Libertarianism involves “the upholding of liberty, seeking to maximise autonomy and free choice, mainly in the economy”.
The two main strands of conservatism are divided over economic policy. The one-nation school of thought favours a degree of state intervention broadly along the lines of a mixed economy, whereas those further to the right of the political spectrum believe firmly in the virtues of the free-market. As such, they are therefore closer to the position taken by classical liberals. Indeed, it is revealing to note that the New Right and classical liberals are influenced by many of the same theorists including Ayn Rand and Robert Nozick. It is also notable that classical liberals are dubbed fiscal conservatives within the United States and are predominately found within the Tea Party movement and the Libertarian Party.
The New Right position on the economy is relatively straightforward. In essence, they believe that the economy should be left alone and freed from state interference. The market is self-correcting and will tend to ensure the most efficient allocation of scarce resources. In addition, it will enable the individual to make their own decisions free from bureaucratic meddling. Those who supply goods and services must respond to the needs of the consumer if they want to survive. If they don’t, the government should let them fail. The consumer should ultimately decide which firms survive and which go under.
Self-confessed Thatcherites within the Conservative Party believe passionately in a dynamic economy free from state intervention. They claim that the free market is both economically efficient and morally superior to any statist alternative. What Joseph Schumpeter called the “creative destruction” of capitalism provides sufficient incentive and reward to enable individuals to fulfil their potential. In contrast, state control of the economy undermines our entrepreneurial spirit. Running an economy along socialist lines creates a “client state” that serves vested interests.
During the coalition government, the Tories were firmly committed to austerity in order to reduce the scope and scale of government intervention. Economic libertarians claim that cuts to government expenditure are beneficial in the long-term. This is based upon the assumption that individuals work harder when they retain more of their hard-earned income and wealth. Balancing the books should enable the government to reduce taxation. Moreover, a flexible labour market is essential in order that firms can best meet changes in consumer demand. To ensure this, the coalition government made it easier to hire and fire workers.
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