Sam Bowman is Executive Director of the Adam Smith Institute.
It has become fashionable on the left to describe anyone who has a fondness for markets as a neoliberal. The fact that almost nobody calls themselves a neoliberal makes it powerful: if the world is indeed neoliberal, and nobody is willing to stand up and defend neoliberalism, then that’s a pretty damning indictment of the current state of affairs.
We at the Adam Smith Institute think that the world is an excellent, successful, prosperous, happy place. Incomes grew strongly for every income group in the UK over the period 1988-2008, most of all for the bottom 10 per cent,, and we’re now returning to growth after the Great Recession. Violence is at an all-time low in the history of our species.
Women have more opportunities to live with dignity than ever before, and progress is being made around the world so that they are truly on an equal footing to men – though a lot more still needs to be done. Globalisation is spreading the fruits of modernity to every corner of the globe. We’re richer than we’ve ever been, and that wealth is growing most of all in developing countries that have embraced markets, property rights and the rule of law.
If that’s neoliberalism, then sign me up. Defending the world as it is, and all that’s good about it, is one of the key aims of the Adam Smith Institute, and one reason why we’ve now decided to start calling ourselves neoliberals. It may be an insult now, but reappropriated insults can have staying power, as every good “Tory” (originally a word for an Irish brigand) knows.
In America, the word “libertarian” has always been an umbrella for lots of different groups, but basically meant people who wanted a government that didn’t tax or regulate the economy too much, and left people alone to live their lives as they wanted.
But the word has always been a mixed bag in Britain. Hayek didn’t like it. Adam Smith, of course, favoured some role for government. He was always very clear about the need for some government, though nowhere near to the extent that some of his left-wing fans would like to claim today.
And I think to most people in Britain the word libertarian connotes a sort of unflexible extremeness – a preoccupation with hard-and-fast rules over policies that actually make people’s lives better. It was this misconception that allowed the Prime Minister get away with equating the libertarian right with the socialist left, as if the two were somehow comparable.
For us at the Adam Smith Institute, the goal is to make clear what we’re really about. We believe in markets: they allow individuals to pursue their own goals and work together, without any central planning or direction, to create enormously complex, productive and innovative economies. We believe in property rights under the rule of law: they allow us to save and plan for the future, forgoing consumption today that we may have more to enjoy tomorrow. These are the engines of growth, and they are better ways of ending poverty than every government welfare programme on the planet put together.
We also believe that the global perspective matters. It may be true, as Adam Smith observed, that we feel more empathy for our neighbours, our countrymen, than for people we have never met on on the other side of the world. But they are human beings with dreams and ambitions for themselves and their children, and their wellbeing still matters. The political and economic system that gives them as well as ourselves the best lives is the one we should favour.
At the root of all this is the sense of empiricism that defined the Scottish Enlightenment and that helped to create the scientific and industrial revolutions. Progress in science and industry comes not from philosophising, but from trial and error. So it should be with government policy as well – our policies should be based on good economics, good history and good evidence.
Our disagreement with Theresa May is not over whether policies should be pragmatic, it is over which policies are pragmatic. We’ve argued that many of her flagship policies – union reps on company boards and energy price controls, for example – fly in the face of experience where these policies have been tried before.
Markets work, and we have a huge amount of evidence for that, so a truly evidence-based policy will usually end up favouring free markets. Abstract principles are for people without evidence for their positions: we neoliberals are about the real world.
Our policy agenda hasn’t changed. We want low, simple, flat taxes to promote investment and growth. We want patients and parents to have choice and control over healthcare and education, through voucher systems and competition between private firms. We want to liberalise the planning system so that the private sector can build more homes, and create a free market welfare system that guarantees that work always pays. And we want free trade with the world and a liberal immigration system that people trust.
So in embracing the term neoliberal, we’re hoping that we’re being a little clearer about what we already believe in and do. We fight for free markets, property rights, globalisation and an open society, all based on real-world evidence. Those are what have given us the rich, peaceful, prosperous world we live in, and with more of them we can help to make things even better. It’s time for us neoliberals to start going on the offensive and fight for the world we have helped to create.