DLT: Economic Liberalism

Duncan Brack and Ed Randall, authors of the Dictionary of Liberal Thought, have kindly agreed to let us publish extracts on Lib Dem Voice. This month we continue our trilogy of postings on liberalism – classical, economic and social. Last month it was classical; this month, it’s economic. You can read other previous extracts on LDV here. The entire book is available on Amazon here and can also be bought at the Westminster Bookshop.

Economic Liberalism

In political terms, economic liberals proclaim their belief in individual freedom and free markets; they support a reduction in the role of the state, particularly in the spheres of economic management and social welfare. The term is often used interchangeably with classical liberalism and that entry should be referred to for a summary of the economic liberal position.

The term ‘classical liberalism’ itself tends to be associated with nineteenth-century approaches to political and economic questions, such as that of the Manchester School. The label ‘economic liberal’ has been more commonly used in modern times, in particular to contrast such individuals’ views with those of social liberals, who are more willing to accept the case for state intervention as a means of promoting freedom. Economic liberals point to the dangers inherent in such state action, including the growth in bureaucratic power, the threat to civil liberties from an overweening state, and the potential reduction in economic competitiveness.

Although the British Liberal Party/Liberal Democrats are in general viewed as a social liberal party, there have been and remain some tensions between social and economic liberals, explored in the entry on social liberalism. That entry also explores why continental European liberal parties tend to be more likely to identify themselves as ‘economic liberal’, although several European countries possess both social liberal and economic liberal parties.

The term ‘economic liberal’ – or ‘neo-liberal’ – has also been used to describe the economic and trade liberalisation policies of the ‘Washington consensus’ promoted in particular by the International Monetary Fund, involving a withdrawal of state involvement in the economy and a reduction in trade barriers.

Duncan Brack

The Dictionary of Liberal Thought is one of the many titles available from the Liberal Democrat History Group. Find out more about them on their website.

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6 Comments

  • Peter Bancroft 18th May '09 - 11:13am

    I’ve agreed with the new dictionary on controversial areas so far, but surely this description leaves out the actual cornerstone of economic liberalism?

    It is not important that some people happen to identify as economic liberals – what is important is that there is a more than century old political philosophy on economics involving free trade, access to markets and market-led mechanisms (e.g. price of energy dependent on supply & demand, not a Parliament vote).

    Yes, this is related to the Washington consensus (in the same way as Marxist economic theory is related to the 1939 5 year plan in the USSR), but relatively casually.

    Politically, there is also no addressing of the question of whether “social liberals” are “economically liberal” – i.e. liberal when it comes to the economic sphere, just as they are liberal on personal and social issues. Most clearly are – few “social liberals” want to nationalise major industries, unfloat the currency, put up more trade blocks to Africa, increase power of collective national pay bargaining, etc. Nor do they want to take apart the competition commission, spend state money on financing large corporations, using state money to give our corporations overseas, promote national champions, etc.

  • Duncan Brack 21st May '09 - 12:45am

    I’d accept this is a fairly slim entry, but that’s because we felt we’d covered the ground already in the ‘classical liberalism’ entry, which is already up on LDV. And you’ll see some of thw

  • Duncan Brack 21st May '09 - 12:48am

    [don't know why I was cut off there!] … some of the questions that Peter Bancroft raises dealt with in the ‘social liberalism’ entry, which will be next up.

    Outside the party, the term ‘economic liberal’ IS often used to refer to the Washington consensus, so we thought we ought to mention it.

  • Geoffrey Payne – “economic liberals… believe in light-touch regulation”. I’m not entirely sure about that. There have been plenty of economic liberals in our party who advocated pretty extensive regulation. Look at the whole Ownership for All movement of the Thirties and Forties.

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