Opinion: Forging ahead
Written by Darrell Goodliffe on 2nd November 2008 – 7:46 pmSomething of a debate has been captivating the Liberal Democrat blogosphere recently. I don’t think this is something unique to the Liberal Democrats as a party; each party and movement is going through something of a process of struggle and redefinition due to the new financial climate in which we find ourselves.
Whatever your general view of capitalism as a social system, it is absolutely true in my eyes that the limitations of the markets have been cruelly exposed in the past weeks. Of course, this is not true if you are a die-hard libertarian; what has been exposed for them is the problems with fettering their beloved market. However, the consensus of opinion, even in such ‘loyalist’ tomes like The Economist and Financial Times, weighs heavily against the libertarian view of the correct lessons that should be drawn from the current crisis.
What has been teased out is that there is a need for a new consensus; maybe even A New Start, as posited by David Allen on these very pages. Of course, your view of how we got here will necessarily determine your view of which way forward is right.
However, what is abundantly clear is that the nature of the Liberal Democrats as a political party mitigates against the adoption of anybody’s ‘maximum program’. I would no more want to be a member of a party that abandons concepts such as social justice and the welfare of the people that the state is supposed to serve, as any libertarian would want to be of a party committed to the nationalisation of the ‘commanding heights’, or even more extreme democratisation of capital.
So, middle ground has to be found. How can we go about this?
With regards to the state there is scope for consensus around the concept of an ‘enabling state’ which retains a role as ’safety net’. The problem with abandoning this concept completely is that, whether libertarians like it or not, we live in a society where often huge disparities of wealth and power are an established fact, and the state is the only power in a position to be able to ‘level the playing field’.
In this sense the Lib Dems’ ‘Make it Happen’ policy paper remains a viable slogan which encapsulates the idea we want to push forward. Targeted tax cuts become acceptable under this umbrella because, as well as ‘relieving pressure’, they enable lower and middle income earners to spend more (in theory at least). However, they need to be coupled with a broader sweep of tax measures which do the same; it is no good robbing Peter to pay Paul, which is what you do if you reduce direct taxation through income only to lose it again in higher prices.
VAT needs to be looked at in serious depth, as does punitive taxation (above inflation increases on things such as smoking and drinking). Also, it needs to be made harder for companies to pass on taxation on their profits to the consumer. Green taxation is a thorny area where we need to take a long hard look at the impact of our proposals to ensure we are not committing the aforementioned robbery. Whether libertarians like it or not, realpolitik says that the libertarian fantasy of banishing the state from economic life is just that; an idle pipe-dream with no grounding in reality. The state is here to stay; rather than bemoaning that fact, there needs to be a recognition that the battle has already been fought and lost.
Some mention has been made of mutualism and left-libertarianism; and within both of these things there is germs of a consensual program. My question/concern about both these trends is the reality I mentioned above: that of huge power/wealth disparities. A slight dash of utopianism exists in both to my mind; essentially the notion that these disparities would allow for an equitable transition seems slightly fantastical to me. We will never know what Asquithian liberalism may have achieved because it was again turned over by that timeless enemy of all politicians; events, dear boy, events.
We do not live in Asquith’s world; we lived in the world shaped by the post-war welfare-ist consensus. And that evolution has left an apparatus that cannot be totally replaced by mutuals and co-operatives, certainly not overnight (and it is questionable if it ever could be). The state will thus have its role. A dramatic lurch in that direction would cause unprecedented social damage and dislocation.
A role for them in creating the ‘useful economic activity and generation of jobs’ that David Cameron wants us to promote could exist - however, that role would - certainly initially, and objectively for a long period of time thereafter - be dependant on state support for it’s fledgling growth. The state would also have a role in curbing ‘useless’ (or downright wasteful) economic activity or reward of such.
A small word needs to be said about non-economic state activity; this is much easier to curb although the limits the state sets itself are again a bone of contention. Liberal Democrats are very united in opposition to things like ID cards, for example, but when it comes to an issue like the smoking ban the lines of demarcation are much more widely drawn. Libertarians have to accept a wider role for the state in social responsibility. I, for example, think it is a very good thing that stringent regulation exists on the sale of firearms, and have absolutely no desire to see us travel down the ‘American road’ on this question.
Environmental concerns fall into a similar category. Libertarianism, taken to its logical conclusion, is anarchism because it abandons all notion of a state able to serve and protect. Rather than championing causes that will bring the shrinking of the state closer (measures of sometimes extreme democracy), it focuses narrowly on fostering resentment of anything that looks vaguely like state control. Thus there is no distinction between the introduction of ID cards (a totally unnecessary invasion of privacy) and the restriction of sales on firearms (necessary protective measures).
One thing is for certain, the debate is far from over, and the longer it continues the stronger our party will be in the long-run for having it.
* Darrell Goodliffe blogs at Moments of Clarity.
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Posted in Op-eds
2nd November 2008 at 8:28 pm
I think that you and Charlotte should get married.
2nd November 2008 at 9:09 pm
No thanks Lawrence
have a lovely gf who is also a Lib Dem and as a bonus to everything else that makes her amazing has much better politics than Charlotte 
2nd November 2008 at 10:53 pm
What has been cruelly exposed is the madness of letting banks gamble in the markets with depositors money.
I don’t see how you can draw any particular conclusions outside finance.
Is there anything in your recipe that you didn’t believe in and call for before the current crisis?
2nd November 2008 at 11:10 pm
The generation of Liberals who joined the party in the 1980s were well aware of the flaws of unfettered market forces - it was Thatcherism that delivered it and in doing so created a highly centralised authoritarian state.
We were clear then that we were not interested in free market fundamentalism that the Tories were back then.
I have been shocked at how quickly the lessons we learnt then have been forgotten, and I am pleased to see this article start to rectify this.
Part of the mixed up think has come about because of those who conflate individual liberty with economic liberty. I do not feel any greater personal liberty today with the railways in private hands than I did when they were nationalised. In fact since the railways are more expensive than ever, I feel I have less liberty to move around the country than I had before. And if putting up my taxes reduces my liberty (for the sake of argument), then what about the private sector not delivering the pensions that they advised me to save up for?
I have to say the kind of debates I would like to see are the very difficult issues around limits to growth. it was something we debated at great length in the 1980s but I am finding on LDV it is almost impossible to have a sensible debate on it today. On the Green agenda we appear to have gone backwards, at least on LDV.
3rd November 2008 at 6:30 am
This post is a bit “school essay” to be honest - there is much better discussion in the private forums. I dont know anyone in the Lib Dems who was calling for less financial regulation - indeed most of us have been echoing Vince’s wise warnings on the error of driving debt-fuelled growth and the insanity of the pyramid-scam housing-boom.
Only a few (out of tens of thousands) have ever called for guns to be freely available. But still, for those who get their satisfaction from attacking imaginary “fifth columns” rather than the Labour Party who wrecked the economy, don’t let us spoil your fun!
3rd November 2008 at 6:38 am
“There is much better discussion in the private forums.”
Shame it’s all in private then.
3rd November 2008 at 9:28 am
It seems to me that this criticism of mutualism & Asquithian liberalism is a direct response to what I’ve been saying to Darrell.
I think I am flattered
Unfortunately, I’m suffering from fatigue, having battered this topic to death, & thereby won’t be saying any more now…
3rd November 2008 at 10:05 am
Joe,
The limits of the systems certainly have been exposed because is it not true that what you think is confined to the finance sector is far from that due to the pivotal nature of the finance sector.
In response to the current crisis we have seen falling manufacturing demand, falling consumer demand etc etc so I don’t really accept that it can be regarded as a localised difficulty.
Mark,
No, I dont think this is a debate that is ‘best held in private’ in fact quite the reverse is true. It’s worth pointing out that no such objection was raised by yourself when Mark Littlewood published on here nor Dave Allen so why now?
Asquith,
Kind of and it’s kind of a reflection that my feeling this is where common ground can be found. As I have said numerous times I think there is something in what you say so criticism/comments are offered in that spirit…
Geoffrey,
Thank you. I think what you are saying about the green issue may well be true but can I tentatively suggest this may be down to an over-emphasis on taxation….ive written my concerns about that here but I think we need to look into other issues like sustainable and sensible productive practices and the encouragement of things like ‘bags for life’….taxation could be used to encourage the spread of those schemes too…
3rd November 2008 at 10:52 am
I don’t know what you’re talking about Darrell - I just said there was a better discussion on the internal forums. If you want to interpret that as me meaning that we shouldn’t discuss this in public then perhaps that illustrates well that you are indeed wanting to find division where there is none.
3rd November 2008 at 11:02 am
Mark,
Fair point but i saw that as you saying this was better done in private and if that is not the case there is no disagreement. As to your more substantive point I would urge you to wander around the blogsphere or even over to Liberal Visions site where there definatly are Lib Dems saying there should be less financial regulation; a smaller state etc,etc…
As to Labour messing up the economy well know I actually I dont think a majority of the blame lays with them; i think it does in so far as they failed to anticipate the coming problems and not put the necessary safeguards in line…but I dont buy David Cameron’s line that this is ‘all Labour’s fault’…
3rd November 2008 at 12:18 pm
Smaller state and less financial regulation are not the same thing. I think there should be a smaller state and MORE financial regulation.
3rd November 2008 at 12:53 pm
Mark,
How do you plan to achieve that unless you actually want to farm the business of regulation to non-govermental (and therefore unaccountable bodies)?? I do see it as something of a logical contradiction that you want to increase the states role in economic life (a fair enough assumption from saying you want a smaller state surely?) but want to shrink it in size…
3rd November 2008 at 12:54 pm
Sorry, last bracket should have read (a fair enough assumption given you want to see more regulation…)
3rd November 2008 at 3:56 pm
Yeh, I guess it’s a problem if you simply think:
State == Regulations of financial services
…but since I don’t think that, there is no contradiction. We have far too much state interference in some areas and not enough in others.
As for blaming Labour:
“Recession will hit UK hardest”
http://www.guardian.co.uk/business/2008/nov/03/recession-economicgrowth
That is Gordon’s personal failure. Remember when he said “I wont let house prices get out of control”? We should be nailing him for that lie, which is now hurting us.
3rd November 2008 at 5:44 pm
Joe Otten
“Is there anything in your recipe that you didn’t believe in and call for before the current crisis?”
Er, well as far as I’m concerned anyway, it’s a fair cop guv. However…..
The fall of the Berlin Wall, likewise, didn’t really teach me anything about Communism that I didn’t already know. What it did do was put more power in my lungs (and others’ lungs) when yelling “Yah boo sucks, Commies, you’ve got it wrong, haven’t you?”
Now, there were plenty of communists from places like Italy who argued at the time that it proved nothing of the sort, it only proved the error of building a wall around your citizens. They weren’t wholly wrong, but there were too many read-across issues for them to get away with that argument. Excessive State control had failed, and that was clear to all.
Well now, here we have Darrell worrying quite legitimately about the very opposite kind of disease, a State that does too little, and lets banks and other big powerful organisations get out of control. And again, I think we can read across. The kinds of dangers we have seen with the banks may very well be matched by equivalent dangers with other types of organisation.
There is of course loads of room for legitimate debate as to what is or isn’t a valid read-across! I will just pick schools as one topic. Now, I would certainly accept that we currently have far too much centralised control, an over-prescriptive bossy national curriculum, etc. However, a cautionary note has to be hit when we go to the opposite pole and look at academies or “free schools”. For example, I am not very happy when I see the State dipping out of its responsibilities, and letting rich Creationist businessmen take control of educating our young people!