Everything about Classical Liberal totally explained
Classical liberalism (also known as
traditional liberalism and
laissez-faire liberalism, or, in much of the world, simply called
liberalism) is a doctrine stressing individual freedom and
limited government. This includes the importance of human rationality, individual
property rights,
natural rights, the protection of
civil liberties, constitutional limitations of government,
free markets, and individual freedom from restraint as exemplified in the writings of
Adam Smith,
John Stuart Mill,
Montesquieu,
Voltaire,
Thomas Paine and others. As such, it's seen as the fusion of
economic liberalism with
political liberalism. though it doesn't necessarily oppose the state's provision of a few basic
public goods. The qualification
classical was applied in retrospect to distinguish early nineteenth-century liberalism from evolutions in liberal thought during the 19th and early 20th centuries, especially the "
new liberalism" associated with
Thomas Hill Green,
Leonard Trelawny Hobhouse, and
Franklin D. Roosevelt, which grants the state a more interventionist role in the economy, including a
welfare state. Classical liberalism isn't to be confused with the ideology that's commonly called "
liberalism"
today in the United States, as "classical liberalism" is closer to what today is a claimed current of
"conservatism" in the U.S.
Friedrich Hayek,
Ludwig von Mises, and
Milton Friedman are credited with a revival of classical liberalism in the 20th century after it fell out of favor beginning in the late nineteenth century and much of the twentieth century. In relation to economic issues, this revival is sometimes referred to as
neoliberalism, although it must be said that many prominent neoliberals, like
Alexander Rüstow and
Wilhelm Röpke have tried to distance themselves from laissez-faire liberals.
Libertarians of a
minarchist persuasion use the term "classical liberalism" almost interchangeably with the term "libertarianism", while the correctness of this usage is disputed (see "Classical liberalism" and libertarianism, below). Nevertheless, if the two philosophies are not the same, classical liberalism does resemble modern libertarianism in many ways.
Overview
In
America, liberalism took a strong root because it had little opposition to its ideals, whereas in
Europe liberalism had to contend with many reactionary interests. From the time of the
industrial revolution through the
Great Depression liberalism in America saw its first ideological challenges. By the time of the Great Depression, liberalism in America had changed its definition to describe its former opposition, for example in the opinion of
Arthur Schlesinger Jr.:
socialism, and therefore no change in meaning occurred. In fact,
Ronald Reagan credited
Bastiat, von Mises, and Hayek as influences.
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
classical liberals argued against
direct democracy "for there's 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's nothing to check the inducements to sacrifice the weaker party...."
In economics, some 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." Their advocacy of an "unregulated free market" is founded on an "assumption about individuals being rational, self-interested and methodical in the pursuit of their goals." Adam Smith, however, wasn't an advocate of pure capitalism, and allowed for many exceptions to a strictly free-market economy.
Classical liberalism holds that rights 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 don't 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." 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 didn't 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.
Origins
Modern classical liberals trace their ideology to
ancient Greek and
medieval thought. 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. But its classic formulation came in
The Age of Enlightenment.
The Wealth of Nations (1776) by
Scottish philosopher
Adam Smith is one of the classic works that rejects the philosophy of
mercantilism, which advocated state
interventionism in the economy and
protectionism. 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 Rosencrance 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.
"By virtue of their mutual interest does nature unite people against violence and war…the spirit of trade can't 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, that'll 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
mercantalist policies (not free trade). To Cobden, and many classical liberals, those who advocated peace must also advocate free markets.
Classical liberalism and freedom
Executive Director of
The Objectivist Center and libertarian
David Kelley states that classical liberals had a concept of freedom that's entirely at odds with the modern liberal conception.
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. Modern liberals include positive freedoms in liberty, which are rights to the provision of goods.
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.
The
Industrial Revolution greatly increased material wealth, but made social problems, such as
pollution,
child labor, and
overcrowding in the cities, more visible. Material and scientific progress led to greater
longevity and a reduced mortality rate. The population increased dramatically, as technology improved agricultural output, millions more could survive whereas a century before they'd have perished. As F.A. Hayek noted,
» "The
proletariat which capitalism can be said to have 'created' was thus not a proportion of the population which would have existed without it and which it had degraded to a lower level; it was an additional population which was enabled to grow up by the new opportunities for employment which capitalism provided."
Increased
agricultural output through
technology reduced the labor necessary for farming creating a migration of labor from rural to urban areas. The industrial revolution saw for the first time rising demands for food and decreasing food prices. Labor wages, in fact didn't decline, but rose above inflation, despite a decrease in the hours worked by labor and an increase in the labor supply. Wages saw a steady increase, without government assistance, prior to the introduction of a national minimum wage. The industrial revolution also saw a shift of child labor from farms to factories, but also saw a decline in the use of child labor prior to government laws banning child labor, as wealth and productivity increased, thus allowing parents to send children to school rather than work to earn for the family.
Alexis de Tocqueville's insight supports Milton Friedman’s idea that the industrial revolution didn't create more poverty as was claimed by Progressives of the time, but created more visible poor.
In the 19th century, the
voting franchise in most
democracies was extended, and these newly enfranchised
citizens often voted in favor of
government intervention into the economy. Rising
literacy rates and the spread of knowledge led to social
activism in a variety of forms. Those calling themselves progressives, called for laws against
child labor and laws requiring minimum standards of
worker safety. The
laissez faire economic liberals considered such measures to be an unjust imposition upon
liberty, as well as a hindrance to
economic development. This 19th century
social liberalism is considered as the first significant split of modern liberalism from "classical liberalism." In 1911,
L. T. Hobhouse published
Liberalism, which summarized what social liberals believe is a "new liberalism," including 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".)
In some European countries the term "liberalism" refers mostly to what is called "libertarianism" in the United States, for example, European "liberalism" is most often in favor of a free market-economy and a more restricted government.
In
Australia the major
centre-right or '
conservative' party is called the
Liberal Party of Australia, where "liberal" was chosen to refer back to the old
Commonwealth Liberal Party and also to distinguish it from the "socialist" Labor Party. However, because of familiarity with contemporary US usage, the term "liberal" can take on a variety of meanings ranging from member or supporter of the Liberal party, to classical liberal, to "liberal" in the contemporary American sense (for example
modern liberalism).
Disputes over whether modern liberalism is derived from classical liberalism
Whether modern liberalism is founded upon the philosophy of classical liberalism is a subject of dispute. Scholar
Leonard Liggio (a self-described classical liberal) holds that modern liberalism doesn't share the same intellectual foundations as classical liberalism. He says,
» "Classical liberalism is liberalism, but the current collectivists have captured that designation in the United States. Happily they didn't capture it in Europe, and were glad enough to call themselves socialists. But no one in America wants to be called socialist and admit what they are."
He believes that this is why liberalism means something different in Europe from in America. Proponents of the
Austrian School and the
Chicago School (sometimes called neo-classical economists), such as
Milton Friedman,
Ludwig von Mises and
Friedrich von Hayek, also reject claims that modern liberalism represents a continuous development from classical liberalism. According to Friedman,
» "Beginning in the late nineteenth century, and especially after 1930 in the United States, the term liberalism came to be associated with a very different emphasis, particularly in economic policy. It came to be associated with a readiness to rely primarily on the state rather than on private voluntary arrangements to achieve objectives regarded as desirable. The catchwords became welfare and equality rather than freedom. The nineteenth century liberal regarded an extension of freedom as the most effective way to promote welfare and equality; the twentieth century liberal regards welfare and equality as either prerequisites of or alternatives to freedom. In the name of welfare and equality, the twentieth-century liberal has come to favor a revival of the very policies of state intervention and paternalism against which classical liberalism fought. In the very act of turning the clock back to seventeenth-century mercantilism, he's fond of castigating true liberals as reactionary!"
Neo-classical economists instead see themselves as the true inheritors of classical liberalism. For example, Hayek argued that he wasn't a conservative because he was a liberal, and had refused to give up that label to what he considered to be modern usurpers.
Joseph Schumpeter stated, "As a supreme, if unintended compliment, the enemies of the system of private enterprise have thought it wise to appropriate its label," implying that modern liberals have "stolen" the word and given it a definition opposite its original meaning.
Daniel Yergin, a
Pulitzer prize winning author, and
Joseph Stanislaw write on the subject of the changed meaning of liberalism in America,
» "In the 1920s, the
New York Times criticized "the expropriation of the time-honored word 'liberal'" and argued that "the radical red school of thought...hand back the word 'liberal' to its original owners.""
Following from this
New York Times criticism, they argue that leading Progressive writers used the word liberal as a "substitute for progressivism, which had become tarnished by its association with their fallen hero,
Theodore Roosevelt". They also concur with F.A. Hayek view (in his essay "Why I Am Not a Conservative") that
Franklin D. Roosevelt adopted the term to "ward off accusations of being left-wing" [withRoosevelt] declaring that liberalism was "plain English for a changed concept of the duty and responsibility of government toward economic life."
Criticism of neo-classical economists as classical liberals
Some have rejected the claim describing neo-classical economists as "right-wing economic liberals", "liberal conservatives" and as the "new right", viewing their efforts at co-opting the term as ignoring the political side of early liberalism and only focusing on the work of the classical economists such as Smith and
Ricardo. Furthermore, it has been argued that "Hayek's view of classical liberal principles is a peculiar one" which ignores the work of pre-eminent thinkers such as
Locke and Mill. However, Hayek cites Mill 51 times in his political books (ranking third out of all political thinkers Hayek refers to) and Locke 32 times.
"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 who 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, others reject 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."
However, such a claim appears to be assuming "libertarianism" as a doctrine of absolute laissez-faire. While there are libertarians who oppose all government intervention, there are libertarians who do make exceptions to allow for government intervention and provision of some public goods such as roads and public utilities. Therefore the claim that libertarianism isn't the same as classical liberalism because some classical liberals make exceptions to absolute laissez-faire may only hold for a particular type of libertarianism.
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.
Alan Ryan, a former professor of Politics at
Princeton University, argues that the claim from
» "contemporary libertarians...that they're classical liberals...is not wholly true. There is at least one strain of libertarian thought represented by
Robert Nozick's
Anarchy, State and Utopia that advocates the decriminalization of '
victimless crimes' such as
prostitution, drug-taking and unorthodox sexual activities. There is nothing of that in John Locke or Adam Smith."
Having written nothing regarding these subjects, however, doesn't negate that there may have been support, or that
prostitution and
illegal narcotics were already legal (or not legally enforced).
Contemporary libertarians generally reject the
Millean "
harm principle" since they feel it's too ambiguous and too prone to
subjective interpretation. For example,
J.S. Mill never stated or clarified what constitutes "
harm" (if harm is defined as a physical or emotional injury). In
reality, even the most mundane, commonplace and trivial of things can harm a
person, in this sense. As such, it would be impractical to create
objective legislation outlawing literally any form of harm. The Millean harm principle was commonly used by classical liberals as the "barometer" or "limit" of
liberty. Many libertarians would instead use the
non-aggression principle as the "limit" to freedom, and would argue that it's far easier for objective laws to be based upon protecting rights to person and
property.
Opposition to classical liberalism
The Fascist leader Benito Mussolini opposed classical liberalism: "Against individualism, the Fascist conception is for the State. It is opposed to classical Liberalism, which arose from the necessity of reacting against absolutism, and which brought its historical purpose to an end when the State was transformed into the conscience and will of the people. Liberalism denied the State in the interests of the particular individual; Fascism reaffirms the State as the true reality of the individual."
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