The paradoxes of Liberal Democrat identity: a way forward

When this piece first appeared in LibDemVoice, I entitled it "Moving On", which was a terrible subject line. It gives no clue about what followed and doesn't inspire the prospective reader to look either.

I think today's subject line is much better, although it probably claims too much.

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These days we Liberal Democrats often divide ourselves, broadly and crudely, into “economic liberals” and “social liberals”. Economic liberals tend to start from the market, prioritising entrepreneurship, low taxes and preventing state interference. Social liberals tend to start from human rights and social justice, usually assuming a greater level of taxation and regulation, and thus of state activity, than economic liberals. But there is a substantial overlap in belief, and the crude characterisation of the last two sentences by no means describes all liberals.

The labels are as traditional as the idea, and I suspect have ceased to be useful as the world has changed so significantly since the days when they were forged. In fact in some ways I suggest that they are actively unhelpful. I have not met a social liberal who does not want a functioning market. Many economic liberals value social justice highly, although I have met too many who have difficulty accepting that individual freedom is a higher goal than maximum market efficiency.

Liberalism begins with the freedom of the individual. When liberalism first cohered, the most substantial threat to personal freedom came from the powers that be – the church or the state, the state being in the form of a monarch, an oligarchy, or even an alleged democracy like nineteenth century Britain.

It made sense at the dawn of liberalism, and it still makes some sense now, to link personal freedoms with freedom to transact. In other words, free markets made free people. For much of the history of liberalism that worked. It was possible for selfish actors to manipulate markets, and for the world to remain seriously unequal, but the downside of markets was more than made up for by the diminution of the dominance of the state and the sway it held over people’s lives. The key force to be aware of, and to guard against, was the force of political power, backed up ultimately by the state’s monopoly of the use of violence on a basis that was claimed to be legitimate. (For the purpose of this argument I am ignoring ecclesiastical power despite its persistence. Churches still retain much power e.g. the maintenance of the Lords Spiritual in this country, the spread of megachurches with cult-like characteristics in the USA and many southern countries, the rise of “Christian” nationalism. But, while they can wield great power over individuals and communities, their power globally is much more limited than it used to be.)

Two arguments were deployed if markets worked to the detriment of individuals. The first was that while some suffered, society at large benefited because markets mostly saw to it that populations prospered. (A rising tide lifts all boats.) The second was that the excesses of markets could be tamed through formal (legislation) and informal (consumer power) means.

The world now is different. It has become steadily more different since the rise of globalisation in the eighties, and in particular the impetus given to that movement by the neoliberal policies of Ronald Reagan and Margaret Thatcher. Now markets are globally dominant, and a few individuals and companies dominate the market. Indeed, such is the imbalance of power that any relationship between labour and profit has been broken. (The rising tide no longer lifts all boats.) Current wealth has such a force of gravity that it attracts more wealth to itself, and is largely in the hands of people who want to leave as little as possible to the rest of us. Markets affect the lives of everyone around the whole planet in ways that state power finds hard to match, even when projected by Donald Trump.

In such a world, the link between market freedom and individual freedom has not quite been broken but is more tenuous than at any previous time. It is legitimate to hold a view that the fundamental engine of a viable society is a free market, and to position that as the bedrock of policy positions. But that view can no longer be called liberal, because current market power is such that it can no longer be held to be unproblematically good. For instance, the UK markets in housing, energy and water have made conditions for most of us poorer and nastier in recent years.

Perhaps it is time for liberalism to centre itself fully on the liberty of the individual, ensuring that all policies flow from that and to regard markets, as well as the state, as forces to be tamed for the good of the people.