Reformist Liberalism

Liberalism itself came into being as a protest, a means to reform an authoritarian monarchical order which denied individual freedom in every sphere- political, economic, social, religious and ethical. But, it is not simply that liberalism is rooted in reform, it is, in its essence, reform itself.

L. T. Hobhouse got it right, it seems to me, when he insisted that the State as “Over-parent” was as truly liberal as it was socialistic. For in both, he said, it is the state that guarantees “the rights of the child, of his protection against parental neglect, of the equality of opportunity which he may claim as a future citizen, of his training to fill his place as a grown-up person in the social system” (Hobhouse, 1911).

In any comprehensive notion of liberalism, all spheres of social order need to be addressed. It is Hobhouse again who stipulates that liberty suffers when it is confused with competition and this appears to be what happens when economic goals supercede more socially bound ones, such as political liberty or religious liberty, or even, the goal of liberty for all. If an economic measure creates poverty, for example, then the humanistic goal of eradicating poverty disintegrates. Many economists and social thinkers have addressed this problem in the past and are doing so now. Most of the solutions that make sense revolve around working with more than one goal at a time: for example, developing free markets and eradicating poverty. When seemingly disparate goals are combined, we find that the questions cited earlier as reform ones become planning ones. Questions on privatisation and deregulation then begin to center on structures and safeguards in place to insure that efficiency and stability follow the privatisation so that the public is served and that its welfare is not endangered.

Such questions and goals are considered vital for developing countries because it is often the case that they do not have strong structures in place for privatisation. If, for example, corruption was part of a government’s control of certain industries, it is likely that corruption will also be part of privatisation since the act of handing over the controls will also involve corruption. Or, if to increase efficiency, private owners trim payrolls, the social costs of unemployment will not be considered though the effect of large scale unemployment upon the economy is usually great.

It was once believed, especially in developing countries, that developed countries had safety nets like unemployment insurance to assist workers when jobs were lost to efficiency measures or to the opening of new markets. But that assumption is dubious now. Developed countries, even those whose leadership is most vocal regarding the benefits of economic rationalisation, can also suffer from too much long term unemployment or having too large a portion of their population in below standard wage earning jobs as often happens in the name of efficiency. And, what is perhaps more devastating for struggling new democracies to learn is that well established democracies with long histories of subduing corruption, are finding that privatisation has made, or brought to light, widespread corruption and cronyism between industry and government.

The problems of neo-liberalism today are everywhere apparent and everywhere analysed. Yet there are few who seriously suggest turning back the tide of modernity. Rather, most nations, especially developing ones, want to embrace it. Liberalism is still viable, but reforms are needed for the old reforms, like the IMF and the World Bank, put in place to assist a war torn world in the 40’s by helping vanquished nations competitively re-enter the market economy. Reason demands that we re-examine the course of economic liberalism. Rationality is, after all flexible. Economic rationality is also flexible as it calculates the best means to the ends in view. Multiple and disparate ends like efficiency and welfare can still navigate the means. Combined goals of opening markets and eradicating poverty preclude opening markets at the expense of any group.

One of the arguments for neo-liberalism is that the invisible hand sees to it that all works out well in the end and that social engineering does more harm than good because we cannot foresee future changes, nor indeed can we be privy to all that impinges upon our decisions. High-powered social engineering is arrogant and detrimental to human beings. Certainly we know by now that it is impossible to take in every variable and contingency operating in a single moment. Moreover, just as economists themselves rarely agree on a single explanation for growth rates or inflation (and that is a matter of analysing the past), they also, alas, disagree on social goals. How sad it is to read that the economist and Nobel Prize winner of the 50’s, Arthur Lewis, felt that inequality was good for development because the rich save more than the poor. Happily, Joseph Stiglitz the Nobel Prize winner in economics in 2001 takes the view that inequality is not acceptable, that one can have development and equality. Economic rationalisation cannot guarantee the far future, that is true, but it can take in short term results especially when the anticipation is based on experience. In the end, our long-term goals for humane governance are more readily met by constantly evaluating the results of short-term projects and applying situational logic.


References:
Hobhouse.L.T., 1911, Liberalism, London:Williams and Norgate.
Stiglitz, Joseph E., 2002, Globalization and Its Discontents, New York & London. W.W. Norton



(This article synthesises a longer study by the same author. It can be found at the following address : Reason, Economics, Reform Liberalism and Development: The case of South Korea)