Why Economic Liberalism Cannot Claim The Future

Recently divisions have reawakened between the two economic wings of the Liberal Democrats. The more right-wing economic liberals and the more left-wing social liberals. Boiled down as far as possible they disagree on one thing – The degree to which state intervention in economics is primarily a source of reduction of (economic liberals) or promotion of (social liberals) liberty.

Recently there have been declarations that one side or the other in this debate are not “true” liberals, or even that they do not belong in the party. This is ludicrous. The Liberal Democrats are a broad church. However, this does not mean its future direction should be broad and vague enough to champion both economic and social liberalism. There is good reason economic liberalism cannot and should not lay claim to the future of liberalism in the United Kingdom.

The fight between economic and social liberalism often seems like a modern problem, caused by the relatively modern merger of the Liberal Party with the Social Democrats. However, it is not new, it is an argument that was fought and won by the successes of National Insurance and the New Deal by the British and American liberal governments of the early 20th Century. Not only did these efforts to expand the role of government to protect and support those in unemployment or ill, they laid the foundation for a welfare state that has never been turned back. Despite the fall of Lloyd George and Roosevelt shortly after, their Conservative successors never repealed their first steps in the welfare state. Instead the rest of the twentieth century involved leaders of both the right and left making progressions and concessions to the state’s role to support citizens as a liberal state ensuring freedom from poverty, insecurity and the exploitation of employers. Country wide national pensions, natural health care and health and safety laws followed.

But if the case for state sponsored support and regulation originally laid back by the Liberals has already been won, why are those same Liberals fighting against the state and further regulation in a battle with newcomer Social Democrats over the soul of the party?

The answer is two-fold, the first demographic, the second political. Firstly, the core demographic of the Liberal Democrat membership is overwhelmingly white, middle class and educated. This hasn’t been so much a conscious effort as an almost accidental side effect of their more nuanced position on politics. This demographic simply does not need the protection of the state as much as the rest of society. They are often well off financially, with the protection of wealthy parents and a strong education that will set them far less at risk of unemployment or being trapped in employment where they are exploited. Secondly there is the libertarian/classical liberal fringe of politics. With the developing authoritarianism of the Conservative Party there is no other natural home for Classical Liberals. They see the Liberal Democrats as being the only real home for those who place individual liberty foremost, and they are right. The Liberal Democrats are the only real champions of individual liberties.

The problem comes when this largely privileged wing of the party push beyond their championing of individual liberties into challenging the historical successes of the liberals in social liberalism and pushing back progress in state support. It is the challenging of efforts to broaden the state’s role in protecting freedoms from poverty, exploitation and persecution in the name of individual liberty that they are able to champion with comparatively little threat to themselves.

Recently there have been demands that economic liberals need not have to defend their membership of the party. This is absolutely valid, but this does not mean they should not have to defend the validity of economic liberalism within Liberal Democrat policy and the future of the state. Too often they have taken attacks on their ideology as attacks on their person when the two, in politics, should not be conflated.
Put simply, economic liberalism is conservative. Not in that it belongs to the Conservative Party (which has long since abandoned libertarian ideals for moral policing) but in that its demands, carried through, would set back social and state progress a century.

Placing individual liberties before all else is a privileged demand possible only from a position where the security of state regulation, protection and support is no longer a concern. Where job seeking is a case of picking the best possible job rather than taking any possible income available. Where exploitation leaves the easy decision of quitting and finding something else or sheltering beneath parental economic wings rather than grinning and bearing it because there is no other option. Where the concept of a living wage enforced on employers can only be a greater affront to liberalism than a life unable to afford basic necessities because not only have they never been in that position but very few of their peers will have done either. Where the market is a force for good because it largely benefits them, rather than exploits them.

The failure of laissez-faire economics as a form of liberalism is evident. It takes only a glance across the Atlantic to see it in action. Rampaging and increasing economic inequality, with a tiny minority holding as much wealth as half of the rest of the population. Manipulation of politics, healthcare and (ironically) individual liberties by powerful economic vested interests. A failed education system, healthcare held together by a thread against political football of “pro-market” politicians and a political system incapable of even stopping rampant spree shootings due to the weight of the coercive forces of oppressive interests against them. A dedication to the myth of trickle down economics and “wealth creators” that has left average wages stagnant for decades as the richest get richer. We can see what happens when individual liberties trump liberties from all oppressive forces and the result is deeply illiberal – a stagnant median economy where slavery to poverty, discrimination and ignorance is common and coercion by powerful financial vested interests is a part of life. In a further hammer blow to letting the market run rampant as an attempt to bolster social wealth it turns out it manages the opposite, according to OECD research. It its results are not only illiberal, they are ironically damaging for the market.

Economic liberalism is the invasion of a preoccupation on individual liberties on other forms of liberty. Rather than placing all liberties on an equal footing it sees individual liberties as superior – over those (or believing they double as) liberties from oppression, poverty, ignorance, and from the lack of food, shelter and warmth. It is a view of equality of opportunity and freedom of choice shaped only by a view of the world where without state intervention everyone is as free to make choices and take opportunities as one another – rather than one where race, class, sexuality, gender, disability, poverty and sheer misfortune dramatically change the reality of this “equality”. Blind to a world where liberty of opportunity, to do and choose whatever is best for you, is hamstrung by pre-existing inequalities that prevent any such liberty being realised no matter how hands-off the state acts.

Social Liberalism is the future of the party precisely because it does not turn a blind eye to these inequalities. It realises that liberty in choice is impossible without liberty from prejudice, exploitation, poverty and ignorance. It champions using the state to reign in the excesses of capitalism to support liberty and equality across the board to achieve a real equality in opportunity, even if this means not making individual liberties of the privileged a primary concern. It uses regulation and limitation to channel the positive forces of capitalism and social progress to benefit the whole of society, rather than those few most able to reap the harvest of market exploitation. It broadens the appeal of the party beyond a middle class, white, educated, male elite to everyone whose best interests can truly be championed by liberal policy making.

Those who do not believe that our present state of affairs is deeply illiberal for reasons above and beyond individual liberty are simply not paying attention. The deep-rooted inequalities of our society make equal individual liberty, no matter how important, simply not possible without a wider dedication to social liberties that even the playing field before declaring an equality and freedom in opportunity. Without harnessing, regulating and guiding capitalism to public good the concept of real individual liberty for all is a myth.

Economic liberalism has good reason to be part of the party. It is a reminder of individual liberties as a core of our values and the Liberal Democrat party is the natural home of such values. However, as much as individual liberties must form a core of liberal values in Britain, they cannot champion liberalism alone. Only social liberals, with a dedication to combating all coercive and oppressive forces of inequality and illiberalism can appeal to a wider demographic and achieve liberty that truly is for everyone.

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9 thoughts on “Why Economic Liberalism Cannot Claim The Future

  1. What you call economic liberalism is not the same as what I call economic liberalism. There’s nothing remotely conservative about economic liberalism. It is no way welcomes the status quo. I’m not sure how you got that idea.

    I’m not going to address every point because that would be a matter for a separate comment piece in its own right, but in the case of the living wage, for example, the issue for economic liberals is not whether it’s intolerable to intervene at all, but whether that intervention will actually leave some people worse off by putting them out of work entirely. It’s also far from a settled issue: it’s a debate within economic liberalism.

    I also think it’s a bit off to attempt to suggest people who disagree with you are necessarily just ignorant of the realities of life, but that’s another issue.

    1. Hi Stuart – I’d certainly welcome a separate comment piece challenging my own one! The more opinions out there the better as far as I’m concerned.

  2. The introduction asks: “why are the economic liberals challenging newcomer social democrats?”, I understand the divisions expressed however it does make one question the divisive nature of the remainder of the post – surely the author is questioning the legitimacy of newcomer economic liberals with the rest of the article. As is often the case, it is likely perceived transgressions are causing problems: what the author sees as as a rational analyses of his description of economic liberalism, others could perceive as an attack and vice versa. For a party that has a proud history of tolerance and pluralism, it seems counter-intuitive to write something that expressly divides.

    The demographics of the Liberal-Democrats should arguably be placed in the context of the demographics of politics in the UK, the author makes a valid point although the corollary is that being white and middle-class somehow prevents one from acting in fashion that is inconsistent with the values of socialism. It could be possible that those who are white and middle-class are more likely to generate support from people who benefit from the type of economic liberalism the author describes but the link is a little vague. This is particularly a problem when the author implies those people are somehow morally unable to argue for a reduction in the state; it implies that a certain group of people can’t argue for something because they are of a certain demographic – something which is, by definition, not their fault.

    A logical comparison, for thought’s sake, could be another demographic, for example; most people who campaigned for Gay Marriage were Gay, they were also the primary beneficiaries of the legislation that followed. Did that legislation benefit others? Yes. Does the campaign help future generations regardless of their demographic? Yes. Now take another step; If the people campaigning for Gay Marriage were all Gay, white and middle-class, campaigned because they get economic benefits from doing so – incidentally this happened with Civil Partnership – does that mean middle-class and white people cannot campaign for it? Of course not. I would argue the people who involve themselves in politics are more often than not are people who have the time, resources and energy to do so: it doesn’t say a great deal about their political persuasion.

    The issue the author identifies with personal attacks is a fair one; in my experience this comes on-line communication. Personally I have often entered an argument without taking the time to write exactly what I am trying to express; in such instances it can seem like I am attacking somebody personally when often I am simply being lazy. I agree with the author on this point but I would add that identifying it as a problem specific to the value of economic liberalism lacks clarity – why does the author think economic liberals, more than any other groups, have claimed they have been personally attacked?

    Of course it could be confirmation bias, or the simple reality that we, being liberals and democrats, tend to engage in discussion with those we disagree with. An example across the pond: If Donald Trump visited the Democrat headquarters and Times Square he may come away with the conclusion that Democrats above all groups, take personal offence more than others. While Donald Trump’s logic may be uncharacteristically sound, it is in reality to do with his engagement; although I will clarify I am not equating the author or anyone with Donald Trump, it simply seemed to be an easily politically translatable example.

    The author does make a slight character of economic liberalism in its description when discussing how it prioritizes individual liberties; although this criticism could be valid from a certain political disposition it would certainly require a great deal more evidence, I would simply make the point that from the perspective of an economic liberal the way to resolve the issues the author identifies is to apply different values. Economic liberalism doesn’t claim to have the values or try to achieve what the author claims it is trying to achieve. It’s wise to be cautious when describing the values of other peoples political disposition, not because it upsets them but because it can prevent effective discourse by making it appear as though the author is attributing characteristics or desires to people: I would suggest this is probably the cause of the authors earlier claim that economic liberals are claiming to be personally attacked because the credentials he ascribes to them are broadly perceived as negative.

    I am by no means guilt free of the above error, however it helps to work on the assumption that the goals are broadly similar but the methods are different. With this in mind I have often been able to understand that I should not describe what I think other people’s methods are as goals. This often irritates people because goals are about who we are and people don’t respond well to being told who they are, whereas methods are changeable.

    The evidence cited by the author regarding lassez-faire refers to only one country, the United States. Entire books can be, and have been, written about whether the United States is successful or not – the initial point is debatable. Nonetheless, a series of arguments could be made explaining the United States apparent economic failing as a result of any number of things. It’s certainly possible that an economic liberal could say the taxation, deficit and extortionate military spending are the result of the problems. Equating political corruption and violence with lassez-faire economics is a far-reaching claim, particularly given the range of counter examples available. Although I would have liked to read this as I believe there would be a good discussion about how best to achieve something.

    The OECD research does not say that lassez-faire economics are illiberal and damaging to the economy. The author has equated lassez-faire economics with inequality, thus implying a link between the two. Furthermore, the research simply indicates that equality of opportunity is a potentially better mechanism for resolving inequality.

    I was extremely angry to see OECD used in this way, it’s not in-keeping with the academic standard the author invokes by using it. I have tried to gave a dispassionate review but would ask the author to consider the research more carefully before using it to invoke a political point. Institutions like the OECD rarely make ideological points with their research using research in this way tarnishes the reputation of the party; Google Iraq dossier if an example is required.

    Regarding the final section I would seriously question the inconsistency of the author. It seems on one hand that economic liberals are central to the Liberal Democrats, however it seems the author is suggesting that only Social Liberals have the goals he perceives to be liberal and therefore are the only people who can champion liberalism. The contradiction comes when one considers the opening question he asked, which criticised economic liberals from challenging newcomer Social Democrats.

    Is it possible some newcomers are economic liberals? Yes.
    Is it possible that some of the thing the author says could be seen as challenging newcomer economic liberals? Yes.

    It’s hard not to read this with the sense that the author has attributed values to economic liberals, it may be the case that the economic liberals the author has encountered do profess the values he describes. Nonetheless it is important to consider that we all have ideological positions, the trick is to work with others to achieve mutual goals.

    An article establishing mutual goals and shared values would probably have achieved a lot more in alleviating the criticism the author claims has existed forever, once again this is probably contestable.

  3. I agree with Stuart Wheatcroft. If you go back to many of the classic liberal economists (Adam Smith, David Ricardo, JS Mill) they understood that unless you recognise the existence of natural resources as being for the Common Good, you will be led into thinking that ‘individual liberty’ is simply a licence to exploit: ‘the law of the jungle’.

    That is why it is so important to distinguish between ‘land’ (and ‘economic rent’, which is the income from private ownership of ‘the commons’) and ‘capital’ which is the combination of labour and land, and provides ‘profit’ (surplus wealth to be invested). When modern economics lost that distinction, ‘economic liberalism’ (as Tristan thinks of it) lost its way. The result is what we see today: a global economy being sapped by ‘rentiers’ taking and using the wealth that the rest of society creates for purely persnal gain – in the process monopolising all natural resources.

    In re-discovering the true meaning of land and its place in society, we can get rid of this awful false distinction between Social Liberalism and Economic Liberalism. It is where many Socialists find common ground (literally!) with Libertarians and Democrats.

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