Economic Theory

Liberalisation Under Threat, Says IEA Author
The trend to liberalised markets, so prominent in the final decades of the twentieth century, is now under threat claims Professor David Henderson, former Head of Economics and Statistics at the OECD in an IEA paper.*

Liberalisation produced clear gains in economic performance, says Henderson, and some commentators argue that it will not be reversed. However, powerful countervailing forces have appeared and may be gaining ground.

Henderson groups both old and new anti-liberal forces under the heading of ‘new millennium collectivism’ which, he argues, provides the main impetus behind anti-liberalism 2000. One important factor is the continuing hold of ‘pre-economic ideas’ and, in particular, the view that a market economy contains many ‘victims’ whose welfare depends on collective action by ‘society’. Newer collectivist elements include the rise of anti-market NGOs, a wider circle of perceived ‘victims of injustice’, the spread of labour market regulation, and an ‘alarmist consensus’ about globalisation and environmental degradation.

An informal interventionist alliance now exists which includes some businesses, unions, quangos, UN agencies and many commentators and public figures. Its appeal derives from three ‘principles’ – human rights, corporate social responsibility and sustainable development – which are open to question.

Liberal economic reforms were prompted by the failures of previous policies. Henderson concludes that it is unclear what policies the critics would want to reverse and what they would put in their place.