In many ways, Britain is a more tolerant society today than 50 years ago—but liberalism is under threat

The Oxford political theorist Michael Freeden has called Britain “a beacon of liberalism.” TS Eliot thought it was “rotten with liberalism.” Friedrich Hayek insisted that it had jettisoned the liberal values of its great days and taken the “road to serfdom.” As these diverse verdicts show, liberalism has many dimensions. Three stand out. The most obvious is the political liberalism embodied in the Liberal party from the 1860s to the 1980s and then in today’s Liberal Democrat party. But liberalism is also a creed; and, not least, it is a way of life as well. These three dimensions overlap in puzzling and sometimes contradictory ways, but on all fronts, Britain’s liberal tradition is under threat.

In its Victorian heyday, political liberalism was a rather leaky umbrella, covering a vast and disputatious caravanserai of the grand, the high-minded and the excluded. The party that embodied it was a motley agglomeration of Whig noblemen, small traders, dissenters, successful professionals, teetotallers, trade unionists, radical intellectuals and leasehold tenants, as well as the occasional business magnate. It was the child of an unlikely liaison between aristocratic Whigs and popular radicals. Yet William Gladstone, the iconic champion of political liberalism, started his parliamentary career as a high Tory and served his ministerial apprenticeship under Robert Peel, the chief architect of the Conservative party.

As he aged, Gladstone moved left. He came to believe that the masses were more virtuous than the classes, sought to mobilise mass support with a fervent public moralism and outraged the respectable in doing so. The great cause of his old age was Irish home rule: “devolution” in modern parlance. He pursued what he saw as justice for Ireland with the driven intensity of an Old Testament prophet scarifying the unregenerate. He led from the front at great personal cost, and appealed to the better angels of British natures. He fought to reconstruct the British state and identity on generous, pluralistic lines and, in doing so, challenged the fundamentally illiberal doctrine of absolute Westminster sovereignty. Had he won, the bloodletting that accompanied southern Ireland’s secession from the United Kingdom would never have taken place. All four nations of the Britannic isles might now be members of a federation in which multiple identities and shared sovereignty are taken for granted.

It was not to be. The Liberal party split in 1886 over the home rule bill, and Gladstone lost. But his ambiguous legacy haunted his party for years after his death. Partly because of this, no neat formula can do justice to its politics. Liberals were for freedom: free trade, free speech, freedom of conscience, freedom of assembly, a free press, a free market, and freedom for small nations to determine their own destinies. But freedom means different things to different people; and Liberals often disagreed bitterly about its implications for policy. The split over home rule was a classic example: Gladstone saw Ireland as a small nation seeking to exercise its right to self-determination; the Liberal Unionists who broke with him saw it as inextricably part of the monolithic British state. Fifteen years later, Liberal Imperialists like Herbert Asquith and Sir Edward Grey supported the flagrantly aggressive Boer war against furious opposition from Liberal “Pro-Boers” like David Lloyd George and Gladstone’s biographer John Morley.

Behind these differences lay a more fundamental one. Were Liberals for “positive” freedom as well as “negative,” or only for negative? For freedom to realise one’s potential, or only for freedom from constraints imposed by others? Broadly speaking, all Liberals have been for negative freedom, but for more than a century the Liberal coalition has encompassed two radically different approaches to positive freedom. Economic liberals have been for negative freedom only; social liberals have also been for positive freedom. Since the late-19th century economic and social liberals have coexisted within the Liberal and Liberal Democrat parties, but there is a huge philosophical and practical chasm between the two strands. Economic liberals have seen the state as an enemy. For social liberals it has been a friend.

Economic liberalism goes back to the bleak social Darwinism of the Victorian sage Herbert Spencer, who insisted on rigid adherence to laissez-faire and denounced social reform (even including free libraries) as a socialistic attack on individual freedom. Social liberals like the economist JA Hobson and the sociologist Leonard Hobhouse supported radical departures from laissez-faire in the name of a positive conception of freedom that stressed personal growth and favoured state action on an unprecedented scale to achieve it. In the glory years of social liberalism before the first world war, the Liberal government passed the National Insurance Act that laid the foundations for the mid-century welfare state, changed the incidence of taxation to favour the poor against the rich and tried to establish the principle that society has a special claim on socially created wealth.

After the war Lloyd George and John Maynard Keynes, the two greatest social liberals of the last century, masterminded the famous Liberal “Yellow Book” (1928)—one of the most radical political documents to appear in 20th-century Britain. Among other things, it advocated a programme of loan-financed public works to stimulate employment, a National Investment Board, an Economic General Staff and a “Council of Industry” to sponsor what amounted to an incomes policy. More remarkably still, it proclaimed defiantly that the “supposed choice between Individualism and Socialism” was obsolete and that market forces could and should be superseded by state intervention when it was in the public interest to do so.

Today the contrast between economic and social liberalism is sharper than at any time since Lloyd George’s campaign to conquer unemployment. For practical purposes, the differences between present-day social liberalism and present-day social democracy are paper thin. Both are eager to use state power to master market forces in the interests of social justice and cohesion. The post-war government of Clement Attlee, the greatest reforming government since Asquith’s, owed as much to Liberal thinkers like Keynes and William Beveridge as to any socialist. The Lib-Lab pact in the closing years of the James Callaghan government, the Liberal-Social Democratic Party (SDP) alliance in the early 1980s, and the Liberal-SDP merger after the disappointment of the 1987 election all showed how easy it was for social democrats and social liberals to find common ground.

But even in the heyday of social liberalism, economic liberalism never died out. There were touches of it in at least two post-war Liberal leaders, Clement Davies and Jo Grimond, and in the last few years it has come in from the cold. The most dramatic example is the notorious “Orange Book,” published in 2004. With belligerent chutzpah, David Laws, the editor and prime mover, did his best to rewrite Liberal history and excise Beveridge, Keynes, Asquith and Lloyd George from Liberal memories. His purpose, he wrote, was to rescue the “Liberal belief in economic liberalism” from the “soggy socialism and corporatism” that the Liberal Democrats had allegedly embraced in the 1980s. Somewhat later, Nick Clegg, another Orange Booker, declared that “the state must back off” and give free rein to “the genius of grassroots innovation, diversity and experimentation.”

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Against that background, the curious story of the present coalition falls into place. For the Orange Bookers, coalition with the Conservatives was not an unwelcome necessity; it was a marriage made in heaven. Had the parliamentary arithmetic made it possible to form a viable Lab-Lib Dem coalition, they would have been dismayed. The vision of a realignment of the left which had tantalised successive Liberal and Liberal Democrat leaders for 25 years had no charms for them. They wanted to shrink the state, not just to placate the bond markets, but on principle. For them, the market was a realm of freedom. They were unmoved by the key social-liberal (and social-democratic) insight that market forces, left to themselves, can stunt and cripple. They belong with the Conservatives, just as their continental counterparts, the German Free Democrats, belong with Angela Merkel.

The real mystery is the role of the social liberals. They were manifestly uneasy about getting into bed with the Conservative party. Though they did so in the end, they remained uneasy, as the ructions over Andrew Lansley’s Health and Social Care Act showed. So far, however, they have not been uneasy enough to upset the party applecart. They have muttered behind their hands and grumbled in speeches to the party faithful, but that is all. The result is grimly ironic. We are living through the second most devastating crisis in the long history of capitalism. The interventionist moral that Lloyd George and Keynes drew from the crisis of 80 years ago has never been more pertinent. It is not surprising that economic liberals reject it: for them, Lloyd George and Keynes are siren voices to which good Liberals should close their ears. The surprising thing is that social liberals (and, for that matter, former social democrats) have also joined forces with the Conservatives to follow a new version of the deflationary economic orthodoxy of the 1920s that Keynes spent his best years demolishing. It is as if Rowan Williams joined forces with diabolists to celebrate a black mass.

We can’t know how the story will play out. Since the coalition was formed economic liberalism has been in the ascendant, certainly among Liberal Democrat ministers and largely among their followers on the backbenches. Party activists outside parliament are mostly social liberals. The most plausible prognosis is that the two tendencies will continue their subterranean struggle until the eve of the next election. The odds are that, when it finally comes, they will fudge their differences and enable the party to face both ways. But the supply of fudge is not limitless. The great question is what happens when it runs out.

The answer depends on the fate of liberalism as a creed. A broadly optimistic understanding of human nature and a default assumption that rational argument and moral leadership can transcend differences of interest have always been fundamental to it. Gladstone’s crusade for Irish home rule in the 1880s and 1890s, the pro-Boers’ attempt to turn back the tide of jingoism in the 1900s, Lloyd George’s campaign for state intervention to conquer unemployment in the 1920s and Beveridge’s campaign for a cradle-to-the-grave welfare state in the 1940s are all examples of the way in which that primordial liberal assumption has operated in practice. Its antecedents go back to the ferment of ideas spawned by the English civil wars of the 17th century. Areopagitica, Milton’s thunderous attack on censorship, is a canonical text. For Milton, there was no merit in a “fugitive and cloistered virtue unexercised and unbreathed that never sallies out and sees her adversary”; only open debate could sift truth from error. John Stuart Mill said much the same thing 200 years later.

Liberalism as a creed is philosophically republican, not in the sense that it is hostile to constitutional monarchy, but in the sense that its hero is the active and responsible citizen once lauded by Pericles, Aristotle and Cicero. It assumes that there is a “res publica”—a “public thing,” or in today’s language a public realm—where citizens collectively decide, through open debate, where the public interest lies and how it should be pursued. That assumption goes with another: that citizens are capable of rising above their private interests and the interests of their clan or class; that they are disinterested enough to judge political arguments on their intrinsic merits and not just as weapons in a struggle for power and resources. These assumptions aren’t altogether alien to conservatism and socialism. Margaret Thatcher, that child of provincial dissent, shared them, albeit in her own very special way. So did Stafford Cripps, the iron chancellor of the Attlee government. But, in general, conservatism and socialism are harder, less optimistic and in an important sense less rational than liberalism. As a result, they are more attuned to the politics of conflicting social interests—not the least of the reasons why the Conservative and Labour parties survived and prospered after the emergence of mass, class-based politics in the 1920s, whereas the Liberals went under.

Today the fundamental postulates of the liberal creed look increasingly shaky. Liberal pluralism, liberal belief in the possibilities of rational persuasion and liberal optimism about human nature and the course of history are manifestly in retreat. Economic crises are not good for liberals. The insecurity and fear bred by crises favour demagogy, charismatic leadership and manipulative populism. They also favour a politics of “clinging to nurse.” These are all profoundly illiberal. That is one of the reasons why, despite Clegg’s early success in the televised debates, the Liberal Democrats ended by losing votes and seats in 2010. No one cared much for the familiar Conservative and Labour nurses, but their very familiarity and solidity were somehow reassuring. Leaping into the outstretched arms of nice-but-untried Mr Clegg was too big a step for most hesitant voters.

Right across the developed world the politics of simplistic populism are edging aside the politics of public reasoning—feebly in some countries, but forcefully in others. The Tea Party in the United States, UKIP in Britain, the National Front in France, the Pirates in Germany, the Lombard League in Italy, the Party for Freedom in the Netherlands, the Law and Justice party in Poland, the Freedom Party of Austria, and Syriza in Greece are all variations on that theme. On the whole, these parties are xenophobic and, in the case of the European ones, Europhobic. They draw on potent but twisted memories of their national pasts. They are dangerous, but not in the way that the far right and far left were dangerous in the 1930s. They have nothing like the ideological clarity and drive of Hitler’s Nazis, Mussolini’s Fascists or Stalin’s Communists. The danger is not that they will one day come to power in their respective countries and establish totalitarian regimes. It is that they will frighten the established parties into buying off their voters. Cameron’s patent nervousness about UKIP’s appeal to Conservative voters is a case in point.

So far Britain has resisted the populist virus more successfully than most of the countries in my list. For that we have to thank the longevity of liberalism as a way of life. Britain has not been immune to panicky intolerance. There was plenty of it during the wars against revolutionary France, and for that matter during the first world war. But it is hard to think of a British equivalent of McCarthyism in the United States, of the vicious anti-semitism that accompanied the Dreyfus affair in Third Republic France or of the paranoid politics of Germany’s Weimar Republic. The rule of law came to Britain much earlier than in most of continental Europe. Once the panic over the French Revolution had subsided, the political elite generally preferred timely accommodation to death in the last ditch. By the same token, the British labour movement generally opted for gradual reform rather than class-war heroics. Civil society was exceptionally rich in intermediate institutions standing between the state and the citizen: vibrant local authorities, co-operative societies, trade unions, self-regulating professions and a wide range of charities were prominent examples. All this procured an easy-going and tolerant political culture, reflected in a remarkable willingness to take in political refugees, ranging from Karl Marx to Napoleon III.

Liberalism as a way of life survives. In many ways, Britain is a more tolerant society today than it was 50 years ago. Except among a tiny fringe, anti-semitism has virtually disappeared. Colour prejudice, homophobia and misogyny are far less prevalent. Homosexuality and abortion are no longer crimes: achievements for which that quintessential social liberal, Roy Jenkins, deserved much of the credit. Almost certainly there are more interracial marriages in Britain than anywhere else in Europe. The Church of England, once known as “the Tory party at prayer,” is now a bastion of liberal generosity of spirit, as well as a scourge of the intolerant right. The BBC still shines like a liberal candle in a naughty media world. Even in Northern Ireland, the sectarian hatreds that tormented the province for generations seem to be abating.

That said, there is no room for complacency. Liberalism as a way of life is not as secure as it seems at first sight. The increasing harshness of social policy both under Labour and under the coalition; the imposition of an ever tighter centralist straitjacket on local government; and incessant attacks on the judiciary, the Human Rights Act and the European Human Rights Convention are all symptoms of a widespread populist illiberalism. In a more complicated way the sharp rise in inequality, which has been a leitmotif of the last 30 years, also threatens to undermine the legacy bequeathed to us by the social liberals of the last century. As they insisted, “freedom from” is incomplete without “freedom to”; and in a society where life chances are as unequal as they are in ours, “freedom to” for those at the bottom of the pile is in short supply.

Does that matter? I think it does. Some time ago, the Israeli moral philosopher Avishai Margalit proposed an excellent proxy for a liberal society. He called it the “decent society,” meaning a society that does not humiliate its members. In Margalit’s sense, grossly unequal life chances are inherently indecent. In a society where wealth is equated with worth, the poor soon become worthless. They become “chavs,” an “underclass,” subjects of humiliating attempts to seal off the undeserving from the deserving. We haven’t got there yet, but it is hard to dispute that we are moving in that direction. So is Britain still liberal? Yes—but be vigilant.