunity-whether that means inclusion or meritocracy. The 60-year-old disabled ex-postman living on income support does not need better opportunities to enter the labour market. He needs a better quality of life. The woman diagnosed as having breast cancer may be content with her working life; what she needs is an operation. To be sure, both of these people will flourish better in a society which genuinely prizes equal opportunity; but a society which prized only that ideal would not be committed to meeting their needs.
A modern, post-social democratic conception of social justice will be concerned to satisfy basic human needs as well as to foster inclusion and meritocracy. It will acknowledge that these values can conflict. Those who think in the old categories of Rawlsian theory will see such conflicts as a falling-away from an ideal of equality. Those who think of politics as an open-ended, pluralist enterprise will see them as evidence that our values are richer and more complicated than allowed for in Rawlsian philosophy. A truly pluralist political culture will not indulge the illusion that fairness is simple. It will openly negotiate the conflicting dictates of fairness.
What might such a post-Rawlsian conception of social justice mean in practice? Its chief distinction is that it preserves a strong concern with the worst off while giving up altogether the demand that the better off be levelled down. This means that redistribution should be implemented in the priorities adopted in public expenditure, not by taxation. A radical, post-social democratic government will be concerned to direct resources where it judges human needs to be most urgent. It will want to assist the social groups which are most excluded and to give most help to those whose talents are most at risk of going to waste. The spending policies of such a government could-and should-be consistently redistributive. Yet its tax policies need not be more than very moderately progressive.
Most people in Britain are worried by signs that social cohesion is breaking down; but they are unmoved by evidence that economic inequalities have increased. They think that poverty and lack of opportunity are social evils because they produce a great deal of human misery, not because they involve inequality. There is no public constituency for seriously redistributive taxation in Britain today. But there is a consensus that public expenditure be targeted at the worst off.
The political philosophy which best expresses this consensus is not social democracy. It is liberalism-not the egalitarian liberalism of Rawls, but the New Liberalism advocated in Britain by LT Hobhouse, TH Green and John Maynard Keynes in the early decades of this century. It was a liberalism concerned with reconciling the demands of individual choice with the needs of social cohesion; but it was not (especially in the case of Keynes) egalitarian. Like John Stuart Mill before them, the New Liberals wanted a society in which all careers were open to talent, in which inequalities were neither fixed nor impermeable, and in which no one's basic needs went unmet. They rejected a stratified society but they saw nothing inherently unfair in economic inequalities.
In JS Mill's case, this view led him to support strongly progressive inheritance taxes levied on the recipient, not the donor, while opposing progressive tax on incomes in favour of a flat rate. In present circumstances, this is politically impossible. Yet it could advance the redistributional goals of a liberal government-raising enough revenue to fund public services and promoting the dispersion of wealth without harming incentives. The tight fiscal restraints which the Blair government faces are not all of its own making. They are imposed as much by voter resistance to higher taxes and watchful global capital markets. Given these realities, it is frivolous to argue that problems of poverty and exclusion can be solved by a return to redistributive taxation.
Redistribution through public spending targeted at the worst off is a better way. It too has problems and nasty trade-offs. Some middle class voters may find redistributive spending policies as repellent as high taxes. We all know that means-testing creates poverty traps. But a strategy which aimed to meet the needs and enhance the life chances of the worst off could have more impact than the egalitarian tokenism advocated by social democratic critics of the government. Indeed, such a post-Rawlsian strategy may be the only genuine alternative to neo-liberal "trickle down" economics.
A government which implemented policies of this kind would not be inconsistent. It would be pur-suing a coherent and compelling ideal of social justice: an ideal which-unlike Rawls's po-faced "difference principle"-articulates the sense of fairness of large sections of the population. And it has the advantage of being consistent with Blair's avowed project of re-inventing liberal Britain. A country in which individual aspiration is unlimited, but public services guarantee lifelong opportunities for all and the satisfaction of basic human needs for the worst off, is an attractive vision of what a liberal Britain might be in the next century.
