Interview
Culture
Economics
S&U interviews
5 min read

Can the economy work for the common good?

Adrian Pabst on the economic framework that is universal yet particular about people.
A man talks animatedly looking at the camera while sitting against a wood panelled wall.
Fondazione Centesimus Annus Pro Pontefice.

Adrian Pabst is Professor of Politics at the University of Kent, and deputy director at The National Institute of Economic and Social Research. His lecture on Just Economy? Catholic Social Thought, Mutualism and Roads Not Yet Taken, was a highlight of the Lincoln Lectures series, organised by Together for the Common Good. Financial markets journalist Laurence Fletcher talks with him to discover more about his thinking.

 

There is no shortage of commentators ready to point out the apparent deficiencies in the UK’s economy. Widespread in-work poverty, poor productivity growth, regional inequality and a perceived reluctance among employers to train up British workers are just some of the accusations that can be levelled. 

But finding realistic, workable solutions is more difficult, as successive governments have found. Is the answer to be found in having higher levels of tax and government spending, or lower? Should governments be intervening more, or give more room for free markets to work? With a general election on the horizon, and with issues of economic growth, government spending and taxation likely to feature prominently, such questions are particularly pertinent. 

Offering one alternative way of tackling the problem is Professor Adrian Pabst, a political scientist at the University of Kent, who is an expert on so-called Catholic Social Thought. This approach, which was developed in the 19th century and draws from the Bible, focuses on the dignity of the individual, care for others and the common good, with the aims of social renewal. It provides a framework for thinking about big topics such as international relations, the economy and the environment, and Pabst believes it has much to say about our economy today. 

Catholic Social Thought “is very particular. It always speaks to the moment. And it’s highly universal because of it,” he said in a recent interview. “This is what the world is like and this is how we must act.” 

Pabst rejects both the idea that everything is fine with our economy (“mythical stories about things working”) and the belief that “everything going to hell in a handcart”. 

Instead, his approach is to look at some of the apparent contradictions in our economy - strengths alongside related weaknesses. For instance, how can a country be rich but have poor citizens, or have a very high output of goods and services while many people do not partake in them? Or how can many people have become worse off in recent years, even though wages are growing? Or how can the UK boast an “incredible” City of London that is one of the world’s top financial centres, yet have people without access to capital? 

“We have to be realistic about where we are - a low wage, low growth, low productivity economy. We can pay people higher wages over time if we increase productivity. That comes from investment,” he said. 

Free markets have at times been heralded as either the answer to all our problems by some on the political right, or the cause of so much misery by some on the left. But Pabst’s approach is more nuanced. Markets should not simply be “the engine for ever-greater inequality”. But, crucially, they are not inherently bad in and of themselves, and often the problem is instead down to a market being stacked in one side’s favour.  

“Markets are not one thing,” he said. “They are an outcome of ownership, regulation… There is not a problem with markets per se, but it’s the wrong regulation, ownership concentrated in a very few people. 

“There are lots of things we can do much better. But if we replace the market with the state, we’d just be doing [communism] and ultimately we’d be poorer,” he added. “The question is, are we putting society first?”  

(As an aside, he also takes a more nuanced view on former Prime Minister Margaret Thatcher, who he believes brought both positives and negatives). 

Big tech firms are “oligarchies accountable to no-one. It’s simply not a tenable position. They’re like media companies yet they’re not subject to media laws… We’ve allowed them to build private infrastructures. It needs to be tackled.”

So what would Pabst actually change? 

For starters, he believes that too much capital is directed towards the wrong purpose, namely financial speculation. While some would argue that speculation plays an important role in the economy, for instance in price discovery in markets or in taking the other side of the trade, say for farmers who want to hedge crop prices, Pabst is keen to see the economy produce “goods and services that have real worth”. Significantly for how society is structured today, he argues that we do not need “a class that lives off assets at the expense of everyone else”. 

Other areas also need to change, he believes. Loopholes should be closed to make it harder for companies to use agency workers rather than employing people. Trade unions need to be encouraged and improved. A national investment bank, grouping together the existing, disparate pots of money, could direct capital to sectors and regions where it is needed. As is already the case in Germany, companies and society would both benefit from having employees on their boards. 

More economic decisions can be devolved from national government to a local level, but challenges such as climate change or regulating the big, powerful technology companies - which he describes as “modern day plutocracies” - should be tackled at a higher level. 

Big tech firms are “oligarchies accountable to no-one”, he said. “It’s simply not a tenable position. They’re like media companies yet they’re not subject to media laws… We’ve allowed them to build private infrastructures. It needs to be tackled.” 

And (more of a comment on the US than the UK) he sees little value in companies reporting earnings quarterly, which he said is driven by “short-term profit maximisation”. 

Intriguingly, Pabst does not shy away from taking a stance on one of the most divisive issues of our times: immigration. 

Catholic Social Thought, he explains, is humane and pro-immigrant. But, to break with what he calls “a low wage, low skill model”, mass economic migration is to be discouraged, because it is detrimental to both the sending and receiving countries. 

“[We say] yes to refugees, to asylum. But no to mass economic migration,” he said. 

So, going into an election, how likely are we to see things change for the better? 

Rather than being optimistic - the belief that eventually things will get better - Pabst is hopeful, because he believes that things could be different, but he is not necessarily expecting it. 

“I remain hopeful,” he said. “I just don’t quite see who’s going to do it.” 

Article
Change
Politics
Psychology
5 min read

How to be a wise diplomat about the election result

It’s not just American citizens weighing-up and trading-off.

Emerson writes on geopolitics. He is also a business executive and holds a doctorate in theology.

An ambassador presents credential to President Trump
President Trump accepts credentials from Indonesian ambassador M. Lutfi.
White House via Wikimedia Commons.

The American election result, whatever the case, is a landmark event in geopolitics. And here, it is unclear which result is better for the world in the long-term, given the ambiguous motives, interests and intentions of its main characters.  

Whereas the Biden Administration led by the Democrats has been fraught with war, the Trump Administration was comparatively peaceful, with breakthroughs such as the historic Abraham Accords. Yet, the rhetoric of President Trump is aggressive and divisive.  

Despite mainstream media assertions focused on the clear best choice in the election, a balanced perspective is necessary involving consideration of trade-offs between what the parties and their leaders each offer. This balance, however, is difficult to achieve as polarisation encourages retrenchment into simple views.  

As the American election approaches, it is worth considering what a diplomatic approach to an election transition might entail. Here we can look to the example of Henry Kissinger, whose diplomatic mindset is illustrated in Barry Gewen’s The Inevitability of Tragedy. Gewen eloquently illustrates the Kissingerian – even if often cold-hearted – approach to the consideration of trade-offs in diplomacy.  

Gewen traces the early-life experience of Kissinger, a German Jew forced to flee Nazi persecution, both serving in the US Army and attending Harvard. Unlike his American peers, Kissinger understood through personal experience that authoritarianism could rise through democratic means, Adolph Hitler the primary example.  

It is partly for this reason that Kissinger was willing as US Secretary of State to intervene in the affairs of foreign states to halt dictators emerging through democratic processes. The trade-off was here between respect of democratic process and the possibility of dictatorship, a trade-off which Americans without German-Nazi experience would never understand and which they saw as deeply unsettling.   

Kissinger is the archetypal diplomat. His example is worth reflecting on in the wake of the American elections. Kissinger approached geopolitics with little emotion, instead considering what course of action in a particular situation served as the least worst evil available.  

He engaged across a wide variety of networks, talking with individuals who would not speak with each other. And he maintained a considerable sense of calm throughout his career as both an actor and commentator, responding to events as they developed. 

An initial consideration in emerging from the American elections is that too much emotionality – amplified by political polarization – will expose politicians, diplomats and the public to risk. Emotion colours careful, strategic calculation of various scenarios and actions across potential scenarios.  

‘People constantly show you who they are; we are just too busy to notice,’ 

An effective diplomatic (or strategist) will carefully consider what might happen and think through potential steps in case these realities actually transpire, while recognising that too much anticipation risks cascading into fantasy. Too much emotion impedes this careful process of reflection and deliberation as part of the development of strategy.  

A second element of effective diplomacy and strategy is to consider people as they are, rather than rely on superficial descriptions in the media, biased second-hand accounts or who or what one hopes another person is. People’s motives, intentions and interests are not easily discernible at first glance, instead requiring careful probing and questioning.

At the same time, there are few more accurate sayings than ‘People constantly show you who they are; we are just too busy to notice,’ conveying that counterparts are always providing information as to who they are, few careful or disciplined enough to mask their real thinking.  

An effective diplomat might consider the early upbringing – much like that of Kissinger – that shapes a person’s character and behaviour, if not their worldview informing action.  

Consider Donald J. Trump, learning right from wrong on the streets of New York City via the mentorship of lawyer Roy Cohn, who served as Chief Counsel to Joseph McCarthy while McCarthy prosecuted potential American communist sympathisers.  

Cohn’s rules of life, work and play were as follows (these summarized by a friend well-acquainted with Cohn and his colleagues): ‘One, attack, attack, attack! Two, deny everything! Three, always claim victory!’ The logic of these three rules of life are readily understandable when considering the harsh New York realities within which Cohn and later Trump operated.  

These considerations are overlooked, however, amid the onslaught of media which fails to consider what really shapes the character of a man or woman.  

Curiosity, a critical mindset and self-restraint in the face of the human temptation to reach rapid and satisfying answers are here necessary, as part of figuring out what exactly is driving action.

A wise diplomat would pay particular attention to these pivotal factors – such as the influence of a long-standing mentor or advisor – as they might manifest in the present. This requires an intellectually honest and serious consideration of the worldview that shapes a counterpart, rather than considering superficial media commentary.  

Third, a wise diplomat will maintain relations across a wide variety of networks, understanding that it is fine to talk with two or multiple individuals whose own relations are fractured (in fact, these strains in relations can be beneficial within diplomacy, the diplomat in this case able to play broker as he or she needs or wishes).  

The maintenance of broad networks is vital, because this enables action under a wide array of potential circumstances, understanding that anything can happen (we are here reminded of Harold MacMillan’s saying “Events, dear boy, events!”) And a key lesson in diplomacy and in the cultivation of strategy is that, once crises unfold, it is the preparatory work in developing networks and alliances that counts; little new network-formation is possible afterwards.  

The previous two points suggest that a wise diplomat will not pay too much attention to what is in the media, but will instead consider their own learning gleaned through in-person interactions with others, as well as the perspective of their most trusted contacts. Curiosity, a critical mindset and self-restraint in the face of the human temptation to reach rapid and satisfying answers are here necessary, as part of figuring out what exactly is driving action, and what can in turn be done to shape action in accordance with interests.  

Finally, an effective diplomat will not try to play God, serving as the arbiter of right or wrong, adopting instead a more considered approach anticipating and responding to circumstances as they gradually or quickly evolve. Effective strategy requires an aloof approach (caring – but not caring too much), removing the self from a given situation so as not to allow natural human vices such as presumptiveness, arrogance or short-term self-interest to affect judgment.  

And the American election bring with them a number of trade-offs, these to be weighed carefully by American citizens, as well as by diplomats and strategists in other countries. These trade-offs will be considered most effectively if approached with calmness – the aloof, even if cold-hearted, approach personified by Henry Kissinger. 

In an age of catastrophising, emphasing emotion, it is easy to descend rapidly into despair, rather than consider action from a long-term perspective. Diplomacy and strategy require the latter, which will be a key to success for those who emerge effective in advancing their interests in the wake of the American elections.