Welfare Liberalism vs Neo-Classical Liberalism: A Historical Analysis

1. Chapter 3 – Liberalism, Pt 3

2. Welfare Liberalism • Keynesians articulated a response to the excesses of laissez-faire capitalism in the Anglo-Saxon countries. • Keynesians were (are) a type of welfare liberal who advanced fiscal policy as a way of managing economic cycles. • On the continent, Socialism gained widespread appeal to deal with sub-standard working conditions, worker exploitation, and economic depression.

3. Welfare Liberalism vs Neo-Classical Liberalism • Welfare Liberal Tradition – Key 20th Century Thinkers • TH Green (first introduced the notion in 1870) • Franklin Roosevelt (FDR) & the New Deal • Wins US Presidency 1932, 1936, 1940, and 1944 • Consensus on the Welfare State 1930s-1960s • John Maynard Keynes (1936) • Gov’t can help manage economic recessions & depressions • John Rawls (1971, Theory of Justice – see last slide below) • Neo-Classical Liberal Tradition: 1st Key 20th Century Thinker • Friedrich Hayek (1944, Road to Serfdom) • Just be able to identify him on the Midterm as key Neo-Classical Liberal • After the midterm, we’ll see Hayek’s influence on Margaret Thatcher’s Conservative Party in the UK & on Reagan Republicanism in the U.S.

4. Liberalism • In popular discourse, “liberal” tends to refer to liberalism on the left after 1932 • Post World War II liberalism: • Civil Rights • Positive Liberty • Left Liberal Movement • The New Left (Students for a Democratic Society) • Positive Liberty • Left Liberal Movement • Argued for active, participatory democracy

5. John Rawls and the Liberal Tradition A Theory of Justice, 1971 • A philosophical defense of the welfare state: how can we maintain liberty while still providing for the maximization of everyone’s well-being, including society’s worst-off members? • If unequal distribution of resources and wealth can be shown to increase everyone’s well-being, we can philosophically tolerate inequalities of wealth. • This is a philosophical refutation of socialism and communism • A philosophical defense of liberalism, welfare liberalism.

6. Reminder: As discussed in class May 2, the last 3 slides are not on the Midterm Exam! We’ll treat them in the Conservatism unit after the Midterm.

7. The Response from the Right: Neoclassical Liberalism • Robert Nozick, and Milton Friedman were late twentieth century Neo-Classical Liberals who argued that Welfare Liberalism’s redistribution of wealth reduced incentives & economic growth • After 1980, shift to Neo-Classical Liberalism & Libertarianism under Margaret Thatcher & Ronald Reagan in UK & US

8. Libertarianism • After 1980, many supporters of Reagan and Thatcher (and by extension Hayek, Nozick, and Friedman) call themselves civil-libertarians. • React to what they perceive as the excesses of welfare liberalism

9. Liberalism after 1992 • The Third Way: By 1996, the Democratic Party and the Labour Party jettisoned much of their welfare liberalism and moved to a compromise with modern conservatism (neo-classical liberalism). • Since the mid 1990s, an uneasy third way consensus has been achieved – between welfare liberals and classical liberals.