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by Hans Dembowski

What The Economist gets wrong about liberalism

On its current cover, the London-based magazine The Economist celebrates its 175th birthday. The issue includes a long essay on the merits of liberalism, the worldview which The Economist wholeheartedly endorses. Unfortunately, the essay shies away from dealing with the crucial inherent contradiction of liberalism: does it emphasize free markets or equal opportunity? What is more important: the private interests of the “bourgeois” or the public good demanded by the “citoyen”?

The essay ( is meant to rally liberals around the world in defence of values such as democracy, entrepreneurship free, civil rights, rule of law and peaceful dispute settlement. It praises the multilateral world order and expresses criticism of nationalist populism. These are worthy causes. The problem I have with this appeal, however, is that liberals are not a coherent political force.

In North America, liberalism stands for social protection, civil rights and government intervention in markets. In Australia or Germany, however, liberal parties habitually argue that the market beats the state and keep on demanding lower taxes.

Whoever wrote the essay in The Economist is aware of this tension. After all, he or she admits that the term liberalism stands for left-wing faith in big government in the USA, but for free-market fundamentalism in France. If this tension is not resolved, liberalism can plainly not serve as a coherent policy agenda.

Liberal philosophy was born in the 19th century. It was an ideology that attacked the aristocracy, denying the nobility its privileges and insisting on a merit-based order. Its proponents argued that individuals should be free to pursue their interests, define those interests themselves and not be restricted by governments. Free enterprise was at the heart of the budding ideology, which reflected the growing economic and political power of industrial entrepreneurs. Liberalism is a child of the Industrial Revolution.

As we know today, the aristocracy lost that big class struggle of the 19th century. All western societies have become capitalist democracies. Some countries, like Britain or Denmark, still are nominal monarchies, but political power rests with elected parliaments, with all adult citizens - whether male or female - being entitled to vote.

Liberalism is no longer an ideology that promotes the interests of insurgent bourgeoisie against an entrenched nobility. When it served that purpose, the interests of the bourgeois, the property owning and capital investing individual, were aligned with those of the citoyen, the citizen who, in the words of the French Revolution, demands liberty, equality and brotherhood.

As private-sector companies became ever more important and evermore influential, political conflicts increasingly revolved around their power. State institutions were gradually made more democratic. Eventually, they served the public interest rather than those of the noblemen. They also serve to regulate markets and corporations, when and where that was necessary to protect the public good. Social inclusion depends on social protection systems. Experience shows that market dynamics neither prevent mass poverty nor do they prevent environmental damage. Indeed, unregulated markets tend to result in both.

Over the past 175 years, two very different strains of liberalism emerged. Today, one variety of liberals emphasises free markets whereas the other emphasises equal opportunity. They are incompatible since private schools tend to offer the best opportunities, but cannot be afforded by all people. Free markets inherently mean that the better off are privileged. If not regulated prudently, they are not ruled by competition, but by oligarchs.

Tony Abbott, Australia's former right-wing prime minister, is an example of a market-first liberal, Barack Obama, the former US president, is of the civil-rights variety. They have very little in common. In international affairs, they did not consider one another allies. And indeed, they were mostly opponents. Both liberal traditions are firmly rooted in history and, in principle, legitimate. Abbott, however, denies climate change, and putting economic interests above a healthy planet for future generations is not legitimate.

To put it crudely, centre-left parties in advanced economies have been liberals in the “citoyen” sense for at least three decades, while the centre-right parties were liberals the “bourgeois” sense of the word. But they oppose one another, and have been doing so for a long time. That is why Germany's “grand coalition” of Christian Democrats and Social Democrats often feels more awkward than grand - even though both are actually moderates, not radical.

I have been reading The Economist for almost 30 years now. Most of the time, this magazine was a standard-bearer of market-driven globalisation. In recent years, it has slightly modified it stance. It has begun to worry about excessive inequality. It is now showing interest in modernising the welfare state, but it still has a tendency towards cutting public spending. Old habits die hard. Articles in The Economist are still likely to prefer a “small state” to a “big state” or accuse Democrats like Obama of “hating” business.

The essay in The Economist tries to build bridges between the two kinds of liberalism. Its arguments for appropriate taxation and adequate social protection makes sense. To really promote the cause of a coherent liberal agenda, however, The Economist needs to do two things:

- it has to spell out much clearer what the roles of the state and the market are, and

- stick to that line in its coverage, week by week.

The Economist essay does take notice of some of the most rabid market-fundamentalists siding with US President Donald Trump. They are called libertarians. Senator Rand Paul is one of them. In general, he wants to dismantle the state to the extent possible. People like him appreciate Trump's deregulation efforts. They are not really interested in the rule of the people, they want freedom for oligarchs. In a perverse way, their idea of fighting corruption is to abolish the laws that limit what rich people are allowed to buy with their money. Of course, many of them would want to buy personal favours from the government (no matter how small they manage to make it). People like Rand claim to hate government deficits and love lower taxes. As we have recently seen, he was happy to expand the deficit by lowering taxes. The idea is that the rising deficit will make it easier to further reduce the size of the state.                 

If it really wants to build bulwarks against right-wing populist agitation, The Economist needs to draw a clear line between liberalism and libertarianism. So far, it has not done that.





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