Saturday, 9 April 2016

Full review of Lib Party and the Economy , Peter Sloman

Liberal Party and the Economy 1929-1964 by Peter Sloman

Like many academic books it is ridiculously expensive, it is advertised on Amazon for £58 .  
I recall a meeting of the Liberal Party Standing Committee in 1979 which was drawing up the Election Manifesto. We reached the item on the agenda marked economic policy. There was a silence until Richard Moore spoke: ‘I joined the Liberal Party in spite of not because of its economic policy ‘he told us.
Many people hold the opinion that our party gives economic policy a lower priority than say the environment, reform of government, foreign policy, Europe, individual rights or the state of the pavements. Such indifference, it is argued, allows a few well motivated and wealthy mavericks to high jack the party’s policy position. William Wallace has written about one such event.

‘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.

The Radical Reform Group (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.
My future father-in-law, Edward Rushworth, had for many years been both a member of Radical reform Group (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.’

Some Liberator readers may well join Richard Grayson in seeing the policy coup in 2008 over tax cuts and promoting a vision of small state in a similar vein to the antics of Smedley and Alexander.

Peter Sloman’s book The Liberal Party and the Economy 1929-1964 (OUP 2015) challenges the assumption that the history of economic policy making in the Liberal party is the history of a struggle between classical free market liberalism and interventionist social liberalism. Sloman has gone where no other historian has gone before examining the twists and tortured turns of policy making. It is an excellent account of the party’s history giving some new insights into issues –not all of them related to economic policy.

Sloman identifies four strands of Liberalism and examines the interplay between them. Classical liberalism, Georgism, New (left) Liberalism and constructive Liberalism. The first two are seen as essentially non-interventionist while the latter two see a positive role for the state. The New Liberal tradition stemming from Hobhouse and Green focusses on ethics whilst the constructive liberalism is influenced by professional economists and focused on practical policies.

If you don’t know your Distributists from your Georgists or your Keynesians and are unaware that the Liberal Party under Clem Davies endorsed central state planning then this is the book for you. Here you can also read how the idea of membership of the European Common Market was used to rout the extreme free marketeers at the 1960 Liberal Assembly and of the most successful economic campaign to come out of NLYL: ‘Ownership for All ‘
Some aspects of classical liberalism had a strong hold on the popular imagination. The belief that free trade enhanced worldwide prosperity and peace tapped into the party’s internationalism. The assertion that free trade kept the price of bread low was a key aspect of the Liberal appeal. In the 1906 election here in Southport that was the main message of the successful candidate

The Liberal Party never supported pure laissez fair economics. All Liberator readers know Gladstone favoured nationalising the railways. By the time of the 1906 Liberal government, many of whose members were influenced by T H Green, the party had moved decisively away from the small state view beloved by the ideologically pure classical liberals. In the 1920’s Keynes announced to the Liberal Summer School that ‘laissez faire was dead’. Nevertheless the neo liberal corpse has had an after life and each new manifestation has been more grotesque that the previous one. We have already glimpsed the destructive impact that neo liberal activists had on the small struggling Liberal Party of the 1950’s. Many of them decamped to the Institute of Economic Affairs where they acted as midwife at the birth of Thatcherism and which today is an apologist for corporatist capitalism.

With the publication of the Orange Book* a new generation of neo liberals have come and wreaked havoc on the party helping to reduce the parliamentary base from 56 to 8 MP’s. The work of a generation, whose activism rebuilt the party in the years after Grimond, has been wiped out. Sloman has argued that the Orange Book led to the rightward move of the party’s leadership facilitating the formation of the coalition with the Tories. It certainly provided the intellectualunderpinning for Nick Clegg’s disastrous  2010 speech, which worried only about social mobility and dismissed tackling the inequality of experienced by citizens today. David Howarth has identified that speech asone of the triggers for the catastrophic fall in support for the Lib Dems from which it has not yet recovered.

Many things from the classical liberal tradition have been absorbed into the Radical Liberal agenda: individual liberties, suspicion of monopolies and the opposition to the excesses of state power promoted by the likes of Blunkett, Reid and Straw. Sloman points out that ‘Gladstone was as concerned about the integrity and autonomy of the state as about its size. It is difficult to find the same concern among today’s ‘economic liberals ’. Radicals need to be robust in rejecting neo-liberalism- a C 20th heresy of the New Right.

Another strand of Liberal economic thinking identified by Sloman is Georgism. Its anthem‘The Land’ has had pride of place in the Liberator Song Book since before Lord Bonkers was born, as it did in ‘Songs for Paper Tigers’ in the time of his father. It is based on the writings of Henry George who argued that land was a finite resource and that no one had an exclusive right to its ownership and that owners should be taxed to compensate the community for their monopoly use of it. Essential they were classical liberals who believed that once the issue of the land was addressed by imposing a tax on the unimproved value of plots the market would operate effectively and a just society would result. Lloyd George include a modest land tax in the People’ Budget of 1909. 

Left Liberalism inspired by the New Liberals was associated with thinkers like T H Green and L THobhouse. They saw a legitimate role for the state in promoting social justice and did not regard free markets and free enterprise as immutable principles

The final categorisation that Sloman identified he calls Constructive Liberalism and it was the dominant position in the C20th. Essentially this is a conflation of classical and New Liberalism. The Summer School movement and the 1929 manifesto are part of that tradition. It is a very elastic term stretching from a fairly minimalist position for the state up to the peak of intervention in 1943 when Clem Davies and  Tom Horobin’s ‘Radical Economic Policy for Progressive Liberalism’ advocated wide scale nationalisation, export and import controls and a high degree of central planning.

By using his more nuanced classification of Liberal policy and moving away from viewing it as a struggle between classical and new liberalism Sloman has given us a much better understanding. Radicals need to take up the challenge of the RRG and produce a new synthesis for C21st which is anti-authoritarian and socially egalitarian. Drawing on the left/New Liberal tradition of passionate social concern with its starting point of distributive justice we can fashion an approach which offers new hope, answering the challenges that Picketty and others have identified. We must reject the neo-liberal consensus that has led to an unacceptable concentrations of wealth in the hands of a small number of owners of capital and a reduction in the share paid to employees. This global trend is accelerating and will soon impact on all employee as automation and cheap labour undercuts their wage rates and destroys their jobs. 

Throughout most of the C20th employee ownership and industrial democracy have been an enduring feature Liberal policy. They were the signature policy of the Grimond years. By offering a radical interpretation of the distributive ideas promoted by the Ownership for All campaign Radicals have advocated using state power to compel companies to introduce profit sharing and meaningful employee representation at Board level. Economists like Nobel Prize winner James Meade (who once advised our party) came up with many ideas to re distribute capital including legalisation to require companies to issue new shares to employee trusts. David Steel in his 1985 book Partners in One Nation argued that these radical ideas were part of a ‘fundamental economic philosophy distinct from that of socialism and free-market capitalism’ and as the RRG said Radicals aim to distribute instead of concentrating political as well as economic power’. Workers would become citizens of industry, not merely hirelings of private employers or of the state.

In his book Sloman suggests that Georgism, the Ownership for All policy and the Distributive ideas of Belloc are part of the classical tradition. What Radicals identify is that they all challenge the existing rights of owners and argue that the state action should be used to redistribute ownership. In his time Paddy Ashdown foresaw a time when ‘workers would be employing capital’. In that assertion he was echoing the greatly respected Liberal Richard Wainwright for whom employee ownership was the ‘holy grail of liberalism’. It is time to take up the quest 

All the links work in the early version here and here

This is my review of Sloman's book that I wrote for Liberator. Regrettably it took me so long to get round to complete it that someone else had submitted one before I had finished. As the thrifty Liberals of yesteryear would have said 'waste not want not', so I am posting it here in three instalments

*I am well aware that The Orange Book is a 'mixed bag' containing some interesting and useful contributions . Nevertheless the motivation of some of its key protagonists has been to shift the centre of gravity of economic thinking away from the social liberal consensus within the party towards a more neo liberal position. In light of that I think it is perfectly reasonable to use 'Orange book' as a short hand for that group. Their liberalism was replaced in the early 20th century with a commitment to the welfare state because of the work of T.H. GreenL.T. Hobhouse and the economist J.A. Hobson; the Orange Book writers were seeking to overturn nearly a century of Liberal party history. It is to be greatly welcomed that the recent conference at York passed an excellent economic policy motion promoted by the Social Liberal Forum

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