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 conclude our trilogy of postings on liberalism – classical, economic and social. This month, it’s social. 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.

Social Liberalism

Social liberals believe in individual freedom as a central objective – like all liberals. Unlike economic or classical liberals, however, they believe that poverty, unemployment, ill-health, disability and lack of education are serious enough constraints on freedom that state action is justified to redress them. The British Liberal Democrats are generally considered a social liberal party, as are a number of other European liberal parties.

The development of social liberalism can be seen as a response to the problems of industrialisation in the mid- to late nineteenth century. Although free trade, the opening up of global markets and the transformation of European economies from agriculture to manufacturing delivered prosperity for many, they were also accompanied by a rising incidence of poverty amongst the new urban working classes.

In Britain the New Liberalism of T. H. Green, L. T. Hobhouse and J. A. Hobson, among many others, was the response. They argued that laissez-faire economic policies and the unrestrained pursuit of profit had given rise to new forms of poverty and injustice; the economic liberty of the few had blighted the life chances of the many. Negative liberty, the removal of constraints on the individual – the central aim of classical liberalism – would not necessarily lead to freedom of choice for all, as not everyone enjoyed access to the same opportunities; freedom of choice was therefore heavily constrained. Green proposed the idea of positive freedom (not to be confused with Isaiah Berlin’s notion of positive liberty): the ability of the individual to develop and attain individuality through personal self-development and self-realisation. Since much of the population was prevented from such self-realisation by the impediments of poverty, sickness, unemployment and ignorance, government was justified in taking action to tackle all those conditions. This was not a threat to liberty, but the necessary guarantee of it. As David Lloyd George put it in 1908, ‘British Liberalism is not going to repeat the errors of Continental Liberalism … Let Liberalism proceed with its glorious work of building up the temple of liberty in this country, but let it also bear in mind that the worshippers at the shrine have to live.’

The social reforms of the 1906–15 Liberal government, including the introduction of old-age pensions, national insurance and progressive taxation, can be seen as the realisation of the New Liberal social programme in action, though it drew its inspiration from many sources, including the experience of the active municipal liberalism of Joseph Chamberlain and other Liberals in local government. Later in the century, the economic genius of J. M. Keynes, the imaginativeness of Lloyd George’s ‘Yellow Book’, Britain’s Industrial Future, and the welfare reforms of William Beveridge seemed to cement the triumph of social liberalism.

The distinction between social and economic (or classical) liberals, therefore, revolves around attitudes to the balance between the free market and state intervention. Social liberals do not, in general, question the value of market-based economies, but accept a significant role for state action in adjusting or supplementing market outcomes, for example through generous welfare provision, socialised medical care, state education and so on. This usually implies a higher level of taxation than economic liberals would desire, and also a greater role for the use of redistributive fiscal policy. In recent years, social liberals have also tended to accept a growing role for the state in regulating economic activity to tackle environmental degradation.

The growth in the size of the state throughout the twentieth century, however, has led to new problems, including the increased power of bureaucracies, and the infringement on civil liberties that may entail, the tendency for elites to capture elements of state power (leading to market distortions such as subsidies), the growth of corporatism, a rising burden of taxation and so on. In response, in many European countries since the war, economic liberals have made something of a comeback, drawing intellectual strength from writers such as Friedrich von Hayek and, more recently, Robert Nozick.

Despite this resurgence of economic liberal thinking, however, in Britain the Liberal Party/Liberal Democrats has remained a social liberal party. In the early 1950s a determined attempt was made by the ‘radical individualists’ to return the party to its traditional commitments to free trade, minimum government and individual liberty. This was not a success, partly because the party leadership was too cautious about moving away from the prevailing Butskellite consensus, and partly because of the activities of the Radical Reform Group in countering the rightward trend. The accession of the Radical Reform Group supporter Jo Grimond to the leadership in 1955 signalled the defeat of the economic liberals; some of them drifted into the Conservative Party and others to pro-market fringe groups, while Arthur Seldon helped to set up the Institute for Economic Affairs, which became an important source of economic liberal thinking and propaganda.

The breakdown of the post-war economic consensus in the 1970s could perhaps have pushed the Liberal Party back in an economic liberal direction, but in fact the IEA found a much readier welcome for its proposals in the Conservative Party under Margaret Thatcher. The resulting association between economic liberalism and other aspects of the Thatcher style, authoritarian, nationalistic and socially reactionary, helped to keep the Liberal Party firmly in the social liberal camp. This was reinforced by the Alliance with the Social Democratic Party in the 1980s, and also by the growing influence of local councillors within the party, comfortable with using the power of the state at local level to improve their constituents’ lives.

From the 1990s, although the economic policies of the Liberal Democrats – along with other political parties – have shifted back in a more pro-market direction, in its approach to an activist role for the state, particularly over public services and environmental issues, and in its taxation policy, it has remained a social liberal party. There are inevitably some disagreements over the precise role of the state in particular sectors, but these do not signal any fundamental division within the party.

Although they accept the need for state intervention, social liberals have also responded to the dangers of the growth in state power highlighted by Hayek and others. The social liberal answer, though, is not, in general, to seek the withdrawal of the state from areas of activity, but to make it more accountable and responsive to its citizens, for instance through decentralisation of power, the creation of federal systems of government and electoral reform, and to constrain it through mechanisms such as written constitutions. In this way social liberals can be distinguished from social democrats, who tend to be much less suspicious of state power, although they may share similar approaches to the mixed economy.

In most of Europe in the early twentieth century, many liberal parties stayed true to their classical liberal belief in free markets and a limited state. Since they also in general fared badly electorally in the competition between socialist, or social democratic, and anti-socialist parties that characterised most of the century, their influence on government was accordingly limited. Most European governments did not adopt the Thatcherite economic liberal approach and, as a result, liberal parties have often been able to remain in command of this particular political niche. Nevertheless, some European liberal parties, chiefly though not exclusively in northern Europe, are avowedly social-liberal in character. Some countries, including Denmark, Lithuania and the Netherlands, possess two liberal parties, one economic liberal and one social liberal.

It should be clear, however, that there is no firm divide between social liberalism and economic liberalism; rather, there is a spectrum of views and positions, depending strongly on the economic and social circumstances in a given country at a given time. Even before the New Liberalism, some of the icons of economic liberalism, including Adam Smith and Richard Cobden, were never as purely laissez-faire as is sometimes supposed; both of them supported, for example, state intervention in education.

What unites liberal parties of both tendencies – a commitment to civil liberties, human rights, open and tolerant societies, and a just international order – has usually proven stronger than what may divide them. Indeed, as Conrad Russell has argued, since the roots of liberalism stretch back well before the state could exert any significant control over the levers of economic activity, arguably liberalism is not a philosophy that can be described in terms of economics – unlike, for example, socialism. Economics is important simply as a means to an end, because it affects the distribution of power in society and can thereby enlarge, or diminish, the life chances of individuals. Social and economic liberals may differ over economic means, but they do not disagree over their ends.

Further reading

• Ronald Dworkin, Sovereign Virtue: The Theory and Practice of Equality (Harvard University Press, 2000)
• Will Kymlicka, Contemporary Political Philosophy: An Introduction (Oxford University Press, 2nd edn., 2002), ch. 3, ‘Liberal Equality’
• Martin Pugh, The Making of Modern British Politics 1867–1945 (Blackwell, 3rd edn., 2002), ch. 6, ‘Edwardian Progressivism’
• Amartya Sen, Development as Freedom (Oxford University Press, 1999)

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.