Learning Liberalism and the Welfare State
New Thinking in Political Economy series
Chapter 5: Learning Liberalism in the Welfare State: Reviewing Economic Liberalism
5.1 INTRODUCTION: A BRIEF STATEMENT OF THE ARGUMENT In the previous chapters I developed several arguments which prompt a rethinking of economic liberalism; in the following I bring them together in conclusion. Liberals have tended hitherto to overlook the obstacles which citizens ‘as they are’ (which means empirical citizens) face when they seek to identify their political preferences.1 This makes it diﬃcult to understand why citizens agree to policies which impair their well-being. Instead, liberals commonly explain the welfare losses of interventionist policies as a result of ineﬃciencies which appear when preferences concerning politics are to be realized in democracy. Besides the problem of aggregating preferences in one consistent social preference order (social choice), political institutions in representative democracy are held responsible for the distortion of preferences; they fail to curb vested interests of groups or of self-serving policy-makers. Without ignoring these insights, my arguments point to a diﬀerent phenomenon: citizens themselves can fail to identify policies which serve their own interests, particularly when assessing policies which indirectly further self-organization in markets. Instead, citizens can form preferences for public activities while overlooking their opportunity costs. In order to single out this phenomenon I have made a further abstraction: I have ignored disincentives concerning informationgathering in politics; put diﬀerently, in my line of reasoning, citizens believe that their own engagement in politics makes a diﬀerence, something which textbook political economics would consider an illusion. Evolutionary market theory – which hitherto has not been used for that purpose...
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