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‘Muscular liberalism’: how to make it work

If Nick Clegg is to continue his pursuit of ‘muscular liberalism’ at the Lib Dem party conference there are two ways he can make it work.

While the term ‘muscular liberalism’ was used by the deputy prime minister to describe how the party would differentiate itself to its coalition partners, it is how that is done that will lay the ground for the party’s electoral proposition in 2015.

It is commonly accepted that there is a rough divide in the party between social and economic liberals. This is crudely seen as a difference of opinion between liberals who favour social justice over liberty and liberals who favour letting the free market work so that liberty and fairness are achieved spontaneously. Yet, both groups agree on some fundamentals about the concentration of power and the freedom of the individual.

Perhaps what really separates the two is how to tackle the problems of a modern society. For instance, the financial crisis has led to calls for greater regulation in order to ensure that the taxpayer doesn’t have to bail out a bank ever again. Government’s supporting banks, or any other business, goes against the liberal grain.  With an already complex, regulated system that gets price signals from a central bank the idea of putting in more regulation to deal with the problem seems very logical. This policy answer could well be part of Clegg’s ‘muscular liberalism’. This response is certainly part of a social liberal agenda.

But as the joke goes about asking directions, would you start from here? A liberal might prefer to be in a different situation in the first place. If there was a way of tearing down the barriers to entry for new financial organisations, freeing up the market so that when a bank failed it could fail and removing perverse incentives to borrow money when one shouldn’t be borrowing money, economic liberals would raise their hand and say yes to that. In fact, if such a system satisfied the policy objectives of the ‘social’ wing of the party, it is hard to see why they would object either.

Could this type of ‘muscular liberalism’ work? If Clegg and others decided that this was the liberal direction of travel they wanted to follow, they may still have to temporarily accept some form of regulation of the banks to deal with the current situation while working towards a liberal approach that John Stuart Mill would be comfortable with.

This approach could use Jock Coats’s ‘rigorous liberalism’ as its template.

What all of this comes down is making a choice between trying to make the economy and society more liberal by using policy tools that led to the current status quo or by using liberal mechanisms to achieve liberalism.

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