What is liberalism?

Whatever it is, there’s more to it than David Laws would have you believe.

I was irritated by a piece Julian Glover wrote in the Guardian last week and meant to blog about it. An excellent post by Stuart White over at Next Left gives me an excuse to do so belatedly.

Glover was upbraiding Andrew Adonis, whom he described as "a liberal shoehorned into a statist party for the achievement of political purpose", for daring to criticise the decision by the Liberal Democrats to enter into a coalition with the Tories. Adonis had described the coalition as "unprincipled"; Glover appeared to suggest that there was no philosophical basis to Adonis's attack:

The differences within parties have often been as great as the differences between them. Adonis, a former Lib Dem, knows that. His objection -- like the predictable complaints of those Scottish former leaders Kennedy and Steel -- is not that Clegg did a deal, but that he did one with the wrong side. It is striking how the most vocal Labour critics of the coalition are New Labour: as if they mourn being cast adrift in a party whose deeper instincts they know only too well.

Yet the Lib Dem leader got better and more reliable terms from the Tories than he could have [had] from Labour; and, more than that, he has formed a government of broad ideological coherence, which he could not have done with an interim administration led by Gordon Brown.

This is, at its core, as much a liberal administration as a Tory one, joined by a shared scepticism about the effectiveness and financial sustainability of the centralised state.

There's a rather narrow understanding of liberalism implied here, though it is one that is consistent with that of the Orange Book faction of the Lib Dems, who, in the persons of David Laws and Nick Clegg himself, now hold sway in the party (and, indeed, in the coalition). Stuart White offers an excellent summary of this strain of contemporary liberalism:

Their thinking rests on some definite, strong -- albeit rather unexamined -- philosophical assumptions. Reading someone like David Laws, for example, there is at times a clear sense that the free market produces a distribution of income and wealth which is a kind of natural or moral baseline. It is departures from the baseline that have to be justified. Laws and other Orange Bookers are of course not libertarians, so they are prepared to allow that some departures -- some tax-transfers/tax-service arrangements -- can be justified. (This is the sense in which they remain social liberals, albeit not egalitarian ones.) But the presumption, for Laws, is clearly for "leaving money in people's pockets".

White's most important point is that there are resources in contemporary liberal political philosophy for a much more egalitarian, redistributive vision -- a vision of social justice, in other words. The basic assumptions of Orange Book liberalism, White says,

run completely counter to one of the basic claims of contemporary liberalism as developed in the work of such as Rawls, Dworkin and Ackerman.

For these thinkers, the "free market" is simply one possible "basic structure" for society along with an indefinite range of other possibilities. It has no morally privileged position. So how do we choose which "basic structure" to have? Their answer is that we try to identify principles of social justice and then design a basic structure -- including, if necessary, appropriate tax-transfer arrangements -- to achieve justice so understood. On this view, taxation and "redistribution" are not invasions into people's pockets, a taking of what is presumptively already, primevally "theirs". Tax transfers are a way of ensuring that people do not pocket, through the market, more (or less) than they are genuinely entitled to. Tax-transfer schemes define entitlement; they do not invade it.

Simplifying a little, one might say that for these liberal thinkers, it is not the free market that is the appropriate, morally relevant baseline, but equality: it is movement away from equality that has to be justified, not movement away from a free-market distribution.

And, Glover's little lesson in history and philosophy notwithstanding, this is something Andrew Adonis understands very well; though he is less likely to invoke Rawls, Dworkin or Ackerman than the great "social liberals" of the early 20th century -- men like J A Hobson or L T Hobhouse. As Hobhouse put it in his 1911 masterpiece, Liberalism, "The 'right to work' and the right to a 'living wage' are just as valid as the rights of person or property."

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Jonathan Derbyshire is Managing Editor of Prospect. He was formerly Culture Editor of the New Statesman.

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There are risks as well as opportunities ahead for George Osborne

The Chancellor is in a tight spot, but expect his political wiles to be on full display, says Spencer Thompson.

The most significant fiscal event of this parliament will take place in late November, when the Chancellor presents the spending review setting out his plans for funding government departments over the next four years. This week, across Whitehall and up and down the country, ministers, lobbyists, advocacy groups and town halls are busily finalising their pitches ahead of Friday’s deadline for submissions to the review

It is difficult to overstate the challenge faced by the Chancellor. Under his current spending forecast and planned protections for the NHS, schools, defence and international aid spending, other areas of government will need to be cut by 16.4 per cent in real terms between 2015/16 and 2019/20. Focusing on services spending outside of protected areas, the cumulative cut will reach 26.5 per cent. Despite this, the Chancellor nonetheless has significant room for manoeuvre.

Firstly, under plans unveiled at the budget, the government intends to expand capital investment significantly in both 2018-19 and 2019-20. Over the last parliament capital spending was cut by around a quarter, but between now and 2019-20 it will grow by almost 20 per cent. How this growth in spending should be distributed across departments and between investment projects should be at the heart of the spending review.

In a paper published on Monday, we highlighted three urgent priorities for any additional capital spending: re-balancing transport investment away from London and the greater South East towards the North of England, a £2bn per year boost in public spending on housebuilding, and £1bn of extra investment per year in energy efficiency improvements for fuel-poor households.

Secondly, despite the tough fiscal environment, the Chancellor has the scope to fund a range of areas of policy in dire need of extra resources. These include social care, where rising costs at a time of falling resources are set to generate a severe funding squeeze for local government, 16-19 education, where many 6th-form and FE colleges are at risk of great financial difficulty, and funding a guaranteed paid job for young people in long-term unemployment. Our paper suggests a range of options for how to put these and other areas of policy on a sustainable funding footing.

There is a political angle to this as well. The Conservatives are keen to be seen as a party representing all working people, as shown by the "blue-collar Conservatism" agenda. In addition, the spending review offers the Conservative party the opportunity to return to ‘Compassionate Conservatism’ as a going concern.  If they are truly serious about being seen in this light, this should be reflected in a social investment agenda pursued through the spending review that promotes employment and secures a future for public services outside the NHS and schools.

This will come at a cost, however. In our paper, we show how the Chancellor could fund our package of proposed policies without increasing the pain on other areas of government, while remaining consistent with the government’s fiscal rules that require him to reach a surplus on overall government borrowing by 2019-20. We do not agree that the Government needs to reach a surplus in that year. But given this target wont be scrapped ahead of the spending review, we suggest that he should target a slightly lower surplus in 2019/20 of £7bn, with the deficit the year before being £2bn higher. In addition, we propose several revenue-raising measures in line with recent government tax policy that together would unlock an additional £5bn of resource for government departments.

Make no mistake, this will be a tough settlement for government departments and for public services. But the Chancellor does have a range of options open as he plans the upcoming spending review. Expect his reputation as a highly political Chancellor to be on full display.

Spencer Thompson is economic analyst at IPPR