Compassionate Economics: The Social Foundations of Economic Prosperity

As the world's financial system totters and Britain faces recession, we need a far richer debate about the nature, the power and the limitations of capitalism.

Compassionate Conservatism was acclaimed as 'the intellectual guidebook to Cameronism'.

Now Compassionate Economics re-examines the fundamental drivers of economic prosperity and social wellbeing - and sets out a new economic agenda for the centre-right.

 

Praise for Compassionate Conservatism:

"The book everyone in Westminster is talking about." The Observer

"A glimpse of the future or British Conservatism." Adrian Wooldridge, co-author of The Right Nation

Praise for Compassionate Conservatism. As Jesse Norman argues eloquently in a new book, Compassionate Conservatism, published by Policy Exchange, the Cameroons' think tank, the Tory leader is gradually building up a political identity based on the idea of a "connected society", in which wellbeing is more important than wealth and the common good matters as much as individual rights. --Rachel Sylvester, Daily Telegraph, 13 June 2006

Praise for Compassionate Conservatism. At once profound and accessible, this book is rewarding reading for anyone interested in political ideas, and indispensable to those on the centre right. It provides the first philosophical definition of the new, 21st-century conservatism. --Charles Moore, former Editor of the Daily Telegraph, columnist and biographer of Lady Thatcher

Praise for Compassionate Conservatism. Superb ... What the Conservatives need now is not re-branding but an actual philosophical and policy basis for action. This book brilliantly provides that basis. It shows not just why the Tories are ready for government again, but why Britain needs them - badly. --Andrew Sullivan, author, blogger and Sunday Times columnist

Over the summer, when the Conservatives had a steady double-digit poll lead and Labour was flirting with regicide, public affairs companies across London started printing glossy brochures forecasting what a Cameron Government would do. Most of these brochures were a load of tosh, with exclusive insights cribbed from ConservativeHome and in-depth analysis which could have read directly at the Spectator s Coffee House blog. Now we are officially in recession, people wishing to spend their money more wisely and gain a real insight into David Cameron s Conservatives should read Compassionate Economics by Jesse Norman. The main objective of the book is to reclaim economics as a discipline which recognises the wider social context in which people operate. Traditionally, economists recognised this. As well as writing the Wealth of Nations, Adam Smith also wrote The Theory of Moral Sentiments, which highlighted pity and compassion as key drivers of individuals. As Friedrich Hayek himself a lawyer and political philosopher as well as a Nobel Prize winning economist once remarked, nobody can be a great economist who is only an economist. This is why Jesse Norman turns his fire on modern, mathematics-obsessed economists. The third chapter of Compassionate Economics opens with a wonderful quote from Kenneth E. Boulding: Mathematics brought rigour to Economics. Unfortunately, it also brought mortis. Traditionally, economists used the notion that people were perfectly rational utility-maximisers operating under perfect information as simply an assumption with useful predictive powers. The problems started, according to Jesse Norman, when it was transformed from an assumption into a description of how people operate in the real world. A good example of the danger of rigour mortis economics being applied directly to public policy is the failure of Tax Credits. To remind readers, tax credits are essentially means-tested payments geared to the recipients income. As income changes, under-or overpayments will occur. With tax credits being paid in advance, overpayments are common place, with disastrous results. The Public Accounts Committee found that the Government had overpaid £6 billion in the first three terms of the systems operation, a massive blow to some 1.9 million families who had to pay the money back. All this heartache was generated, according to Norman, by a simplistic belief that people would understand and be able to operate rationally under a complex system which even tax experts have difficultly explaining. Tax credits were rigour mortis economics at its worst. The conclusion of Jesse Norman s book is that policymakers should put compassion back into economics by recognising the subject s wider social context. First, people should be considered as more than just walking economic calculators. Second, the social foundations of economic prosperity independent institutions, the right balance of competition and co-operation, and widespread entrepreneurship should be nurtured. Compassionate Economics is not a mushy prescription for public policy; it is an attempt to update Adam Smith for the 21st Century. Norman himself describes this and his previous book, Compassionate Conservatism, as distant, modest but direct descendents of Adam Smith s work. Being a conservative, Jesse Norman will agree that all humans are flawed, and there are, like in any book, a few small errors in this book. Tax revenues in 2007-08 were £545 billion, not the £450 billion mentioned on page 85. John Locke s mixing labour metaphor for the establishment of private property does not limit the right of ownership to only so much as [a person] can directly cultivate the existence of gold in the state of nature removes the natural constraints on the accumulation --Matthew Elliott, Conservative Home 10 Dwecember 2008

Praise for Compassionate Conservatism. Superb ... What the Conservatives need now is not re-branding but an actual philosophical and policy basis for action. This book brilliantly provides that basis. It shows not just why the Tories are ready for government again, but why Britain needs them - badly. --Andrew Sullivan, author, blogger and Sunday Times columnist