David Laws, neoliberalism, and concentration of power

Calling someone a neoliberal is rarely a sign of agreement or a term of endearment. It is one of those terms that’s only ever used pejoratively. It’s hard to think of anyone who would choose to classify themselves as a neoliberal. The definition of neoliberalism is quite fluid and contested, but no one uses the label as a sign of approbation.

So when David Laws was branded a neoliberal in the comment thread on a recent post at Liberal Democrat Voice a few supporters sought to defend his honour. The majority of the commenters, on the other hand, were less complimentary about him and his ideas. And there was some negativity about the possibility of his returning to government. Everyone agrees he’s a jolly clever chap. But many see him as the poster boy for the Orange Book Tendency and, as such, a malign influence within the Liberal Democrats. He seems reasonably comfortable with the Orange Book label and that it betokens a faction within the party. Indeed it is one he seems to relish.

But is he a neoliberal?

It depends on where you think the boundaries of various branches of thought lie. Does economic liberalism unleavened by social liberalism equal neoliberalism? Quite possibly. And how does that relate to classical liberalism or libertarianism? Neoliberalism can be taken to refer to those who evince an unshakable faith in the power and beneficence of markets. It can refer to those who believe that governments have no role in activist fiscal policy or redistribution, rather they should restrict themselves of deregulatory supply side measures. The working assumption is that all regulation should be viewed as a manifestation of sectional private interest or wrongheadedness, rather than the public interest. Public services should be marketised and privatised as far as possible. The state should be viewed as a malign influence and its size should be minimised.

Another aspect of neoliberalism is persistence in arguing for competition and choice in markets, while failing to recognise that in reality we live in a corporate economy. A discourse of the individual and choice is used to promote policy change, but acts as a smokescreen for a process which in fact leads to the concentration of economic power in the hands of the few. As economic and political power become increasingly entwined the corruption of the political process follows. I discuss this in a slightly different context here. This is an argument developed more fully by Colin Crouch.

But is this a fair characterisation of Laws’ views? Clearly some aspects of it accord with his public pronouncements, in his role as the Tories’ favourite Lib Dem. But I couldn’t say for sure.

There are others who take the view if it looks like a duck, swims like a duck, and quacks like a duck, then it’s probably a duck.

This debate has arisen with the advent of the most recent issue of Economic Affairs (subscription required), which is a special issue reflecting on the Orange Book eight years on. It is an interesting issue, and features a final essay by Laws addressing both the impact of the Orange Book and what a future agenda inspired by it might look like. If you can get access to the journal it is well worth reading all the essays. Of course, it is important to keep them in context. Economic Affairs is published by the IEA and as such it has a clear agenda to promote an unremittingly positive view of free markets and an equally pathologically negative view of the role of the state. Some of the essays are clearly written with this in mind.

There is much that is fascinating about these essays, not all of it, perhaps, entirely what the authors intended.

The collection seeks to create a narrative. It constructs the revival of classical liberalism as a small group of true believers battling to reclaim a liberal heritage from “socialism” within the party. The authors are rather unclear whether the party membership as a whole was in thrall to socialism. Or whether a small coterie of closet socialists had turned up at Conference and forced the party to adopt collectivist policies based upon a benign view of the state, redistribution and regulation against its better judgement. Either way, we should be grateful that Laws and the economic liberals have ridden to the rescue, returning the party to an older, purer liberalism founded on individualism, deregulation, choice and markets. And having little truck with progressive taxation, redistribution, state provision of services, or any other socialist claptrap.

Perhaps understandably, the authors don’t examine the possibility that the rise of the Orange Book Tendency in fact represents a small coterie of closet neoliberals turning up at Conference and forcing the party to adopt undiluted economic liberal policies against its better judgement. That is a version of recent history that might find more favour among the Lib Dem activitist base.

The authors’ construction of Orange Bookery as a return to true liberalism is certainly one view of what has happened. To see this as an entirely positive step requires us to ignore the fact that the party has its roots in both social liberalism and social democracy, as Spring Conference 2011 reaffirmed unanimously (that would be those cursed socialists again).

Perhaps the two most interesting aspects of the collection are the narratives of modernisation and maturity.

The ascendency of Orange Book Tendency is viewed not simply as recovering some lost verities, but also as a process of modernisation. The term “moderniser” here is used in the way that the Blairites applied it to Labour: slough off any remnants of social democracy and embrace free market economics. Move to the right. When Laws comments on future directions for the Liberal Democrats he states that:

we must keep the faith with economic liberalism, notwithstanding the problems in the global economy since 2007. Free market capitalism, including competition, consumer power and private sector innovation offer the best prospect for increasing wealth and reducing poverty and poor living conditions – including in the developing world … Government’s role should remain focused on creating the right conditions for growth – economic stability, good infrastructure, low inflation, competitive taxes and efficient markets.

Some of the statements made by the authors in this collection strike me as extraordinarily dogmatic. The implosion of the Anglo-American model of deregulated capitalism that we have just witnessed cannot be dismissed with a “notwithstanding”. The model is fundamentally broken. It needs to be rebuilt. The more enlightened members of the economics profession have recognised this. And several have identified the massive income and wealth inequalities that has followed on from the naïve prescriptions of economic liberals as one of the most pressing issues holding back both economic growth and social mobility. Yet the contributors to this collection are peddling the line that redistributive taxation or taxes on wealth – or indeed any attempt to address inequalities beyond interventions in education – are not truly liberal.

It would appear that when we are seeking to balance the fundamental values of liberty, equality and community the appropriate balance is to place almost all the weight on liberty, a very small amount on equality – of opportunity but never outcome – and none at all on community. If the poor are to benefit then it would appear it is to be via the zombie economics of trickle down. We’ve been reading our own constitution wrong.

Truly modernising economic thinking within the Liberal Democrats would move beyond these failed models – not keep faith with them.

The people who continue to cleave unquestioningly to the free market faith are those of the Mont Perelin persuasion. One of the pieces in the collection suggests the reader pursue the arguments in favour of deregulation and reining in the state by consulting materials presented by the Cato Institute and the Heritage Foundation. These are libertarian think tanks on an ideological crusade to promote free market economics for all occasions and at all costs. The idea that the Liberal Democrats should look to them for lessons on anything is, frankly, bizarre. Anything and everything emanating from those sources should be treated with extreme scepticism.

The collection also constructs the history of the party as a process of maturation. And here it seems to me it raises some serious questions. The contribution by Sanderson-Nash divides the chronology of the party’s history into four phases: learning to walk (1988-1997), adolescence (1997-2006), coming of age (2006-2010); maturity. The rise of the Orange Book Tendency heralds maturity, apparently. Some of the ideas held by the party up until that stage were rather jejune; the naivety of youth. Views to grow out of as you grow up. But maturity isn’t equated simply with the ideology of economic liberalism. It is also associated with changes to the party machinery that have accompanied it. There has been “professionalization”. And there has been a concentration of power at the top, a process that has if anything accelerated since the advent of the Coalition. As Sanderson-Nash observes:

Factions, competing elites, and leadership strength, whether a welcome development or not, seem to be the mark of a mature professional political party.

Most members and activists in the Liberal Democrats would probably recognise this component of the analysis. And they would see it as a bad thing. Growing centralisation represents a betrayal of the democratic, federal structure of the party. It destroys one of the unique and most precious of the party’s tradition.

The framing of the narrative in terms of the lifecycle is an interesting rhetorical strategy. It seeks to create the impression that this is all a natural and irreversible process. We all age, one day at a time. It’s pointless to question; impossible to resist.

Sanderson-Nash continues (p14):

The Orange Book invited scrutiny of the executive wing of the party, as part of a wider strategy to gain power, and one that proved both successful in Clegg’s leadership election, and salient, as the 2010 coalition proved. To continue along this path and maintain the flexibility necessary to negotiate coalitions in future, Clegg is likely to want to make the party more like its rivals, and reform the elected committees that have the potential to cause obstruction, making a turn to the right, or in theory to the left, a secondary factor to the important goal of holding office.

While activists may view the prospect of a leadership let loose with concern, for the Orange Book Tendency it appears that the progressive disenfranchisement of the membership is to be welcomed. It means we’re getting serious about politics. The stark terms in which this point is made are, to me at least, rather alarming. Papworth writes:

Conference … has a built-in tendency to load regulatory burdens and spending promises on the leadership … it is only once the leadership can ignore the uncosted spending promises and burdensome regulatory demands of the activists that it can present itself as a credible governing party.

If this is in any way an accurate portrayal of the intentions of the current leadership then it would seem to pose serious questions for the party, and for anyone within it who doesn’t welcome a further concentration of power. There are some in the party who are looking to a post-Clegg future and hoping that the party will swing back to the sorts of priorities that it held pre-Clegg. These are the priorities that they are more comfortable with. That vision of the future depends in part on the leadership not reshaping the internal governance of the party in a way that allows the membership to be ignored and a self-perpetuating and unrepresentative oligarchy to be created.

Of course, the line being taken in this collection may not represent the plans of the leadership. The authors may simply have the objective of seeking to implant ideas or steel resolve: to seek to encourage the leadership to pursue the strategy favoured by a small concentrated interest group.

A coterie of closet libertarians seeking to shape the party to their preferred image? Such a conclusion would not be fair. But from this collection of essays it is hard to detect the social liberalism that leavens the economic liberalism.

And we know what that could equal.

Image: Liberal Democrats via flicker (under a Creative Commons licence)

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3 replies »

  1. You write eloquently and passionately, but cynically and making derogatory aspersions that you know to be unsubstantiated and unfair. Regrettable, you could use such powers for good.

    • Andrew, thank you for your comment.

      Is my post cynical? To a large degree it simply turns the logic of the arguments presented in some of the EA essays back on itself, and uses repetition of the same rhetorical forms to reinforce the point. You might well argue that it has something of the “et quoque” about it.

      Given that the fundamental building block of conventional economic theory – the one that delivers the conclusion that markets are welfare maximising – is that welfare is maximised when people pursue their own self-interest then presumably from the perspective of the OBT everyone should be expected to be cynical, and that is to be applauded. Much of the critique of homo economicus as the basis for analysis revolves around precisely the inadequacy of this type of modelling.

      I’m not sure which passages of my post you thought constituted unsubstantiated derogatory aspersions, but, again, that wasn’t my intention. The conclusions I have drawn are based on reading the articles. I have used quotes to illustrate the points I wanted to make. Those quotes are verbatim. There are plenty more I could have included to support my case – for example on the desirability of reducing the role of the state or of supply side deregulation; the undesirability of redistribution; the foolishness of liberal democrats who take a positive view of the state – but as a blogpost it was already quite long.

      Someone may say that I have misinterpreted what those articles are saying or the intention that lies behind it. That is undoubtedly possible, although I have tried to construe the arguments as carefully as I could.

      It could be argued that those particular authors are not representative of the OBT more generally – that these pieces are out on a limb, perhaps because of the audience they are writing for. It could be argued that the ‘mainstream’ of the OBT – if such a thing exists – strikes a different balance between economic liberalism and social liberalism; one that has a greater slice of social liberalism in it. That is, of course, possible. The original Orange Book itself contains chapters that were much less “Orange Book” than many people might suspect – they are much closer to well-established and long-held positions within the Liberal Democrats. David Laws in his contribution to the EA volume identifies his Orange Book chapter on health reform as the most controversial and, at the same time, the closest to what he thinks Orange Bookery should be all about (perhaps not surprisingly). So I don’t think I’m being unfair.