What economic liberalism means to me

 

One of the phrases most guaranteed to start a healthy discussion is Economic Liberalism. This is, I feel, due to differing perceptions of what the phrase means.

One that has considerable traction is one that conflates Economic Liberalism with the Economic Liberalisation of Thatcherism and Blairism, which were in turn often driven by neo-liberal ideas. Given the damage many feel neo-liberalism has done economically and socially, I can understand why there is such a visceral reaction to neo-liberalism and thus Economic Liberalism.

To me however Economic Liberalism is very far removed from neo-liberalism. Economic Liberalism means freedom, responsibility, innovation.

Freedom

  • Anyone (individual, business, charity or trust, even government organisations) should be free to trade what they want by way of goods or services, unless national or international law forbids it. The flip side, of course, is that activism against them should be equally free to happen.
  • Laws and regulations are as essential in the economic sphere as in any other. They keep people and the environment safe, prevent or regulate monopolies, and keep business practices ethical. But they should be limited, fair to everyone, proportionate and enforced without bias.
  • Anyone should be free to trade anywhere across the world, with a minimum of tariff and non-tariff barriers (which is why I’m both pro-EU and pro-TTIP), unless the UN votes for sanctions. Free trade, as long as it isn’t exploitative, can benefit everyone involved and should be encouraged.

Responsibility

  • Everyone benefits from society. Taxes aren’t a cost to be minimised, and laws aren’t something to be weaseled round. They are your way of paying back and continuing to get society’s benefits.
  • Employee compliance at the end of a truncheon or P45 and employee closed shops stifling organisations are all relics of the past. No organisation should be trying to economically recreate them. Instead employees and businesses should be working cooperatively for their, and their community’s, benefit.
  • The science is in, and has been for a long time. Climate change is happening and is being caused by human interactions with our natural world. If we want the Earth to remain capable of supporting an incredibly large number of humans then we need to act to maintain that. Which means our economy needs to be restructured to deliver the same, or better, results in a less damaging way.

Innovation

  • Anyone should be encouraged to try new things, to celebrate success, and to be supported in failure. With the freedom to sell anything comes the freedom to identify a missing product or service, to create it and then try to sell it.
  • Technology is advancing all over the world and new scientific discoveries are being made. Our universities (and university towns) should be both a hotbed for new companies at the cutting edge and for new ideas.
  • The first generation of robotics in industry is now mature technology and the second generation of robotics and computer programs in the service industry is about to happen. We should accept that change is coming and help everyone to successfully innovate their way through it.

* Peter Scott Brooks is a Liberal green feminist, geek, and party member since 1997. A PhD chemist now studying accountancy whilst working in local government.

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30 Comments

  • Bill le Breton 9th May '16 - 6:43pm

    Peter Martin, some monetarists might be neoliberals but not all monetarists are. It is perfectly possible – I would say sensible – for social Liberals to be monetarists.

    Clearly FDR was a monetarist in 1933 when he manipulated the price of gold to create inflation and so take a huge step to defeating deflation.

    Modern monetarists believe that the central bank should use its powers to maintain a steady growth in nominal GDP. They point to periods over the last 30 years when NGDP growth has been kept close to 5% in both the US and the UK – giving people confidence about the state of growth in aggregate demand and allowing people and firms to make good decisions. I would have thought social Liberals would welcome this approach.

    BUT Peter Brooks – what Reagan, Thacther and then Blair and I think Laws, Marshall and Clegg favoured was an economy that encouraged self-actualization and inner directedness – by giving people more and more freedom to focused their spending on satisfying their desires for consumption.

    It is just a modern version of a) there is no such thing as society and b) greed is good.

    Certainly the huge public support for such ‘freedom’ is a problem for those who believe that each of us belongs to a larger whole, whose welfare incorporates her own.

    At this level you can’t be both an economic and a social level because economic liberalism diminishes the power of and support for that idea.

    “I am a social animal, you desire the freedom to be are an individual.”

    Where do you stand?

  • David Evershed 9th May '16 - 6:48pm

    Economic liberalism is the ideological belief in organizing the economy on individualist and voluntarist lines, meaning that the greatest possible number of economic decisions are made by individuals and not by governments, collective institutions or organizations.

    Economic liberalism is often associated with support for free markets and private ownership of capital goods, and is usually contrasted with similar ideologies such as social liberalism and social democracy, which generally favour alternative forms of capitalism such as welfare capitalism, state capitalism or mixed economies.

    The Liberals are more inclined to economic liberalism and the Social Democrats are more inclined to social liberalism.

    Hence people don’t know what the Lib Dems stand for. This needs to be put right if we are to compete with Conservative, Labour and UKIP parties that are clearer about what they stand for even if all parties are pragmatic in their actual policies.

  • Graham Evans 9th May '16 - 8:25pm

    @ David Evershed I’m not inclined to accept your claim that social liberalism and social democracy are generally associated with “state capitalism or mixed economies”. Firstly if you want examples of state capitalism you have to look to countries such as Singapore, and I would hardly describe the governing party there as social democratic. Similarly I think most main stream western democratic parties these days would claim to believe in the mixed economy. While I accept that the Liberal Democrats tend not to have a clear identity, this is because in practice, at least until recently, and particularly since 1945, both the Labour and Conservative Parties have sought to broaden their electoral base by pursuing a managerial approach to the economy and to society, even if the rhetoric might suggest otherwise. This leaves little room for a centralist, or non-socialist but left leaning party, to establish a clear identity, and nor, until the Coalition, could the LDs make any claim to being better managers than their opponents. Contrast this with the Canadian Liberals whose politics differ little from our own, but who have a long term record of successful government, enabling them to come back from severe defeat, despite the challenge from the New Democrats. (The Canadian Conservative Party achieved a similar feat some years ago.) True social democracy is actually associated with the social market economy, as exemplified by the German SPD, which however has retained strong links with the trade union movement. Liberals lost this strength when the trade unions decided to establish their own party, the Labour Party, as the beginning of the 20th century. Moreover, globalisation and other factors have severely dented the appeal of the social democrats who now struggle to acheive a vote share of barely 25%.

  • Bill le Breton 9th May '16 - 10:00pm

    Peter “someone who believes almost exclusively in using the powers of the central bank in setting interest rates to control the economy.” is a New Keynesian not a Monetarist.

    New Keynesians believe in the liquidity trap and therefore as your describe it they think the central bank is powerless at the zero lower bound.

    Monetarists do not believe that.

  • Peter Brooks 10th May '16 - 12:46am

    Bill, I would call myself an individual who wants to live in, and would work to support, a social, liberal society. Subsuming myself into a social structure to the extent you describe is not for me but I would make sure an individual has the help to build the social structures and networks should they chose to do so.

  • Peter Brooks 10th May '16 - 1:00am

    Peter, I suspect that several of my points, especially the need to reshape our economy to minimise the impact of global warming, of the need for regulations (and full compliance with them), of the need for organisations to be more cooperative, would all be things many neo-liberals would baulk at. Which areas did you think I was pushing a neo-liberal agenda?

  • “One that has considerable traction is one that conflates Economic Liberalism with the Economic Liberalisation of Thatcherism and Blairism, which were in turn often driven by neo-liberal ideas.”

    It doesn’t “conflate” it, the reason ‘economic liberalism’ is associated with non-liberals, is because that it where it originates. It is neither liberal or good economics. It is not ‘neo(new)-liberalism’ but old Conservatism.

  • Geoffrey Payne 10th May '16 - 7:57am

    The way economic liberalism is defined here seems fair enough. However what are we to think of the David Laws book on the Coalition where he describes Micheal Government nd George Osborne as economic liberals? They happen also to be Thatcherites who want to privatise public services, disregard global warming and slash the welfare state. Nothing in the article refers to the top down management structure that dominates the private sector and which conjures up authoritarian bosses like Alan Sugar and Donald Trump.
    I regret the word Liberalism comes into it. Some forms of economic liberalism are actually authoritarian. In my view economic liberalism should be about empowerment rather than exploitation. Those that call themselves economic liberals usually have a complacent and inadequate critique of capitalism.

  • Bill le Breton 10th May '16 - 8:26am

    Peter – thanks for engaging. I too don’t want to push it too far as the issue of the relationship between economic liberalism and social liberalism is extremely important.

    But the vast majority of economists today would call themselves New Keynesians eg Simon Wren Lewis. There are a few, but very few monetarists. (Then there are the new and growing influence of Market Monetarism.) There are Austrians. But I can’t think that there are any people who would define themselves as Keynesians. Keynesians seem only to exist in the minds of politicians.

    Monetarists really discredited Keynesian economics in the 70s and 80s. The successors of the Keynesians replied by (as you wrote earlier) accepting that it was essential to direct monetary policy via interest rates in pursuit of a target for forecasted inflation.

    My beef is that, by conflating neo-liberalism with monetarism, Liberals become blind to the advantages of monetarism and especially of market monetarism – for which see especially Scott Sumner, David Beckworth and Lars Christensen.

  • Adrian Sanders 10th May '16 - 8:44am

    Bill Le Breton – I think you are going to need to call it something other than monetarism or New Monetarism or people will associate it with the Thatcher era and that closes the ears of a large part of the population.

  • Adrian Sanders

    “you are going to need to call it something other than monetarism or New Monetarism or people will associate it with the Thatcher era and that closes the ears of a large part of the population”

    I think you are over estimating the level of interest of most of the population, most wouldn’t even associate most wouldn’t even have any association with it al all. I would say that only the political geeks would make the association, but actually the true geeks would point out that in the UK it was Callaghan/Healey that really started Monetarist policies in the UK.

    In Economics anyone too rigidly attached to one school of thought may make a good academic by doggedly pursuing their theories and testing it against others criticisms. As a national economic policy sticking to one idea in changing circumstances in spite of new information is not going to generate great policy. We have to do the best with the currently available research, as it develops we have to be open to revaluating our ideas.

  • Bill Le Breton,
    I think what PMs since Thatcher have simply tried to shift as much of public borrowing into private borrowing as possible to make the books look more balanced than they actually are. It’s all based on pushing us plebs into unsustainable levels of debt.

  • Neil Sandison 10th May '16 - 12:24pm

    Tend to agree with Graham Evans that a social market economy is the best model .There is nothing wrong with a mixed economy .There are things the market is better at achieving and there are things the state either through regulation or direct provision is better at achieving and yes sometimes the market is better at delivering socially useful or environmentally desirable outcomes much more rapidly than depending upon the public purse and taxation particularly when it comes to innovation . What we need to get away from is the dogmatism of private good public bad so much loved by the conservatives .Perhaps we should remind them that it was the public purse that bailed out the banks and kept our economy going when the conservative brand of neo-liberalism failed so spectacularly.

  • Adrian Sanders 10th May '16 - 12:56pm

    Psi I’m a campaigner not an economist. If any opponent described their economic policy as monetarist I’d be faced with a choice. Spend two paragraphs as you have done pointing out what it really means, or call it Thatcherite. Which do you think our opponents will choose?

  • Simon Banks 10th May '16 - 4:58pm

    Plenty I agreed with in the article, but I think it doesn’t address some key issues. Social Liberalism, which, David Evershed, is not Social Democracy, recognises that humans are social animals and reach self-realisation and liberation with others in love and community. It rejects atomistic “economic liberalism” that treats all human decisions as if they’re purchasing decisions in the market and views co-operative organisations with disdain. Peter is quite right to carve out a characterisation of economic liberalism distinct from Thatcherism or even, in my view, from Browneism, but no definition of economic liberalism can be a complete definition of Liberalism. Between the kind of economic liberalism Peter advances and social liberalism there is no sharp divide, which is why David Evershed is way off the mark. People are confused about what we stand for because of two main reasons: one, that they’ve been schooled to think of politics purely in binary, right-left, Tory-Labour terms, by which by definition we’re confusing and “neither one thing nor the other” and two, because where our identity is clearest, on civil liberties, devolving all the way including to individuals where possible and on the environment, the performance of the coalition plus waffly centrist talk confused them.

  • Bill le Breton 10th May '16 - 5:13pm

    Psi, I had the good fortune to be taught by the guy (ex Bank of England) who ‘taught’ Callaghan in No10.

    What we need to understand is that the problem in the 1970s was inflation. Today the problem is deflation or endemic disinflation.

    Monetarism in the 70s did bring down inflation and monetary policy is the only way to tackle deflation.

    Those 70s monetarists focused on reducing the money supply and were directed by a fairly simple equation. The change in the money supply = the PSBR + change in commercial bank lending to the non bank private sector – the change in non-bank private sector lending to the public sector + the overseas impact on the money supply.

    Hence the focus on reducing the PSBR by reducing government expenditure. By reducing the funding of the PSBR by ‘printing money’ ie that part not funded by the sale of Gilts. And also by the overseas impact the money supply.

    Of course the equation works is you want to increase the money supply as well as if you want to decrease the money supply. Which is why once central bankers had inflation under control they stopped telling politicians about the equation.

  • Bill le Breton 10th May '16 - 5:30pm

    One can appreciate the problem Adrian has with it. But then we have spent close to a lost decade and Japan is into its third lost decade. Social tensions have increased, intergenerational strife, the Eastern bloc of the EU is electing far right governments and the PIGS are suffering enormous volumes of unemployment amongst young people.

    Meanwhile the world slowly adapts to an environment in which everyone thinks that increases in aggregate demand (Nominal GDP) will remain subdued and well under trend increase levels. That means fewer tax receipts and more and more pressure on services which we Liberal Democrats wish to see.

    For those willing to think the unthinkable …

  • Adrian Sanders 10th May '16 - 5:43pm

    I can think the unthinkable Bill, it’s the thinkable that worries me, and finding another title for this new/old economics would be very helpful:)-

  • Lorenzo Cherin 10th May '16 - 6:19pm

    Very good comments and approaches.

    Understand what Adrian means about the implications of the words associated with Thatcherism , and obviously listen on this to others knowledgable above , sensible debate!

    Cannot here agree with David Evershed , his putting and pitting, social liberalism and social democracy , and indeed economic liberalism , in the way he does is wrong , all these can and do work well together in different circumstances.

    Agree with those like Simon , Geoffrey , etc

    We must be staunch proponents of a social , liberal ,market, economics, where the small is often beautiful , but the big is fine when it is good and just and plays by the rules .That means our Liberal belief in the rule of law extended into the market place , to mean playing by the rules of economic justice that is in tune with social justice. Any big business playing by those rules is an example to work with and to.Business is our friend when friendly .When not it is not .It is no different to what our attitude should be to organisations in the public sector .There is no justice for the patient or pupil let down,terribly , by neglect or complacency , life itself ,or life chances ,ruined.
    All are our friends when friendly .

    We must be against the law of the jungle .For too long free trade has been seen as unfair trade, by those who are progressive .It is not free trade at all, often , but , as many on the centre left in the U.S. call it , socialism for the rich !Biggest subsidies for the most powerful industries , especially the banks and the worst offending factory farming giants .Small, often ethical and environmentally sound ones , on such a yardstick , losing out.

    We must advocate a dynamic , enterprising economics , creative , innovative , free and really free , which means fair too.

  • David Evershed 10th May '16 - 7:41pm

    Many good thoughts in the comments.

    If our party is to be distinctive we need to be seen as different from other parties.

    So there seems no point in having Democrats in our party name since all the other parties are also democrats. Indeed it seems only non democratic republics put democrat in their title. 🙂

    So let’s call ourselves the Liberal party and be clearer about what we can agree it means.

  • Lorenzo Cherin 11th May '16 - 12:21am

    David Evershed
    I disagree with you on our party name .None of the other parties are Democrats !!!
    I would be very upset to eliminate Democrat ,as would very many in our party .That
    is not a way of uniting with colleagues older than me who pre merger gave service to our party history and do yet.I admire those stalwarts.

    I say it often.It is that very word Democrat ,or Democratic , being in our name, that is our distinctiveness .It baffles me when people cannot see it as something to cherish . And it is because of our ,in part , Social Democratic background ,which you cannot wipe out of our history or the present .The word we should emphasise , more than we have , to the wider electorate is Democratic ,it has an inbuilt empathy with the electorate, the very reason for each election being so vital,and I say that as someone who considers myself a strong Liberal.The very thing we should promote often , is our belief in democracy , social or any , for others say it and don t mean it .We could have called the recent initiative Your Liberal , Democratic , Britain .By all means let us celebrate Liberal , I do , and am with a new venture within our party , for Liberalism is ours ,but at large , and in elections , let us be Democrats too !

    And on your point about parties in dictatorships using it , the Democrats in the USA, and Democratic Alliance , our sister party in South Africa, are amongst the finest political parties in the world .Plus the D, in D66 , our very, nearly, closest sister party in Europe stands for DEMOCRATS ! And France , the Democratic Movement ,, the party of our terrific fellow Liberal , Francois Bayrou. I think as many or more of our colleagues are calling themselves , only Democrats.

    If we had a name change for branding or re branding can you remember a thing called New Labour ?What happened ?

    Any real change to the name would have to stand for something far better than the removal of Democracy ! Only Alliance , as in SDPLiberal Alliance , ALDE ,
    and our Northern Ireland colleagues would work in my view.

    Also ,there is a rump “Liberal”party, it still carries on , with hardly any support .Now that is not a good starting point for unity .

    Could otherwise sensible people leave it be.

  • Neil Sandison 11th May '16 - 9:46am

    David Evershed Don’t start that hare running again .We are the Liberal Democrats deal with it . Lets keep this conversation to the point and develop a viable economical narrative between economic liberalism and a social market economy.

  • @David Evershed it’s good to see an article on something of real substance and importance, and great to see someone who “gets” economic liberalism.

    Regarding the neo-liberal point, many people who are natural statists (and not a few in our party) conflate neo-liberal and economic liberalism which are, as you rightly point out, separate and distinct, with “bad”, “Tory”, “Thatcherite” in some sort of knee-jerk mantra designed to identify the heretics to be excluded. So it’s good that you show where it is distinct.

    I also agree that we should reclaim the word “Liberal” for our party, and all of the four corners that it stands for.

  • Bill le Breton 12th May '16 - 3:14pm

    Calling @petermartoin2001.
    Thought you might be interested in this: and anyone else who doesn’t understand the relationship between Keynes, Friedman and Liberalism: https://uneasymoney.com/2016/04/26/whats-wrong-with-monetarism/

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