The Strange Rise of Liberal England

May 14, 2016

 

 

 

 

Brexiteers are reviving classical liberalism in UK. Their views on regulation, trade, markets and foreign policy are identical to nineteenth century liberals. As a political group, they deserve to survive the referendum.

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  • Over-regulation was also a prime target for 19th century liberals

  • Pre-war Liberal Party believed global free trade offered UK best prospects

  • Liberals hated high tariffs and rigged markets, because they cost workers money

  • So, the Tory party is headed for an ideological split

 

At first sight, Brexiteers are an unlikely bunch. Awkward-squad Tories, free-thinking labourites, non-establishment businessmen and single-issue activists, semi-led by an eccentric mayor. What no-has cottoned-on to, though, is what binds them together. Unconsciously, Brexiteers are grasping an ancient political thread of enormous strength; one that’s lain buried in UK politics for a century.  

Brexit Believers: Reviving a great political brand

Classical liberalism was the dominant force in British politics from 1846 to World War I. It, too, attracted an odd band of followers, from anti-privilege radicals like John Bright, to high-minded democrats like William Gladstone. What united them was faith in liberal principles: personal freedom, democratic representation, free trade, abolition of vested interests, and progress — as delivered by enterprise and small business.

 

As a force in British politics, liberalism died in 1914. Co-ordinated strikes, rebellion in Ulster and riotous suffragettes tripped the Liberal Party into nervous collapse. In post-war Britain, politics resolved itself into a straight fight between workers and property: liberal ideas had no traction in an economy dominated by trade unions and big business. Instinctive liberals joined forces with Tories, out of necessity not conviction.

 

But right on historical cue, your Brexiteers are reviving liberalism as a political proposition. Listen to them, and you hear a present-day application of every one of those classical liberal principles. What gives them potency is the re-emergence of their old political base. Today, small-scale private enterprise is the most dynamic part of your economy, and your workforce is radically reshaping itself. If your Leave campaigners can hone their message, they have a huge, natural audience to speak to.  

No rules please, we’re British

Brexiteers share with liberals a profound distaste for rules. This makes the EU an instinctive target for Brexiteers, because the EU is a regulation-creating machine; it cannot operate or expand its power any other way. The fact that all its rules have to be enacted into UK law means that UK is inherently a more heavily regulated place to live and work than it would be if UK were outside the EU. And since the EU can only progress by making new rules, this trend won’t change.

 

Compare this state of affairs with a classically liberal concept of governance, from 1872:

 

“The difference between a free government and a government which is not free is principally this: that a government which is not free interferes with everything it can, and a free government interferes with nothing except what it must[2].”

 

A more elegant expression of the Brexit manifesto you will not hear. Possibly most of your political class would concur, but what marks out the Brexiteers is their desire to act. For them, to oppose excessive regulation without opposing the EU is pointless. The UK can only reliably reduce regulation by exiting the EU, and they have 40 years’ history on their side.

A free trade area? Pull the other one

Your Brexiteers have also clocked that the EU’s Single Market is a free trade area in name only. In reality it’s a vast, legal construct forced onto commerce and employment relations that stipulates not just what can be sold, but how products must be made. In effect, the Single Market is the reverse of a free trade area, because it restricts the freedom to create and sell new products.

 

The idea that governments should create and control markets by stipulating what can and can’t be sold aroused horror among Victorian liberals. From the same speech:

 

“It is the practice of allowing one set of people to dictate to another set of people what they shall do, what they shall think, what they shall drink, what they shall buy and what wages they shall get, and how they shall spend them, against which the liberal party has always protested.”

 

So when business kicks against the EU’s Working Time Directive, or James Dyson has a stab at German competitors who manipulate EU product standards for their own benefit, they are echoing a basic principle of economic freedom grounded in classical liberalism.

Global free trade: the hot gospel of Victorian liberals

In terms of economics, what marks your pro-Brexit squad out from the Remain pack is their commitment to global free trade. This is an ideal that the EU has never shared. In the 30 years the EU has had to negotiate free trade agreements, their biggest so far is with South Korea — an initiative, incidentally, of the South Korean Lee Myung-bak government.

 

Raising the banner of global free trade isn’t just an out-flanking of the ‘Little Englander’ jibe, nor is it just about trade. For Victorian liberals, free trade was a social agenda: it united every strand of the liberal movement, including working-class radicals. Low trade barriers allowed industrial workers to exchange their own labour in highly-competitive manufacturing for the lowest possible price of (imported) food. It balanced the interests of manufacturers with the interests of workers as consumers.   

 

The age-old trade-off between access to global markets and low import prices has resurfaced with Brexit. Take the favoured UK punch-bag, the Common Agricultural Policy (CAP). Just like the old Corn Laws, the CAP and its associated EU tariffs is a mechanism for keeping cheap overseas food off UK dinner tables, or at least out of UK supermarkets.

 

The historical analogies with radical liberalism extend quite far, even if today’s oratory falls far short. Your Grassroots Out activists share the same taste for mass-movement opposition as the old Anti-Corn Law League. Both drew energy from a sense that the current economic system was rigged against less well-off workers — and the CAP amounts to an annual £2.9 billion bung to farmers. Just like the Anti-Corn Law League, Grassroots Out is attacking vested interests that add costs to daily life.

 

So if vested interests that work against the poor is something that gets you riled, the EU is one fat target: a fact which helps to explain why your Labour Party is so hopelessly incoherent in its response to Brexit. As one of your ‘Economists for Brexit’, Patrick Minford, has elegantly put it:

 

“The EU is a customs union that erects a tariff and non-tariff wall around EU member states that is highly protectionist and raises the prices of protected goods, including agriculture and manufactures … far from being a free-market paradise, the EU market has prices well above world market prices.”[3]

 

No-one in your debate has tried to deny that EU has higher average tariffs than, say, US or Canada, and that EU’s food tariffs are particularly high[4]. Fortunately for Brexit, and thanks to the World Trade Organisation, global tariffs are quite low. But there are still multiple areas, especially food, where UK citizens pay above world prices because the market is manipulated – and imports restricted – by the EU.

 

Even when the EU does have a stab at free trade, it tends to miss the point. Take the recently negotiated Canada–EU trade deal. The one trade liberalisation that would most obviously benefit UK (and Irish) citizens would have been the mutual recognition of professional qualifications. The benefits would have flowed from schools and hospitals to multiple areas of professional practice as UK citizens gained access to foreign expertise. Did the EU put that in for UK’s benefit? ‘Course not.  

Foreign entanglements

Last, your Brexiteers and liberals share a discomfort with permanent alliances. The EU is above all a perpetual alliance, and the UK is steadily abandoning its independent foreign policy for the diplomatic caché of speaking with a single EU voice. Interestingly, Cameron’s ‘renegotiation’ package made no mention of pulling UK back from the trend towards a single European foreign policy. 

 

This is the precise reverse of the liberal approach. It was a liberal Prime Minister, Palmerston, who said England had ... “.. no eternal enemies, only permanent interests”, and Gladstone who consistently warned against “foreign entanglements”.

 

Your Brexiteers are clear that they want UK to be free to set its own foreign policy. Looked at from the other side of the world, there’s no reason this wouldn’t work. Much smaller countries manage it. Australia has a permanent security alliance (ANZUS) with US, just has you have via NATO, but otherwise we join diplomatic forces with other countries when needs arise and interests coincide.

 

In any case, with so many varied interests to pull together, the EU has a poor record of responding effectively to crises — from the Balkan Wars in the 1990s to today’s refugees. The Brexiteers calculate that UK will get more bang for its diplomatic buck if the country saves its energies for the moments when UK interests are directly stake. Their liberal forebears would agree: if they didn’t snigger at the suspicion that the Foreign Office was just trying to make life easy for itself.

Brexiteers have a political base waiting for them

The most interesting question, though, is whether your Brexiteers have a receptive audience. The 19th century liberals did. If you were a skilled labourer, a small businessman, an entrepreneur, or a dissenter or non-conformist with a social conscience, or in fact anyone who saw progress in terms of personal effort, then the liberal, Free Trade hymn was music to your ears. 

 

It’s probably no coincidence, then, that the Brexit debate has surfaced now. Today, small-scale entrepreneurs are the most dynamic players in your economy, and the dominant trend in UK employment is the rise of small business. The freedom of the digital economy has opened up national and international markets to small-scale entrepreneurs. Corporate Britain is losing its cache because anyone can market their own business. Given a choice that’s what Britons like doing.

 

According to official data, small and medium sized businesses now employ 15.6 million people, which is 60% of all private-sector employment. Approximately 4.5 million people are self-employed. Your workforce is become more atomized, separating out into ever smaller units of employment. In economic terms, you’re working in a world that Adam Smith would grasp better than Maynard Keynes.

 

This matters because small businesses share the same economic agenda as Brexiteers: they hate regulation because the cost of compliance disadvantages them against bigger competitors. They know that EU regulations are typically cooked up in ‘consultation’ with big business in Brussels, whose interests are thereby served. And where regulation slows innovation, it attacks the competitive edge small business needs to take on bigger companies.[5]

 

What are small companies’ interests? Free access to global talent is one. For them, far better for the UK to adopt a skilled migration scheme that brings in high-earning, skilled workers than unskilled non-English speakers. Brexiteers may be wide of the mark in wanting Australia’s points-based migration system because Australia has moved to an employer-sponsored approach. But the desire for undiscriminating access to global talent is still obvious — and difficult to argue with.

One month to find their base

It would be a pity if your Brexiteers don’t connect with their natural voters in time for the referendum. As liberals, they have a natural constituency waiting to hear a progressive message of economic opportunity and social justice. It’s almost the same audience our Liberal Prime Minister, Malcolm Turnbull, spoke to when he gained office earlier this year, claiming, “There has never been a more exciting time to be an Australian.” But then, the Australian Liberal Party never died.

 

If 19th century liberals were present at the Brexit debate, they would see every tenet of their political faith at stake. With the withering away of trade unionism, and the powers of innovation and initiative seeping back into the hands of small business, they would be talking to a workforce they understood.

 

What would they say? With due allowance for moralising and the tired, told-you-so tone of the old, you would probably be treated to a few homilies along the lines of:

  • Excessive rules aren’t just annoying, they’re an infringement of personal liberty

  • Over-regulation isn’t just costly, it’s a threat to creativity and progress

  • Free trade is progressive, because people can purchase more with their money

 

As they spend more time together, your Brexiteers will discover that what unites them is far stronger than a shared antipathy to the EU. They have already adopted a coherent set of political and economic principles that carry formidable political heritage. So if they win, prepare yourselves. Westminster will have a new political grouping on its hands. 

 

© Phil Radford

 

 

References

 

[1] The title is a reference to George Dangerfield’s 1936 classic: The Strange Death of Liberal England.

 

[2] Sir William Harcourt, 31st December 1872. The Times.

 

[3] UK Daily Telegraph.

 

[4] The UK Treasury estimates that the average EU tariff on animal products at 20%, cereals at 15% and Beer, spirits and tobacco at 13%. Some food tariffs exceed 80%.

 

[5] The Spectator

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