The Loss of Happiness is less challenging to standard beliefs than its author believes, but it does seem to me a valuable book. Robert Lane does not conceal his erudition, and nearly everything political science has to say about our social affections is said somewhere here, either by him or by his many footnoted authorities.

While borrowing their language, Lane shows much annoyance with economists. Obviously an extra dollar means more when you are poor than when you are rich—a fact, incidentally, which explains the enormous greed of the wealthy, for whom nothing less than an extra million can raise a smile. This is no secret to economists, the most reactionary of whom will support tax transfers to the deserving poor. But the marginal utility of money income is an untidy concept, and they see no point in constructing concave indifference curves between amounts of money and amounts of the companionship which money cannot buy. They know quite well that the best things in life are either free or unavailable—hence no business of theirs. They also know that a Pareto equilibrium does not represent a just outcome, since agents can enter the market with wildly unequal endowments. They do understand their own theories. If they show prejudice it is on the great question whether those things which money can buy should be bought privately or collectively. But in this they are not alone. There is no entry for ‘health’ in Lane’s index, although polls have shown that most Americans would prefer to purchase their health care through universal insurance. They also believe that no political party will enable them do so. A striking datum (p. 206) is that nearly all Americans now believe Washington serves ‘a few big interests’; thirty years ago this was a minority view. It is not clear whether Lane regards this as a symptom of malaise or as an accurate insight. Either way, if people are unhappy with political democracy it is because they think it insufficiently democratic.

Professor Lane has interesting pages on the biological determinants of happiness, but since a constant cannot explain a variable they are not essential to his case. The source of our deepest enjoyment is our changing relationship with other people. He rehearses and updates the Weberian view that market societies tend to atomise families and guilds into individual consumers connected to their fellows only as competitors or customers. Cold contracts replace warm obligations, while internal markets privatise our transactions and the culture of markets privatises our aspirations. Anyone with the wise habit of reading introductions last will be surprised by the following sentence. ‘My argument does not depend on the evidence of growing unhappiness in the post-war period (which may be a blip in a long-term curve); even if that infelicity were not growing there would still be enough misery to make an accounting necessary—in spite of the fact that in the United States today most people say they are happy.’

True, the descent from Gemeinschaft to Gesellschaft has being going on for centuries. But the post-Second World War period is a proper testing ground for Lane’s ideas. In 1950 whole populations had just escaped from poverty, and national markets were still under the collective lash. Subjective questionnaire data seem to me much more trustworthy as an index of change than as a measure of levels. In Lane’s text most of his time-series survey data run from 1973 to 1993, a period which was actually not at all a happy one economically for most of the American population. Perhaps it is too soon to know how indices of SWB acted during the Clinton boom. Evidently between 1973 and 1993 the percentage of ‘happy’ people declined significantly, as also—by way of explanation—did percentages of those who were content in their marriages; of those who felt financially secure; and of those who were satisfied with their jobs. Lane’s data suggest that married infelicity carries more weight than the other factors. The institution designed to make one person happy is patently failing to make two people happy.

In general, Lane does not distinguish very sharply between the unpriced unhappiness which the market characteristically causes and that which it simply fails to cure; or between those ‘external’ woes which happen despite the prosperity created by the market, and those which are indirectly due to its failure to provide prosperity. It is odd in that respect to hear unemployment described as a market externality; it is usually regarded as either a market rigidity or an indispensable tool of the profit system. In his war against economists Lane is scornful of Revealed Preference, partly because people do not always know what drives them, but partly because he thinks the optimising of ranked preferences implies a concealed value judgement. So it does, and an excellent one too: that in the long run adults are better judges than political scientists of what makes them happy. He shows how television has reduced our visits to neighbours and relatives—though not apparently to our friends. Is this a net loss? People prefer watching television to visiting neighbours because they enjoy it more. It is not a gain for human development; but it may be a gain for human happiness, which is Professor Lane’s targeted value.

So: unless we are poor, market prosperity does not make us truly happy; market failure adds woes which political democracy in the USA cannot assuage. What is to be done? Professor Lane, necessarily, has few answers. We should exercise free will and cultivate our companions. We should devise policies to make work more interesting. We should reduce unemployment so as to improve family life. Above all, we should demand that economists learn to measure true happiness, and we should all cease to worship GDP.

Fat chance. Witness the policies of New Labour, a managerial caste whose main merit is its crashing superiority over the available alternative. Its economic programme is one of higher wage differentials, lower taxes on earnings and creeping marketisation, while its social programme aims at a vast increase in equality of opportunity. In this it differs radically from the Tories, who think equality of opportunity already exists. But revenue is needed to industrialise the education system and satisfy voters’ uninstructed belief that guaranteed health care is a precondition of subjective well-being. A bigger tax base without bigger taxes requires a bigger GDP, and if that is not achieved I think that, somehow, we will not be happy.