Opinion: What is an economic liberal?

As a phrase used in academic circles, it is associated with neo-liberals such as Hayak and Friedman, the pillars of 1980s Thatcherism. Within the Liberal Democrats the term has become popular, but understood in a different way. People like David Laws have tried to combine economic liberalism with social liberalism in order to acheive things in society that Thatcher was either not interested in, or failed to deliver. Economic Liberalism is meant to generate the wealth to make social justice affordable.

Given the success of Thatcherism in delivering victories for the Conservative party and transforming the Labour party, it would seem churlish to reject the whole ideology as we were prone to do at the time (and personally I am still strongly inclined to do). So what economic liberal values should we champion?

Maybe ambition is a good thing? Perhaps we should embrace innovation? Kick out the ‘Nanny State’? I like it that my local party is ambitious (albeit constantly thwarted by poor election results, but you can’t have everything). Our PPCs are ambitious. Neighbouring constituencies have candidates that are determined to win, and in the case of Lynne Featherstone, have done so already. It is good to have the drive for success. It is worth encouraging in society, and in our education system in particular.

But ambition has a dark side. Some people are more ambitious for themselves, rather than any principles that they believe in. You may have even met a few such people within the Liberal Democrats (it has been known). In foreign policy the ambition of “punching above your weight” is considered by new Labour to be a good thing, until we got flattened by Iraq (and Afghanistan will be next).

Economic liberals have been arguing until recently that the Liberal Democrats should appeal to the ambitious. Instead of appealing to weather-grizzled street protesters – which we happily did in the past – we need more sharp-suited city trader types, who like to bark down two phones at the same time.

For a while it became fashionable after the last general election to echo the sentiments that encouraged many of these people to join the Tories. We shouldn’t tax the rich more. Taxing them more is to punish them, and we should do the opposite and allow success to be rewarded. Money that goes to the government will be wasted anyway.

Now we discover the truth. It IS possible to pay people too much, and the Liberal Democrats now want to hunt down those people who were so irresponsible on the money markets. Give markets too much freedom, and you create a moral hazard where people only think about the short term profits of there actions, and neglect the long term consequences.

The problem in the UK is sometimes too much ambition, rather than not enough. From now on, high street banks should be boring institutions that make boring profits. We cannot afford for them to ever be ambitious again. And the state has to have the power to ensure that this is the case. So much for opposing the ‘Nanny State’!

The term ‘Nanny State’ is a metaphor, it is not real life. Unfettered market forces can often be irresponsible and against the interests of society. The state can and should also be subject to scrutiny, but nonetheless it is the only institution that potentially can stop markets from being irresponsible.

And what about innovation? I raise the matter because I have a question. If the period of economic growth from 2001-07 was driven by a bubble of unsustainable debt, which is something that we will no longer permit anymore, then what will drive economic growth in the future?

I have asked many people this, some of them economic experts, and maybe I have asked the wrong people, but the only answer I get is “innovation”. Well who knows, maybe. However, as Joseph Stiglitz has pointed out, the biggest innovation that drove growth until recently was how to get round the regulations. Like ambition, innovation can be a good thing, but might not be.

For me the term “economic liberal” is a term I can never embrace as a Liberal. I cannot abide the historical associations with Thatcherism, where paradoxically the free market ideology ended up creating a centralised state (opposed by Liberals at the time) in order to suppress opposition to it.

Now we find it is not just a matter of semantics. Unfettered free markets can be disasterous. Maybe economic liberalism doesn’t have to be like this, but the anglo-US model of capitalism beloved of many has failed. What we need now to be true to our values is for more social and less economic liberalism.

* Geoff Payne is secretary of Hackney Liberal Democrats.

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  • Andrew Duffield 24th Mar '09 - 10:17pm

    My goodness, that’s a big chip you’re shouldering Geoff. Yet you acknowledge the indivisible truth of Liberalism right at the start of your diatribe:

    “Economic Liberalism is meant to generate the wealth to make social justice affordable.”

    That’s it! Let that chip fall!

    The world has yet to experience the redistributive empowerment of genuinely “unfettered free markets”. Thatcherism was a grotesque distortion of economic democracy, deliberately designed to further entrench wealth and privilege in the hands of the few – with the vacuous promise of “trickledown” as a sop to the gullible.

    Economic Liberalism is NOT a right-wing ideology. Its language may have been hijacked by Thatcher and others, but its true history and genuine promise are both progressive and sustainable. And since 1909, this country hasn’t even come close to its implementation.

    You ask – “If the period of economic growth from 2001-07 was driven by a bubble of unsustainable debt, which is something that we will no longer permit anymore, then what will drive economic growth in the future?”

    People, Geoff. PEOPLE create wealth. Set people free from deadweight taxation of their efforts and enterprise – while capturing and recycling the public value they create – and just watch them grow! Unbridled privilege and monopoly are the enemies Geoff, not economic democracy.

    Unfortunately, if you think “a bubble of unsustainable debt… is something that we will no longer permit”, you almost certainly have another think coming. The one thing every government in the world has been striving for since the crunch began is to “get the banks lending again” – the progenitors of poverty and debt!

    Economic Liberalism would have the banks BORROWING again, from depositors and from the state, and paying US for the privilege. There would be no bailouts. An economy free from corporate welfare would ensure that bad debts were written down to the correct market value and traded accordingly. Mortgage debts would have to be re-negotiated DOWN to reflect the true market price of the property – not the boom value. “Jubilee” it used to be called!

    To be really “true to our values” we need Economic and Social Liberalism in equal and complementary measure. They are mutually dependent and indivisible. The sooner that truth is understood, the sooner we can look beyond our respective shoulders and move forward – together – for freedom, fairness and a sustainable socio-economic future.

  • Kat Dadswell 24th Mar '09 - 10:53pm

    No offense to any economic liberals out there, but in my opinion if extreme economic freedom such as we’ve seen has led to the suffering that we’re now seeing then it breaks the golden rule of liberalism – “as long as it doesn’t harm anyone else”. To minimise the harm done, there needs to be regulation, certain things like health or education need to be nationalised to avoid profit-focus rather than society-focus and associations with Thatcher need to be avoided at all costs!!!

  • Matthew Huntbach 24th Mar '09 - 11:42pm


    It [economic liberalism] is not favourable to the rich, whose position is created thanks to lack of economic freedom for the poor.

    You economic liberal types like to tell us it’s like voting, every tinme you spend a pound it’s a vote for whatever you spend a pound on, so much more democratic than a vote eveyr five years.

    OK, but doesn’t that mean the rich get a lot more votes than the poor? Perhaps you could explain your reasoning that says having no tax on the rich and no state support for the poor is not favourable to the rich and disfavourable to the poor.

  • Matthew Huntbach 24th Mar '09 - 11:48pm


    The world has yet to experience the redistributive empowerment of genuinely “unfettered free markets”. Thatcherism was a grotesque distortion of economic democracy, deliberately designed to further entrench wealth and privilege in the hands of the few – with the vacuous promise of “trickledown” as a sop to the gullible.

    Hmm, that sounds very much like the Trots of old explaining why every form of socialism you cared to mention and pointed out didn’t work too well wasn’t “real socialism” and all you needed was unfettered real socialism and all would be lovely.

    Are you able to point out even a semi-example of what you want working to give the spread of wealth and the power it gives you claim it will lead to?

  • Plain old liberal 24th Mar '09 - 11:58pm

    “You economic liberal types”

    Nice labeling!

    And I’m impressed by the way you put words in Tristan’s mouth.

    Perhaps you should address Tristan’s points on their merits, rather than creating your own straw man to beat like a political piñata.

  • Matthew Huntbach 25th Mar '09 - 12:00am


    As long as government manipulates interest rates and the money supply

    I thought the Bank of England was given independence to set interest rates at what it wanted. And I rather think that loan companies and credit card companies set interest rates to what they think they can get, what government manipulation of them is there?

    forces banks to lend based on social rather than economic criteria

    Can you give me examples of which banks in the past decade or so were saying “woe, woe, we are being forced by the wicked government to lend money we rather would not lend”?

    subjects the financial sector to massive state regulation

    which are? Well certainly not restrictions to shift the money to some little island somewhere so they don’t have to pay tax on it. And not wage restraint on its chief executives. And were there restrictions on creating wacky financial instruments that even those responsible for them didn’t understand? Or do you mean legislation on the pension sales scandal or the endowment sales scandal?

    It is very, VERY managed

    compared with? How it was in the 1960s?

  • You guys are missing the point. The author is asking a rhetorical question, to which his only answer is: “I clearly don’t know or care, but I don’t want them in my nice party. I preferred my party when it was smaller and I understood what everyone in it was saying.”

  • Matthew Huntbach 25th Mar '09 - 9:31am

    Thank you Jock and Tom. Your argument seems to be that despite the problems that seem to have arisen since the Thatcher/Reagan governments started the process of liberalising the economy, all of these are just due to it not being liberalised enough. Which doesn’t seem tome to be thst far from Trotskyists whose only argument against Stalinist terror was “well, that wasn’t real socialism, what was needed was more of that in a much more extreme form”. Hmmm …

    So, did the forebears of those Trotskyists say that what Lenin and Stalin was doing was wrong? No. They were happy to cheer on Leninist communism seeing it as just the sort of Marxist progress they thought would be good. Only when it didn’t work did they say “it wasn’t done properly”.

    Did anyone who called themselves “economic liberals” criticise Thatcher et all in the 1980s in the way you do now? Was anyone who preached the benefit of a free market economy condemning Thatcher about “cosseted, cartelised bankers and other corporate vested interests”? Or are you lot just like those who praised Lenin and Stalin in their time, but when what they did turned out to be horrible deftly jumped to saying “oh, that wasn’t really what we wanted”?

    So if you lot lied to us in the past about the benefits of free market economy when you were praising Thatcher, how can we believe you now?

  • “What we need now to be true to our values is for more social and less economic liberalism.”

    What we need now is less silly posturing on semantics and labels and some serious policy ideas that will help an economic recovery without causing even deeper pain in the long-term.

    The question on the voters minds at the moment is not whether the neo-Thatcherite-Reaganite-economic-liberal-neo-con conspiracy is less effective than the neo-communist-social-democrat-social-liberal-Chavista alternative, but ‘will I have a job tomorrow?’, ‘can I pay the bills?’.

    At the moment Geoff the only contribution you’re making to that is to raise the question in people’s minds of “What is the point of liberals?”

  • Matthew Huntbach 25th Mar '09 - 9:45am

    Plain old liberal

    And I’m impressed by the way you put words in Tristan’s mouth.

    Perhaps you should address Tristan’s points on their merits, rather than creating your own straw man to beat like a political piñata.

    Well, I have no idea what a piñata is. I suppose it is something American, and I rather feel the readiness of economic liberal types to make obscure references to the USA and its culture suggests an over-influence in their thinking from factors more relevant to that country than to ours.

    Tristan made a statement about economic liberalism

    “It is not favourable to the rich, whose position is created thanks to lack of economic freedom for the poor”

    for which he gave no justification. I am asking him to justify it. One of the consequences of economic liberalism as it has been practised in the USA and the UK more than in some other European countries is a growth in inequality, and I do not see poor people in our country experiencing much of the freedom that rich people have. It does seem to me the more money you have to spend, the more free you are, and if all restrictions on spending that money are taken away that gives you even more freedoms – if you have the money in the first place. Tristan appears to be saying the opposite is the case, so I should like to see an explanation of why he thinks that is rather than a mere statement that it is.

  • Matthew Huntbach 25th Mar '09 - 9:55am


    This is a reference to the Community Reinvestment Act (aka. the Make Banks Lend To Poor People Even Though They Are Not Credit-Worthy Act) in the US, a piece of political financial manipulation that – thankfully – even New Labour weren’t stupid enough to introduce.

    Er, yes, and we do not live in the USA. No one forced the banks in this country to take on any share in this lending, so if they did that was an entirely free market decision of theirs.

    Now were you or any “economic liberal” types saying in the 1980s and 1990 “poor people should not have mortgages – the rise in home ownership is a bad thing”. No, you were saying the opposite. Oh, retrospectively you can say “that was wrong”, just like the Trots retrospectively could say why Stalinism was wrong even though their intellectual forebears were using the same words they used to cheer it all along.

    So how can we trust you when people who used the same language as you use lied to us in the past? Now you tell us they were all rich people defending their own cartels and privileges and the like. You and your like didn’t say that when Thatcher et al were “liberalising” the economy. The language used to justify the fat cats making themselves fatter and pretending they were “creating wealth” when they were just creating debt is just the language you use.

  • Matthew Huntbach 25th Mar '09 - 10:03am


    What we need now is less silly posturing on semantics and labels and some serious policy ideas that will help an economic recovery without causing even deeper pain in the long-term.

    Yes, which is why I question those who call themselves “economic liberals” since all I seem to get from them is silly posturing on semantics and labels. When one raises questions about what they want, all one gets is insulted for being some sort of nasty socialist and empty claims, not illustrated by any sort of practical policy, that everything that has been called “economic liberalism” in the past isn’t really that and that we just need more of it, only in a much more extreme form.

  • See, I was about to leave a comment here saying, “So Geoff, economic liberalism is anything about liberalism that you don’t like, is it? When I look it up in the Big Political Dictionary, will I find a picture of you with the word ‘NOT’ beside it?”

    Then I realised, on reading the other comments on this article that I was going to be forced to defend Geoff.

    Look, you libertarian types, if you can’t see that the state has a role as an enabler of choice rather than simply a denier of it, you really should join the Tories. Take the example of Labour’s Sure Start programme, which – for them – was a very liberal project that expanded the range of choices available to single mothers in terms of education, employment and training. Naturally, they ruined it by over-centralisation and other socialist stupidities, but the principle remains.

    For all your talk of our philosophical ancestors, you neglect Mill. Mill advocated the expansion of education provision, not because he wanted the government to control the upbringing of children, but because knowledge is an enabler of choice. And this is the key to liberalism. Jock’s Churchill quote is apposite here; we may have similar policies to the socialists on occasion, but we reach them from a very different perspective.

    Arguments about the size of the state are outdated and rather worthless. The question for liberals should be: how can we expand our range of choices? How can we expand our freedoms? The state is not an enemy to this process, it is merely a tool, which can be misused as well as used effectively.

  • Matthew Huntbach 25th Mar '09 - 12:22pm

    Jock, I have been a long-term supporter of Site Value Rating, but if that’s what you mean perhaps you should say that’s what you mean rather than using language which makes you sound like a born-again Thatcherite. Or giving an answer to every point “er poor people get pushed around because their options are limited by not having money” with “oh, that’s because the wicked state taxes them too much” as if those third world countries which have limited state services are beacons of happiness and freedom compared to those western European countries which have more state services at the expense of more taxation.

  • Matthew Huntbach 25th Mar '09 - 2:18pm


    So why do people like you still credit Thatcherism as being what it says it was, even though the evidence and history tells us it was something else entirely?

    Because your arguments for being different are very hand-wavy. Because like Thatcher and the Conservatives you really do not seem to understand how much one’s liberties are curtailed by being poor. Because your answer to everything is “that’s because taxes are too high” even when quite palpably that isn’t the cause of the problem. Because you use just the same language that bankers used to justify why making themselves stonkingly rich was good for all of us.

    It’s very hard to re-invent the language economists have been using since before Mill just because one conservative abused it horribly.

    Thatcher reduced taxation, privatised state businesses, introduced competitive tendering to state services, reduced regulation on the financial sector. For this she was lauded by the media, all of whom claimed what she was doing was economic liberalism. It was not conservatism because conservatism means keeping things the same, and this is just what she was not doing. She was happily smashing up traditional Britain. I do not recall anyone saying at the time “this is not true economic liberalism”. All I recall is her being cheered on, and those who use just the same language you use about this being what true freedom entails saying “more, more of this please”.

  • “most of us were in our teens”?

    During the Roman empire? You are older than you look

  • Are you ready for an IRC chat yet? I emailed you but still no response

  • Jock, I was there and I emailed you to say so. Do you ever check your email?

  • Plain old liberal 25th Mar '09 - 4:59pm

    “Well, I have no idea what a piñata is. I suppose it is something American, and I rather feel the readiness of economic liberal types to make obscure references to the USA and its culture suggests an over-influence in their thinking from factors more relevant to that country than to ours.”

    Actually, a piñata is Mexican. Does my readiness to make (actually not particularly) obscure references to a less developed country and its cuture make me a social liberal? Does it make me overly influenced by the poorer nations of the world and thinking about them? Shame on me!

  • Mr Knight

    Well, it seems like there are various kinds of economic liberals.

    Some people advocate the “freeing” of banks as a solution to our current problems. Others do not.

    Maybe a set of new terms is required to facilitate useful communication.

  • Matthew Huntbach 25th Mar '09 - 11:01pm


    I have no problem at all with your

    “the belief that liberty of individuals can be improved by better structuring the legal underpinnings of the economy to promote equality and reward valued activity”.

    You ask “what is so offensive about this view?”. To whom are you asking that? I certainly do not find it offensive, nor have I written anything that suggests I find it offensive.

    MatGB asks me to “think for once”. Mat, you may disagree with my conclusions but do you honestly think I am not thinking? A true liberal would accept that others may think differently from him and be able to tolerate a difference of opinion without resorting to insult.

    My concern with “economic liberalism” is that it seems to suppose the only barrier to freedom that exists is the existence of governments and that therefore minimising governments should be the prime or even sole thing liberals are interested in doing. I don’t believe that, I believe the existence of governments and state services can enhance rather than diminish freedom.

    Apart from Site Value Rating, a policy I have long supported, I see nothing here from the people with whom I have been arguing in terms of concrete policy which convinces me they are different from those right-wingers who have advocated low taxation and low government services supposedly in the name of liberating the economy but actually increasing economic inequality and making life more miserable and curtailed for those at the bottom of the pile. All I see is hand-wavy “oh, we’re nothing like Mrs Thatcher” with a complete absence of concrete examples of differences, as if merely saying it is enough.

    I base much of what I say both on my own experience of growing up in poverty, and my twelve years as a councillor for a ward which fell into the 10% most deprived wards in the country. So I have seen through this how people suffer and their freedom is curtailed through such things as the withdrawal of the council house safety net that used to exist. I believe my parents and myself when young had much more freedom because council housing was then readily avilable than the people I met in my councillor’s surgery weeping through the misery of being poorly housed and of having no chance whatsoever of getting either a council house or of affording private housing. But you “economic liberals” appear not to regard those people’s lack of freedom as an issue (or you will give your usual answer of concreting over the countryside, thereby denying the freedom I also enjoyed as a youngster of haviong that countryside).

    If I am wrong, and you have some magic plan that will satisfy you and me, then explain it instead of insulting me.

  • Matthew Huntbach 25th Mar '09 - 11:18pm


    the “‘continuing’ Liberal Party” is not the continuing Liberal Party because the legal continuation of the old Liberal Party is the Liberal Democrats. One of the reasons I could not get on with the party that calls itself The Liberal Party that was founded in the late 1980s is that I find its claim to be the true continuation of the old Liberal Party to be ludicrous. I simply could not be in a party which made that ludicrous claim.

    But another reason is that I am pragmatic, liberalism isn’t about party labels, we accept that we must work in whatever way is most practical. That may mean balancing being in a party we don’t find perfect with accepting we can be more effective in a party of a reasonable size than in a micro-party.

    During all the time I was a councillor, I paid very little attention to what was happening in the party more widely. It has been something of a shock to find, at least in Liberal Democrat blogs and the like, it now has quite a few members who hold views which back in the days when I was more active in the old Liberal Party would have been regarded as extreme Thatcherism.

    If I am to be forced out because they manage to change the party to something I find so unattractive I no longer feel it a tradeoff worth accepting to be a member of it though it doesn’t 100% chime with my views, well so be it.

    MatGB swears at me for saying this, but if he wishes to convince me I am wrong to regard people who call themselves “economic liberals” as closer to the politics of the Conservative Party than to the politics of the Liberal Party when I first joined the latter, then he needs to give some more concrete reasons as to why that is so. As I have already said, the hand-wavy arguments I am hearing are no more convincing that the hand-wavy arguments I used to hear from the Trots when they tried and failed to convince me that they were nothing like Stalinist Communists.

  • Matthew Huntbach 25th Mar '09 - 11:30pm

    Plain Old Liberal

    Actually, a piñata is Mexican. Does my readiness to make (actually not particularly) obscure references to a less developed country and its cuture make me a social liberal?

    I assume it is something found amongst Hispanics who make a big proportion of the USA’s population. Your use of this word and seeming supposition that everyone will understand what it means suggests to me you are one of those people who are wannabe Americans.

    I think there are historical and cultural reasons why “libertarianism” is particularly popular in the USA and less so in Europe. The big one is that the USA has or had lots of free land, so it did not have the concept of people’s freedom being curtailed because all the land was owned by the aristocracy.

  • I think the problem with the term “economic liberal” is that what most “economic liberals” mean by it is as follows:

    “I would like to claim to be a liberal. But I don’t buy the whole liberal package. And I don’t want to say very much about what it is I don’t buy.”

    That, of course, is what the Thatcherites meant by it. Some, but not all, the posters on this thread mean something similar.

    Rob Knight, for example, clearly doesn’t mean that. In my book, if you start with a clear social justice goal and you then put forward arguments for a free-market route toward that goal, you’re not just an economic liberal. You’re a liberal, plain and simple, and that’s the best thing to call yourself.

    Sometimes, rather than trying to “reclaim a term”, it’s better to accept that people will understand it the way they commonly use it. If you enjoy the company of children, you could, I suppose, try to reclaim the term “paedophile” to describe yourself. Or you could have better sense!

  • Matthew Huntbach 26th Mar '09 - 9:37am


    I have already said I agree with you on Site Value Rating. I also agree with you and with Rob on the idea of a basic or citizens income which could largely replace more complex and paternalistic welfare systems. If thus is what you are about, then fine.

    However, the language of economic liberalism, and indeed the term, has largely been used by people whose main interest is cutting taxation and minimising state support. They have argued that concerns about the poor are silly because this will mean entrepeneurs will make more money and this will trickle down in some way to the poor. Recent events have made it more clear that much of this entrepeneurship which this is supposed to encourage has not been truly creating social benefit but rather finding clever ways of taking from the poor and giving to the rich. The feeling that we have a system in which reward is not given for true enterprise is behind such things as the anger at Sir Fred Goodwin’s pension. Yet, at least until recently, the wealth of people like Sir Fred was defended on the grounds that it resulted from free trade and Sir Fred and his like being stinking rich meant all of the rest of us also would be better off. And I don’t recall those on the more economic liberal wing of our own party dissenting from that, at least not until popular anger in the past year or so has forced them to.

    Now you talk of tackling monopolies of land and interest, but the fear is that part of the agenda will be lost while the cutting taxes to make the rich richer and cutting state support for the poor because that’s paternalistic get priority. After all, those who stand most to benefit from that have loud voices by virtue of being rich and powerful. So they will push that side of it, using your “it’s liberalism” argument, while the other side never gets reached.

    Similar happened with Soviet communism. The idea was that one needed a centralised force to push through the revolution and then freedom and the dwindling of the state would happen. Well, of course the side of that which helped the powerful happened, the rest didn’t.

    Land is the key, but the land taxation line is a very difficult one to push, I know, I’ve tried, and I’ve been denounced as a “communist” for advocating it. There is a very entrenched view in this country that absolute untaxed ownership of land is natural. Our own party helped push this with its advocacy of local income tax and its rejection of the closest we have – although in a very poor form – to Site Value Rating, the council tax. It is very difficult to get across to people how the benefits they seem to gain from this are false and are outweighed by the disadvantages. Hence again my fear that while there are some parts of your agenda which are easy, there are other parts which are hard. Doing the easy parts without the hard parts gets you Thatcherism (not quite, because Thatcherism did retain a little bit of older Toryism as in its “family values” agenda).

    So, if you wish to be respected by people like myself, you need to push this hard part further, and come up with practical ways of making it attractive. You need to distance yourselves from people who have pushed the “low tax, low state support” idea and who pour scorn on those who are concerned at the way that diminishes the freedom of those at the poorer end of society. It does not help when my concerns at this level are just dismissed with swear words and claims that I am not thinking. Sorry, but snake-oil salesmen claiming to be true liberals but actually holding to what you now say isn’t what you are really about have caused a lot of suspicion. How do we know you are not also one of them?

  • Matthew Huntbach 26th Mar '09 - 12:49pm


    I don’t think your analogy works, because I don’t think the Thatcherites were into deliberate deception. They, and those in the media who cheered them on, genuinely believes that what they were doing was “economic liberalism”. When Margaret Thatcher held up Hayek and said “this is what my philosophy is” (or words to that effect), I don’t think she did it thinking she was lying or fooling anyone, so that is just not the same as your white pretending to be black.

    Theirs has been the dominant ideology for the past 30 years or so. So I don’t think it’s a case that needs to be pushed as you and others seem intent on doing, as if it’s still 1975 with socialism is the dominant ideology that needs to be overthrown and the liberal power of the free market something new and unappreciated. Rather you need to have ready answers to the criticisms of it, which include making quite clear how you are different from what we have seen in practice since 1979. If I keep pushing you because I haven’t had satisfactory answers to my queries, and your only response is to insult me on the lines “oh, you’re just an old fashioned socialist who wants state uniformity and gets a kick out of dominating people” we won’t get anywhere.

    History is replete with those who claimed to be liberators using the ideology of liberation to maintain power – the trick is to pretend you’re carrying on fighting the old battles against the old defeated enemy while ignoring new enemies. That is why those of us who think the era of state power has gone might have a suspicion of those whose politics still seems to be based around fighting it.

  • David Allen 26th Mar '09 - 1:14pm

    Let’s write a book. “Scapegoating the State”

  • Something I noticed recently.

    In his keynote conference speech, Mr Clegg said “A never-ending cycle of red-blue, blue-red government has got us into this mess – it is never going to get us out.”

    I see in that no recognition that the Lib Dems failed in any way. The Lib Dems can, on occasion, influence government policy by coming up with good ideas which then get stolen to attempt to narrow the differences between parties.

    So the fact that the Lib Dems did not push for better regulation of the banks or something that would product equivalent results is significant. Now I know the Lib Dem party is not the biggest but if it is big enough to stridently criticise, it is big enough to recognise when that criticism should be applied internally.

    Stephen Tall asked in October “is there anything more the party can do to turn the polls around”.

    Maybe a starting place for tackling the polls is to acknowledge where we are and how we got there, rather than just hoping some oversimplified criticism will stick to opposing parties.

    Substance rather than hope

  • You are asking the manner of the push.

    The Lib Dems have been anti-regulation in the past.

    Was there a commitment in the 2005 Lib Dem manifesto saying “the banks are currently poorly regulated, in danger of gambling all our money away, and we will come up with primary legislation to address this”?

    Such a statement would have made headlines it would seem.

    If the Lib Dems did not see the danger of casino capitalism, how can Mr Clegg criticise others for not seeing it?

    On a more positive note, I think the existence of The Lib Dem Voice and the willingness of Mr Tall and others to discuss their views with all comers is to be commended. It suggests a willingness to change which I find encouraging.

  • Tom:

    “The B of E responds to government-set inflation targets which were and are decided by Gordon Brown. He chose CPI over RPI and chose to ignore money-targets such as M4. As a result the money supply has expanded by 10%-15% per year since 2001, which has led house prices to rise by (oh, shock-bleeding-horror!) 10%-15% since 2001.”

    Except Brown chose CPI over RPIX (not RPI) in 2003 (not 2001). It would’ve been stupid to have chosen RPI instead. This is because RPI includes inflation on mortgage interest rates (whereas RPIX doesn’t). This means that if the BoE wanted to lower inflation by raising interest rates and they’d used RPI instead, then they’d increasing the interest on mortgage rates as well, which of course means that they have inflated, so the RPI index goes up. Simple. Don’t use RPI. There is an argument for using RPIX over CPI though, but there are a couple of reasons they chose CPI (as far as I can tell): CPI uses a better formula to calculate the interest rates than RPIX does; the EU uses CPI so the government wanted to be more in line with them; and the fact that CPI uses less figures concerned with housing than RPIX does, and apparently these are less accurate to calculate. So I can certainly see that both measures have weaknesses, and maybe a modified RPIX is in order, if that’s at all possible. Anyway, this change did not cause the Housing bubble. I can see that maybe it accelerated (I haven’t seen any graphs or figures on this so I can’t be sure) the bubble, but this change occured in 2003, whereas the Housing bubble has been going on since the mid-90s, when the Tories were in power.

    “This is a reference to the Community Reinvestment Act (aka. the Make Banks Lend To Poor People Even Though They Are Not Credit-Worthy Act) in the US, a piece of political financial manipulation that – thankfully – even New Labour weren’t stupid enough to introduce.”

    This is complete rubbish actually. It comes from a right-wing smear from the Repblican party against a combination of Jimmy Carter and Bill Clinton. The Community Reinvestment Act is specifically designed to outlaw the practice of “relining” – that is stop institutions from deciding to lend based on race. The act has no bearing on lending to poor people at all, it is there so that a bank can’t refuse an African-American a loan just because they are black. They can still refuse to give them the loan if they are poor. The US banks loaned out money of their own free will, and our banks did the same too.

    “Now, how long is the current list of Government regulations on banks. Is it a million words? Lines? Pages? Books? I can’t even remember; it’s too late at night and I need to go to bed. Suffice to say that it’s not exactly the kind of thing you take on holiday with you.”

    That’s quote a fallacy you’ve commited there. Just because a number sounds big, doesn’t mean its TOO big. Let’s say they have a million pages of regulation. Is that too many? How the hell can you tell without knowing what’s in those pages? How much of that is waffle? How many regulations are in those million pages? It could just be 100 rules for all you know. Law is very complex, and regulations have to very complex because if they are simple, then loopholes can be found. You should not be counting the number of pages of regulations, rather you should be judging the quality of those regulations, and this crisis shows that they have seriously deficient and missing.

    “Rater, it’s the kind of thing that forces companies to spend billions of pounds on accountants and lawyers and encourages people to squirrel money away in the Cayman Islands.”

    None of those things cause this crisis. I think I’c rather have companies spend money on lawyers (they already would have the accountants anyway) than have them trading derivatives that are next to worthless and dressed up as “triple A” or whatever. As for the tax havens, don’t make me laugh! They don’t exist because of government regulations forcing them to put their money over their, they exist precisely because of a lack of government regulation outlawing them.

    “A nice, simple tax code should be the aim on any liberal.”

    You are aware that taxes aren’t the only form of regulation? I mean, you do want regulations against, say, dumping massive amounts of pollution into the environment, or building schools with asbestos? Regaulations and taxes shouldn’t be simple for simple’s sake; they should be as complex as they need to be.

    “Compared to a free economy. Compared to how it should be. Compared to perfection.”

    A free economy? You want a free economy? I don’t think you’re a liberal at all: you’re nothing but a libertarian.

  • Apologies for a few spelling mistakes in my comment above. My only excuse is it’s late. I think everything is still clear anyway, except that the practice that they were outlawing with the Community Reinvestment Act was “redlining” not “relining”.

  • Matthew Huntbach 28th Mar '09 - 10:25pm


    Your description of your own political views sounds very similar to mine. So what exactly are we arguing about that you should keep insulting me by accusing me of not thinking or being ignorant?

    Perhaps it is your

    So your definition of economic liberalism comes not from texts or study, but merely from what the media says it is?

    My definition comes from an observation of how the term tends to be used in general, and from the emphases on policy put by those who describe themselves as such. Please do not insult me by claiming that I have not read or studied appropriate texts. I am not a stupid person just because I have some doubts about some of those who use this term of themselves, in particular about their over-willingness to think the only barriers to freedom are those caused by state legislation.

  • David Allen 29th Mar '09 - 5:53pm


    “Markets work. … they are the best and most efficient methods”

    That’s dogmatism.

    Geoffrey Payne

    “Market freedom distorts choice…. Markets fail… Markets are flawed..”

    That’s dogmatism too.

    The market economy sometimes achieves its theoretical capability to optimise resource allocation, and sometimes it doesn’t. We need to look hard at the real world, and find out what works and what doesn’t. We need to be eager to bring in the State when markets fail. We need to be equally eager to throw out the State when it fails, and look for the right ground rules for Government to establish a free market.

    Of course, we then wouldn’t have a beautiful, clear, simple ideological position. We’d have nothing to show for our efforts, except a system that works better.

  • Matthew Huntbach 29th Mar '09 - 9:24pm


    A large number of left leaning people now want to abandon markets, and object to the language of economists, because Thatcher applied bits of liberalism.

    They do? Who are they? Not in the Labour Party, which seems to be very much wedded to the untrammelled free market. Not left-leaning Liberal Democrats like myself, I don’t think market freedoms are the only freedoms that matter, but that doesn’t mean I reject them. I certainly see the freedom to trade as an important aspect of liberalism.


    In the 1980s we specifically defined our liberalism as NOT being “economically liberal”, because that was what Thatcherism was. It is only in the past 10 years that it has become trendy in the party to describe yourself as economically Liberal.

    Yes, I’m aware of that, I have, after all, been a member of the party since the 1970s. The slogan “none shall be enslaved by poverty, ignorance or conformity” was the central one in the pre-amble to the Liberal Party’s constitution, and that sets clearly the idea that there are other barriers to freedom apart from that imposed by the state.

    But I don’t think we said we were “not economically liberal” in the sense of thinking markets were automatically a bad thing. The concern was only that markets where some have a great deal of power due to being wealthy and others have very little power due to being poor weren’t particularly free. That remains my concern, and my concern is that those who are pushing the idea that liberalism should principally be about free market trading pay insufficient attention to that problem, or just hand-wave it off as “all of that will disappear when the revolution comes”.

    I agree with you, however, that since the 1980s there seems to be a growth in the number of people who are in the party and who seem to be pushing lines that were once associated with the right-wing of the Conservative Party: tax is evil, markets where the price is paid in money are the best way to run almost everything.

    In the 1980s it was a staple of the right-wing press to run articles which said we should go that way because that was “true liberalism”, but there were insignificantly small numbers (I don’t remember any) of people in the party who agreed with that.

  • Geoffrey,

    OK, I was being a bit harsh! Actually, you don’t come across as overly dogmatic in what you write. Nor for example does Rob Knight, from the opposite wing of the party. It’s the people who think “practical” is a dirty word that worry me…

  • Matthew Huntbach 30th Mar '09 - 9:24am


    This constant refrain that Margaret Thatcher stole economic liberalism again reminds me so much of the arguments I used to have with Trotskyists. They were full of this idea that Stalin stole Marxist communism and if it were not for him it all would have worked out fine.

    The reality seems to be that it is very easy for the ideas of economic liberalism to be morphed into what is a defence of economic privilege. It is certainly not just Thatcher who did this. It is what seems to have happened across the world everywhere where those entranced by the ideas of writers on classic economic liberalism have got theri hands on power.

    Thus again like Marxist communism – it may be a good idea in theory, but if every time it is tried out in practice it goes wrong due to its capacity to be misinterprted and misused, one must question it.

    I take what you say about land and money monopolies. However, I think your claim that all monopolies are due to government regulation and they would go away if there were no such regulation is a little far-fetched. It does seem to me that the complexity of modern living and economies of scale inevitably mean many goods and services will be provided by large providers, who thereby establish a monopoly. People do shop at the big supermarkets for well-founded reasons, it is not just down to governemnt regulations that street markets and small shops are losing customers and closing down. People do use Microsoft products for well-founded reasons, it is not just down to government regulations that this company came to dominate the market for office software.

    For myself I am pragmatic. I can take some of the lines of the economic liberals as an important contribution to the general idea of liberalism. What I dislike is when there’s an air of fanaticism about them, when these things are put forward as the answer to everything, when those who question how they work in practice as dismissed as fools, when it seems there’s a wish to bend facts to fit the theories rather than vice versa. Again – very much like my arguments with the Trotskyists, which ended up with these people convincing me that I was not a socialist.

  • Matthew Huntbach 31st Mar '09 - 10:37am


    The argument that it is an attack on liberty for the state to have any controls on what the rich may enforce on the poor due to the poor’s need to get the needs to survive are an attack go back MUCH further than Maggie and Ronnie. One may find radical such as William Cobbett fulminating against the hypocrisy of the economic liberals of their day back as long ago as the early 19th century.

    The constant failure of you and others who call themselves “economic liberals” even to recognise the point I am making here is one of those things that puts me off what you are saying. It suggests you have very one-track dogmatic minds which just dismiss anything inconvenient to your neat theories.

    On big supermarkets, sorry but I use them and so do most other people because it is convenient to have a big choice all gathered in one place, where you can just load up and pay for it in one go. To suggest that if it were not for the government forcing us, we would all be shopping at market stalls and mom-and-pop cornershops is, well, nuts. But the sort of nuts we’d expect from some ideologist who’s so enthralled by some simple dogmas that he tries to fit everything into those lines even when anyone with a wider appreciation of how humans work can see it’s nonsense.

    And I say this as someone who actually has a great deal of sympathy for a lot of what you’re saying, as a long-term supporter of LVT for example. It’s your (I mean here not just you, but others who identify themselves as “economic liberals”, in fact you are more thoughtfull than most) readiness to dismiss anyone who raises questions with you as some sort of statist opponent and to shut off any concern about the implications of what you want with “it would be work better if it were more extreme” that’s the problem.

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