David Lloyd George: The Peoples Budget changed the direction of liberal thought. (Photo credit: Wikipedia)
Riyadh: Wednesday 5th December 2012:
In his book, Civilization, The West and The Rest, the historian, Niall Ferguson, makes an unusual, and quite radical proposition, rooted in the logic of his own political ideology, but quite original in and of itself.
Ferguson is a man of the political right; an economic liberal whose histories are couched in free market economics. Yet, for reasons, which will become clear in this series of posts, this does not in and of itself make Ferguson, or any other Economic Liberal, a Conservative by instinct or practise. Rather, Ferguson demonstrates time and again an utterly empirical mind, and clearly independent strand of thinking. Even as he describes himself as being a conservative, he reveals himself to be a conservative of a very liberal kind.
True, in advocating Empire, as he does, he echo’s Rudyard Kipling’s White Man’s Burden, a poem about the responsibility of the ruling classes towards those of subservient orders. But, be also explores economic and social progress and development out of less enlightened times, which as we shall see in this post is a deeply Liberal; not Conservative idea.
In Civilization, he asks a question a three parted question, Why is “The West” dominant over other cultures, when did this happen and will it maintain this dominance?
The answer he comes up with is that six particular codes of behaviour emerged in the west, which gave it a head start over the worlds other regions, however, Ferguson concludes, the possession of those modes of behaviour (he refers to them as “Killer App’s”), is neither limited to The West, nor necessarily inherent to it.
Indeed, he then goes on to show how The West has effectively surrendered some of them.
One in particular caused me to sit up and take note.
For Ferguson suggests that one of the secrets of the West’s success was its observance of Christianity. Yet he goes on to postulate that one of the key reasons that Europe has lost its Christian edge and suffered decline was because European States, effectively took Christianity into Public Ownership, and in so doing, robbed it of its competitive instinct and entrepreneurial brio. The Church of England, or the Church of Scotland, he suggests have leaked people as a result.
In contrast, The US, which has kept a secular distance between State and Church, has seen attendances decline far less rapidly. Ferguson argues that this is no coincidence, as the churches’ independence is effectively what has allowed them to compete with one another for converts. The result is an evolution in faith, with large inspirational churches, brimming with vigour.
But not rigor; Ferguson does not leave American Christianity free from critique. He points instead to an intellectual dumbing-down in America’s churches to the point where they are less about emphasising scripture and the right and wrong way of conducting your relationship with the world and with God, and more about how religion can offer you a sort of spiritual ‘self-help’.
The implication is that this is not really designed to keep America ahead of the curb on ecumenical issues and is allowing a much more rigorous brand of Christianity to take the lead in China and elsewhere.
Now, first and foremost, I am paraphrasing Ferguson’s argument and in so doing, probably slightly misrepresenting it. Moreover, his argument is out of context.
I don’t think, he suggests that the decline in church attendance is responsible for western decline. Yet, taken as part of his wider narrative (and I would heartily recommend the book), the notion that you can apply secular economic theory to an issue such as religious attendance is interesting. I do not wholly buy it. But, I cannot disprove it.
For the purposes of this post, it is interesting principally because it is precisely this sort of applied economic thinking which dominates much of the debate about how we should live our lives today.
During the recent Presidential election, there were times, when both candidates appeared not to engage with one another at all on economic issues. Rather they spoke in terms their respective political bases could and would relate to.
Democrats spoke about protecting the “Middle Class” (a focus group expression which plays better with Americans than, alternatives such as, “The Poor,” “The Majority,” or “average Americans.” This is revealing because it implies that Americans may well belong to the majority, may well feel poorer than at any point previously and may well have profoundly middle of the road careers, interests and concerns. But they do not want to be defined by these. In referring to “The Middle Class” Democrats are able to speak aspirationally for the poor, inoffensively to the majority and imply a meagre step between them and the people at the top.
In Contrast, Republicans referred constantly to “American Jobs,” and are still doing so through the fiscal cliff negotiations. This is a focus grouped expression as well but it is not as grounded in demographics as the Democrat expression. Rather it addresses American fears and it addresses perceived economic realities according to the prevailing free market doctrines of the day.
According to this theory, America benefits from keeping taxes low on the rich, as this encourages them to settle in America and build industry there. By the same token, we recognise that they tend to put their money off shore and avoid taxation as a consequence, but this is more likely to happen if we increase their taxes. The tax burden needs to fall somewhere and we would like it to fall on the middle classes as this encourages them to work hard and safe what money they have. It discourages reckless spending which depletes our balance of payments by sending Middle class Dollars to China in return for IPod’s and TV’s.
This also has the added benefit of making Americans more competitive. Economic growth is sustained through exports, rather than consumption, further positively affecting balance of trade. “American Jobs,“ does not necessarily translate as meaning “Well paid American Jobs.”
More importantly, however, as the tax take from the middle classes cannot cover social spending and military spending, and as America requires a powerful military to control the worlds seaway’s, it is necessary to reduce public spending.
Even if this were not necessary, it would be desirable as providing State benefits (or “entitlements” as they are pejoratively referred to in America) encourages dependency which is counter to the entrepreneurialism which drove America into its current position of economic dominance in the first place.
Just as Ferguson has extended this economic doctrine to explain the West’s Religious malaise and spiritual loss of self-confidence and élan, so this economic theory readily explains the reasons for America’s apparent decline.
Through a curious trick it also appeals to the creation mythology of America. It recalls frontiersmen and first generation immigrants, working to make a better life.
Yet, while many Americans on the right would find the idea laughable, this is an essentially Liberal idea. In fact it is the essential blueprint of 19th Century Liberal liaise faire economics.
Moreover, the arguments over the correct use of a limited public pot, either prioritising Defence or limited welfare reform (and whatever the justifications and accusations surrounding Obama-Care, the fact is that it is a long way short of the comprehensive, free, medical cover I have enjoyed all my life), are essentially the same arguments as those which took place over Lloyd George’s “Peoples Budget” of 1905.
More importantly, for the purposes of this post, the arguments centre on a simple concept: Fairness.
Then it was dreadnought battleships that were the key defence priority, today it is Drone aircraft, but the differences between the Debate then and now are essentially semantic. The themes are the same.
Lloyd George’s Liberal Party was already in its death-throes by then. It was in government thanks to a rump of 80 Irish Radical MP’s who supported the Liberals in exchange for promises of Irish Home Rule. But the party itself had split losing the Liberal Unionists. All parties are essentially coalitions and the Liberal coalition of the 19th Century no longer existed in any substantial way. By the time Lloyd George would lead the Government, he was utterly reliant on Tory support to keep going as a Government of National Unity.
The Liberal bottle had cracked and was haemorrhaging supporters. These would end up in Conservative and Labour movements and petty nationalist parties. Yet they and their descendants would carry with them Liberal ideas and Liberal responses to problems. More importantly, While Socialists are primarily concerned with Equality, and Conservatives with Nation and hierarchy, Liberals have traditionally concerned themselves with something else: Fairness.
So it is, that while a socialist will redistribute wealth and opportunity regardless of merit, a Liberal is more conflicted ideologically. While a Conservative will argue in favour of the status quo unless overwhelming evidence supports something better, a Liberal will seek to improve and divest a system of its weaknesses.
Through this wider haemorrhage in Liberal politics the fundamental alteration that had taken place in Liberal thinking during the last third of the 19th Century was effectively hidden from view. During this time the Liberals had moved from being essentially liaise faire on economics and social policy to being increasingly interventionist socially and politically.
It was not that Liberals were ashamed of their economic record. In the contrary, they were extremely proud of it, and with good reason. But their extended period in office had led to such massive disparities in wealth in the new industrial cities that across society there was a feeling that something needed to be done.
Increasingly, liberals were concerned that in Britain as a whole and the Empire at large, the policies of liaise faire required moderation.
In 1900, it was possible to amass colossal fortunes, by taking advantage of the cheap well-educated and abundant labour at your disposal. The era immediately before had given the world a new expression; ‘Self Made Men.’
These were frequently practical men, well versed in the new science of engineering and the technologies that came from it. Importantly, they were not from the traditional class of wealthy aristocrats but driven men who has succeeded through their own ends.
When asked to credit their success they frequently pointed to qualities common to the time, forbearance, austere and understated Protestantism, education and temperance.
And yet, scratch below the surface and western society, was not uniformly protestant, forbearing, educated, understated or temperate.
Among the poor, especially the new urban poor, there was a class of people who had few if any of these qualities.
In London in the 1880’s, when Jack the Ripper, was stalking The East End, it has been estimated that 1 in 8 women in the city was reliant on prostitution to survive. This startling statistic was partly a result of the stifling social conventions of Victorian society, but partly too to the result of huge numbers of itinerant migrants to the city, and the disjointed, insecure, gin sodden existence they were obliged to live under.
Industrial cities reeked of human waste. The rich settled in numbers to the west of the industrial cities where they were largely protected by prevailing winds from the soot and smog and putrid filth of those upon whose labours they relied.
And The Liberal elites, these self-made men and their well-educated sons and daughters began to see in the cities, they had created, the awful effects of the inequality their Liberalism had wrought. The Works of Joseph Rowntree in Britain (whose study of the urban poor heavily influenced a generation of Liberal Politicians)and the American photographer, Jacob Riis, (whose photos of New York’s poor, entitled How the Other Half Lives, scandalised polite American Society), were to be influential in convincing a new generation of Liberals that liaise faire required something more.
Moreover the scale of the social injustices wrought by liberal free markets were so extreme that those predicting doom increased to the point where you can hardly read an account of the time without confronting this poverty.
Charles Dickens covers it extensively, Thomas Hardy, so often misinterpreted as a creator of rural idylls, in fact recreates a world of injustice and indignity heaped upon his everyman heroes. Jude the Obscure and Tess of the D’Urbervilles are tragic victims of the inequalities of Victorian England and the novels, searing indictments of the callous system which can destroy them so completely.
Political thinkers and economists, too were traumatically affected by the closely proximate excess and degradation of Victorian society. Karl Marx and Friedrich Engels wrote their theories primarily on the back of experiences of English Cities. Eugenics (the theory that you could bread morally upstanding middle class people and breed out the corrupt, indolent and undeserving poor), was a theory devised in England, by a disciple of Darwin, called Francis Galton, at this time.
The Suffragist Movement for women’s votes rose out of the church societies (Notably the temperance Movement), which itself was a reaction to the endemic alcoholism of the urban poor.
Augustus Pugin, the architect responsible for the Houses of Parliament designed his buildings in the mock-Gothic in order to wilfully subvert the ugliness and vice of the city, his intent being to return us to the rural piousness of the pre-industrial era.
My point is not that these different theorists of the 19th and early 20th Centuries, shared much in common. Yet between them, they gave the Western World, the Scientific theories that would inform Communism, Rural Conservatism, Welfare Liberalism, Fascist Rural Christian Conservative Escapism, Nazi Racial Theory, Unitarian Socialism, Irish Nationalism and Christian Socialism.
All of these movements owe something to the dual parentage of liaises fare Liberal capitalism and moralising Protestant Imperialism.
When we look back on the 20th Century, it is tempting to see it as a battle between Socialism and Conservatism, yet in reality, it was a story, of reactions to and advances upon Liberalism.
In 1905, David Lloyd George triggered a crisis, by releasing The Peoples Budget. Lloyd George was a part of a new generation of Liberals whose radicalism was not set in a commitment to protect commerce over hierarchy, but to protect the people from poverty.
In advancing the People’s Budget, he effectively went to war with the aristocracy, yet he could not have been where he was, without the British population generally moving in this direction. There was already, though few recognised it, a groundswell of public opinion, which was set in favour of improving the lot of the poor and doing so though the power of the State.
The merits of this, change in the direction of Liberalism can be argued. But what is clear is that Liberals had learned lessons from their Century of Power. Liberalism had created three of the most powerful nations on earth, The British, The French and the Americans (The new Nation of Germany, retained a decidedly Conservative, hierarchical, militaristic feel, emphasising duty honour and obedience).
Economic Liberals were discredited, and would be relegated to the side-lines of politics on both sides of the Atlantic until they were given new voice by the economics of Friedrich Hayek and Milton Freedman. They would hang on longer in the United States before the Dust Bowl, Wall Street Crash and the pained efforts of Calvin Coolidge and Herbert Hoover, would usher in the era of ‘Roosevelt Democrats’ and complete the Western Hemisphere’s transition to Liberalism based upon free movement of capital, to Liberalism based upon regulation of supply. From now on the supply side economics of Keynes would rule.
This moderation took two forms.
- Tariff Reform: trumpeted by the Liberal Unionists: Essentially protectionism through creating an economic block.
- Redistribution: Trumpeted increasingly by Religious groups, Trades Unions and the Middle and working classes, this was not merely about wealth and income redistribution, but about whole scale redistribution of power. It entailed devolution of power to the regions, votes for women and the poor, provision of basic levels of support for the destitute and a more balance and “Progressive taxation system”. Free trade would finance this, more than taxation however. This was a long way from the European style welfare state of the late 20th Century, but it was the commencement of the idea.
On the face of things therefore, the great divide was Tariff Reform Verses Free Trade, and Defence versus welfare. But, as with the Great debate over home rule which had split the Liberals in the 1880’s, the reality of this debate was over Fairness.
To the newly literate and agitating classes, the massive disparities in wealth had utterly undermined the arguments that had always kept Britain stable.
It was increasingly impossible to view Britain as entirely wealthy when there was such abject and miserable poverty, of opportunity, live expectancy, morality among the lower classes. It was no longer possible to couch the debate in terms of deserving and undeserving poor. Things had gone too far. Even the most philanthropic business leaders in this age of Christian do-gooding, were barely able to scratch the surface.
I am not suggesting here that America’s poor, today, are equitable to those of Victorian England, or 1930’s Depression America. Yet, it seems to me that the great weakness in the case for a deregulated financial market comes at the moment when fiscal readjustment comes in the form of recession.
Fairness is about perception. And when it is no longer possible to perceive of crossing the gap between the few at the summit and the many below, the system suddenly and irrevocably loses its single biggest thread of legitimacy.
For liberal economics justifies poverty and inequality as a necessary by-product of a fairer system. By ensuring that the system is open-ended at the bottom, and that people can therefore fall away, it provides the necessary generation upon generation hunger and vitality from the bottom up.
liaise faire was discredited for a generation because, when times got tough and collateral stopped flowing. The rich closed the doors at the top. The rest were forced to scramble about for diminishing returns. People as a whole got poorer, not richer.
The system of liaise fare would need a generation and a massive face lift to regain credibility. It was not until the 1970’s that an economic justification for liaise faire would return. And that justification was based wholesale on the idea of fairness.
Only this time, Fairness was not called fairness. It was called “Trickledown.”
This idea promised that the rich invest in and drive the economy, their wealth thereby trickling down through the creation and innovation of new industries which pay better jobs and increase spending in towns and cities.
The theory has caused consternation among many, who saw it as a repackaging of an old economic orthodoxy, and who looked at the failure of the deregulated system when the economic buffers were hit in 1929. However, by 1980, with memories of the Wall Street Crash fading, and understanding of the real failings of Keynesian Supply Side Economics to provide the economic vitality to pull us out of a Stagnating economy, Free Market Liberals would once again get their day in the sun, under sunny president Ronald Reagan.
I do not propose to offer either a repudiation of, or a eulogy to, Trickledown here.
Experience has taught me that, like the death penalty and Iraq war, you are either against it or in favour of it. You have already decided for yourself. I would merely point out that like all economic theories it has a degree of truth and works when economic facilitators are correct, but that when it does not work, it breaks in a dramatic and traumatic fashion and that it does so disproportionately as those with economic wealth are able to hoard it and see out the storm while those without it are left to fend for themselves. Whether this makes it worse than a ‘stagflation economy’ such as that of the late seventies is open to debate.
Crucially, however, we can draw several conclusions from the 19th & 20th Century’s experience with Liberal Free Markets.
- Liaise faire is Liberalism at its fundament: Liberalism does not seek equality but fairness. It therefore devises systems which reward merit. liaise faire in decrying regulatory or redistributory intervention, actively encourages the cream to rise to the top.
- Liaises Faire, must be seen to work for all people: As long as it is seen to be making the poor richer as well as the rich, it is justifiable in terms of fairness.
- However when Liaises Faire fails. It does so in such a way that any slack in the system is immediately secured by those at the top: The result is that in times of economic hardship, liaises faire is seen to be demonstrably unfair next to alternative systems which may not have the same power to drive economic development but ensure that the slack is more evenly distributed.
- Arguments over whether Trickledown Economics work, are essentially irrelevant because they will work when there is lots of liquidity in the economy and they will stop abruptly when liquidity dries up: Trickledown neither works nor doesn’t work. It is merely a channel through which economic liquidity is automatically distributed. Like a river valley it will carry liquidity when times are good and fail to do so when they are bad. This is true regardless of the economic system you deploy. The question is therefore, whether you employ alternative economic systems when times are difficult in order to redistribute capitals downward flow and protect the poor (in other words, whether you create a social safety net to mitigate the worst effects of trickledown or further deregulate the economic system to maximise its freedom to drive economic growth)
If you are a disciple of Liberal economics today, you may well consider yourself to be a conservative. If you do, then you may well consider that real fairness is to further deregulate capital in order to allow growth to be stimulated. This was the approach of 19th Century Liberals. They too considered this fair because they believed that the system benefitted everyone according to merit and benefitted the idle and undeserving less than everyone else.
However, Liberals today tend to accept fundamental elements of free market capitalism but espouse differing forms of regulation and welfare. The reasons for this are that Liberals tend to base all economic and political thinking on the concept of Fairness and have learned though history that liaise faire is fair only when it fairly distributes opportunity, rather than allowing it to be harvested solely by the wealthy who invariably ensure their own families are protected first.
In other words, Liaises faire (or trickledown) can only be truly fair for a single generation as a second generation will create an undeserving rich who have inherited wealth and an undeserving poor who have suffered exploitation as a result of the slowing trickledown of economic liquidity.
It is no surprise, therefore, that the two great Liberal inventions are liaise Faire and Welfare.
Today, liberalism on both sides of the Atlantic has fragmented and we tend to see one as the preserve of Conservatives and the other as the preserve of Socialists. Yet, this is both historically illiterate and highly politically self-serving.
The Welfare State in Britain was the invention of Sir William Beverage, a Liberal and, was a reaction to the economics of another liberal. John Maynard Keynes. Moreover, as we have seen welfarism had begun under Liberal Chancellor Lloyd George, in what was essentially a repudiation of unregulated liberal Liaises Faire economics.
So what does this tell us, other than that Liberals hide among us and that they are deeply conflicted?
Well, it underlines something critical about western development in the 19th and 20th Centuries. For while we tend to think in terms of Socialism versus Conservatism, the reality is that both of the last two centuries have been battles between different strands of Liberalism and a conservative instinct to maintain the status quo.
We might refer to this as Progressivism Versus Conservatism, if it were not for the fact that these expressions themselves tent to be co-opted by right and left respectively.
But define it like this and then we see a difference:
- Progressive (Liberal): The belief in progress and making things better. This essentially advises that humanity progresses and improves though learned experience from darkness to enlightenment and engagement. Progressivism therefore embraces free market economics as a key economic driver of improvement and a natural human instinct. It also embraces provision of basic safety nets to protect people who fail under the economic free market system. This after all is the fair thing to do and is a by-product of an improving progressive civilisation.
- Conservative (Tory): The belief that humanity existence is cyclical rather than progressive. Sometimes things are good and sometimes they are bad. It is therefore important to preserve the existing system as it is this that will provide continuity and safety. Conservatives are pragmatic over economic theory and will tend to enthusiastically embrace any economic theory which seems to work. As such conservatives in the 1940’s 50’s 60’s and 70’s embarrassed supply side Keynesianism. Prior to that they embraced tariff reform and prior to that liaise faire. Socially, however, conservatives are hierarchical and dogmatic in defence of the status quo. They will implement change, but only when the alternative appears to be revolution.
Many who see themselves as people of the right or left will not recognise themselves in these distinctions. A right wing Conservative will balk at the thought of being a progressive and a Welfare state leftist might recognise him or herself as being a Conservative under this description and reject it in consequence.
You would both be wrong. You have both simply failed to recognise your mutual liberalism.
As such, much of the rest of this series of posts will not necessarily make a lot of sense to you. But I urge you to stick with it. You have got this far.
In my next post I am going to look at the way in which liberal ideas of fairness have evolved in the West but how conservative notions of hierarchy have tended to predominate in almost all other cultures. I will also look at the continuing development of notions of fairness from childhood self-interest to adulthood through the pivotal point in a humans life, adolescence.
Related articles
- The Story of Fairness: Part 1: Shape-Shifter (crabbitat.net)
