Margaret Thatcher said a few controversial things in her time. She was reported, for example, as describing the National Union of Miners as the "enemy within" – likening them to other enemies of Britain such as the Argentinian dictator who had invaded the Falkland Islands, General Galtieri. There was the time she snapped at a reporter who had quizzed her about high unemployment. Don't stand there as “moaning minies,” she replied: “Now stop it!”. Or at the election press conference when she defended her use of private medical care at a time when the State NHS was under pressure. “I insure,” she said, “to enable me to go into hospital on the day I want; at the time I want, and with a doctor I want.” Many in the public were furious at what they saw as a wealthy Conservative prime minister’s lack of empathy.

No Thatcher quote has been more remembered and more misrepresented, however, than something Britain’s first female prime minister said during an interview with a women’s magazine in 1987. It still haunts her reputation and the Conservative cause to this day:

“I think we have gone through a period when too many children and people have been given to understand “I have a problem, it is the Government's job to cope with it!” or “I have a problem, I will go and get a grant to cope with it!” “I am homeless, the Government must house me!” and so they are casting their problems on society and who is society? There is no such thing! There are individual men and women and there are families and no government can do anything except through people and people look to themselves first. It is our duty to look after ourselves and then also to help look after our neighbour and life is a reciprocal business…”

We spotlighted another truncated quotation in the last chapter – the truncation of Adam Smith’s observation about the invisible hand - but the shortening of this quotation was much more severe and also malevolent. Only a handful of Margaret Thatcher’s words are usually quoted – and completely out of context. They’ve been used to give the impression that she didn’t believe in social bonds, only in individualism. If you read the full quote it is clear that the so-called Iron Lady believed very deeply in social responsibility – but of a personal rather than statist kind. For her the command to “love thy neighbour” was addressed to each of us personally and wasn’t something we could automatically pass to the State. She didn’t oppose state action but it should never be the first resort.


What Mrs Thatcher objected to was what the American writer Marvin Olasky has described as “stingy compassion”:

A feed-and-forget compassion where we don’t love our neighbours ourselves but pay for others to do so. It’s one where we don’t give our children the time that they need to flourish but instead shower them with toys and use TV and game stations as babysitters. It’s where we run schools that award children soft grades rather than ones that build skills that will prepare them for success in life. A feed-and-forget welfare state is one in which we give the unemployed enough money to eat and be housed but not enough care so that they actually become independent people.


Keith Joseph would have approved of Marvin Olasky’s description of true compassion and of Margaret Thatcher’s conception of social responsibility. I remember him giving a lecture to Conservative students in which he urged more of them to study sociology rather than economics. If Joseph was Thatcher’s guru, Oliver Letwin is the nearest thing to a sage for David Cameron. Like Joseph, Letwin has argued for a sociological turn for Conservatism. In a speech made before the economic crash he gave one of the most thoughtful speeches of the modern political era - and summarised his argument in an article for The Times (£). Here is the key extract:

“Before Marx, politics was multi-dimensional – constitutional, social, environmental as well as economic. But Marx changed all that. After Marx, socialists defended socialism and free marketeers defended capitalism. For both sides, the centrepiece of the debate was the system of economic management. Politics became econo-centric.”

But then, Letwin claimed, the free market triumphed - “from Beijing to Brussels” – and politics “entered a post-Marxist era”. “Politics,” he continued, “once econo-centric – must now become socio-centric.” In the socio-centric era he said the challenge was how to use the prosperity generated by free market economies to make people happier:

“The mission of the modern Conservative Party could not be clearer. It is to bring about Britain's social revival: to improve the quality of life for everyone in our country, increasing our well-being, not just our wealth.”

In this new era, he continued, “irresponsible parents” rather than “irresponsible unions” were the cause of weakness. Britain was no longer the sick “man” of Europe but social breakdown made it the continent’s sick “family” – characterised by high levels of social atrophy. Social rather than economic decline was the new challenge.

The speech was given in May 2007 at a time when Gordon Brown was still boasting about having abolished boom and bust. It was a real “end of history” period when politicians had come to take the creation of wealth for granted. The early signs of the financial crash were beginning to appear but Mr Letwin could be forgiven for not noticing them. New Century Financial Corporation had filed for bankruptcy one month earlier. Up until that moment it had been the second biggest lender to subprime mortgage borrowers in the United States but property prices were now declining sharply. The housing bubble was bursting and the era described by Bank of England Governor Mervyn King as “NICE” (non-inflationary consistently expansionary) was about to end. We were all about to dust off those forgotten books on the 1930s and the Great Depression – especially the Chairman of the US Federal Reserve - Mr Ben Bernanke, a student of the period. We were all about to become a teeny-weeny bit econo-centric again as the whole world was hit by the biggest economic shock of the post-war era.

But if Oliver Letwin’s speech was ill-timed and even then a little blasé about the economic challenges facing poorer citizens it was not a fundamentally flawed analysis. Voters at the end of the “NICE” era were increasingly worried about their quality of life, notably environmental issues, as well as their standard of living. The defeat of John Howard in Australia by Kevin Rudd – partly on the climate change issue – was the most obvious political expression of this shift in the priorities of advanced electorates. Justin Trudeau’s victory over Stephen Harper in Canada might be a sign that it is about to return again. Letwin wanted the Conservatives to respond to the “quality of life” agenda and he’s not the only one who recognises that materialism is not enough.


Alex Smith, a British social entrepreneur and former adviser to ex-Labour leader Ed Miliband, has even argued that a move towards more relational forms of public policy may be more urgent in a period when economic challenges are great. Institutions that traditionally mediated between us and power – like unions, local government and faith communities – are weaker. Banks, the police, the hospital have become bureaucratised – we don’t deal with bank managers or local bobbies or matrons but with call centres, robocops in day-glo police cars and wards that jettison us as soon as the medical procedure can be performed. Through online media we often know people in other countries better than we know our next door neighbours. The welfare state, writes Smith, has to be reorientated so that it becomes part of the solution rather than part of the problem. It needs to seek to strengthen relationships rather than replace them. It needs to change from a focus on “making payments” to “making connections”. This man of the political Left regards the current welfare state as completely out-of-date:

“Payments for everyone with children; tax credits which seek to offset, rather than solve poverty; pensions which grow in perpetuity regardless of the recipient’s wealth; universal winter allowances for all over-62s (a time of life quite different from the same life stage 70 years ago); housing top-ups which further inflate the market – these are not modern solutions for modern problems.”

Smith wants more funding for voluntary groups that build relationships. He wants schools to “re-prioritise personality and character – entrepreneurialism, resilience, disruption, confidence, trust – over traditional qualifications, equanimity and 'hard’ skills, if they are to prepare people for the modern world.” He wants older citizens “to be brought into schools, colleges and corporate workplaces to provoke, mentor and inspire the next generation – and to help create the mutual community connections that really matter for all, young and old.”


The Legatum Institute has long understood that true “prosperity” is about much more than material welfare and our Prosperity Index - an annual rating of 142 nations - is an assessment of six criteria:

1. Entrepreneurship and Opportunity;

2. Education;

3. Healthcare;

4. Personal Freedom;

5. Safety: and

6. Social Capital and Values.

The opinion poll findings at the start of this report were absolutely conclusive. 79% of Britons think strong family and community life is as important to well-being as a strong economy. Just 5% disagree. The conclusion is shared across the world. By 81% to 2% the German people agree. Academics who have studied well-being and happiness would not disagree.


Terry Leahy, the CEO behind the phenomenal success of the Tesco supermarket group until his retirement in 2011, advised that if businesses focus on profits, they risk failing. If, instead, they focus on looking after customers, the bottom line will take care of itself. C S Lewis said something similar in the context of religious faith: “if you look for truth, you may find comfort in the end; if you look for comfort you will not get either comfort or truth only soft soap and wishful thinking to begin, and in the end, despair”. According to Martin Seligman – a self-help guru who roots his advice in scientific research – a similar high-minded focus is necessary for personal happiness. The happiest people don’t seek constant pleasure – they seek relationships, meaning and self-understanding. They find time to “do good”, in other words. They are often part of religious communities. They go outside. They exercise. They are optimistic. They regularly rest. They regularly detox from social media. In the framework suggested by David Brooks in his “Road to Character” book (2015) – they emphasise eulogy rather than résumé values. They emphasise the things in life that tend to be said of someone at their funeral rather than at a job interview.

“People need social bonds in committed relationships, not simply interactions with strangers, to experience well-being”. That was the conclusion of Ed Diener and Martin Seligman in their 2004 paper, “Beyond Money: Toward an Economy of Well-Being”. John F Helliwell and Robert D Putnam reached a similar conclusion in their 2005 paper, “The social context of well-being”:

“Such evidence as we have suggests that social connections, including marriage, of course, but not limited to that, are among the most robust correlates of subjective well-being. People who have close friends and confidants, friendly neighbours and supportive co-workers are less likely to experience sadness, loneliness, low self-esteem and problems with eating and sleeping. Indeed a common finding from research on the correlates of life satisfaction is that subjective well-being is best predicted by the breadth and depth of one’s social connections.”

The Cambridge-based Relationships Foundation suggests that strong relationships will ideally have five qualities:

1. Directness: relationships need to be face-to-face

2. Continuity: there needs to be a regularity of contact

3. Multiplexity: honest, effective relationships will be built within more than one setting

4. Parity: there will not be unequal power in good relationships

5. Commonality: common interests and concerns underpin healthy relationships


Oliver Letwin would say that both the contemporary Right and Left are econo-centric. Another way of describing the problem is to say that both are essentially materialist and individualist philosophies. Both are about providing material goods or services to individual agents. Capitalists on the Right are interested in consumers and workers and investors. Statists on the Left are concerned with taxpayers and public servants and welfare claimants. Where is the political philosophy that puts parents, neighbours and volunteers at its centre?

The family has never been popular with left-wing collectivists. If, in the eyes of conservatives, the strongest families are “social penicillin” – capable of educating, healing and civilising; “the nearest hospital, the first school for the young, the best home for the elderly” to use Pope Francis’ words - they do, by the same power, undermine any hope of equality of opportunity. But families aren’t just unpopular with many on the Left. The family also perplexes many libertarians. Writing for the Washington-based think tank, the Cato Institute, Lauren K Hall used a recent essay to observe that “it is no accident that John Galt’s family was only barely mentioned in Atlas Shrugged.” The fictional Galt, who believes in using his own “kaput” for entirely his own self-fulfillment rather than for any social collective, ran away from his family at the age of 12. The family gets in the way of Ayn Rand’s vision of individuals who act only out of self-interest and rationality. It also, of course, gets in the way of a mass collectivisation of society which is why it has been unpopular with many radical left-wing movements. “The family’s multigenerational bonds,” writes Hall, “challenge the demands of immediate collective decision-making and bind us to rules, habits, and ways of life that reject both rationalist and egalitarian reforms.” In particular, contends Hall: “the family challenges individualist arguments for personal responsibility and self-sufficiency since it relies in large part on the reality of human need and dependence.”

Hall lists thinkers, notably Edmund Burke and Adam Smith, who recognise “the crucial role the family plays in moderating both individualistic and collectivist desires, and thus in ensuring both individual freedom and social stability… the overall point, which needs to be taken more seriously by political theorists broadly, is that the family challenges ideological purity in almost every way.”

The other explanation for why relationships are not at the heart of public policymaking may be a straightforward practical issue. It’s easier to help someone start a business than keep their family together. Politicians – whose own lives are as complicated as every other person’s – are reluctant to look like they are setting up an ideal that they struggle to attain themselves. They fear being accused of preaching or promoting one thing but living another.

I don’t think we can afford to be so defeatist. We literally can’t afford to be so defeatist. The economic value of strong relational institutions is enormous. We know, for example, that family breakdown costs each UK taxpayer an estimated £1,546 per year (£47 billion in total) according to the Relationships Foundation. The Early Intervention Foundation has estimated that many parents’ failure to give their youngsters a healthy diet, read with them regularly or set clear boundaries is resulting in social problems from obesity to criminality that cost taxpayers £17 billion every year. The care provided by the UK’s 6.5 million unpaid carers (largely women) would cost £119 billion to purchase if taxpayers had to start footing the bill for looking after sick, disabled or very elderly citizens.

We should know the value of social institutions – what Peter Berger and Richard John Neuhaus called “people-sized institutions” in their 1977 book, “To Empower People: from State to Civil Society” - before we take them for granted and trample upon them. What is the value of a full-time parent, for example, before we incentivise them to go into work? $112,962, according to one very rough estimate? We know the economic value of record levels of UK participation in the labour force. Is there a social cost? Perhaps it’s negligible and I should stop worrying. Perhaps it’s huge and we should all start fretting.

It does not automatically follow, of course, that just because relational capital matters – that government should do something to protect and enhance it. Government interventions can often cause more harm than good but public policy should be intelligent and informed. Policymakers should understand what is happening to the nation’s social capital and should at least operate by the equivalent of the social Hippocratic oath and do no harm.

At the heart of a relationally serious policy agenda would be more data. David Cameron has experimented with introducing new indicators of happiness since becoming British prime minister but we need much more information on the social solidarity of a nation. If we had that information politicians might worry more about social decline and social growth as much as economic decline and economic growth. The year-long Legatum Institute Commission on “Wellbeing and Policy”, chaired by the former head of Britain’s civil service, Lord Gus O’Donnell, and including this year’s Nobel Prize-winning economist Angus Deaton, reported last year. As well as emphasising new internationally-comparable statistical measures of the quality of life it spotlighted the fact that only one in four citizens of advanced countries affected by mental illness were in any form of treatment. It also set out a range of practical ways to help parents enjoy healthier, happier relationships and also set out an agenda for building character in schools. A theme taken up by Sir Anthony Seldon in his February 2015 lecture to the Legatum Institute: “Character and Values in Society and Education”.

In the meantime a major housebuilding and community infrastructure programme might provide the best single policy for helping keep families and communities together. In “Holding The Centre: Social Stability and Social Capital” – a policy paper produced by four British Conservative MPs: Fiona Bruce, Jeremy Lefroy, John Glen and Caroline Spelman in September 2014 - there were recommendations for longer term contracts for private renters, housing developments to include more homes designed for flexible use and new ways of capturing “planning gain” to increase investment in infrastructure and affordable housing. If we want family life to flourish the current expense of housing and the indebtedness it causes, the insecurity of tenure and the cramped nature of “rabbit hutch” developments are all problems. Consideration should be given to eliminating “marriage penalties” in the welfare system and also the kind of parenting classes recommended by Steve Hilton, David Cameron’s former strategy adviser, but giving every family a good home is probably the best single pro-family policy.


The infographic might be most easily read via here.


Diener and Seligman even argue that the quality of relationships matters more than a person’s economic standard of living: “Although economic output has risen steeply over the past decades, there has been no rise in life satisfaction during this period, and there has been a substantial increase in depression and distrust. We argue that economic indicators were extremely important in the early stages of economic development, when the fulfilment of basic needs was the main issue. As societies grow wealthy, however, differences in well-being are less frequently due to income, and are more frequently due to factors such as social relationships and enjoyment at work.” For the reasons set out in chapter two, economic growth delivers so many medical and social innovations that it would be very dangerous to pursue an anti-growth policy but Diener and Seligman’s research should point us to the danger of any economic advances that hurt social solidarity.

Go to the next chapter: On "purpose maximisation" rather than "profit maximisation".

Go the homepage of the Prosperity for All report.

Or to the homepage of the Legatum Institute.