Classical Liberalism and the Future of Public Policy
New Thinking in Political Economy series
Chapter 1: Introduction: Classical Liberalism and Robust Political Economy
INTRODUCTION Contemporary debates in political economy have been shaped by reactions towards ‘neo-liberalism’. From reform of the welfare state to discussions over international trade and the environment, many commentators have discussed the apparent ascendancy of a belief in ‘free markets’ and the minimal state. The impression generated by such commentary is that following the collapse of the socialist project in Eastern Europe and elsewhere, opposition to neoliberalism, or classical liberalism as it should really be known, has been marginalised in the political landscape. A cursory glance at the trajectory of public policy, however, reveals a different picture. While the ‘privatisation’ movement of recent years may have slowed the advance of post-war social democracy, many policy areas have exhibited a marked resistance to liberalisation or have seen a further expansion in the role of government. The financing and delivery of health and education remain, for example, the overwhelming preserve of governments in most liberal democracies with even minor attempts to introduce market forces making little headway. In the realm of international trade, continued adherence to agricultural protectionism and widespread support for financial aid as the key to securing prosperity in developing economies confirms a lingering attachment to interventionist principles. Environmental policy has proven even more resistant to classical liberal ideas with a massive growth of regulatory initiatives. And, as if this were not enough, the unprecedented scale of government activism that followed the ‘financial crisis’ of 2008 hardly suggests that the grip of ‘market fundamentalism’ has been particularly secure. The speed...