The Liberal Democrats are moving: not just Nick Clegg who, at times in his address to the party conference in Bournemouth, was so animated that he threatened to walk off stage left, but the party he leads.

The speech itself veered between conference hall and music hall. Calling your opponents lazy and dishonest is itself lazy and dishonest. So is pretending that government is easy and that the Liberal Democrats are preparing for power. This was a speech that will be read long after Milton and Shakespeare are forgotten - but not until then.

All that said, this has been a good week for the Liberal Democrats at the end of a good year. That's because they have begun the process of resolving the tension that they carry in their name. Between the liberals and those whom Keynes derided as the “watery Labour men” there can be no permanent reconciliation. Though the organisational merger was clean, a philosophical merger has proved impossible.

That, rather than electoral calculation, is the source of the political identity crisis that has dogged the Liberal Democrats. The fringe audience at the Labour Party conference will still applaud anti-market sentiments. The Tory audiences will applaud anything disobliging about the State. The Liberal Democrats will cheer both. There is no durable political position for a party born on a fault line.

Mr Clegg has shown the first signs of understanding this. The recent shifts in policy have been remarkable, though mostly unremarked. It is not so long ago that Liberal Democrat education policy was more or less faxed over by the teachers. Now the Lib Dems are in the vanguard of arguments about parental power and a premium for poorer children.

In the process, David Laws, the education spokesman, is using the unlikelihood of power in exactly the way he should - as a liberation. The Liberal Democrats have an important place as the anti-conventional wisdom party, testing ideas, goading the others.

Above all, they should be articulating a brand of radical liberalism - or optimistic liberalism, as Mr Clegg called it - from which the two main parties have a great deal to learn. The tax proposals unveiled this week will be mocked for their mixture of spurious specificity and poor arithmetic. It is, indeed, a mistake to attach numbers to the proposal, not least because it obscures the main point. And that is that people on low and middle incomes pay too much of their income in taxation. The progressive case for tax cuts is more daring than the Conservatives', more in touch than Labour's and a good liberal principle in itself.

In an interview on the fringe this week, Mr Clegg emphatically described himself as a liberal. His conference speech contained the seeds of a viable liberal position that will champion independence as its sovereign value, that will push power to the lowest possible level and that will encourage everyone to live a life of their own choosing.

If the leader can take his party with him, the Lib Dems could yet turn themselves into a party with a purpose. The Liberal Democrats will still be a coalition, as all political parties are, but the emphasis will be on the first word.