Robust Political Economy
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Robust Political Economy

Classical Liberalism and the Future of Public Policy

  • New Thinking in Political Economy series

Mark Pennington

This important book offers a comprehensive defence of classical liberalism against contemporary challenges. It sets out an analytical framework of ‘robust political economy’ that explores the economic and political problems that arise from the phenomena of imperfect knowledge and imperfect incentives.
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Chapter 9: Conclusion

Mark Pennington

Extract

9. Conclusion Intellectual battle-lines in political economy are focused today, as ever, on determining the boundaries between the sphere of individual liberty and the coercive power of the state. Classical liberalism as it has been understood throughout this book bases its case for a movement ‘towards the minimal state’ on the principles of robust political economy. It suggests that given limited rationality and the need to constrain the behaviour of those motivated by self-interest, a framework that allows for decentralised experimentation and which holds people accountable for their experiments in living is more likely to promote socio-economic progress than one that centralises power in a coercive authority, democratically elected or otherwise. At the time of completion in 2010, however, the pendulum of opinion appears to have swung decisively in the direction of a more state-centric approach. From responses to the financial crisis to concerns over income inequality and environmental protection, the notion that state power can deliver what liberty cannot is once again widely shared. Ideas matter in political economy, and for good or for ill, changes in the climate of opinion affect the direction of institutional change. The case for classical liberalism is held by critics to depend on the fanciful assumptions about human rationality that underlie the ‘efficient markets’ hypothesis of neo-classical economics. Classical liberals are widely thought to hold an asocial conception of the individual which has little or no appreciation for the communal identifications that shape human lives. And finally, classical liberalism is considered to be...

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