Economic Security and the Free Movement of Capital

Abstract

The liberal programme requires for its accomplishment the free movement of all the factors of production, including labour and capital. The free movement of labour is considered by governments incompatible with social stability, and restrictions are imposed on immigration by almost all countries. Most governments are thereby placed at odds with the liberal ideal. The free movement of capital may be subjected to restrictions, on emigration as well as on immigration. The objective of such restrictions is greater economic security. In 1979, UK exchange controls were abolished. They were abolished at a time when a current account surplus derived largely from the fortunate discovery of North Sea oil seemed to make it safe to do so. But the move had merit in that it was pointless to operate devices designed to keep sterling high when the probable consequence of North Sea oil was that it would move too high.