Liberal and radical approaches to economic development have divergent views on the role of the individual in society. For conservative liberals, laissez-faire government is inextricable from individual liberty, individual autonomy, and individual exercise of judgment. Thinkers such as Rawls, Locke, and Mill are among the key founders of this individualist...
Liberal and radical approaches to economic development have divergent views on the role of the individual in society. For conservative liberals, laissez-faire government is inextricable from individual liberty, individual autonomy, and individual exercise of judgment. Thinkers such as Rawls, Locke, and Mill are among the key founders of this individualist perspective (Ryan, p. 7). They endorse less government to enable individuals the freedom to create wealth in the free market. This perspective gave birth to the present day Neoliberal economic order, which advances the profit motive, markets, and free trade, and is also known as the "Washington Consensus" (Jomo K.S., p. 1). It is at odds with forms of liberalism that are associated with social democracy. Ryan notes that in the United States, economic liberalism has been akin to social democracy or even socialism, and in Great Britain there are questions about whether liberalism is in fact associated with free market economics and private property (p. 8). Keynes's work is noted for shifting liberal economic theory from the individual to the government and public policy; the concept of macroeconomy is central to this perspective. The focus is on aggregate demand restoring and maintaining full employment and equilibrium (Lippit, p. 205). Other perspectives on liberalism that depart from individualism are akin to radicalism. These approaches explore the influence of class and hierarchy on economic development. One of the debates is whether slavery and colonial life left vestiges of hierarchy and class tensions in America, or if there is less class conflict in American liberalism than in other advanced capitalist industrial societies (Young, p. 4).
Radicalism embraces multiple often conflicting forms of post-Keynesian approaches to economic development. It emerged in the context of the protests against Vietnam and the civil rights movement of the 1960s. It was further fueled by recession in the 1970s and the environmental crisis. Its focus on public policy and the broader political economy is broadly based on Keynesian macroeconomics (Hardy, 2016). Generally, radicals are not concerned with the right or freedom of the individual but with using public policy to alleviate the inequalities of capitalism. For Radicals, the state and class play a central role in economic analysis.
Hardy (ISJ.ORG.UK) suggests there are three distinct radical perspectives.
Firstly, radical economists in the United States, who address the crisis of capitalism; they propose more spending by not only government, but also by business, foreigners and private households to stimulate aggregate demand. However, government investment in the economy (eg., infrastructure) is generally seen as the key to stimulating demand. This perspective is not monolithic, there are variations around the causes and the solutions; some of the main theorists are Krugman, Stiglitz, Summers, and Bernanke.
Secondly, theorists like Shiller (Nobel Prize Winner, 2013) analyze cultural and psychological factors, namely the triumphant capitalist mentality after the fall of communism, the pro-market influence of the media, and the herd mentality of investors as key factors in the crisis of capitalism.
The third group have more progressive, social democratic thinking and include theorists such as Robinson, Kalecki, Balogh, Artesis, Sawyer, and Toporowski. They accept the influence of Marxism in assessing the weaknesses of capitalism, and the interaction of inequality and financialization.
Clearly there are significant differences both within and between the two perspectives. They are probably best understood as theories along a continuum of perspectives on economic development, rather than as dichotomous theories.
Ryan, Alan, The Making of Modern Liberalism, Princeton, NJ: Princeton University Press, 2012.
K.S. Jomo, The Pioneers of Development Economics: Great Economists on Development. Tulika Books, London & New York: Zed Books, 2005, p. 234.
Hardy, James. Radical Economics, Marist Economics and Marx’s economics. International Socialism, A Quarterly Review of Socialist Theory. Issue: 149, January 2016.
Lippit, Victor D. Radical Political Economy: Explorations in Alternative Economic Analysis, Armonk, NY: M.E. Sharpe, 1996.
Young, James P. Reconsidering American Liberalism: The troubled Odyssey of the Liberal Idea, Boulder, CO: Westview Press, 1996.