I’m a neoliberal. Maybe you are too

‘Neoliberal’ is a term of abuse used by some people to attack fans of the free market. It is usually badly defined and other people’s attempts to define it have ended up being confused or confusing. Ben’s definition is the best I’ve read, because it describes a group who are distinct from libertarians and who lack a good descriptive term already.

This post is an attempt to trash Ben’s good work and reappropriate the term for my own purposes. A lot of what Ben says still applies, but a lot doesn’t too.

There is a emerging and growing group of people, particularly coming out of the libertarian movement, that lacks a useful descriptive term. These are people who are libertarianish — but they are fundamentally different to the mainstream libertarian movement when it comes to important values and approaches, and frankly lots of libertarians hate them for being, in their eyes, too statist or leftist.

I am one of them, and perhaps you are too. Many of our left-wing opponents would describe us as neoliberal to slander us. I suggest we follow the Suffragettes and wear this label with pride.

So who are “we”? Here are a few common beliefs that I think “we” have in common. I’m not claiming that these beliefs are exclusive to us, of course.

  1. We like markets — a lot. We think that markets are by far the best way of organising most human affairs that involve scarce resources, because they align people’s incentives in ways that communicate where resources can be be used most efficiently, and give people reasons to come up with new ways of using existing resources. This means that markets and market-like systems are desirable in many, many places they’re not present at the moment — healthcare, education, environmental policy, organ allocations, traffic congestion, land-use planning.
  2. We are liberal consequentialists. A system is justified if it is the one that best allows people to live the lives that they want to live, or makes them happiest or more satisfied than any other. There are no inherent rights that override this. People’s wellbeing is all that matters, and generally individuals are best at defining what is best for themselves.
  3. We care about the poor. Caring about people’s wellbeing leads us to caring about the worst off people. Usually an extra £100 makes a pauper better off than it makes a millionaire. This diminishing marginal utility means that poor people’s lives are the easiest to improve for a given amount of time, energy and money.
  4. We care about the welfare of everyone in the world, not just those in the UK. It’s natural to feel more in common with people who live near you and live like you, just as it’s natural to care much more about your family than about strangers. But when it comes to policy, we care about improving everyone’s lives, wherever they are. That’s one reason we tend to be quite pro-immigration — not just because it’s good for natives here, but because it’s so good for the migrants themselves.
  5. We base our beliefs on empirics, not principles. There is an unlimited number of stories that you can tell about the world, but only a few are true. You find out which are true by comparing the stories to reality with experiments and throwing away the ones that don’t fit. It doesn’t matter if a theory appears to be internally coherent — if it can’t stand up to experimentation, it’s wrong. In particular, quantitative empirical research is what we look for.
  6. We try not to be dogmatic. Testing your beliefs against the world requires you to be prepared to throw out the ones that are wrong, even though it’s often painful to do so. This means that we have to be willing to change our minds, contradict our friends, forsake our heroes, and be unpopular with fellow-travellers who think that they’re obviously right. One way to deal with the emotional costs of this is to internalise the virtue of open-mindedness so that changing your mind makes you feel just as good as being ideologically consistent once did.
  7. We think the world is getting better. And, really, it is: pro-market ideas have taken hold nearly everywhere, raising living standards by an extraordinary amount for a huge number of people. The centre-ground consensus in nearly every developed economy is extremely pro-market and liberal compared to where it was fifty years ago, and although they are often less pro-market than they were one hundred years ago that is offset by major advances in the rights of women and non-whites.
  8. We believe that property rights are very important. Predictable and formalised ownership of scarce resources is extremely important. It allows people to make long-term plans for the future, which incentivises improvement of their own circumstances. Overriding property rights capriciously undermines the incentive people have to hold off from consuming and invest in their futures instead, because they will be unsure about whether they’ll actually get to enjoy the returns of that investment. This is extremely important in the developing world, where weak or nonexistent property rights preclude capital accumulation and growth.
  9. But we’re comfortable with redistribution, in principle. Because we’re consequentialists we don’t think that property rights are morally significant in and of themselves — they’re a useful rule that allows the economy to function properly but there is no intrinsic value to them. People don’t really deserve the talents they’re born with any more than they deserve to have been born in a rich country rather than a poor one, or to be born in 1996 rather than 1896. Because of this, redistributing wealth or income from lucky people to unlucky people may be justifiable, if it’s done without depressing economic growth too much. Too much redistribution can have bad consequences because taxes tend to depress investment and growth, but too little redistribution has bad consequences too — poor people don’t live good enough lives. A neoliberal is someone who believes that markets are astonishingly good at creating wealth, but not always good at distributing wealth.

I’ve noticed that most, if not all, the above statements are true of many people I hang around with and consider my closest intellectual bedfellows. I also suspect a weak version of most of them is held to by many people who consider themselves centrists, and that a very weak version of this might be the basic ideology that underpins the modern world.

My name is Sam Bowman, and I’m a neoliberal.