Opinion: I’ve got the Orange Book blues

Orange_BookThere have been many articles in LDV on the recent ‘Orange Book Two’ conference but I wanted to comment, by way of reflection a month later, on the sum of the more classical liberal ideas presented at the conference, particularly my slight feeling of, well, perhaps ‘emptiness’, as I left the conference for a flight at Heathrow.

The presentations and speeches were polished, interesting, stimulating, and full of fact-based insights especially on issues such as the dangers of an overbearing government and how the sheer volume of economic regulation today, contrasts with the standard socialist mantras about ‘unregulated business’ and the public being ‘at the mercy of the market’.

Thus, my Orange Book blues did not stem from any criticism of individuals or their strongly held views, but more with the sum of the thing. My OB blues also stemmed from an absence of unifying themes or formulations which provided the scope to keep the Party unified and less divided between left and right.

My first wave of blues related to the weakness of the links between the classical liberal ideas being espoused and the main problems facing the UK today – for example, unsustainable debt, uncertainty over Britain’s place in the world, tenacious poverty, poor quality public services, low productivity, opaque administration and, well, we all have our own list. I kept waiting for the ‘and therefore’ points related the current UK political and economic policy, or global affairs, but was rather disappointed.

I was left wondering if Lib Dem classical liberals lack experience of the real world and are reticent about tackling the big juicy problems of the day. (More generally, isn’t this a claimed reason for the rise of UKIP ?). Maybe there is another reason ?

My second wave of blues came when it was suggested, without a murmur of dissent, that free markets meant absence of regulation. I always thought that a free market was ‘a game with rules, characterised by absence of monopoly’.

To me the long drive against elite monopoly power has always been the bedrock of liberalism, and a primary role for liberal government. Indeed, didn’t the revered Adam Smith make this point 220 years ago ? What’s more, absence of undue monopoly power is not only a key moral basis of liberalism, it is also at the root of Britain’s economic problems. Only the Ostrich-like are unaware how much the UK is riddled with excessive monopoly power, and blind to the extent to which the UK economy is predicated upon short supply. There is much to be said about solving problems of competition and monopoly in the UK and the conference seemed to by-pass this.

My blues further deepened because of something important missing at the conference. Democracy. Maybe I am wrong but I don’t think the word was even mentioned. Democracy is central to liberalism and British democracy has been travelling in reverse. There is an over centralised state, secretive government, weakened scrutiny, and too much influence from the powerful via lobbying. More than 80% of sub-national government funding comes from a micro-managing Whitehall, making the UK the most centralised administration among OECD countries. Indeed, it seems near-impossible to achieve better value for money and prioritisation in public spending without stronger democratic accountability and transparency at all levels. I was left wondering why this key component of the liberal way was so glossed over.

However, since the conference I have regained some of my confidence in the different ‘wings’ of the Party to reformulate, rethink and unite. Let us hope it is justified.

* Paul Reynolds works with multilateral organisations as an independent adviser on international relations, economics, and senior governance. He is a member of the Lib Dem Federal International Relations Committee and an Executive member of Liberal International (British Group).

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  • geoffrey payne 18th Jul '14 - 3:07pm

    For me the greatest irony about Orange Book Liberalism was that it gained ground in the Liberal Democrats precisely at the time when light touch regulation of the financial institutions led to catastrophic market failure. In 2008 Vince Cable became immensely popular because he broke the cross party neoliberal concensus and advocated the nationalisation of Northern Rock. Would David Laws had done likewise in his position? It seems unlikely.
    It really looks bazarre to me why the Lib Dems would suddenly decide to take this course at this moment in time.

  • Jenny Barnes 18th Jul '14 - 4:22pm

    ” it was suggested, without a murmur of dissent, that free markets meant absence of regulation”

    Of course market based capitalism has no need of police, courts, contract law, patents, general security, armed forces to deal with pirates (for example)… the statement above is nonsense on stilts. The “free” market relies on the coercive power of the state to enforce its deals. It’s no wonder those at the conference appeared to have no connection with the world in which the rest of us live. The problem at the moment is that globalised capital has almost completely escaped state control, which is why we have the global race (to the bottom) for labour wages and conditions, reluctance or even refusal to pay their corporate way – incorporating in Luxembourg for example, while relying on the hollowed out state to manage social reproduction of the work force on which they rely – education, health (coming to a paid for site near you soon) and so on.

  • Joshua Dixon 18th Jul '14 - 4:56pm

    I hope you’ll be joining us at SLF Conference, Paul ;)?

  • Paul Reynolds 18th Jul '14 - 6:47pm

    Hi Joshua. Unfortunately, this year, I will be out of the UK at SLF conference time.

  • Green Voter 18th Jul '14 - 6:57pm

    What do you propose we do about lobbying?

  • I don’t usually comment on economics because there are so many people who understand the subject better than me, but , as I think Jenny Barnes implies, globalisation has rendered national governments incapable of restraining monopoly capitalism. As Liberals we believe both in free trade (for which read globalisation) and in a vigorous attack on monopolies of all kinds. Certainly our support for the EU is a coherent response to this dilemma, but I’m not sure that it is sufficient to resolve the contradictory consequences of our beliefs. The even bigger problem is that of capital accumulation in China. If our government has allowed control of our former public utilities to pass into foreign hands there is very little we can do to mitigate a potential future abuse of power. This probably sounds as though it was written by a supporter of UKIP, but their fuzzy sense that ‘things aren’t as they should be’ is, I believe, grounded in realities that we are not facing up to as a Party.

  • Paul Reynolds 19th Jul '14 - 8:10am

    Comments from Tony Hill & Jenny Barnes are instructive. Tony and Jenny – I don’t know if you are avowed Marxists or not, but your comments seem to be based on Marxist/socialist/communist assumptions. The Marxist narrative through the ages has always tried to divide politics into ‘progressive’ socialism and regressive monopoly capitalism where the rich get richer and the poor get poorer. Liberals know different. For the problems of elite dominance, whether by monarchy, religious diktat or crony capitalism, and for the problems of general sustainable prosperity, there are two competing sets if approaches, not one. Those are liberal democracy and state socialism. However socialists for more than 100 years have been successful in conflating liberal democracy – an idea against elite dominance – with defenders of the status quo and elite system.

    Unfortunately many liberals too have been drawn in to this formulation too…. either by using the works of luberal thinkers like Smith, Mill, and Hayek to defend elite dominance, or by adopting the language of Marxism. In the Lib Dems I feel we are frequently guilty of both.

  • Paul Reynolds I am not sure how old you are, or what your life experiences have held. I agreed with several of your worries in your initial post, although I think your reference to “regulation” may be a bit of a giveaway that you are heavily influenced by economic orthodoxy as practised in the last 30 years or so (ThatcherReaganomics, if you like). Your recent post, talking of “Marxist (or should it be, marxist) thinking” does rather confirm that thought. Had you been from an earlier generation, you would not have been so hardline in trying to draw “two approaches” from what you had read of Tony and Jenny’s comments. The mixed economy of the 50s 60s and 70s had not failed, as many people have contended, and was certainly not “marxist”. The idea that democracy (ie people’s participation and votes influencing the direction taken by public policy) is enhanced by having a substantial part of the public economy owned (yes, OWNED) by the public, was embraced by Liberals. We, like most others would have had doubts about Tony Benn’s “ownership of the commanding heights of the economy” arguments, but we would and did have no doubts that what Thatcher, and subsequent economically orthodox thinkers were doing to the economy, and through the economy, to society, were wrong. That was undemocratic, having everything to do with raw power, and nothing to do with the power of the people. You may query how people power was going at the end of the 70s, ie fighting back against high inflation etc, and you could say that some people had power to exercise, wherea others didn’t, but you as a democrat can hardly deny that it’s a good deal more “democratic” than today’s post – thatcher settlement, with very little power in the hands of either “the people” or their elected representatives. Orange Bookery has always seemed to be an attempt by certain people to get Lib Dems to accept the post-thatcher settlement.

    Forms of marxism were quite prevalent in 60s and 70s thinking, and obviously influenced economics ad politics. To suggest that it amounted to “one approach”, however, is inaccurate, and possibly throwing the baby out with the bathwater after the fall of the Soviet Union. Much of the thinking of post 1945 had nothing to do with either Marx or the Soviet Union, and to throw out practices of that time because of an unspoken assumption that they are out of date or don’t work, is short sighted. What we DO need, is some serious thinking about two factors very important in the modern world:
    1 How we live in a world where economic growth as currently defined cannot continue (limited resources, rising population), and linked
    2 How we operate democracy on a supranational scale.
    Modern politics, economics, (and Orange Bookery) have very little constructive to say here.

  • Paul Reynolds 19th Jul '14 - 11:41am

    Very good points you make, Tim. My point about Marxism is to do with the unthinking Marxist assumptions that people make. This is not the same as Marxist thinking which to me implies conscious support of Marxism as an ideology. Marxist assumptions include the idea for example that private business is inherently bad, or that private ownership, electoral democracy or broader freedoms necessarily lead to exploitation by the few of the many. My reference to economic regulation is by way of criticism of the assumption that the excesses of private businesses or problems like unemployment or monopoly are always the result of ideologically-based absence of a sufficient quantity of regulation. But equally I am critical of the de-regulation mantras of the neo-liberals. How is a sufficient or insufficient quantity of regulation to be measured ? The number of pages or words ? When a person forms a legal entity in the UK, they suddenly become subject to several billion pages or regulations, much of it to little effect. How can socialists be sure when the requisite amount of regulation is reached ? How can neo-liberals (not anarchists, most of them) be sure when de-regulation has reached it’s limit ? I wish to highlight the folly of such thinking. Better to define the aims and quality of regulation, and reform accordingly. The billions of pages of financial regulation did not stop the rapacious financial sector from stealing the public’s cash. My view is that there is insufficient mature thinking on the challenges here. I have my own views on this based on my own international experience – but for another day.

    It is true that I am definitely not a socialist or supporter of elite dominance. I prefer democracy to socialism. That is, I believe that the population should change the government, not that the government should change the population. The assumption that somehow the duped population should be transformed, requiring better quality of duping, is really not for me. And my experience tells me that The State is not impartial – it has interests of its own, and such interests should not be assumed away, as socialists tend to do.

  • Bill le Breton 19th Jul '14 - 12:40pm

    Paul, thank you for this piece. It reminded me very much of Chapter 4 – The Underdog and the Economy in Conrad Russell’s An Intelligent Person’s Guide to Liberalism.

    Then you finish with, “However, since the conference I have regained some of my confidence in the different ‘wings’ of the Party to reformulate, rethink and unite. Let us hope it is justified.”

    What could possibly have helped you regain some confidence? Conrad Russell describes the consistency of principle through the evolution of a very different Party from one that pursues classical liberal ideas, which general find their home among Tories and Conservatives.

  • “My first wave of blues related to the weakness of the links between the classical liberal ideas being espoused and the main problems facing the UK today … “

    But were they actually classical liberal ideas or just ideas that, as in charades, ‘sound like’ classical liberal thinking?

    A case in point is the suggestion you report that “free markets” means an absence of regulation while you (and I also) always understood it to mean fair rules and an absence of monopoly. The word ‘free’ here has been repurposed to give it exactly the opposite meaning to the original. It is now a market free from rules, hence one characterised by monopoly, by exploitation and looting by insiders. It isn’t terribly difficult to see that the people complaining about the principle of regulation (as opposed to specific bad regulations) are promoting their own vested interest. Like the aristocracy down the ages they think that rules and laws are only for the ‘little people’ and shouldn’t bind the like of them,

    In the same way ‘freedom’ has been subtly but completely redefined to invert its original meaning so that in the mouths of neoliberals it no longer means ‘freedom for people’ but ‘freedom for capital’ (and by extension the owners of capital). There is an unstated assumption here, namely that what is good for large firms is necessarily good for the economy as a whole which is necessarily good for people as a whole. Naturally this is never examined because it simply doesn’t bear examination; even the most modest exposure to the real world contradicts it.

    This confusion is immensely useful to some. For instance the TTIP is held by some to be a Good Thing because it involves the magic words ‘free trade’. What it will do is to put large corporations above the law, above democracy and to guarantee their expected profits – the freedom is from rules. That it’s not really about free trade at all is revealed by the fact that the TTIP and group of trade agreements of which it is just one exclude China by design – they are all part of a US plan to limit growing Chinese influence. This is all nonsense of stilts of course and makes a mockery of any idea of markets. That’s why Democracy was missing from the conference; democracy is utterly toxic to this aspiration.

    How we got into this sorry state of affairs is hard to say. Maybe they no longer teach critical thinking at leading schools like Westminster or maybe there is a Faustian bargain lurking in the undergrowth but whatever the reason we have to change the terms of debate or liberal democracy (lower case) is toast.

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