The Social Market Economy [Part 2 of 2]
Robert Skidelsky
Social Market Foundation Paper no. 1 [1989] | Sunday, January 01, 1989

Historically, the state has played a crucial role in determining the scope, and conditions, of market production and exchange. We can leave to one side the question of whether the state or markets came first.13 The topics we take up in this chapter are the legal foundations of a market system and the state's role in correcting market failures.
Legal Foundations. The main tasks of the legal order are to specify and protect property rights; to enforce voluntary contracts; to guarantee freedom of movement and free choice of occupation, and to prevent and punish physical harms and fraud. However much trade we may imagine to take place in a "state of nature", the state is, for practical purposes, a necessary condition for a market system. Only the state can guarantee a non-coercive environment for market exchange. However, the state is also the greatest danger to the market system. Hence the constitutional order must be such as to limit the coercive power of the state "to instances where it is required to prevent coercion by private individuals."14 The market economy thus depends on a general environment of freedom, which it reinforces.
The second point follows directly from this. The state's "duty" to the market is not limited to maintaining what economists call "efficiency conditions" (as described in the first part of Section Three). It must also maintain the conditions of freedom and creativity. Thus, in order to justify a measure of state intervention, it is not enough to show that the market fails to supply some good efficiently. It is necessary to show, or at least argue, that government intervention will produce a better outcome - not just in efficiency terms, but in terms of the other social goods of a market. (We can easily imagine a situation where intervention will increase efficiency in allocating given resources, but weaken the incentives to create new resources.) But the argument pulls in the opposite direction as well: certain market outcomes may be efficient and yet be socially unacceptable, and thus weaken the system which produces them. The only safe rule is to discount arguments for both intervention and non-intervention which do not show an awareness of the full range of social costs and benefits involved.
The general causes of market "failure" can be grouped under three heads: (a) absence or vagueness of property rights; (b) imperfections of information, important for insurance, employment, and capital markets; and (c) government and other interference, relevant to monopoly and also employment. An identifiable failure (unemployment) may have several causes. Also, depending on which cause for a failure is being claimed, government action may take the form of interference, or withdrawing from interference.
The various types of failure may be listed as: monopoly, public goods, externalities, insurance, and unemployment. Each will be briefly considered in turn.
Monopoly. Monopolistic tendencies exist whenever the producer can influence the price of his product. Defined in this general way, such tendencies are clearly pervasive, and can never be entirely eliminated. What can be influenced is the degree, extent and duration of monopoly. Arguments against monopoly have to do with freedom, efficiency, and innovation. Freedom of choice can be restricted when there are too few suppliers. Monopolistic conditions can diminish efficiency and the incentive to innovate. Maintenance by government of the conditions of competition is, therefore, an indispensable duty in a market economy which is to be social. This requires both free trade and anti- monopoly laws, with adequate machinery for their enforcement.
It cannot be stated too often that support for the market economy does not commit a government to the interests of big business. If anything, it commits it to medium-sized and small business. The Marxist equation of market economy with "monopoly capitalism" was always a confusion.
Nevertheless, it is true that governments have often weakened competition themselves. They have rushed to the defence of "essential" industries which "need" to be kept going, or kept under national control. They have imposed protective tariffs. They have instituted tax regimes and legislation which discriminate against small firms. Regulatory agencies designed to control or prevent private monopolies have often colluded with vested business interests. Governments have illegitimately widened the scope of the "natural" monopoly argument. There are "natural" monopolies, where competition would be wasteful. But these are much more limited than is often claimed. Roads are a "natural" monopoly (but not cars); the electricity grid (but not electrical appliances); the railway tracks (but not the carriages or catering); the gas pipes (but not the gas appliances); telephone lines (but not telephones); water pipes; the broadcasting network. These could either be publicly owned or regulated private monopolies. The advantages of the latter are freedom to borrow on the capital market, and the possibility of much stronger regulation than public monopolies are subject to, OFTEL being an example.
Many economists argue that the dangers of monopoly are exaggerated. The crucial efficiency condition is freedom of entry and exit. Thus the actual number of suppliers in a market may have little to do with the exercise of monopoly power. Even a market with only one producer (as in the "natural" monopoly case) will behave like a competitive one if the costs of entry to potential entrants are fairly low, so that the market can be easily contested. The ease of potential entry may be therefore sufficient to keep many a natural monopoly efficient. This is the basis for much of the recent changes in anti- trust laws and deregulation in America, though clearly the privatisation of British Telecom while restricting entry into the industry shows that this lesson has not been learnt in Britain. There is little agreement at present as to how much government intervention is needed, and of what kind, to maintain competitive conditions.
Public Goods. It has long been accepted that public goods have to be provided by the state. The essence of a public good is that no private property right can be established in its consumption. If it is provided, no one can be excluded from consuming (using) it. And if one person consumes (uses) it, this does not diminish the total amount available for others. Neither of these characteristics is true of private goods like butter or apples. It follows that, in the pure case, the good will not be provided by trade or voluntary agreement, even if it is desired by all. Therefore, it has to be provided by the state through a compulsory levy - taxation. The classic examples of "pure" public goods are defence and law and order. No citizen can "opt out" of his country's defence system; and the defence of one citizen is not at the expense of another's.
The existence of public goods may explain the origins of the state; but it offers an imperfect guide to policy, for three main reasons. The first is that, owing to the lack of connection between individual payment and benefit, there is no accurate way of telling how much of a public good is wanted. In former times, this was decided by the Prince. Now it is determined in a rough and ready way through the voting system. But this is not an accurate measure of individual preferences. Many people regard a defence system based on nuclear weapons as a public bad, not a public good. They have to pay their taxes nonetheless. From their point of view the good is oversupplied. On the other hand, there is some evidence to show that people would voluntarily spend more of their incomes on healthcare and education than they are compelled to pay through taxation. These are simply illustrations of the "social choice" dilemmas described above. The important point is that public provision, collectively financed, does not necessarily solve the problem of undersupply of some goods; and it may well lead to oversupply of others.
Secondly, outside the "pure" cases of defence, law and order, and a sound currency, most public goods are only partially public. In practically all cases, some degree of exclusion is possible; and sooner or later, "congestion" sets in, leading, in the absence of prices, to queuing. Congestion is endemic in public services, like roads and hospitals, suggesting that some rationing by price is both feasible and necessary.
Finally, government and commercial enterprise are not the only possible suppliers of such goods. There is also philanthropy. Many public goods in the past were supplied by this means, notably Victorian municipal buildings, but also schools and hospitals. Many of the arts are supported by private giving, more so in the United States than in Britain.
These conundrums are abstract, but they should influence thinking about policy. There are many possible mixes of public, voluntary, and commercial effort which can be used to supply goods which have some degree of publicness about them, such as education and health-care. Given the difficulty of making public services accountable to consumers, there is a strong case for inserting an element of individual payment into the financing of many so-called public goods.
Externalities. Externalities are unpriced spillover effects of some economic activity, harmful or beneficial. A harmful externality is when effluent is dumped in a river; a beneficial one when the river is cleaned. They arise when property rights (in this case in the river) are not defined and hence no trade is possible between the creator of the externality and his victims or beneficiaries. The theory predicts that a market economy, left "uncorrected", will over-produce neighbourhood harms and under- produce neighbourhood benefits. These benefits and harms provide grounds for state intervention of various kinds; prohibition or regulation; supplying or subsidising the amenity; taxing the polluter either to reduce the volume of his activity by increasing his costs, or to compensate those who suffer, or both.
This principle is mainly relevant to "green issues". But it is hard to translate into policy. For one thing, the government itself is an important source of harmful externalities. It has polluted air and water, crashed roads through attractive countryside, and put up hideous buildings. Secondly, how does one calculate the appropriate tax or subsidy? How is the balance (particularly the inter-generational balance) to be struck between the benefits of the clean air and the good or service the polluter produces? Thirdly, it may be that some of the missing property rights can be created by law, producing markets in externalities. Samuel Brittan sums up carefully as follows:
Most economists would favour taxes and subsidies (and perhaps a few out-and-out prohibitions), when there are large and obvious spillover effects, and would support cost-benefit studies ... when large projects with obvious environmental effects are being considered. But to go beyond this and advocate discretionary state intervention in every private sector activity involves all of at least the three following empirical judgements: (a) that the unpriced spillover effects are likely to be large in relation to the costs of intervention; (b) that officials will have enough knowledge of cost conditions and individual preferences, now and in the future; and (c), and most important of all, that the Government action will not in practice be largely influenced by local, political and industrial pressures (or prestige considerations) which would lead to a worse result than that of the unaided market.15
Insurance Markets. Private insurance against ill-health, unemployment, and old-age may fail because suppliers of insurance may not have enough information to calculate the risk. The familiar examples are asymmetric information (where the insurer knows less than his customer) and moral hazard (where being insured makes the insured's behaviour less prudent than it would otherwise have been). In such cases actuarial calculation of risk is impossible or very difficult. Nicholas Barr further suggests that, since inflation is an uninsurable risk, it will not be in the interests of private insurers to offer index- linked pensions, thus reducing the supply of insurance below the demand. This is doubtful. But even if true, the failure here is not in the insurance market but in the state's failure to provide a credible guarantee of the value of money. Stable money, we recall, is one of the conditions of a social market economy.16 [Similarly it does not seem right to regard the failure of the chronically or congenially sick to get insurance as a failure of insurance markets. The premium in such cases would be so close to the cost of actual treatment that there are no advantages in insurance.
Compulsory insurance increases the efficiency of insurance markets by pooling high and low risks and charging everyone the same premium. The more important argument for compulsory insurance is to prevent the external "bads" which non-insurance can impose on the rest of the community (in the form of a spread of disease, or starvation). But there is little point in forcing people to take out insurance against life's hazards if they cannot afford the premiums; in practice, every compulsory insurance scheme involves cash assistance to the poor. In the case of health-care, there is an argument not just for compulsory insurance but for public provision, as a way of keeping costs under control. If a health service is publicly funded but privately provided, doctors are not faced with a budget constraint. The cost of maintaining such a service is, therefore, likely to escalate out of control. This is a strong argument for the National Health Service. The fact that we spend a smaller percentage of GNP on health than the United States or other West European countries may simply be because we are more efficient at providing it. However, it may also be that it is being seriously under-supplied.
Unemployment. The main charge against the market economy is that it fails to maintain continuous full employment. But there is currently no agreement as to why this should be. Two positions may be identified.
The first is that wages are prevented from falling to their market-clearing rate by government and other interferences. Monopoly pricing by unions, minimum wage legislation, unemployment benefits set at inappropriate levels and given under too easy conditions are all blamed. Unemployment is not a fault of an unaided market economy, but of government which has failed to keep labour markets efficient and actively contributed to making them inefficient. This is often coupled with the view that, except when government engineers or allows a collapse of the money supply, there is no involuntary unemployment over the normal course of the business cycle.
The alternative, Keynesian, view is that unemployment is inherent in an unaided market economy. Keynes suggested many reasons for this; one was the pervasiveness of ignorance and uncertainty. Keynes's work can form the basis of an explanation of mass unemployment in terms of the failure of co-ordination between markets.
These two views impose different duties on government. The first is "supply side" policy to reduce the "natural" rate of unemployment, coupled with maintaining stable money. The Keynesian duty is to maintain enough aggregate demand in the economy to employ all those seeking work. In fact, the two are not incompatible, and should rather be regarded as complementary. These are clearly matters on which much more hard thinking needs to be done.
Of all the market failures we have discussed, the existence of mass unemployment impinges most seriously on the social promise of the market. In Hayek's own terms, full employment is one of the most important guarantees of a free (non-coercive) environment. Hayek writes: "The essential fact is that in a competitive society the employed is not at the mercy of a particular employer, except in periods of extensive unemployment."17 The right to employment is thus the modern equivalent of Locke's right to property, which he derives from the right of everyone to "property in his own labour". Failure to preserve this right thus amounts to a denial of the freedom from coercion which is a central justification of market economy. This denial is particularly palpable, and tragic, in the case of the long- term unemployed who are, in effect, debarred from the labour market. Unemployment is one of a number of interlocking problems which a market economy which aims to be "social" is bound to address.
I have suggested that certain types of state intervention may be appropriate to improve the efficiency of the market economy, but that the costs of such interventions should always be carefully weighed against their claimed benefits. This fixes certain parameters of debate between the interventionists and the non-interventionists. But beyond this the market economy must be part of social arrangements seen to be "fair". It is in this area that social democracy makes its distinctive contribution.
The concept of the "social market" brings together two leading political ideas: freedom and power. Freedom describes the absence of coercion by others; it has to do with the availability of choice, the existence of a private domain exempt from collective or arbitrary decision. As Locke puts it, freedom is "not to be subject to the inconstant, uncertain, unknown Arbitrary will of another man." Power denotes a capacity to act; it has to do with the exercise of choice, with achievement. A person lacks freedom if he is forced to carry out someone else's plan; he lacks power if he is unable to carry out his own plan. The two things are clearly different. A person may be free to own property, but lack the power (resources) to buy it. Freedom of speech can co-exist with enormous inequalities in the effective exercise of that right, due to inequalities in wealth and education. Freedom has to do with the constitutional and legal order; power with the distribution of resources. [In his Constitution of Liberty (1960) Hayek distinguished between being "coerced by individuals" and "compelled by circumstances". Only the first, in his view, constitutes a state of unfreedom.]
Power to achieve one's aims depends on the resources, human and material, one can bring to that task. Lack of power is not the same as lack of freedom; but it lessens the value of freedom, and creates resentments against a free society. Social democracy's distinctive aim has been to reduce the inequality of power; or to put it another way, to "enable" people who need it to realise their aims.
The question is: why should enablement be the subject of special political concern? The answer is that whereas the market economy is one of the main guarantors of freedom, subject always to the full employment condition, its rewards are skewed in favour of those who start with advantages of birth. This has long been recognised, and that is why liberals and social democrats have added to their traditional demand for "formal" equality of opportunity (careers open to talent) the requirement of "fair" equality of opportunity (equalising initial conditions). Social democrats have further pointed out that even if full employment is maintained, the market value of the work of the low paid may be too low to secure them the minimum resources needed for self-respect and autonomy (which include supporting families and contributing as citizens to the community). The policy implications of these principles include: (a) steps to disperse personal wealth through inheritance taxes, in order to secure a fair value of equal liberties; (b) targeting educational resources on the least-advantaged; and (c) guaranteeing a basic minimum income. To these must be added the goal of full employment already mentioned.
The requirements of a "social market economy" outlined above are very close to John Rawls's principles of a "just" or "fair" society. These are arrived at by means of a thought experiment in which we are asked to imagine what social arrangements individuals would agree to set up if they had no knowledge of their particular circumstances or identities. Behind this "veil of ignorance", Rawls argues that individuals will accept two principles of a just society: (a) that each person is to have an equal right to the most extensive basic liberty compatible with similar liberty for others; and (b) that social and economic inequalities are to be arranged so that they are reasonably expected to benefit the least advantaged, and are attached to positions and offices open to all under conditions of fair equality of opportunity. The first principle is "lexically" prior: liberty can be limited only for the sake of liberty. A market economy is "social" if it is consistent with equal liberties for all, fair equality of opportunity, and assured access to resources sufficient not just forlife, but for autonomy and self-respect.18
Before arguing for what I have called the social democratic view, I would like to consider three other approaches to the issue of "fairness": those of the New Right, modern liberalism, and socialism.
The New Right takes the initial distribution of endowments, or resources, as given. In the well-known argument by Robert Nozick, property is justly held if justly acquired or transferred. For a market system to be just the only requirement is absence of coercion. Coercion may be used only to prevent or punish physical harm, theft, and fraud, and to enforce voluntary contracts. Setting aside rectification for past injustices, Nozick excludes any compulsory redistribution of justly acquired property.19 Hayek concedes that both the state and private individuals, have a charitable duty to the "indigent, unfortunate, and disabled". However, like Nozick, he rejects any compulsory redistribution of wealth. The simplest objection to the Nozick-Hayek statement of the sufficient condition of Justice in exchange is empirical: it has not been so perceived. The main chink in the formidable intellectual armoury of the New Right is that it has never been able to give a satisfactory historical account of the "revolt against the market". Clearly freedom of exchange has not been the only demand societies have made of the market economy. This, of course, has been recognised by Mrs Thatcher's governments, which have done more to create a popular base for a privately-owned economy through their policies of council house and public asset sales than any Conservative government this century.
Modern Liberalism has tried to correct for inequality in inherited social position by insisting on "just initial conditions". This is equivalent to Rawls's "fair equality of opportunity". Rawls writes: "The thought here is that positions are to be not only open in a formal sense, but that all should have a fair chance to attain them ... we might say that those with similar abilities and skills should have similar life chances." Central to such an aim are legal and social arrangements which prevent "excessive accumulations of property and wealth" and maintain "equal opportunities of education for all".20
Socialism has claimed that even if there was fair equality of opportunity, so that market outcomes reflected only innate differences of ability and not social inheritance, any result other than equality of incomes would be unjust. The thought here is that innate inheritance is just as much the result of a lottery as social inheritance and confers no ethical claim to superior reward. The principle of reward according to market-valued skills is replaced by the principle of "to each according to his needs". There is a further assumption that needs do not vary much between individuals. The market system should be replaced by a system of centralised allocation which gives everyone an equal share of the national product. Few socialists have held these views with the dogmatic simplicity just described. But equal outcomes is the result to which socialist thought tends. The crucial weakness in the "pure" socialist position is that it entirely ignores the requirements for liberty as well as efficiency. Since social democrats give absolute priority to liberty, they cannot accept equality of result as the legitimate goal of a just society.
Social Democracy builds onto the liberal goal of "fair equality of opportunity" the aim of securing for all "reasonable economic conditions of well-being, the bases of self-respect and personal self- development, irrespective of the individual's market position".21 This does suggest some modification of market outcomes for the least-advantaged. What the market economy promises is that workers are paid what they are worth to those who hire them - no more, no less. It does not guarantee even a wage sufficient to maintain a household, much less the material bases of self-worth and self-respect. The social democratic view of the requirements of an acceptable system of market economy can be summed up as follows: (a) maintenance of the system of natural liberty, or, as I would call it, the accountability of economic arrangements to individual wants; (b) achievement of fair equality of opportunity through the educational system and a wide dispersal of property; and (c) a guarantee of a basic income to the least-advantaged sufficient to maintain the material bases of self-respect. Social democrats would argue that these principles are compatible with long-run market efficiency, if the social costs of an acute sense of unfairness are taken into account.
These aims would, I believe, be widely accepted. There is some advantage though, in avoiding certain types of language in advocating them. Some people on the Left distinguish between "negative" and "positive" freedom, the first corresponding to what I have called freedom, or liberty, and the second to what I have called "power". I think only a confusion results from using the same word to describe these two things and a dangerous one, since it suggests the possibility of a trade leading to an enhancement of freedom overall. It is important to insist that freedom and power are not the same and that freedom can be limited only for the sake of freedom.
A second recently fashionable language is that of citizenship. Raymond Plant, for example, distinguishes between "basic rights" of citizens, concerned with civil and political liberty, and their "social rights" which are "rights to resources such as income, health, social security and education".22 One problem about this language is that it suggests that both sets of rights are confined to "citizens", whereas we would surely wish many, if not most, to apply to aliens resident in Britain. Further, the language of citizenship inhibits the targeting of benefits on the least well-off: it suggests universal provision, when what is required for some purposes is selective provision. Finally, when one talks about the rights of citizens, it is impossible not to go on to talk about their duties as well, as Plant recognises. What this leads to was spelt out by Beatrice Webb in language more brutal that would be allowed today: "the obligation of each individual to serve the state, in return getting a maintenance". Should a right to a basic income carry with it an obligation to work? This was certainly the idea of citizenship which underlay the Beveridge Plan, in which compulsory insurance against contingencies was linked directly to the labour market through the deducted national insurance contribution.
The debate is an old one which cannot be summarised in a few words. We need here only contrast two traditions: the Judaic-Christian idea of the duty to labour as a punishment for Adam's transgression, and the Greek idea of labour as being fit only for slaves. Without deciding between these two views it would seem more appropriate to talk about the rights of individuals than the rights of citizens. This carries the suggestion that freedom rather than necessity is the goal we aim for.
The arguments above have the following implications. First, market economy is a primary social good. Second, this being so, market failure does not in itself justify state intervention. Such intervention should be attempted only when the failure is massive, and there are good grounds for believing that the outcome of intervention will be better than the existing state of affairs. Employment, health and the environment are prime candidates for intervention. The state must also maintain a substantial role in education because of the link between education and both the job market and the public good of knowledge. Third, the state - or more broadly statemanship - must not only maintain appropriate legal foundations for a market order, but must at all times concern itself with securing the social acceptability of the market system. This involves working towards "fair equality of opportunity", a wider dispersal of property, and a basic income guarantee.
Issues for further investigation can be grouped under eight heads.
Accountability. There is an urgent need for a plausible accountability model for the public services. The basic question is: how are these services to be made accountable to their customers and not just the government? Questions to consider are: to what extent can the delivery of public services be made competitive? Can democratic or "voice" models be developed, and what is their application? What do we need to do to ensure reliability of delivery? Can industrial action, which is acceptable under conditions of competitive supply, be allowed when there is, in effect, only a single supplier? The greatest weakness of contemporary liberalism is that, in its excessive reliance on the "voice" model, it ignores all the "social choice" dilemmas described earlier.
Industrial Relations. What is a modern role for the trade union movement? If they are thought of as suppliers of services to employees, what sort of services should they be supplying? What have been the main trends in trade unionism over the past decade? Are any further changes in the law needed? On a related matter: can more be done to make employers accountable to their workforce within firms? Has "co-determination" or "co- partnership" got a future in this country? It is time for a hard look, with case studies.
Technology and Competition Policy. What is the best form of competition policy? What limits are set by technological conditions? According to the German model, the decision for the social market was a decision for the "small or medium-sized firm". Are such firms efficient? In what areas? How concentrated is British industry? What have the recent trends been? Marxists talk of "post-Fordism", but data for this country are extraordinarily hard to come by.
Externalities. What should be the respective roles of state and market in dealing with environmental hazards, whose full costs will only be paid by future generations?
Education. The theory of the social market suggests a policy of positive discrimination in favour of the least-advantaged children. This is an important implication of the principle of fair equal opportunity. As John Rawls puts it: "The principle of redress holds that in order ... to provide genuine equality of opportunity, society must give more attention to those with fewer native assets and to those born into the less favourable social positions."23 It is important to note that, in applying this principle to children, we are not aiming at equality of result. We need to consider seriously what would be entailed by targetting educational resources on the least advantaged. What would be the costs and benefits of (a) widening access to private education through differential vouchers or more Assisted Places; (b) concentrating resources on least-advantaged neighbourhoods; or (c) basing education to a much greater extent than presently on technical and vocational training? What priority ought we to give in our social policy to enhancing "human capital"?
Taxation. The resources for achieving the "social" aims of the social market must come largely from the proceeds of taxation. What is to be the design of a tax system which promotes our social aims? Can, for example, the social aims be achieved within the framework of a low, uniform tax rate? There is a great confusion between progression and redistribution. Redistribution does not require progression in the tax rate, simply a decision on how to use resources. Progression is not generally accepted: the evidence being that much of its effect is avoided by tax reliefs in respect of borrowing for house purchase and occupational pension plans and by holding money abroad. How do we work towards a wider dispersal of wealth? Vertical redistribution from the state has virtually run its course, with the main chance being missed. Would it be possible to earmark the proceeds of inheritance or capital taxes for widening share ownership?
Economic Policy. The crucial question is how to reconcile the goals of stable money, full employment, and external balance. If the only acceptable rate of inflation is a zero rate (as I believe it to be), how do we get it? This government has abandoned the goal. By joining the EMS and buying the credibility of the Bundesbank? How exactly would this work? How are we to sort out the Keynesian and non- Keynesian positions on unempployment policy? How much further than the Chancellor can we go in indexing part of workers' pay to company profits? What commitment ought we to make to the long- term unemployed, and under what conditions of reciprocity? For example, it has been suggested that they be given an "employment voucher" to enhance their chance of re-employment. Is this feasible?24
External Affairs. The main external issue looming for the social market economy is the opening up of the EEC in 1992. To what extent are our principles consistent with the aims of the EEC? What line should we be taking, from a social market perspective, on Mrs Thatcher's Bruges speech? How can we promote the spread of market principles, and the freedoms attached to them, to other areas of the world?
1 Hubert Henderson, Supply and Demand(1922) pp 139-40
2 Anthony Nicholls, The Other Germany - the Neo-Liberals' in RJ Bullen, H Pogge von
Strandemann and A B Polonsky (eds) Ideas into Politics (1976) p 167
3 Quoted in Jeremy Leaman, The Political Economy of West Germany 1945-85 (1987)p 50
4 V Berghahn, The Case of Ludwig Erhard' in Bullen et al p 184
5 A Muller-Armach, The Principles of Social Market Economy' German Economic Review (1965,
no 2) p 99
6 Quoted in Nicholls, p 170
7 R Skidelsky, in R Skidelsky ed Thatcherism (1988) pp 3-14
8 Adam Smith, The Wealth of Nations, Book IV, Ch 2, p 421 (Cannan Edition)
9 F Hayek, The Constitution ofLiberty (I960) p 29
10 Ibid., p 140
11 David Owen, Our NHS (1988) p 104
12 Arthur Seldon, Charge (1977)
13 See Anthony de Jasay, Social Contract, Free Ride (1989)
14 Hayek, p 21
15 S Brittan, Participation without Politics W7 5), p 66
16 Nicholas Barr, The Welfare State as an Efficiency Device', The Suntory Toyota International
Centre for Economics and Related Disciplines (1987)
17 Hayek, p 121
18 John Rawls, A Liberal Theory of Justice (1972) pp 60-1 and 302-3
19 Robert Nozick, Anarchy, State and Utopia (1974)
20 Rawls, p 75
21 Alex de Mont, 'A Theory of the Social Market', Tawney Society (1984), p 5
22 Raymond Plant, New Socialistic 1988), p 8
23 Rawls, p 101
24 See Peter Ashby, 'Citizenship, Income and Work' St George's House, Windsor Castle (Feb 1989)