Social Institutions and the Law of Contract Under Attack

The Treatment of Stephen Hester and Fred Goodwin - Has Populist Politics Gone Too Far?

By John Marenbon, author of Politeia's Populism and Democracy: Politics in the Public Interest

Decent people will have reacted with dismay to the measures recently taken by a populist government against two individual citizens who have the misfortune to be bankers: the stripping of a knighthood from one, ostensibly by a committee of officials, but with the clear encouragement of the three main political parties; the denial to another of his contractually agreed remuneration, supposedly by his own choice but in fact only when government and opposition attitudes had made any other decision impossible. But is this dismay any more than an aesthetic reaction to what, the politicians’ defenders may see, is the necessary ugliness of governing in a mass democracy? It is hardly a tragedy, after all, if a very rich man becomes rather less rich than he had expected, or someone loses a title that it was already hard to use without irony.

Yet there are deeper reasons to deprecate this week’s ill-considered decisions. They have to do with the slogan which – now less frequently – is used to characterise the Prime Minister's approach to government: the ‘Big Society’. This phrase was stimulated by discomfiture over Mrs Thatcher’s celebrated declaration that ‘there is no such thing as society’ and the political capital made by opponents using it. Of course, in one sense, Mrs Thatcher was completely right. Her comment was the first half of an antithesis, and she went on to explain that, rather than the abstraction, society, there are individual men and women. Conservatives, however – and none more than Mrs Thatcher herself, believe that, as well as individuals, there are indeed social institutions, distinct from government; and that whereas government is an unfortunate necessity, to be kept as small as possible, a nation’s social institutions are its most precious resource, enabling individuals to live flourishing lives within a community. In his phrase, Mr Cameron gestures towards such an understanding.

A country’s honours system is one of its social institutions. In Britain this position is marked out by the fact that such awards come from the Crown, not from the government. It is true that, in the choice of those to be honoured, politics sometimes plays a part, and sometimes, unfortunately, a disreputable one. None the less, the system itself has, in the past, been kept apart from politics. But now the system itself, with regard to the conditions under which honours are held, has been made the subject of politics, and politics at its crudest. In order to look better in the eyes of unreflective voters, the government decided that, against all precedent, someone should lose his knighthood, not because he had committed a crime, but simply because he had shown bad judgement. By that move, honours have become less a social institution and more a government-controlled convenience.

Another social institution is the law of contract. It safeguards, with the whole force of the law, the agreements which individuals and groups have freely reached with one another. When a government uses its weight to see that a contract is not honoured – as happened in the case of Stephen Hester – it weakens a social institution that, perhaps beyond all others, is necessary for safeguarding individuals and their freedoms.

This week’s government actions are worrying examples of how populist politics, through ill-considered opportunist interventions, can destroy a social fabric built up over centuries.

John  Marenbon
2 February 2012

Read Populism and Democracy: Politics in the Public Interest by John Marenbon