For the last 20 years the Liberal Democrats have been confusing themselves and others as to their identity. Those who believed that they are a progressive, left-of-centre party will have found the creation of the Conservative-Liberal coalition and the party's collaboration in Cameron and Osborne's plans for deep and early cuts in public spending particularly bewildering. However, to regard the Lib Dems as a straightforwardly left-of-centre party is a mistake. A better understanding of the party will reveal that its decision to enter coalition is neither the surprise nor the disaster for progressive politics that it might first appear.

I joined the party at the time of the Iraq War, hoping that it might take up the struggle for social democracy that had been abandoned by Labour under Tony Blair. I was swiftly forced to come to terms with the fact that social democracy was not the dominant strand of thinking within the party.

In certain parts of the country Lib Dems presented themselves as the softest of soft conservatives. Others were old fashioned liberals who believed in equidistance from Labour and the Conservatives. Meanwhile, the rising stars of the party were contributors to the ‘Orange Book’, which urged the party to embrace the economic liberalism of the free-market.

On important issues such Europe, civil liberties, constitutional reform, localism and a strong commitment to the environment the Lib Dems are united. But sensible and attractive policies in important areas do not amount to an overarching philosophy. On the great bread-and-butter questions of tax, the economy, public services the Liberal Democrats have found it difficult to unite around a clear set of beliefs. The historical division between social liberals such as Keynes and Beveridge and free-market liberals cuts through the party today.

However, the party does have a distinctive character that permits it to make a special contribution to our public life. As an internally democratic party, its character reflects that of its members who are, to a high degree, middle class, educated, civic minded and slightly technocratic. This makes for an approach to politics that is rational and pragmatic has little time for the romanticism, the visceral class bias, or the lurches into populism that characterise the politics of the other mainstream parties.

The Lib Dems have few policy shibboleths or ideological loadstars. Although there are members of the party disposed to free market and others in favour of greater state involvement in the economy, the party as a whole is open-minded and is not anchored to any instinctive commitment to the economic policies of the traditional right or left.

It is this openness and independence of thought, as well as its distance from the pressures and temptations of power that has enabled the Liberal Democrats to look further than the other parties in identifying the public good. Its approach to the environment is a prime example of the Lib Dem approach to politics. There is no particular reason of principle or philosophy why Lib Dem’s should have been more sensitive to the concerns about the environment than Labour or the Conservatives. However, both in its national policy making and in the actions of many local councils it has been the only mainstream party to begin to respond adequately to the greatest political challenge of our age.  

The Liberal Democrats and the many non-party organisations that have recently sprung up in the UK and which aim to reform politics and renew democracy, have about them an echo the Progressive movement in American politics at the beginning of the 20th century. That movement represented an outpouring of civic energy from educated citizens who sought to promote democracy, attack political corruption, curb the power of corporations, protect the environment and reinvigorate public life of the nation. In short, to rescue American society from the ravages of an era of unregulated capitalism.

However, the Progressive movement provides a warning to modern reformers. Narrowly middle class, high minded and technocratic, they had only limited success in changing American politics and society. Unlike the later New Deal Democrats, or the post-war European social democratic parties, they failed to coombine their far sighted understanding of the public good to policies that met ordinary voter’s demand for economic security.

It must be hoped that as the damage caused to our society by gross economic inequalities and the rampant marketisation of our culture becomes ever more obvious, the Lib Dems will start to unite around recognisably social democratic principles, realising the electoral advantage of doing so and realising also that their goals of environmental protection, a stronger civil society and a renewal of democratic politics can only be realised alongside a clear commitment to social justice.

Right now no such unity of understanding exists within the party but the coalition with the Conservatives should not be regarded as a definitive shift to the right. The same independent, unpredictable spirit that lead the party to enter the coalition will ensure that the fact that Liberal Democrat ministers sit in the cabinet, does not inhibit sustained thinking about the future direction of the party.

Labour supporters may deride the decision of the Lib Dems to enter the coalition, but the Labour party made its own pact with the right when it elected Tony Blair as leader. It was a deal from which Labour failed to extricate itself under the leadership of Gordon Brown.

It is a sobering thought that at this point neither the Lib Dems nor Labour provide a social democratic alternative to the market-populism that has dominated British politics since 1979. In the next few years the battle for social democracy must take place within the two parties as much as between them.