Wednesday, 13 July 2011

Free market think tank madness -sadly Lib Dems implicated. Time for action

Shrinking the size of the state by abolishing the NHS and limiting overseas aid to humanitarian disasters could save more than £200bn a year and pave the way for growth-generating tax cuts, says a leading free-market thinktank.

The Institute of Economic Affairs (IEA), responsible for many of the policies implemented by Margaret Thatcher in the 1980s, said the plans to tackle Britain's budget deficit during the current parliament are not radical enough.

So says the Guardian today

It is with enormous sadness that I note that someone posing as a Lib Dem -Mark Littlewood- advocates such damaging and wacky proposals.

The IEA's director general, Mark Littlewood, said that given the choice between reducing public spending to 30% of GDP to allow a £7,500 cut in taxes and keeping public spending at 40%,-...well you can guess where that is heading

 We have been here before. Back in the 1950's our party was convulsed when a tiny-well financed -group tried to hijack the party. William Wallace wrote about this in a letter to Liberal History Journal when he commented on the role of the Radical Reform Group (RRG). I've copied it in full:

The group of free-trade Liberals that included S.W.Alexander and Oliver Smedley had drive, financial resources, and a clear sense of Liberalism in a libertarian, minimum-state interpretation. The almost anarchic structure of party assemblies allowed for such groups to exert real influence.

RRG, as I recall, provided the most coherent alternative definition of Liberalism – much closer to the radical Liberal tradition, and to the nonconformist beliefs which a high proportion of its members held. It helped enormously that Jo Grimond as leader was naturally sympathetic to the RRG perspective; but the existence and activities of RRG, and the arguments of its members on the Party Executive, made Grimond’s task in reorienting the party much easier.

Joining the party in 1960, I caught only echoes of the arguments that had convulsed the then-tiny part in the 1950s. My future father-in-law, Edward Rushworth, had for many years been both a member of RRG and of the party executive.

He made little distinction between being a Liberal and being a teetotal nonconformist; his instincts were anti authoritarian and socially egalitarian.

In the 1962 Orpington byelection Michael Steed and I stayed for a week with the Seldon family while canvassing; Marjorie was an active party member, but her husband Arthur had ‘left the party over free trade’ and was engaged with others of that group in finding an alternative vehicle for their ideas – which became the Institute for Economic Affairs, through which free-market liberal ideas later influenced Margaret Thatcher and her advisers.

William Wallace (Lord Wallace of Saltaire)

You do not need to sign up fully to Professor Richard Grayson thesis that 'while for many Liberal democrats the coalition is explained by practical circumstances, its ideological basis can be found in the dominance of centre-right small state liberalism in the leadership of the Liberal Democrats-to acknowledge that there is a problem that needs sorting.

Revealingly David Howath  in his review of two of the books written about the forming of the coalition wrote:
........To make a new judgment on the balance between raising confidence in the financial markets
 and lowering it in the real economy in the heat of an election campaign, and to put it into operation
immediately  thereafter is, to say the least, courageous. According to Wilson, the Liberal Democrat
 leadership took no external advice about the issue, or about the separate issue of accelerated deficit reduction. Both the Treasury and the Bank of England would have reinforced the acceleration view, given half a chance, but that view is built into their nature. Others took very different positions on the optimal path, from the NIESR’s (of which Lord Oakeshott  is connected) moderate caution to David Blanchflower’s jeremiads. The puzzle is not that the party took  one view or another, but that it did so on the fly without consulting specialists. Has the party of  Keynes lost touch with economics as a discipline?

Well if Sir Humphrey had been writing that paragraph I suspect that he would have said it was a 'brave' decision rather than a 'courageous' one unles of course 'courageous' is one notch up from 'brave'.


  1. You do realise that Lord Beveridge himself never proposed an NHS. Is he a wacky right wing looney?

    I'm not really very sure why liberals these days think that a state that produces health care is a fundamental principle of liberalism?

    Surely an insurance system would be just as liberal and avoid all the problems with the state providing anything.

    Similarly why is it wacky and non-liberal to think that the state has got too big in Britain these days. Are Cobden, Gladstone and J.S. Mill all illiberal because the states they advocate are MUCH MUCH smaller than Mark Littlewood's proposal.

    From a recent conversation with Mark I can attest that he is very much a liberal and his genuine aim is certainly not to make poorer people worse off or to benefit the rich. It would be useful if when a genuine presents free market proposals we could engage with them not use ad hominem attacks to reject them.

  2. I'm not sure how a debate about Beveridge's political thought really helps us- he was incidentally educated here in Birkdale an experience that he wrote warmly about in a letter to our parliamentary candidate in 1945 Bob Martin.

    With Beveridge it is a matter of picking which period of his life you are referring to-he was significantly under the influence of the Webb's in the early part of his life and as late as his first report (1942) he was arguing that unemployment could only be effectively tackled by full scale state planning the like of which would have driven the IEA in to full scale apoplexy.
    But even in 1942 (HMSO CMND 6404)he was advocating health provision. In the introduction to the report he says : 'Medical treatment covering all requirements will be provided for all citizens by a national health service organised under the health departments and post-medical rehabilitation treatment will be provided for all persons capable of profiting by it.'
    Of most interest to Liberals is the period post 1942 when he joined the party. He was still a man of the left but of a distinctly Liberal left.The key report he wrote in this period (1948) asserted that 'making and keeping something other than the pursuit of gain as the dominant force in society....The business motive is a good servant but a bad master and a society that gives itself up to the dominance of the business motive is a bad society.'

    Beveridge's fury at the Labour government was directed at the proposal of ditching the (not for profit) mutual and friendly societies and in a moving passage in that report -which owes more to Kropotkin's notion of mutual aid than to the wacky free market notions- he argues not for the profit motive and competition but for a 'social services state'

    The Liberal view of the state has evolved. The municipal liberalism of Birmingham offended many small staters, as did the thoughts of Hobhouse, Hobson et al (sorry Lord Bonkers). the level of economic intervention envisaged by Lloyd George and Keynes in the Yellow Book was different in scale again. It does depend on circumstances. Modern day Liberal do not have ideological view on the precise size of the state. We do have a view on holding power to account, to decentralisation, and as Mill, Keynes and Beveridge argued to the distribution of wealth and democratic participation in the in the control of assets.

  3. See you say modern day liberals do not have a precise view on the size of the state but I would contend most do. Most feel extremely uncomfortable when those on the right talk of limiting the state and making it smaller. I can't see why this is the case, I do not trust those on the right to carry that job out fairly but I think the job needs doing.

    By running away and declaring all tampering with the state to be madness and being furious lib dems could possibly engage in a think tank that discusses that is just silly and it means that the only people who end up having any role to play in shrinking the state are not liberals.

    Are you honestly going to tell me that the unions didn't need 'breaking up' and the economy didn't need liberalising in the 80s? I don't agree with how Thatcher went about it and I would like to see the BMA and the law society tackled in the same way. But by liberals disengaging from the debate we allow the right to control it.

    I reiterate again, Mark Littlewood may not get the PR right and may enjoy being a bit provocative but fundamentally he comes at things from a liberal perspective, he is not a mad crazy right winger.

    P.S. I use Beveridge as an example because I was aware he at one point did call for an insurance health scheme, I could be wrong that this wasn't his general view. Incidentally I believe strongly in a free market society but I see mutual aid societies as very much a part of that and incidentally mutual aid societies arose during a time of laissez faire economics....

  4. Firstly mu apologies for taking so long to deal with your posting. I think we need to clear up our terms here Joe. When I talk of Liberals I mean those who have clustered round the Liberal party. For the most part that excludes the small statists that Mark represents. I make no objection to those who take that view making their case; Arthur Selsdon, Oliver Smedley, Keith Joseph, Margaret Thatcher, Ronald Reagan, The Tea Party..... but please accept that the centre of gravity in the Liberal Party is far removed from such views. The reason for the original posting and quoting Lord Wallace's letter at such length was to emphasis that point.


I am happy to address most contributions, even the drunken ones if they are coherent, but I am not going to engage with negative sniping from those who do not have the guts to add their names or a consistent on-line identity to their comments. Such postings will not be published.

Anonymous comments with a constructive contribution to make to the discussion, even if it is critical will continue to be posted. Libellous comments or remarks I think may be libellous will not be published.

I will also not tolerate personation so please do not add comments in the name of real people unless you are that person. If you do not like these rules then start your own blog.

Oh, and if you persist in repeating yourself despite the fact I have addressed your point I may get bored and reject your comment.

The views expressed in comments are those of the poster, not me.