It’s true: the Liberal Democrats are far more radical than Labour

At autumn conference this year, unnoticed by most as the farce of Brexit continued to dominate headlines and Lib Dem attentions, the party passed some of its most radical, progressive and exciting economic policy in years. In the nearly four years that I’ve been a member, I’ve spent a lot of my time criticising the party for failing to think properly about the economy beyond tinkering with the existing system, so it fills me with happiness that we’ve finally sorted ourselves out. In particular, I noticed this article get a lot of stick. How ludicrous, the critics say, that the dull, centrist Lib Dems can paint themselves as more radical than Corbyn and McDonnell! But here’s the thing – it might be uncomfortable for some to admit, but it’s true. And here’s why.

In some of my more formal essays on liberalism, I’ve outlined the necessity for liberals to be genuinely radical and creative with their economic solutions, and not just be content to operate within the same old systems which have caused such structural damage and disadvantage. I’ve argued that we need to systematically dismantle those structures of domination, and truly liberate people economically. These policies do exactly that.

The policy I’m perhaps most excited about is the realignment of wealth taxation. By abolishing inheritance tax and instead taxing intergenerational transfers as income, as well as taxing income from wealth in the same way as normal income, we stop the entrenchment of privilege across generations by huge transfers of wealth, while giving most people – the non-wealthy – a very generous allowance and exempting small gifts. A similar proposal was mooted by the IPPR, my favourite think-tank, and it’s fantastic to see it as formal Lib Dem policy.

But it’s also about what we can do with the money raised from this. We now have policy to set up the Citizens’ Wealth Fund, a sovereign wealth fund managed by independent financiers, to invest on behalf of the nation. Most excitingly, we want to use it to set up a citizens’ dividend, so every person can share in the growth of the nation they helped contribute towards. I am particularly interested in a supplementary idea, spoken about before by Vince, of turning this into a young people’s dividend, receivable on their 18th birthday, to really hammer home our message of intergenerational fairness. We also want to invest in lifelong education and reskilling, so workers are equipped for the modernisation of industry. We are the only major party talking about this.

But we’ve also come up with more: most notably, abolishing business rates and replacing them with a land value tax. This proposal would stop the absurd disincentive to investment and development that business rates currently provide, and would instead tax solely the basic land occupied. In this way, the burden of taxation also shifts from tenant to landlord, and thus provides a major shift of economic power.

Adding all of this together is a radical platform in itself. But combined with existing policy – most notably employee-ownership, one of our core pieces of industrial policy for over half a century and ingrained into our constitution, and a preference for new wealth taxation on property rather than higher income tax, our economic policy is by far the most reformative and fresh of any of the major parties. This is most notably true with Labour: the economic section of their 2017 manifesto merely called for some taxes to be tweaked upwards, a few nationalisations, and intervening to stop high street ATMs being taken away. They try to present themselves as radicals, but the truth is that their policies are pedestrian. The Lib Dems are the real reformers, and after Conference this year, that is truer than ever.

7. Liberalism and the Economy – Universal Basic Income

With a framework for the determination of liberal policy constructed, and the bridge between philosophy and policymaking complete, our attention can now be turned fully to policy. As explained in my initial essay, I intend to conduct a broad sweep of each general area of policy, drilling down to specifics over multiple parts. The first of these is the economy, which I intend to examine in multiple parts. This first essay will concern the basic organisation of the economy, which I argue should be capitalist, though acknowledging the current issues with the broken capitalism we have, and then argue for a universal basic income, to eradicate the greatest source of domination: economic uncertainty arising through poverty.

The system at large

The significance of the economy for the liberal project cannot be understated. As explained in a previous essay, it is the underpinning of everything; the single biggest determinant of one’s life chances and quality of life. It is essential, then, that the basic structure of the economy is set up correctly. The basic fabric should be fundamentally capitalistic: the capitalist economy at its most fundamental respects and responds to the choices of the individual, and thrives when our basic freedoms are most respected. But capitalism can be warped – without a proper flow of information, and without regulation, the power that capitalism rightfully deprives from the state in terms of economic control can be transferred almost entirely to private entities, where the domination is no less problematic. True capitalism – liberal capitalism – must regulate free markets to ensure sufficient information is given to consumers to be able to make informed choices, must ensure no entity grows so large that it gains dominative power, and ensure that capital – capitalism’s basic unit – is accessible by the masses. The problem in recent times has been that companies have been owned by an increasingly elite group of people, and free markets have been pursued as an end in themselves, rather than an instrument for the freeing of people. I intend to turn to solutions to this problem in the next essay, where I will argue amongst other things for a radical new employee ownership scheme and bold co-operatisation programmes.

Personal finance and the Universal Basic Income

But if our system is capitalist, then money is of high value. Those with it can do as they please, unstressed and unburdened by the disenfranchising problems of poverty, while those without it feel exploited by a system that doesn’t work for them, and allow them the fruits of society and the economy. Most importantly, and most relevantly for our philosophical framework, poverty means they lack the capacity to participate in society, and from there stem multiple societal problems – disaffection leads to crime, to lower educational standards, to healthcare problems, and so on. Take an example: a single parent having to juggle three jobs just to keep food on the table and a roof over the family’s head would very likely end up stressed, leading to health problems down the line, have no extra time to give to their children, leading to gaping educational disparities between rich and poor, and never own property, leaving them without economic security. This is economic precariousness. It is a burning injustice. And in such a situation, it is clear that a person cannot participate fully in society; they cannot be said to have equal freedom from domination. Fixing that economic precariousness that people find themselves in is crucial, then – it is a source of the highest domination in people’s day-to-day lives, and as liberals, we have to eradicate it.

How? Again, the philosophical framework is useful. If our philosophical priority is getting the poorest to a point where they can participate in society, and precariousness is the target of our action, then there is a very simple answer: unconditionally give everyone a reliable source of income to push them over that line. This is called a universal basic income (UBI), and has been trialled successfully in a few places around the world.

It is superior to the present welfare system for practical reasons: rather than creating a complicated bureaucracy of dozens of elements requiring form-filling, checks, multiple levels of processing, and everything that accompanies it, it is one single payment that everyone gets. For the rich, who don’t need the money, it gets taxed away, but for the very poorest, it completely removes economic precariousness as a source of domination, by knowing that whatever happens, they will have enough money to live off.

Objections to this policy are obvious: giving money to people who don’t work for it seems to be subsidising the lazy. But there are compelling reasons why this is not a persuasive objection. Firstly, in the present social welfare system, there are free-riders, as there will be in any comparable system. It is a constant section of the population, and giving the payment in one tranche and as one payment won’t affect that. And secondly, on a more philosophical level – the money proposed as part of a UBI would be enough to live off. What compelling moral argument is there for someone not to receive the bare minimum to survive? All members of society, regardless of what they do or don’t do, deserve that much.

Another objection is that it would encourage people not to work. But it seems to me that this lacks force as well: very few people are satisfied with earning the bare minimum to live anyway. Indeed, empirical evidence shows this to be true. A UBI pilot in Canada in the 1970s found that there was no change in employment rates, but people did stay in education longer, there were fewer hospitalisations, and mental health admissions sharply declined.

Poverty and economic uncertainty are two of the greatest causes of social and public health problems. Welfare systems are overcomplicated and enormously bureaucratic, leading to eye-watering costs, and also to people falling through gaps and being left in dire need but with no money whatsoever for periods of weeks or months. A universal basic income identifies this source of economic domination, and eradicates it immediately. It is a happy coincidence that it also respects the dignity of the individual, giving them money and trusting them what to do with it. For the philosophically minded, this in particular will satisfy liberal luck egalitarians – people are given money to enable them not to be dominated. But if they choose to squander it (which studies show does not really happen at all), that is the consequence of their choice. It therefore corrects the brute bad luck of being born into a poor family, but not the option luck of using the money badly.

Liberals should be deeply alarmed by the great injustice of poverty, and its distorting effect on society. Rather than tinkering around with minor tweaks to tax rates, personal allowances and other things which fail to attack the core of the issue, we should be unafraid to be bold in our ambition to eradicate economic precariousness for every citizen of our country. A universal basic income does precisely that, and, I would argue, is a liberal thing indeed.

6. A Brief Framework for Liberal Policymaking

In the previous essays, a philosophical justification for liberalism has been provided on the conceptual level, beginning with basic, universal philosophical principles, and working through their implications. It was determined that liberalism is what results from giving priority to equal freedom from domination and equal capacity to participate in society, and that, for anyone who values autonomy at all, this principle is superior to conservatism, libertarianism and socialism. But now that the concept has been identified, it is necessary for us to go a step further, and to stray into the territory of practical policymaking. This is the gap so infrequently bridged in liberal thought, with philosophers theorising in books and articles on the one hand, and liberal politicians working in near-isolation on the other. The aim of this essay will be to build that bridge, by establishing a generic framework for the generation of liberal policy, and thereafter, in following essays, I will examine its implications for each major area of practical policymaking.

Based on the philosophical groundwork, one principle above all – our supreme principle – must be fulfilled. Liberal policy, very simply, must free people from domination. But in order to drill down into precisely what is meant when this is said, we must first determine what domination constitutes. Fortunately, our auxiliary principle helps with this.

We stated earlier that the auxiliary principle was the creation of equal capacity to participate in society. The value of equal freedom from domination, we said, was to allow equal participation. It was from there that we derived the principle that our primary focus should be on helping the lowliest in society to be pushed over the threshold at which they can be said to participate properly – and thus on an equal footing. And so it is here that we can shine a light on the definition of domination. Because domination is not simply a current, existing interference with that freedom to participate: domination encapsulates potential threats to that freedom. Liberals want to liberate people from any conglomeration of power which could choose to act to limit a person’s capacity to participate in society properly, and on an equal footing. The best example is of the slave and slaveowner. The slaveowner might be benevolent, and in practice not interfere with the life of his slave. But does that mean that the slave is free? No, the slave is still dominated, and needs liberating.

So, in sum, all liberal policy must be designed to free people from domination, where domination is a threat – potential or current – to a person’s capacity to equally participate in society. So far, so obvious.

But there is a further requirement that liberal policy ought to fulfil: policy must be radical. If a source of domination is identified, then in almost all cases, that domination is structural. It arises out of the way society or its institutions have been set up and organised, and thus is systemic. If a liberal identifies such a source of domination, then the way to eliminate it is inherently to make a structural change. These are necessarily radical. It would make little sense to identify a problem which has its roots in the way the system is set up, and then to keep the same system in place, but simply to tinker with some of the finer details of how that system is executed. The domination would remain in place, because someone could simply change those details back – the system would still be susceptible to interfere with an individual’s capacity for equal participation.

Liberalism, then, is the ideology of equal freedom from domination, and as its auxiliary, equal capacity to participate in society. It views all people as inherently morally equal, and thus no more deserving or undeserving of the benefits of arbitrary qualities. It views freedom and equality as fundamentally social concepts rather than untethered, ethereal ones, and thus views democratic, societal equality as the root of all other equality which may follow from it. It is not egalitarian for its own sake, but believes first in the priority of the poorest until they reach a point of sufficiency measured by their ability to participate in society, tolerating minor inequalities and the reaping of some fruits of arbitrary talent by the talented if by doing so, the lot of the poorest is increased. And thus, any liberal policy must adhere to two core principles: it must identify a source of domination and eradicate it with reference to improving an individual’s capacity to participate in society – the liberational element – and it must do so without falling into the temptation to merely tweak the existing systems which are the source of the domination – the radical element. It is abiding by these principles that liberals can generate policy in all areas, underpinned by a consistent set of philosophical principles.