Classical liberalism

Classical liberalism is a political ideology that developed in the nineteenth century in Western Europe, and the Americas. It is committed to the ideal of limited government and liberty of individuals including freedom of religion, speech, press, assembly, and free markets. Notable individuals who have contributed to classical liberalism include Jean-Baptiste Say, Thomas Malthus, and David Ricardo. There was a revival of interest in classical liberalism in the twentieth century led by Ludwig von Mises, Friedrich Hayek and other economists.

The phrase classical liberalism is also sometimes used to refer to all forms of liberalism before the twentieth century. And some conservatives and libertarians use the term classical liberalism to describe their belief in the primacy of economic freedom and minimal government. It is sometimes difficult to tell which meaning, or whether both, is intended in a given source.

Core principles

Central to classical liberalism was a view of human nature as selfish, calculating, idle and atomistic. Being selfish, people were motivated solely by pain and pleasure. Being calculating, they made decisions intended to maximize pleasure and minimize pain. If there were no opportunity to increase pleasure or reduce pain, they would become idle. Therefore the only motivation for labour was either the possibility of great reward or fear of hunger. This belief led them to pass the Poor Law Amendment Act 1834 which limited the provision of social assistance. On the other hand they thought that men of higher ranks were motivated by ambition. Seeing society as atomistic, it was no more than the sum of its individual members. These views departed from earlier views of society as a family and therefore greater than the sum of its members.

Classical liberals agreed with Thomas Hobbes that government had been created by individuals in order to protect themselves from one another. They thought that individuals should be free to pursue their self-interest without control or restraint by society. Individuals should be free to obtain work from the highest-paying employers, while the profit motive would ensure that products that people desired were produced at prices they would pay. In a free market, both labor and capital would receive the greatest possible reward, while production would be organized efficiently to meet consumer demand.

Adopting Thomas Malthus's population theory, they saw poor urban conditions as inevitable as they believed population growth would outstrip food production, and even desirable as it would help limit population growth. They opposed any income or wealth redistribution which they believed would be dissipated by the lowest orders.

Government, as explained by Adam Smith had only three functions: protection against foreign invaders, protection of citizens from wrongs committed against them by other citizens, and building and maintaining public institutions and public works that the private sector could not profitably provide. Classical liberals extended protection of the country to protection of overseas markets through armed intervention. Protection of individuals against wrongs normally meant protection of private property and enforcement of contracts, and the suppression of trade unions and the Chartist movement. Public works included a stable currency, standard weights and measures and support of roads, canals, harbors, railways, and postal and other communications services.

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 tenets 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 among 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 identified with conservatism and sometimes with 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 conservatives 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 Encyclopedists 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

Classical liberalism was the dominant political theory of the United Kingdom from the early 19th century until the First World War. Its notable victories were the Catholic Emancipation Act of 1829, the Reform Act of 1832, and the repeal of the Corn Laws in 1846. The Anti-Corn Law League brought together a coalition of liberal and radical groups in support of free trade under the leadership of Richard Cobden and John Bright, who opposed militarism and public expenditure. Their policies of low public expenditure and low taxation were adopted by William Ewart Gladstone when he became chancellor of the exchequer and later prime minister. Classical liberalism was often associated with religious dissent and nonconformism.

Although classical liberals aspired to a minimum of state activity, they accepted the principle of government intervention in the economy from the early 19th century with passage of the Factory Acts. From around 1840 to 1860, laissez-faire advocates of the Manchester School and writers in The Economist were confident that their early victories would lead to a period of expanding economic and personal liberty and world peace, but would face reversals as government intervention and activity continued to expand from the 1850s. Jeremy Bentham and James Mill, although advocates of laissez-faire, non-intervention in foreign affairs and individual liberty, believed that social institutions could be rationally redesigned through the principles of Utilitarianism. The Conservative prime minister, Benjamin Disraeli, rejected classical liberalism altogether and advocated Tory Democracy. By the 1870s, Herbert Spencer and other classical liberals concluded that historical development was turning against them. By the First World War, the Liberal Party had largely abandoned classical liberal principles.

Political economy

Classical liberals saw utility as the foundation for public policies. This broke both with conservative "tradition" and Lockean "natural rights", which were seen as irrational. Utility which emphasizes the happiness of individuals became the central ethical value of all liberalism. Although utilitarianism inspired wide-ranging reforms, it became primarily a justification for laissez-faire economics. However, classical liberals rejected Adam Smith's belief that the "invisible hand" would lead to general benefits, and embraced Thomas Malthus' view that population expansion would prevent any general benefit and David Ricardo's view of the inevitability of class conflict. Laissez-faire was seen as the only possible economic approach and any government intervention was seen as useless. The Poor Law Amendment Act 1834 was defended on "scientific or economic principals" while the authors of the Elizabethan Poor Law (1601) were seen as not having had the benefit of reading Malthus.

Commitment to laissez-faire however was not uniform. Some economists advocated state support of public works and education. Classical liberals were also divided on free trade. Ricardo, for example, expressed doubt that the removal of grain tariffs advocated by Richard Cobden and the Anti-Corn Law League would have any general benefits. Most classical liberals also supported legislation to regulate the number of hours that children were allowed to work and usually did not oppose factory reform legislation.

Despite the pragmatism of classical economists, their views were expressed in dogmatic terms by popular writers, such as Jane Marcet and Harriet Martineau. The strongest defender of laissez-faire was The Economist founded by James Wilson in 1843. The Economist criticized Ricardo for his lack of support for free trade, and expressed hostility for welfare, believing that the lower orders were responsible for their economic circumstances. The Economist took the position that regulation of factory hours was harmful to workers and also strongly opposed state support for education, health, the provision of water, and granting of patents and copyrights. A rigid belief in laissez-faire also guided government response in 1846-1849 to the Irish famine, during which an estimated one and a half million people died. It was expected that private enterprise and free trade, rather than government intervention, would alleviate the famine.

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, a view recognized by such modern American political scientists as Dahl, Doyle, Russet, and O'Neil. 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.

Relationship to modern liberalism

Many modern scholars of liberalism argue that no particularly meaningful distinction between classical and modern liberalism exists. Alan Wolfe summarizes this viewpoint, which

reject(s) any such distinction and argue(s) instead for the existence of a continuous liberal understanding that includes both Adam Smith and John Maynard Keynes... The idea that liberalism comes in two forms assumes that the most fundamental question facing mankind is how much government intervenes into the economy... When instead we discuss human purpose and the meaning of life, Adam Smith and John Maynard Keynes are on the same side. Both of them possessed an expansive sense of what we are put on this earth to accomplish. Both were on the side of enlightenment. Both were optimists who believed in progress but were dubious about grand schemes that claimed to know all the answers. For Smith, mercantilism was the enemy of human liberty. For Keynes, monopolies were. It makes perfect sense for an eighteenth century thinker to conclude that humanity would flourish under the market. For a twentieth century thinker committed to the same ideal, government was an essential tool to the same end.

According to William J. Novak, however, liberalism in the United States shifted, "between 1877 and 1937...from laissez-faire constitutionalism to New Deal statism, from classical liberalism to democratic social-welfarism".

Hobhouse, in Liberalism (1911), attributed this purported shift, which includeed qualified acceptance of government intervention in the economy and the collective right to equality in dealings, to an increased desire for what Hobhouse called "just consent". F. A. Hayek wrote that Hobhouse's book would have been more accurately titled Socialism, and Hobhouse himself called his beliefs "liberal socialism".

Joseph A. Schumpeter attributes this supposed shift in liberal philosophy to the 19th century expansion of the franchise to include the working 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, laws establishing a minimum wage and old age pensions, and laws regulating banking with the goal of ending cyclic depressions, monopolies, and cartels. Laissez faire economic liberals considered such measures to be an unjust imposition upon liberty, as well as a hindrance to economic development, and as the working class in the West became increasingly prosperous, they also became more conservative.

Another regularly asserted contrast between classical and modern liberals: classical liberals tend to see government power as the enemy of liberty, while modern liberals fear the concentration of wealth and the expansion of corporate power.

In the United States in the second half of the 20th Century, many classical liberals allied with social conservatives, and attacked the very concept of liberalism, calling their beliefs conservatism.

See also

• Liberalism
• Contributions to liberal theory
• Libertarianism
• Liberalization
• Manchesterism
• Philosophical Radicals
• Austrian School
• Liberalism (book)
• The Economist
• Social liberalism
• Conservatism

References

• Gray, John. Liberalism. Minneapolis: University of Minnesota Press, 1995. ISBN 0-8166-2800-9
• Hunt, E. K. Property and prophets: the evolution of economic institutions and ideologies. New York: M. E. Sharpe, Inc., 2003. ISBN 0-7656-0608-9
• Richardson, James L. Contending Liberalisms in World Politics: Ideology and Power. Boulder, CO: Lynne Rienner Publishers, 2001. ISBN 1-55587-939-X

External links

• A Guide to Classical-Liberal Think Tanks by Joseph L. Bast
• What is Classical Liberalism? by John C. Goodman
• The Foundation for Economic Education An educational organization that promotes free markets and limited government.
• Ludwig von Mises Institute - A research and educational center for classical liberalism based on the Austrian School of economics. Also includes libertarian political philosophy and anarcho-capitalism.
• The Free Marketeers Network The networking site for Free Marketeers around the world
• The Institute for Humane Studies at George Mason University A unique organization that assists undergraduate and graduate students worldwide with an interest in individual liberty
• Classical Liberal Historical Timeline, Belmont University LockeSmith Institute.
• Where Liberalism and Libertarianism Part Company, by Joshua Cohen in the Boston Review
• Classical liberalism, Stanford Encyclopedia of Philosophy.