Home' Policy Magazine : Policy Vol 33 - No 3 Contents 38 POLICY • Vol. 33 No. 3 • Spring 2017
IN DEFENCE OF NEOLIBERALISM
We are globalist consequentialists who have
concluded that free markets, property rights, free
trade and liberal migration policies are effective
tools for fostering economic growth and improving
the well-being of the global poor. We’re suspicious
of politics; democracy is not the panacea for our
problems that many on the left and, increasingly,
the populist right seem to think. We cannot hope
to solve political problems by chucking out experts
and replacing them with politicians or referendums.
How to Spot a Neoliberal
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
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—from
healthcare, education and environmental policy to land-use planning, traffic congestion and organ allocations.
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 well-being is all that matters, and generally individuals are best at defining what is best for
3. We are individualistic. We promote low simple taxes because we want economic growth and to give people more
power over their money, so it is individuals and not the state who choose where their income goes. We promote
competition in healthcare, education, utilities and other public services because we want those things to be better
through a process of experimentation and individual choice.
4. We care about the poor. Caring about people’s well-being 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.
5. We are globalist in outlook. 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. We promote globalisation because we want to raise the living
standards of people around the world through trade and investment. We also tend to be pro-immigration—not just
because it’s good for the natives, but because it’s good for the migrants themselves.
6. We are empirical and open-minded. 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, even though it’s often painful to do so. 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.
7. We are optimistic about the future, and think the world is getting better. And, really, it is: pro-market ideas
have taken hold, raising living standards by an extraordinary amount for a huge number of people. The centre-
ground consensus in nearly every developed economy is much more pro-market and liberal compared to where it
was 50 years ago. Although it is often less pro-market than it was 100 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 especially important in the developing world, where weak or
non-existent property rights preclude capital accumulation and growth.
9. 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. 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.
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