Learning Liberalism and the Welfare State
New Thinking in Political Economy series
Chapter 1: Preferences for the Welfare State as a Challenge for Economic Liberalism
1.1 INTRODUCTION The last quarter of the twentieth century witnessed an amazing renewal of economic liberalism. From the viewpoint of economic history as well as the history of economic ideas this renaissance is remarkable, because economic liberalism had survived for decades only in the archives of outdated political concepts. Many similar and sometimes rival conceptions of economic liberalism co-exist in theory and politics, so that a clear-cut deﬁnition of what makes up economic liberalism cannot be given at the outset. In Chapter 2, I present an evolutionary concept of economic liberalism and delimit it from equilibrium theory. For a ﬁrst orientation, however, let us take economic liberalism as a conception which seeks to minimize the role of the state as to society, including markets. All advocates of economic liberalism seek to foster market development which requires economic liberty, whereas the state has to guarantee economic rights such as property rights, the right of abode, the freedom to choose and free trade. Other than anarchists which are constantly at loggerheads with the state, liberals accept that a social entity such as the state should exist and contributes to our well-being in society. Beyond a protective role of the state, however, economic liberals are sceptical about furnishing the state with ambitious tasks; instead they seek to bound further governmental intervention to a restrictive concept of market failure. The latter excludes far-reaching redistribution policies (but can include minimum welfare aid for the poor), as it avoids an extensive provision of public goods...
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