Introduction

In the literature of comparative politics, political economy and globalisation, progressive policy is portrayed typically as an alternative to economic liberalisation: social democratic corporatism as an alternative to neo-liberalism (Garrett, 1998); a social investment strategy as an alternative to neo-liberal austerity (Boix, 1998); a coordinated market economy as an alternative to a liberal market economy (Hall and Soskice, 2001). Progressive approaches enable governments to avoid economic liberalisation. It is by avoiding liberalisation that progressive governments are able to project sovereignty and give expression to their political values.

I believe that this dichotomous vision rests on a narrow, impoverished conception of economic liberalisation. My central claim is that there is more than one way to liberalise. Economic liberalisation need not be synonymous with the harsh, neo-liberal methods of Ronald Reagan and Margaret Thatcher. It is possible to reconcile liberalisation with concerns about equity and the disadvantaged, depending on how liberalising reforms are constructed. Such progressive liberalising reforms are not simply abstract possibilities but the very real practice of a number of European governments.

I call the progressive approach to economic and social reform a ‘new social liberalism’. What is ‘new’ about the new social liberalism is that it does not simply accept a liberal market order, while compensating the losers (as under the German ‘social market economy’ or arguments about trade openness and welfare state development). Rather, the ‘social’ helps define the content of ‘liberalism’ itself, the character of the more marketised economic order. Under the new social liberalism, the character of the market economy – of the smaller government, lower taxes and more flexible and active labour markets – is itself defined by social principles and concerns for the disadvantaged.

The new social liberal approach to economic and social reform has marked the actions of European governments, particularly left-led governments, in a variety of areas including budget cutting, tax relief and competition in public services. Often, these reforms reflect what I have termed a ‘vice-into-virtue’ strategy (Levy, 1999). Under the vice-intovirtue approach, savings are extracted, not from virtuous programmes that help the poor and disadvantaged, but rather from the attenuation of ‘vices’, that is, programmes that concentrate benefits on the affluent, that are marked by patronage or fraud, that are patently dysfunctional or that are at odds with stated programme objectives.