Wednesday 25 June 2014

Liberal free trade is not conservative free trade

Orange_BookFor years, I have been arguing that there is no real division inside the Lib Dems, who are (in my characterisation) – both the Orange Bookers and the Social Liberal Forum – uniformly uninterested in economics, its constraints or its possibilities.

But I went to the Orange Book knees-up conference yesterday, run by CentreForum, and have begun to realise that I have been wrong all this time. And on nearly all counts.

For one thing, listening to David Laws - the co-editor of the original collection of essays - I realised that he is certainly interested in economics. He may see things differently to me, but he is definitely interested, and (despite the way he is portrayed) interested in how you mesh together social and economic liberalism.  As I am.

For another thing, there is clearly a division. It is an irritating one, between two different kinds of economic conservatism, but you only had to look around the conference to realise the division was there. There was a handful of us not in the grey suits and ties of the Westminster mafia, but not many of us. Yes, there is a divide. I got it wrong.

Because I am always hopelessly late, I missed the first symposium about free trade. I had hoped somebody would try and define free market economic liberalism as distinct from free market economic conservatism. I gather that the only person who did so at all was Tim Montgomerie, former editor of Conservative Home.

But I listened closely to David Laws, and with respect – because he is a thoughtful politician, and there are not many of them.

He is also clearly a Liberal in his understanding of the constraints that poverty and social deprivation impose on open markets. He understands that, and ought to get more credit for it than he does – and his record at the Department for Education will bear this out.

But there are three weaknesses of ‘Orange Book Liberalism’ as he defines it.

1. Save to invest, which Laws says is a key principle, clearly implies investing to save. But it is ‘invest to save’ that is the really big Liberal idea, and where the difficulties are and which needs wrestling with. For those of us Liberals who still believe in thrift – a defining feature as far as I’m concerned – then investing to save is absolutely crucial. It has to be if it is going to prevent public services from being overwhelmed by need.

2. Choice and competition. This emerged in the debate rather often as two sides of the same coin, but – when they are linked together like that, as if they meant the same – they are both defined vaguely. One of the reasons that choice seems to me to have got so stuck under the coalition is because it is not defined precisely enough.

3. Monopoly. Here we get to the nub of it. By their failure to develop the Liberal understanding of free trade over the past two generations, it seems to me Liberals have allowed a their idea to slip out of their hands, and into the hands of those who believe it is just about deregulation. The prevailing understanding of free trade is dominated by American conservatives. Liberal free trade, the original version, is all about tackling the tyranny of monopoly, state or private. The prevailing interpretation of free trade, as understood by the IEA for example, is far too cosy to private monopoly, and – by letting monopoly off the hook – is not really free trade at all.

Liberal free trade is about enterprise, innovation and imagination. It is about the right of the small to challenge the big. It is not about giving absolute power to the wealthy and powerful. Quite the reverse. But who is articulating the Liberal interpretation of free trade?  I'm not sure I heard it articulated yesterday.

There was a telling moment when David Laws said that, unlike previous economic collapses, the 2008 crisis did not lead to an insurgent new understanding of economics. I have been wondering about this ever since, because he is both right and wrong.

It is quite wrong that there is no challenge to the prevailing, broken understanding of economics shared by the Whitehall machine. The combination of Piketty’s concern about equality and the emergence of the sharing economy is powerful but, so far, incoherent.

And yet, and yet, the sharing economy - the resurgence of mutualism in its broadest sense - is an example of precisely the kind of insurgent economic liberalism that I am talking about. But did the suited wonks in the room recognise that?  Had the hard-faced men who-had-done-well-out-of-the-coalition ever heard of it?

Because I find that, when I’m told that there is no emerging alternative in a room full of Westminster suits, all my contrarian instincts begin to emerge....


Gordon said...

Thanks for returning to the subject of free trade. It stimulated connections that had been lying around half-formed in my mind.

The best description the Lib Dems seem able to come up with for what they're all about is "fairness". That's fine to a point but talk to any ordinary decent Conservative and you will soon find that they also pride themselves on the centrality of "fairness" in their thinking.

This works because each group has its own definition of "fairness". For Lib Dems it means a degree of equality, especially of opportunity; for Conservatives it's about keeping the hard-won fruits of one's own labour and not having to subsidise the "work-shy".

Much the same is true of "freedom". For Lib Dems this is taken to mean freedom for individuals; for Conservatives, especially economic Conservatives (and also it seems for economic liberals), it means freedom for capital (e.g. from pesky regulations and tax).

Similarly, to circle at last back to your post, "free markets" can mean free in the sense of being kept open to challenge or free in the sense of unfettered by regulation.

In short, these are all Humpty-Dumpty words that means whatever the speaker wants them to mean.

If the Lib Dems want to do rather better than current abysmal polling suggests they must tackle a long list of issues top of which is that political economy matters and that to get to square one of that you first have to understand the meaning of words.

Gordon said...

"There was a telling moment when David Laws said that, unlike previous economic collapses, the 2008 crisis did not lead to an insurgent new understanding of economics".

Wow! Either he's been living under a rock for the last few years (unlikely) or the Westminster Village is even more isolated than I thought.

Try this short video for just a flavour of some of the better thinking out there.