Thursday, March 23, 2006


Politically Intolerant, Economically Blinkered, Historically Illiterate (but not all bad)

A number of self-styled ‘economic Liberals’ claim that the Liberal Democrats should return to ‘pure’, ‘free market’, ‘small-state’ Nineteenth Century Liberalism, and that if Mill or Gladstone were to hear Liberal Democrats advocating income tax rises (say) they would spin in their graves and take their votes elsewhere. I’m not an historian, nor especially well-read in history, but I have sufficient awareness of my own perspective to be careful of claiming that similar-sounding policies from the period would have had the same effect, or have been advanced with the same aims in mind.

Economics and a Sense of History

John Stuart Mill was a strong advocate both of individual freedom and the free market, but was absolutely clear that these were for different reasons: the former on principle, and the market simply because it worked. William Ewart Gladstone constantly wished to abolish income tax, but – in office – only sometimes lowered it, sometimes raised it to new highs, renewed it for longer than his predecessors and, when he made a final stand against it by leading the Liberals in a sudden pledge to get rid of it altogether, was comprehensively defeated at the next election and never tried it again. Gladstone also constantly wanted to cut public spending, but again comparing this directly with a ‘minimal state’ approach has no sense of history. Like Radicals who supported free trade because it would help the poor but are associated through an historical prism with the greediest of international capitalists, Gladstone’s desire to cut spending was heavily related to where the money was then spent, and it wasn’t on schools, hospitals, pensions and benefits. He wanted to pare down money spent on defence, and disapproved on moral grounds of much public spending because it was to feather the nests of the rich at the expense of the tax-paying poor. To claim that if Gladstone was suddenly to appear on today’s scene he would certainly call for vast slashing of spending on the poor to save money for the rich and that anyone who disagrees is therefore diverging from the pure flame of Liberalism is historical illiteracy of the highest order. Looking at Gladstone’s record, it might be true, or it might not. Looking at Gladstone’s record, he might strongly support one course and then swing through an equally passionate 180-degree turn, because he frequently did. And looking at Gladstone’s record, a great mass of perfectly sound Liberals of the time would disagree with him either way, because they frequently did, and we have every right to, as well. Because Liberals are like that.

Oh yes. And on the notion of ‘public ownership bad, private ownership good’, one issue on which Mr Gladstone kept being tempted towards whether he was a Tory or a Liberal was railway nationalisation, which he considered several times in several different forms. He saw it as a pragmatic and not a dogmatic issue, in common with most of the more sensible modern Liberal Democrats.

I suspect the people who most annoy some in the free market fetishist faction of the Liberal Democrats are not their polar opposites in the party – between whom they can happily trade fruitful insults like ‘Socialist!’ and ‘Tory!’ – but those of us who follow the historically more Liberal trend of taking a pragmatic view on economics. Liberalism is much more about power than money, and if the Twentieth Century was defined by Marxists and anti-Marxists who took mirror-image positions that economics was more important than anything else, well, that century’s over now.

I’m happy to listen to and debate with the self-styled ‘economic Liberals’. If what they propose sounds like it’ll work better, I’ll even vote for it. But to those of them whose contribution to the debate consists of ‘If you don’t agree with my precise economic prescription you’re not a proper Liberal like Mr Gladstone,’ I have three suggestions. First, you have a choice between persuading and haranguing people, as you evidently aren’t capable of both. Second, listen to other people once in a while and you might find other approaches might be equally valid. And third, after opening your mind, please open a history book and stop making bloody fools of yourselves.

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I totally agree that liberalism is about power, which is the reason I'd class myself as an economic liberal, where free markets function correctly they are the best means to ensure that power is not accumulated in a few pockets.
There are cases where markets don't function, Adam Smith and Hayek both realised this, the important thing is that the government/state should not act in the interests of particular groups but should act to ensure a free market where possible.

As much as possible, individuals should be free to spend their money as they'd like, this is an essential part of individual liberty.
I also take the view that to ensure distribution of power individuals should have access to education and healthcare, although how this should be done is less clear... (there are several conflicting ideals at work in these areas when I consider them...)

I oppose what I see as a more socialistic view of some in the party who seem to think that the state intervening is the solution to everything (the nanny state I suppose). A reduction in the powers of the state is necessary to ensure liberty and division of power, the state should have less powers to coerce people not more.

As for public/private: Where competition can act freely private should be the way to go, or at least with private options on the same level.
In some areas competition is not possible (the railways perhaps, and I'd argue the telephone cable system) so public ownership is an option here (although control should removed from direct meddling by ministers and preferably self sustaining with no subsidy).

I feel there is a tendency amongst some to run away from 'economic liberalism' because of some of the effects of Thatcher. The problem there is that she was not a liberal but an anti-socialist and a Tory with her illiberal views on society and distinct authoratarian inclinations.

You are totally correct when saying Liberals were never a party of 'laissez-faire' although always committed to free trade.
Gladstone sought to give Irish tenents state aid and landowners compensation in order to redress some of the problems in Ireland, hardly the 'devil-take-the-hindmost' laissez-faire of which 19th Century Liberals are sometimes accused...

The other charge which is sometimes made is that economic liberalism is about supporting the rich and powerful.
This could not be further from the truth for people like Ludwig von Mises, Hayek or Friedman, all of whom took the view they did for reasons of personal liberty and helping the disadvantaged.

The LibDems are not a libertarian party, I would not have joined if they were, but there is a strong case for a more economically liberal view to balance the social liberal view (which sometimes comes too close to socialism).

I think a pragmatic view on economics will win-out (the dismal science is I think mainly pragmatic), and will be the most successful solution. There is a strong case for greater economic liberalism in this country, and much of the parties policy already reflects this (reduction of red tape, scrapping the DTI etc). I remain skeptical about the benefits of increasing income tax at the moment, although I accept there are times when it may be necessary.
I do feel the long term aim of the party should be to reduce taxation as a proportion of GDP, but this cannot happen immediately.
Yes, but, yes but...

I find that the anti-economic-liberal wing of the party is if anything even more intolerant. Although it's crude and wrong to accuse people of unreconstructed soggy socialism, sometimes they ask for it by appearing to oppose anything that involves a greater role for the private sector or a lesser one for the public sector in either the economy or public services. And then accuse anyone who disagrees of being part of a sinister right-wing project.

Also a tendency to say what they are against (economic liberalism) but not what economic policy they are for (economic illiberalism?).

But revisionists do have a tendency to be unnecessarily dogmatic, provocative and iconoclastic.

What we need to do is reclaim the whole concept of economic liberalism to reflect an economic worldview that liberals support, different from socialist corporatism or neo-Thatcherism.

And you are right that this would involve a positive but pragmatic approach to free markets with a real commitment to making them work for the poor and powerless.
If you think that the economic liberals are intolerant, what do you make of this?

'Lord Greaves, one of the leaders of the Left-of-centre "social liberals", condemned Mr Laws "as a Tory" and raised fears that Sir Menzies would end up taking the Lib Dems "to the Right of David Cameron".

Less than 48 hours after Sir Menzies's victory in the leadership contest, Lord Greaves said: "The armchair members voted for him, the majority of activists did not."'

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