Classical liberalism is a
political ideology that developed in the 19th century in England
, Western Europe, and the Americas. It followed earlier forms of
liberalism in its commitment to personal freedom and popular
government, but differed from earlier forms of liberalism in its
commitment to
free markets and
classical economics. Notable classical
liberals in the 19th century include
Jean-Baptiste Say,
Thomas Malthus, and
David Ricardo. Classical liberalism was
revived in the 20th century by
Ludwig
von Mises and
Friedrich Hayek,
and further developed by
Milton
Friedman,
Robert Nozick,
Loren Lomasky, and
Jan
Narveson.
The phrase
classical liberalism is also sometimes used to
refer to all forms of liberalism before the
20th century. And, after 1970, the phrase began
to be used by
Libertarians to describe
their belief in the primacy of economic freedom and minimal
government. It is sometimes difficult to tell which meaning is
intended in a given source.
Definitions
The phrase
classical liberalism is used in standard
academic sources to mean early liberalism, often with particular
emphasis on the liberalism of
Jacksonian democracy in the 19th
Century, which stressed
laissez-faire
economics and
Originalism.
Another use of phrase is by Libertarians, who use it to mean a form
of liberalism in which the government does not provide social
services or regulate industry and banking. Libertarians often claim
that this belief was shared by the American
Founding Fathers. Libertarian classical
liberalism is also called
laissez-faire liberalism.
The philosophy of classical liberalism in the Libertarian sense of
the phrase includes a belief in rational self-interest,
property rights,
natural rights,
civil liberties, individual freedom,
equality under the law,
limited government,
free markets, and a
gold standard.
According to Razeen Sally the "normative core" of classical
liberalism is the idea that a
laissez-faire economic policy will bring
about a
spontaneous order or
invisible hand that benefits the
society, though this does not necessarily prevent the state from
providing some limited basic
public
goods.
The qualification
classical was applied retroactively to
distinguish it from more recent, 20th-century conceptions of
liberalism and its related movements, such as
modern liberalism and the
Civil Rights movement. Classical
liberals are suspicious of all but the most minimal government and
object to the
welfare state.
Ludwig von Mises,
Friedrich Hayek, and
Milton Friedman, are credited with
influencing a revival of classical liberalism in the 20th century
after it fell out of favor beginning in the late 19th and early
20th centuries due to major economic depressions. In relation to
economic issues, this revival is sometimes referred to, mainly by
its opponents, as "
neoliberalism".
The German "
ordoliberalism" has a
somewhat different meaning, since the likes of
Alexander Rüstow and
Wilhelm Röpke have advocated a more
interventionist state, as opposed to
laissez-faire
liberals. Classical liberalism has some commonalities with modern
libertarianism, with the terms being
used almost interchangeably by
minarchist
libertarians.
Overview
In the
United
States
, liberalism took a strong root because it had
little opposition to its ideals, whereas in Europe liberalism was opposed by many reactionary
interests. In a nation of farmers, especially farmers whose
workers were slaves, little attention was paid to the economic
aspects of liberalism. But as America grew, industry became a
larger and larger part of American life, and during the term of
America's first populist president,
Andrew Jackson, economic questions came to
the forefront. The economic ideas of the Jacksonian era were almost
universally the ideas of classical liberalism. Freedom was
maximized when the government took a "hands off" attitude toward
industrial development and supported the value of the currency by
freely exchanging paper money for gold. The ideas of classical
liberalism remained essentially unchallenged until a series of
depressions, thought to be impossible
according to the tennets of
classical economics, led to economic
hardship from which the voters demanded relief. In the words of
William Jennings Bryan, "You
shall not crucify the American farmer on a cross of gold." Despite
the common recurrence of depressions, Classical Liberalism remained
the orthodox belief American businessmen until the
Great Depression. The Great Depression saw
a sea change in liberalism, leading to the development of
modern liberalism. In the words of
Arthur Schlesinger Jr.:
when the growing complexity of industrial conditions
required increasing government intervention in order to assure more
equal opportunities, the liberal tradition, faithful to the goal
rather than to the dogma, altered its view of
the state," and "there emerged the conception of a social welfare state, in which the national
government had the express obligation to maintain high levels of
employment in the economy, to supervise standards of life and
labor, to regulate the methods of business competition, and to
establish comprehensive patterns of social security.
In Europe, especially, except in the British Isles, liberalism had
been fairly weak and unpopular relative to its opposition, like
socialism, and therefore no change in
meaning occurred.
By the 1970s, however, lagging economic growth and increased levels
of
taxation and debt spurred new ideas,
sometimes called conservatism and sometimes called classical
liberalism.
Friedrich von
Hayek and Milton Friedman argued
against government intervention in fiscal policy and their ideas
were embraced by conservative political parties in the US and the
United
Kingdom
beginning in the 1980s. In fact,
Ronald Reagan credited
Bastiat,
Ludwig von
Mises, and Hayek as influences.
[A]t the heart of classical liberalism", wrote Nancy
L.
Rosenblum and Robert C.
Post, is a prescription: "Nurture voluntary
associations.
Limit the size, and more importantly, the scope of
government.
So long as the state provides a basic rule of law that
steers people away from destructive or parasitic ways of life and
in the direction of productive ways of life, society runs
itself.
If you want people to flourish, let them run their own
lives."
Classical liberalism places a particular emphasis on the
sovereignty of the individual,
with
private property rights being
seen as essential to individual liberty. This forms the
philosophical basis for laissez-faire public policy. The ideology
of the original
classical liberals argued against
direct democracy "for there is nothing in
the bare idea of majority rule to show that majorities will always
respect the rights of property or maintain rule of law." For
example,
James Madison argued for a
constitutional republic with
protections for individual liberty, over a
pure democracy, reasoning that in a pure
democracy, a "common passion or interest will, in almost every
case, be felt by a majority of the whole...and there is nothing to
check the inducements to sacrifice the weaker party...."
According to Anthony Quinton, classical liberals believe that "an
unfettered market" is the most efficient mechanism to satisfy human
needs and channel resources to their most productive uses: they
"are more suspicious than
conservative
of all but the most minimal government."
Anarcho-capitalist Walter Block claims, however, that while Adam
Smith was an advocate of
economic
freedom he also allowed for government to intervene in many
areas.
Classical liberalism holds that individual rights are natural,
inherent, or inalienable, and exist independently of government.
Thomas Jefferson called these
inalienable rights: "...rightful
liberty is unobstructed action according to our will within limits
drawn around us by the equal rights of others. I do not add 'within
the limits of the law', because law is often but the tyrant’s will,
and always so when it violates the rights of the individual." For
classical liberalism, rights are of a
negative nature—rights
that require that other individuals (and governments) refrain from
interfering with individual liberty, whereas
social liberalism (also called
modern
liberalism or
welfare liberalism) holds that
individuals have a right to be provided with certain benefits or
services by others. Unlike social liberals, classical liberals are
"hostile to the
welfare state." They
do not have an interest in
material
equality but only in "
equality before the law." Classical
liberalism is critical of social liberalism and takes offense at
group rights being pursued at the
expense of
individual
rights.
Friedrich Hayek identified two
different traditions within classical liberalism: the "British
tradition" and the "French tradition". Hayek saw the British
philosophers
David Hume,
Adam Smith,
Adam
Ferguson,
Josiah Tucker,
Edmund Burke and
William Paley as representative of a tradition
that articulated beliefs in
empiricism,
the
common law, and in traditions and
institutions which had spontaneously evolved but were imperfectly
understood. The French tradition included
Rousseau,
Condorcet, the
Encyclopedist and the
Physiocrats. This tradition believed in
rationalism and the unlimited powers of reason, and sometimes
showed hostility to tradition and religion. Hayek conceded that the
national labels did not exactly correspond to those belonging to
each tradition: Hayek saw the Frenchmen
Montesquieu,
Constant and
Tocqueville as belonging to the
"British tradition" and the British
Thomas
Hobbes,
Godwin,
Priestley,
Richard
Price and
Thomas Paine as belonging
to the "French tradition". Hayek also rejected the label "laissez
faire" as originating from the French tradition and alien to the
beliefs of Hume, Smith and Burke.
History
Modern classical liberals trace their ideology to
ancient Greece, the
Roman republic and the
Renaissance. They cite the 16th century
School of Salamanca in Spain as a
precursor, with its emphasis on
human
rights and
popular
sovereignty, its belief that
morality
need not be grounded in religion, and its moral defense of
commerce. Other
Renaissance thinkers
such as
Erasmus and
Niccolò Machiavelli represent the
rise of
humanism in place of the religious
tradition of the
Middle Ages.
Rationalist philosophers of the 17th Century, such as
Thomas Hobbes and
Baruch Spinoza developed further ideas that
would become important to liberalism, such as the
social contract. However, liberalism's
classic formulation came in
The
Age of Enlightenment.
John Locke's
Two Treatises of
Government argued that legitimate authority depended on
the consent of the governed, while
Adam
Smith's
The Wealth of
Nations rejected
mercantilism,
which advocated state
interventionism in the economy and
protectionism, and developed modern
free-market economics. These early liberals saw mercantilism as
enriching privileged elites at the expense of well being of the
populace.
Another early expression is the tradition of
a Nordic school of liberalism set in motion by a Finnish
parliamentarian Anders
Chydenius.
Classical liberalism, free trade, and world peace
Several liberals, including Adam Smith, and
Richard Cobden, argued that the free exchange
of goods between nations could lead to world peace. Modern American
political scientists including Dahl, Doyle, Russet, and O'Neil,
recognize that early liberals believed free trade could lead to
peace. Dr. Gartzke, of Columbia University states, "Scholars like
Montesquieu, Adam Smith, Richard Cobden,
Norman Angell, and
Richard Rosecrance have long speculated
that free markets have the potential to free states from the
looming prospect of recurrent warfare". American political
scientists John R. Oneal and Bruce M. Russett, well known for their
work on the democratic peace theory, state:
The classical liberals advocated policies to increase
liberty and prosperity.
They sought to empower the commercial class politically
and to abolish royal charters, monopolies, and the protectionist
policies of mercantilism so as to encourage entrepreneurship and
increase productive efficiency.
They also expected democracy and laissez-faire
economics to diminish the frequency of war.
Adam Smith argued in the
Wealth of
Nations that as societies progressed from hunter gatherers to
industrial societies the spoils of war would rise, but the costs of
war would rise further, making war difficult and costly for
industrialized nations.
...the honours, the fame, the emoluments of war, belong
not to [the middle and industrial classes]; the battle-plain is the
harvest field of the aristocracy,
watered with the blood of the people...Whilst our trade rested upon
our foreign dependencies, as was the case in the middle of the last
century...force and violence, were necessary to command our
customers for our manufacturers...But war, although the greatest of
consumers, not only produces nothing in return, but, by abstracting
labour from productive employment and interrupting the course of
trade, it impedes, in a variety of indirect ways, the creation of
wealth; and, should hostilities be continued for a series of years,
each successive war-loan will be felt in our commercial and
manufacturing districts with an augmented pressure.
Richard Cobden
When goods cannot cross borders, armies
will.
Frederic Bastiat
By virtue of their mutual interest does nature unite
people against violence and war…the spirit of trade cannot coexist
with war, and sooner or later this spirit dominates every
people.
For among all those powers…that belong to a nation,
financial power may be the most reliable in forcing nations to
pursue the noble cause of peace…and wherever in the world war
threatens to break out, they will try to head it off through
mediation, just as if they were permanently leagued for this
purpose - Immanuel Kant, the Perpetual Peace.
Cobden believed that military expenditures worsened the welfare of
the state and benefited a small but concentrated elite minority.
Summing up British
imperialism, which he
believed was the result the economic restrictions of
mercantilist policies. To Cobden, and many
classical liberals, those who advocated peace must also advocate
free markets.
Gold standard
Classical liberals advocate a
gold
standard to place fiscal constraints on government Adam Smith
was concerned with the government manipulation of the money supply.
To prevent this he favored a monetary system based on gold and
silver, and also supported
free
banking. Classical economists who favored a gold standard
include Cantillon, Hume, Ricardo, Thornton, Mill, Cairnes, Goschen,
and Bagehot.
Classical liberalism and freedom according to David Kelley
Executive Director of
The Objectivist Center and
libertarian
David Kelley claims that
classical liberals had a concept of freedom that is entirely at
odds with the modern liberal conception. While classical liberals
argued for free trade and a limited central authority, Kelley
claims that modern liberals have redefined freedom and human rights
to include expanded government authority over property, labor, and
capital. Adam Smith argued that in order to best serve human
welfare, individuals should be left free to follow their own
interests, which were to "sustain life and to acquire goods" and
that a government should abstain "from interference in free
enterprise, putting checks only on undue strife and
competition."
On the classical liberal concept of freedom the
Edinburgh Review wrote in
1843:
Be assured that freedom of trade, freedom of thought, freedom of
speech, and freedom of action, are but modifications of one great
fundamental truth, and that all must be maintained or all risked;
they stand and fall together.
Kelley also suggests that classical liberals understood liberty to
be a negative freedom—a freedom from the coercive actions of
others. Kelley claims that modern liberals include positive
freedoms in liberty, which are rights to the provision of goods. He
goes on to claim that modern understandings of positive freedom is
the opposite the classical thinking of negative freedom.
He claims that the theory of classical liberalism appropriated most
of
classical republicanism
theorists due to their dedication to the issue of liberty.
Redefinition of liberalism from laissez-faire form to
interventionist form
The cause(s) of the shift in
liberalism in the United
States "between 1877 and 1937...from laissez-faire
constitutionalism to
New Deal statism, from
classical liberalism to democratic social-welfarism" has been a
subject of study among scholars.
Some attribute this shift to the greed and envy of the working
class, who resented the wealth and power of the captains of
industry. They point to the extension of the
voting franchise in most
democracies in the 19th century, and claimed
these newly enfranchised
citizens often
voted to benefit themselves, instead of voting to benefit the upper
class. Rising
literacy rates and the spread
of knowledge led to social
activism in a
variety of forms.
Social liberals
called for laws against
child labor,
laws requiring minimum standards of
worker safety, a [[minimum
wage|a living wage, and old age pensions. The
laissez faire economic liberals considered
such measures to be an unjust imposition upon
liberty, as well as a hindrance to
economic development.
Others see the rise of social liberalism as due to the extreme
poverty of the working class, frequent unemployment caused by
cyclic depressions, and the growing power of the rich to establish
monopolies, called at the time
cartels, and
to influence legislation with "campaign contributions" or outright
bribes.
Thus, in the 19th century, social liberalism largely replaced
"classical liberalism." In 1911,
L. T. Hobhouse published
Liberalism, which outlines a "new liberalism" which
includes qualified acceptance of government intervention in the
economy, and the collective right to equality in dealings, what he
called "just consent". So different from classical liberalism did
Hayek see Hobhouse's book that he commented that it would have been
more accurately titled
Socialism instead. (Hobhouse called
his beliefs "liberal socialism".)
The form of liberalism that arose in the second half of the 20th
Century, calling itself "conservatism", professes to echo the views
of the classical liberals, and rejects the ideas of the social
liberals.
"Classical liberalism" and libertarianism
Raimondo Cubeddu of the Department of
Political Science of the
University of Pisa says "It is often
difficult to distinguish between '
libertarianism' and 'classical liberalism'.
Those two labels are used almost interchangeably by those we may
call libertarians of a '
minarchist'
persuasion—scholars who, following Locke and
Nozick, believe a state is needed in order to achieve
effective protection of property rights". Libertarians see
themselves as sharing many philosophical, political, and economic
undertones with classical liberalism, such as the ideas of
laissez-faire government, free markets, and individual freedom.
Nevertheless, Samuel Freeman, a staunch advocate of 'welfare
liberalism' (that he argues should be called 'High liberalism')
rejects this as a mere "superficial" resemblance:
Libertarianism's resemblance to liberalism is
superficial; in the end, libertarians reject essential liberal
institutions.
Correctly understood, libertarianism resembles a view
that liberalism historically defined itself against, the doctrine
of private political power that underlies feudalism.
Like feudalism, libertarianism conceives of justified
political power as based in a network of private
contracts.
It rejects the idea, essential to liberalism, that
political power is a public power to be impartially exercised for
the common good.
Those who emphasize the distinction between classical liberalism
and libertarianism point out that some of the key thinkers of
classical liberalism were far from libertarian:
Adam Smith should be seen as a moderate free
enterpriser who appreciated markets but made many, many
exceptions.
He allowed government all over the place.
For example, Adam Smith supports public roads, canals and bridges.
However, he favored that these goods should be paid proportionally
to their consumption (e.g., putting a toll).
In the mid-1800s,
Abraham Lincoln
followed the
Whig version
of economic liberalism which included state provision and
regulation of railroads. The
Pacific Railway Acts of 1862 provided
the development of the
First Transcontinental
Railroad.
Further, some argue that libertarianism and liberalism are
fundamentally incompatible because the checks and balances provided
by liberal institutions conflict with the support for complete
economic deregulation offered by most libertarians. However,
arguments over the similarities are made difficult by the large
number of factions in both classical liberalism and libertarianism.
For example,
minarchist libertarians are
not necessarily in favor of complete economic deregulation in the
first place and often support tax-funded provision of a select few
public goods.
See also
References
External links
LockeSmith Institute.
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