If you read a lot of books on politics or economics, you can generally tell where an author is coming from within the first chapter or so. That’s not necessarily a bad thing, and a good book will strengthen the tradition it stands within and push forward that perspective. Uncategorisable books are more rare, but Human Politics, Human Value is one of them. Martin Whitlock ploughs his own furrow through the complications of globalisation and free market economics, with an unusual originality and clarity of thought.
Whitlock sees a crisis in British politics. Democracy has eroded, participation is low, and there is little trust between the governed and the government. Successive governments have failed to get a handle on poverty and exclusion, and bureaucracy has proliferated. It’s a crisis of imagination, doomed to endless tinkering, while “frustration is rapidly becoming the defining characteristic of political engagement.”
The problem lies in setting ourselves the wrong measure of success, according to Whitlock. By championing GDP as the one metric to rule them all, we have made economic activity a good in itself, whether or not that activity is useful and productive. The more transactions there are between us and the goods we require, the more GDP is created, but the result is “an economy in which so much work has no productive or useful value.”
Whitlock illustrates this through the supermarket, which adds so many layers of activity between the farmer and the consumer. Or a pair of trainers made for £3 in Asia and sold for £80 in Britain, with 90% of their price taken up with marketing, branding, shipping, retail overheads and shareholder profits. Perhaps worst of all, consider Britain’s housing crisis, and the fact that we have half a million estate and property agents.
Branding, marketing and retail do at least give us goods that we want at the end of the line, however complicated the chain. Other forms of work are best seen as a cost to be avoided. “If someone could get through their life without paying a penny to a lawyer,” Whitlock suggests, “they would count it a good result.” Accountancy, insurance, legal and management services are things we want to access as little as possible, but are an ever growing slice of the economy. The tendency towards activity as a good in itself is something the book calls the ‘transactional economy’:
“A transactional economy is one in which far more of the work people do is spent transacting (buying, selling, negotiating, managing, administering and checking) than is spent in producing real, usable wealth – the things that people want and need.”
What we should be after instead is ‘human value’, which includes “basic needs such as food and shelter, material goods and the time and opportunity to satisfy emotional, intellectual, creative, physical and social needs too.” These are not measured by GDP in its current form, so the economy inevitably fails to deliver everything we want from it. That’s where politics can come in, reshaping our priorities and re-balancing the economy towards greater participation. “The objective of human politics” says Whitlock, “must be to prioritise true collaboration in economic activity, to place the production of human value at its centre.”
The later chapters of the book explore this idea in practice, re-thinking insurance as a collaborative safety net with low overheads, for example. Global trade, democracy, debt and education are covered. There is a chapter on land and its importance to the economy. (If I had a criticism, it’s that climate change and environmental sustainability only comes up in any detail in the afterword.)
Each of these topics is approached with new perspectives and unusual ideas, some theoretical and some practical. Creative thought experiments bring in new arguments along the way. My favourite is the idea of tracing financial power by ‘following the builders’ – a journey that goes from the pyramids to the cathedrals, to stately homes, to the skyscrapers of corporate banks.
Human Politics, Human Value doesn’t settle for the usual answers. You might not agree with all of them, but at a time when our politicians seem so desperate for new ideas, it’s well worth taking the time to explore what politics could be if we put human benefit at the heart of the economy.
The Earthbound Report 
The criticism of the ‘transactional economy’ is largely misguided. Martin Whitlock rightly says that real wealth comes from advances in productivity but one of the main drivers is the division and specialization of labour.
The transactional economy is about connecting those specialists. In being able to use experts we gain more than we lose, which is why we do it.
We must connect the specialists in order to see the whole and not just the parts, but the goal must not merely be financial.
I take your point about specialisation, but that’s not what the transactional economy is about. It’s more akin to bureaucracy, the proliferation of middle-men that generates economic activity for the sake of activity.
The housing market is a case in point – months of back and forth between solicitors, surveyors, mortgage brokers and estate agents. Endless work for specialists, but it’s hard to see how that’s efficient. In the US you can buy a house in a single day. GDP is generated, but no actual value. Wages have been consumed in fees, but nothing new has been created.
You try conveyancing you own house. It is long hard work for the non specialist and you could easily miss stuff that could create a great liability for yourself. What has been achieved is opportunity cost reduced and risk ameliorated. These are not inconsequential things. They are worth the money.
Surely there’s a middle ground between doing everything yourself, and the months-long process we have at the moment.
In my experience, the solicitors are doing their work in good time but bemoan their waiting for replies from all concerned. (Last one was done in seven weeks, but she is a family friend!).
Maybe the process could be faster but that doesn’t remove the point that these transactional stages do have value. And comparative advantage and specialization of labour means paying others to do them makes sense.
When someone points at a part of the economy and says they can’t see the sense in that, when lots of people are freely paying their oown money for it, the problem is much more likely with the understanding of the observer, not the system.
Well that’s clearly nonsense. There’s no good reason why the train from Luton to London should cost the same as a flight to Paris, and there’s not many commuters who’d argue otherwise – but we all have to pay up anyway.
While we’re talking about the understanding of the observer, let’s just remind ourselves that you haven’t read the book.
As I said before, the problem with the transactional economy is not with the specialisation of labour. I have no problem with that, and neither does Whitlock. It’s about growing layers of complexity between producer and consumer, and the tendency to create economic activity by boosting transactional costs rather than increasing production. There’s a lot of overlap with the idea of rent, or I’ve heard similar arguments referring to institutional costs.
There are very good reasons why a train ticket from Luton to London costs the same as a flight from London to Paris. The infrastructure costs are higher and demand is higher so price is used to manage it. Just because you don’t like paying the price doesn’t make it wrong. Go on, give me another, I can do this all day.
The growing complexity is an essential part of the division of labour. As our economy grows more complex you need to go to more and different levels between producer and consumer since there are more elements in each product. Each element is best produced by a specialist.
There are imposed transactional costs but those are mostly through regulation.
No, there are explanations, but not ‘good reasons’. The high price of the train has little to do with the cost of infrastructure, and much more to do with monopoly over a rail line that serves both Gatwick and Luton Airport. That’s a failure of competition. Nothing to celebrate there, surely?
I see you’re still pushing the division of labour argument. Why don’t you read the book, and then we’ll discuss what it actually says?
Well reading the book clearly hasn’t given you good examples for problems with transactional economy.
Lack of competition in train services is not an example of the problems of transactional economy which you defined as a proliferation of middle men.
Now if your complaint had been that the train operating companies rent trains to run on track owned by Network Rail and maintained by different engineering companies then you would be talking about the transactional economy. But your concern is lack of competition. The split in ownership is required for competition on the railways. While Thameslink is currently the only operator direct from Luton to Gatwick another operator could run services if they wished as happens on other lines. BR had fewer transactional costs but was a monopoly.
So the concerns about the transactional economy can conflict with our desire for competition. Given you, who just read this book, didn’t get that, then I doubt the book is worth the opportunity costs of me reading it.
My mention of the trains wasn’t an example of a transactional economy bloat, but in response to your daft comment that “When someone points at a part of the economy and says they can’t see the sense in that, when lots of people are freely paying their oown money for it, the problem is much more likely with the understanding of the observer, not the system.”
That’s a surefire recipe for complacency and ignoring the warning lights on malfunctioning markets. So because people keep freely buying houses, all is hunky dory in the housing market? By your logic, anyone talking about a housing crisis has misunderstood the system.
But you know this. You’re just out for an argument. Come back when you’ve read the book.
So only if someone has read a book can they comment on the themes raised in the review?
My point is that you need an understanding on a situation to be able to judge if there is an actual problem. Your example of conveyancing was bad as was the one on trains (airplanes don’t have to install and maintain the sky). You have made my point for me and now you are grumpy.
If they want to comment intelligently, yes, they should read the book. Anyone can chuck out snap judgements to dismiss an idea they don’t like.
You could try arguing with evidence. ‘Its true cause I read it in this book’ is only one step above ‘I read it on the internet’.
We haven’t even got to discussing the actual merits of Whitlock’s theory. We’ve been arguing about your mistaken interpretation of it, and then dealing with your silly accusations about my own views.
Which is why I say either read the book, or stop wasting my time.
@DevonChap – Surely, Martin Whitlock will be well aware of your definition of a transactional economy, in that, he merely wants to see the specialists connect and collaborate in order to reduce the transaction costs and time of so many specialists each needing to cover their own costs, so that we could direct more time and energy working together for our real needs; and that allows us more space to consider the effects of our actions upon us all and draws us closer to our environment?
@DevonChap – I’m not pestering you, (despite appearances!), but, even if the problem MW seeks to address is not known as the ‘transactional’ economy, the problem he sees is real and the solution he proposes makes sense (as collaboration cuts down on duplication and its associated costs). If you want to claim the ‘facts’, it would have been good for you to explain how ‘transactional’ comes to mean ‘connecting’ and how collaboration in his sense conflicts with competition in a negative way. Otherwise, it justs looks as if you haven’t understood him.
I agree with your last para of your reply 28th Nov to Devon Chap-It is the growing layers of complexity between producer and consumer and tendancy to create economic activity that annoys, frustrates and aggrevates the consumer-whilst one recognises the sense in commissioning the services of experts in the matter of conveyancing for example, nevertheless its convoluted approach in such matters confirms the very point being made. Wherever possible I was taught to use the KISS principle- ‘Keep it stupid simple’ if only!