Liberalism: the delicate balances between democracy and market capitalism, between freedom and solidarity

When I first joined the Liberal Party many decades ago, it thought of itself as the party of ideas.  It wasn’t much good at campaigning, but groups of Young Liberals and old liberals, in universities and London clubs, held study sessions and published papers and books; and the Liberal Summer School devoted several days to serious discussions of policies and principles.  We took pride in the occasions when other parties pinched our ideas: we saw ourselves as the intellectual drivers of British politics.

Since then we have learn how to campaign, above all at the local level.  But that’s come at the cost of thinking and debating, of picking up new ideas and translating them into policies.  There are many reasons for this.  Politics in Westminster has become far more hectic, preventing our MPs (and peers) from spending the time with outside experts and intellectuals that their predecessors in the 1960s and 1970s enjoyed. Our policy-making process is slow and under-staffed, churning out policy papers over 9-12 months for conference approval.  Since Paul Marshall went over to the dark side of Brexit politics we have lacked a friendly think tank to push out proposals before they grind through our official processes – though there are some bodies to which we can and should turn for advice.  The Social Liberal Forum and other groups do their best, but cannot – without staff and funds – compete with the well-funded think tanks of the right.

With an election campaign in 18 months or less, now is hardly the time to sit back and reflect at length on alternative futures for British politics.  But we will fade away as a party unless we develop distinctive narratives about how to promote liberal values in our society, economy, environment and international policy.  We should, for example, be picking up the themes being developed by policy-related economists, criticising the dominance of free-market assumptions and reintroducing political economy and the moral concerns that Adam Smith addressed in his first book, The Theory of Moral Sentiments but downplayed in The Wealth of Nations. 

Mark Carney, former governor of the Bank of England,  introduces social and environmental qualifications to market economics in his Values: an Economist’s guide to everything that matters, published in 2021.  MInouche Shafik, former Bank deputy governor, now London School of Economics head, goes further in What we Owe Each Other: a new social contract  (also 2021), bringing in health, welfare and inter-generational exchange.  

Even more ambitious is Martin Wolf’s just-published The Crisis of Democratic Capitalism, a 380-page volume which takes us from Plato to Hayek.  He emphasises how recent a development the democratic state is, how the growth of competitive markets helped to spread power and wealth away from authoritarian governments, but how loosely regulated free markets risk upsetting the delicate balance between democracy and capitalism by concentrating wealth and power in the hands of unaccountable (and tax-avoiding) elites.  He writes passionately about the need ‘to restore the balance’ between these two, and argues that an emphasis on citizenship and shared national community is essential to avoid creating a gulf between plutocrats and the left-behind.  His hero is Franklin D. Roosevelt, who recognised that social democracy was essential to hold his country together, and that a global order that paid attention to the gap between rich and poor was needed to limit international conflict.

Similar arguments have been advanced by Dani Rodrik at Harvard, Mariana Mazzucato at University College London, and others.  But they have not penetrated far into the public or political debate in Britain, where leading newspapers still support shrinking the state and cutting taxes to allow financiers to flourish and wealth to trickle down.  There’s a narrative here, which counters the dominant free market assumptions of the right and the current government.  We ought to be shaping that narrative, which is fundamentally that of social liberalism and liberal democracy.  Are we all too busy delivering leaflets and knocking on doors to find time to do so?

* William Wallace is Liberal Democrat spokesman on constitutional issues in the Lords.

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8 Comments

  • Steve Trevethan 16th Mar '23 - 6:56pm

    Might liberalism and democracy be, at bottom, matters of choice within an equitable society?

    Might we be in an era of inequitable, monopolistic communication and thought?

    Might our party promote the research into and promotion of prosocial and different ponts of view?

    Might we then become the party of well informed discussion followed by firm considered action or restraint thereof?

    Might we thus effectively oppose and defeat the lack of choice/ absolutism of the vociferous absolutists, whichever metaphorical flag they are flying ?

  • Good sense from LWW as usual.

    “many decades ago, [the Liberal party] thought of itself as the party of ideas.”

    So I have been told – but, as someone who joined as recently as the mid-1980s, that has never been my experience. It may be harsh, but the LibDems feel like the ‘National Coalition of Residents’ Associations’.

    What went wrong?

    I suggest, the problem dates from the SDP-Liberal Alliance which yoked together two parties with leaders who didn’t get on and couldn’t work effectively together. This was eventually solved by the merger – except of course, that the settlement achieved has never worked, IMHO, for two main reasons.

    Firstly, to avoid further conflict, consensus, justified as ‘democracy’, is prioritised above all. The easy way to do that (the only way with overly large committees) is to find the lowest common denominator. In turn that means adopting the MSM position (especially Guardian) of about 10 years prior.

    Secondly, politics is only partly about policy as such. It’s also about politicking – inspiring, building coalitions, making trade-offs, manoeuvring, etc. Yet our spokespeople aren’t empowered to do any of that. Constitutionally, we require them to be parrots, repeating what some committee has decided and Conference has rubber stamped. Boat-rockers aren’t welcome.

    That’s a bare-bones analysis and maybe a little hard but it explains why LibDems are no longer a party of ideas, why they’re so ineffective in opposition, and why they and came so badly unstuck in Coalition.

  • So, IMHO, the LibDems are in a bad place but don’t have to be.

    The experience of several decades is that doing things the ‘traditional’ way simply doesn’t work. But doing things that way is purely optional. My commercial experience is that small and subtle changes in organisation can have dramatic results very fast and, if done well, can do so while preserving all that was good of what went before.

    I suspect the Party establishment will mostly belong to the ‘one more heave’ school of thought. Be that as it may, that doesn’t stop the rest of us starting an alternative approach. Liberals must again become the ‘party of ideas’ they used to be, a party of genuine diversity rather than one of bureaucratic blandness.

    Am I alone in thinking this way or do others agree?

  • Steve Comer 17th Mar '23 - 8:26am

    As William Walace says, we need to deal with these delicate balances. But this is not just an issue for the Liberal Democrats or even the UK or Europe. It is about stopping the drift toards a more Edwardian type of society where the top 1% get increasingly richer, while the majority have reducing incomes, less job security, and reduced housing opportunities. This is what leads to the rise of authoritarian and reactionary forces which are feulled by the deperation of ordinary working people.

    A useful contribution to this debate from a Social Democratic perspective came from Australian Treasurer (ie Finance Minister) Jim Chalmers last month in an essay that was widely commented on there:
    https://www.themonthly.com.au/issue/2023/february/jim-chalmers/capitalism-after-crises#mtr
    And this response from Joeph Stiglitz is also worth a look:
    https://www.themonthly.com.au/blog/joseph-e-stiglitz/2023/23/2023/australia-and-post-neoliberal-order

  • Trevor Andrews 17th Mar '23 - 8:49am

    I could not agree more. In talking to people about the LibDems I get phrases like “wish washy” or “don’t know what they stand for”.

    We Ned to spend less time moaning about other parties and more time on what we will do if we got in power.

  • William Wallace 17th Mar '23 - 9:53am

    Steve Comer: Thanks for tips and links to the Chalmers and Stiglitz articles. They reinforce my argument that there are many credible figures out there challenging the free market/shrink the state narrative – just not very many daring to say so in partisan political campaigning. An Op-Ed in the FT – the only printed medium in the UK that dares to raise such broad issues – made a similar point about the UK political debate avoiding the major issues, from the break-up of Britain to Brexit and tax increases. The biggest obstacle is that the public at large appear to resist thinking about such difficult questions.

  • Alan Butt Philip 17th Mar '23 - 11:58am

    William Wallace raises important questions about our liberal democracy and the relative absence of discussion of ideas and values inside the Liberal Democrats. These issues will be addressed at a fringe meeting tomorrow evening at the York conference hosted by the John Stuart Mill Institute,the Social Liberal Forum with support from Liberator. Liberals need to return to examining first principles in order to defend effectively their values and the institutions of liberal democracy.

  • Depressing, but unfortunately true. As someone who first joined in the late 1980’s I have always found policy development to be something of a niche interest that geeky types did while others wrote Focus deploring the state of the local potholes. We already have two major parties who seek power but have little idea what to do once they get it. And what would be wrong with seeing our good ideas adopted by other parties ? Is our goal a better country or more bums in ministerial Daimlers ?

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