What’s the Difference Between Liberals and Conservatives? The Economic Dimension

Posted: October 28, 2015 | By: Iowa Caucus Project Staff Tagged: About the Caucuses

By Dennis J. Goldford, Harkin Institute Flansburg Fellow

Professor of Political Science, Drake University

Besides the moral dimension of liberalism and conservatism in America, there is an economic dimension. We ordinarily distinguish them by speaking of economic or market liberalism and economic or market conservatism. What confuses the matter is the fact that economic or market conservatism is actually a form of liberalism, a form that is typically called 19th-century or Manchester liberalism. See, for example, the way conservative economist Milton Friedman characterizes his views in his book Capitalism and Freedom as liberalism in its 19th-century sense. Also see “conservative” economist F. A. Hayek’s essay, “Why I Am Not a Conservative.”

Lost in the polemics of difference is the fact that in their economic dimension American liberalism and American conservatism share a fundamental commitment to the idea of market society, the central principle of which is this: under conditions of fair competition and equality of opportunity, inequalities of outcomes are traceable to differences of individual effort and achievement and are therefore just.

Given that principle, then, for economic conservatives, the free market, left to itself, will operate optimally indefinitely. Because the chief danger to and source of problems in the operation of the free market is government intervention, the solution is a policy of laissez-faire.

For economic liberals, the massive increase in economic power and concentration represented by the great trusts that developed by the end of the 19th century meant that the idea that the free market left to itself will operate optimally indefinitely, if ever true, was true no longer. The liberal position, developed during the Progressive era, was that the free market, left to itself, will self-destruct; that even if conditions of fair competition and equality of opportunity existed at the outset, the operation of the free market would itself undermine them.

Therefore, to economic liberals, because the chief danger to and source of problems in the operation of the free market is a policy of laissez-faire, the solution is government intervention. Recent works in this regard include Thomas Piketty, Capital in the Twenty-First Century and, more recently, The Economics of Inequality, and Joseph Stiglitz, The Price of Inequality.

In this sense, socialists oppose both economic liberals and economic conservatives—i.e., market liberals and market conservatives, respectively—because they, the socialists, oppose the idea of the free market and the very idea of market society supported by both. During the present caucus season the American people have learned that Bernie Sanders considers himself a democratic socialist.

Nevertheless, as indicated by his reference to Scandinavia in general and Denmark in particular in the Democratic debate on October 13, 2015, Sanders’ position appears to be one that advocates simply and larger and more substantial welfare state—i.e., a stronger social safety-net—than conventional American liberals support, rather than the abolition of market society. It must be said, though, that while both liberals and socialists support a much more generous social safety net than conservatives do, liberals believe that this is possible within the framework of market society, whereas socialists believe that we would have to move beyond a market society to construct such a policy.

There is, additionally, another key proposition in dispute. Both economic liberals and economic conservatives subscribe to the proposition that it is possible to have meaningful political and legal equality—a fundamental tenet of the liberal tradition—in the context of substantial social and economic inequality. Both expect the market, in the absence of discrimination or other forms of unfairly putting a finger on the scale, to issue in such inequalities due to differences in individual effort and achievement. As we have seen, what divides liberals and conservatives in this sense is not a commitment to the market, but to whether there is in fact an unfair finger on the scale.

Socialism, on the other hand, rejects the possibility of having meaningful political and legal equality in the context of substantial social and economic inequality.

After this rather extended discussion, then, perhaps the most succinct “takeaway” regarding the economic dimension of American liberalism and conservatism is this: economic liberals and economic conservatives opposed each other because, despite their common commitment to the free market, they hold opposing views as to the source of and solutions to problems with the free market.