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Classical liberalism (also called laissez-faire liberalism) is a term used to describe the following:

• the philosophy developed by early liberals from the Age of Enlightenment until Herbert Spencer
• the same philosophy, as revived in the 20th century by Friedrich Hayek and Milton Friedman.

This entry is about the political philosophy which sources refer to as "classical liberalism."

Classical liberalism is a political philosophy that supports individual rights as pre-existing the state, a government that exists to protect those moral rights, ensured by a constitution that protects individual autonomy from other individuals and governmental power, private property, and a laissez-faire economic policy. The "normative core" of classical liberalism is the idea that in an environment of laissez-faire, a spontaneous order of cooperation in exchanging goods and services emerges that satisfies human wants. It is a blend of political liberalism and economic liberalism which is derived from Enlightenment thinkers such as John Locke, Adam Smith, Voltaire, Johann Wolfgang Goethe and Immanuel Kant, and their precursors, like Thomas Hobbes and Baruch Spinoza.

Many elements of this ideology developed in the 17th and 18th centuries. The early liberal figures now described as "classical liberals" rejected many foundational assumptions which dominated most earlier theories of government, such as the Divine Right of Kings, hereditary status, and established religion, and focuses on individual freedom, reason, justice and tolerance.. Such thinkers and their ideas helped to inspire the American Revolution and French Revolution.

The qualification "classical" was applied in retrospect to distinguish the early 19th century laissez-faire form of liberalism from modern interventionist social liberalism.

Overview

According to the historian of liberalism Arthur Schlesinger Jr. in A Note for Europeans, liberalism was "redefined" in the United States over time from the laissez-faire policy embodied in the famous phrase from Thomas Paine "that government is best which governs least" to "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." The term "classical liberalism" refers to the political philosophy prior to this redefinition.

According to Nancy L. Rosenblum and Robert C. Post, "at the heart of classical liberalism" 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 liberals place 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 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 be felt by a majority, and there is nothing to check the inducements to sacrifice the weaker party."

In economics, classical liberals believe that "an unfettered market" is the most efficient mechanism for satisfying human needs and channeling resources to their most productive uses and "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."

They do not believe that government creates individual rights (in a moral sense), but rather that moral rights exist independently of government. Thomas Jefferson called these "inalienable rights" and indicative of the classical liberal belief that rights do not come from law but that law serves to protect natural individual rights, he says, "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 liberals, 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) 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, the unlimited powers of reason, and sometimes showing 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.

Early in the 20th century, classical liberalism took a backseat to the ideas of modern liberalism which embraced central planning of the economy by the state and social welfare. According to Harry Girvetz and Kenneth Minogue, classical liberalism experienced a revival in the 20th century, with Friedrich von Hayek and Milton Friedman providing the intellectual foundations. This was a response to Keynesian interventionist economic policies' seeming inability to revive stagnant economies beset with high unemployment and inflation, and to the high taxation levels necessary to maintain the welfare state.

Origins

Modern classical liberals trace their ideology to ancient Greek and medieval thought. They cite as an expression the 16th century School of Salamanca in Spain and its classic formulation in the Enlightenment tradition. 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.

Key thinkers in classical liberalism

John Locke

As the industrial revolution began in the United Kingdom, so did the first conceptions of liberalism. John Locke (1632-1704) defended religious freedom in his important work A Letter Concerning Toleration published, along with his other important work Two Treatises of Government in 1689. However, Locke would not extend his view on religious freedom to Catholics.

Locke was responsible for the idea of "natural rights" which he saw as "life, liberty and property". To Locke, property was a more compelling natural right than the right to participate in collective decision-making: he would not endorse direct democracy in government, as he feared that the "tyranny of the majority" would seek to deny people their rights to property. Nevertheless, the idea of natural rights played a key role in providing the ideological justification for the American revolution and French revolution.

Baron de Montesquieu

Similar basic liberal ideas began to emerge in France. Baron de La Brède et de Montesquieu (January 18, 1689 – February 10, 1755) was a French political thinker who lived during the Enlightenment. He is famous for his articulation of the theory of separation of powers in De l'esprit des lois (The Spirit of the Laws.) This idea is now taken for granted in modern discussions of government and implemented in many constitutions all over the world.

Voltaire

François-Marie Arouet (21 November, 1694 – 30 May, 1778), better known by the pen name Voltaire, was a French Enlightenment writer, essayist, deist and philosopher.

Voltaire is known for his sharp wit, philosophical writings, and defense of civil liberties, including freedom of religion and the right to a fair trial. He was an outspoken supporter of social reform despite strict censorship laws in France and harsh penalties for those who broke them. A satirical polemicist, he frequently made use of his works to criticize Church dogma and the French institutions of his day. Voltaire is considered one of the most influential figures of his time.

Thomas Paine

Thomas Paine (January 29, 1737 – June 8 1809), a radical pamphleteer, was the author of Common Sense, was credited with helping start the American Revolution, and was the best-selling liberal writer of his era. Paine opposed slavery and was amongst the earliest proponents of social security, universal free public education, a guaranteed minimum income, and many other radical ideas now common practice in most western democracies.

Thomas Jefferson

Thomas Jefferson (April 13, 1743 N.S. – July 4, 1826), a political philosopher who promoted republicanism, a laissez-faire economy and the separation of church and state, was the author of the Virginia Statute for Religious Freedom (1779, 1786), which was the basis of the Establishment Clause of the First Amendment of the United States Constitution. He was the eponym of Jeffersonian democracy and the founder and leader of the Jeffersonian Republican Party, which dominated American politics for over a quarter-century.

Immanuel Kant

Immanuel Kant (22 April, 1724 – 12 February, 1804) further advanced the idea of a liberal peace by demonstrating conditions and requisites for international peace among states in his work Perpetual Peace: A Philosophical Sketch (1795). As an early liberal, Kant opposed the concept of majority rule over the individual. In opposition to democracy, which in his time meant direct democracy, he advocates a constitutional republic. He says, "Democracy is necessarily despotism, as it establishes an executive power contrary to the general will; all being able to decide against one whose opinion may differ, the will of all is therefore not that of all: which is contradictory and opposite to liberty."

Furthermore, Kant's moral philosophy, from the Critique of Pure Reason states,

“No one can compel me (in accordance with his belief about the welfare of others) to be happy after his fashion; instead, every person may seek happiness in the way that seems best to him, if only he does not violate the freedom of others to strive toward similar ends as are compatible with everyone’s freedom under a possible universal law.”

Finally, Kant's conception of the Cosmopolitan Law, which was the free movement of individuals to do business in foreign nations. The cosmopolitan law, according to Kant, was to be the economic portion of human liberty. Liberal states would therefore foster free international trade between them.

Adam Smith

Adam Smith, (baptised June 5, 1723 O.S. (June 16 N.S.) (the exact date of his birth is unknown) – July 17, 1790) believed that the government had three and only three roles to play: 1.) "protecting the society from the violence and invasion of other independent societies...which can only be performed by means of a military force" 2.) "protecting, as far as possible, every member of the society from the injustice or oppression of every other member of it..." and 3.) "erecting and maintaining those public institutions and those public works, which...though most advantageous...are such that the profit could never repay the expense to any individual or small group of individuals" which implies that governments should work to provide some public goods and correct market externalities. Smith, advocates the state should not interfere in domestic or international trade through protectionism and that prices for goods, services, and labour should be set through the mechanism of a free market. He believed that if individuals pursue their economic self-interest that the good of society will be achieved indirectly by maximizing the stock of wealth.

Friedrich von Hayek

Hayek was a contemporary critic of John Maynard Keynes and believed that the outcomes of Keynes' interventionist policies would result in the destruction of civil liberal society. He further advovated this thesis in his work, The Road to Serfdom, arguing that restrictions among economic freedom result in a loss of civil and political freedom.

Milton Friedman

Credited as being co-responsible with Friedrich von Hayek for providing the intellectual foundations for the revival of classical liberalism in the 20 century, Milton Friedman is known for his work in monetary economics: specifically the quantity theory of money. He co-authored, with Anna Schwartz, "A Monetary History of the United States", which sought to examine the role of money supply in explaining macroeconomic fluctations in US history. He is also well-known for this work on the consumption function especially the permanent income hypothesis. Other important contributions include his critique of the Phillips curve and the concept of the natural rate of unemployment. Friedman, like Hayek believes that economic freedom created and protected civil and political freedom and that the loss of economic freedom led to a loss in civil and political freedom. His most famous popular works include Capitalism and Freedom and Free to Choose where he advances the ideas of laissez-faire free market liberal government. Friedman classifies himself as both a "libertarian" and a "classical liberal."

Other classical liberal thinkers

• Frederic Bastiat
• Grover Cleveland
• Marquis de Condorcet
• Gustave de Molinari
• Denis Diderot
• The Founding Fathers of the United States
• David Hume
• Karl Popper
• Herbert Spencer
• Ludwig von Mises
• Mary Wollstonecraft

The 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 more visible, such as pollution, child labor, and overcrowding in the cities. Material and scientific progress led to greater longevity and a reduced mortality rate. The population increased dramatically resulting in an increased supply of labor relative to capital, which led to declining wages. Many laissez-faire economists felt that these problems of industrial society would correct themselves without government action.

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 liberals 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, i.e., European "liberalism" is most often in favor of a free market-economy and a more restricted government.

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 does not 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 did not 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 than 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 emphasisis, 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 prerequisistes 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 merchantalism, he is 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 was not 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.

Criticism of neo-classical economists as classical liberals

Many have rejected this claim describing the 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.

"Classical liberalism" and libertarianism

Libertarians tend to use the phrase "classical liberal" interchangeably with "libertarian", a usage which is disputed by many. 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. However, others reject this as a mere superficial resemblence. Samuel Freeman states that

"that 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 be impartially exercised for the common good."

Those who emphasize the distinction between classical liberalism and libertarianism point out that even Adam Smith believed a free market could not satisfy all the demands of a society. Furthermore, some argue that libertarianism and liberalism are fundamentally incompatible because the checks and balances provided by liberal institutions conflict with the support by most libertarians of complete economic deregulation. However, arguments over the similarities are made difficult by the large number of factions in both classical liberalism and Libertarianism (for example, minarchists are not necessarily in favor of complete economic deregulation in the first place.)

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."

Alan Ryan, professor of Politics at Princeton, argues that the claim from "contemporary libertarians...that they are 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."

Classical liberalism and neo-liberalism

This section needs expansion. You can help by adding to it.

A major philosophical difference between classical liberalism and neo-liberalism is the former's emphasis in justice and natural rights, as opposed to the latter's utilitarism. Neo-liberalism tends to emphasize efficiency, gross output, trade volume, and similar concepts that elevate economic gain over rights. Free Enterprise Institute Instituto de Libre Empresa promotes this difference in commentaries and academic activities. The most obvious policy difference between classical liberalism and neo-liberalism is in the area of foreign policy. Classical liberalism is strongly opposed to imperialism, specifically using military or political means to open markets. Neo-liberalism is defined by its support of such coercive methods.

See also

• Austrian School
• Capitalism
• Free market
• Globalization
• Privatization
• Liberalization
• Liberalism
• Libertarianism
• Manchesterism
• Contributions to liberal theory

References

1. ^ Adams, Ian, Political Ideology Today (2002), Manchester University Press, page 20
2. John Gray (1982). "F.A. Hayek and the Rebirth of Classical Liberalism". Literature of Liberty. 5 (4).
3. ^ Girvetz, Harry K. and Minogue Kenneth. Liberalism, Encyclopedia Britannica (online), p. 16, retrieved May 16,2006
4. Razeen, Sally. Classical Liberalism and International Economic Order: Studies in Theory and Intellectual History, Routledge (UK) ISBN 0-415-16493-1, 1998, p. 17
5. Heywood, A. (1998) Political Ideologies: An Introduction, Macmillan Press page 27
6. Richardson, James L. Contending Liberalisms in World Politics: Ideology and Power (2001), Lynne Rienner Publishers, page 52.
7. Schelesinger Jr., Arthur. Liberalism in America: A Note for Europeans from The Politics of Hope, Riverside Press, Boston, 1962
8. Rosenblum, Nancy L. and Post, Robert C. Civil Society and Government, Princeton University Press ISBN 0-691-08802-0, 2001, p. 26
9. ^ Ryan, Alan. "Liberalism". A Companion to Contemporary Political Philosophy, editors Goodin, Robert E. and Pettit, Philip. Blackwell Publishing, 1995, p.293.
10. Madison, James. Federalist Paper no. 10, 1787
11. Quinton, Anthony. "Conservativism", A Companion to Contemporary Political Philosophy, editors Goodin, Robert E. and Pettit, Philip. Blackwell Publishing, 1995, p. 246.
12. Drilane, Robert and Parkinson, Gary. Online Dictionary of the Social Sciences.
13. Jefferson, Thomas. Letter to Isaac H. Tiffany, 1819
14. Kukathas, Chandran in the book The Many and the One: Pluralism in the Modern World, editors Richard Madsen and Tracy B. Strong, 2003, p. 61
15. Duncan-Aimone, Katherine and Evans, Mark, Edinburgh Companion to Contemporary Liberalism: Evidence and Experience, ISBN 1-57958-339-3, Routledge (UK), 2001, p. 55
16. Hayek, F. A. The Constitution of Liberty (London: Routledge, 1976), pp. 55-6.
17. See, Gallie, W.B. 1978. “Philosophers of Peace and War.” Cambridge University Press. p. 27. and, Tesón, Fernando R. “The Kantian Theory of International Law” Columbia Law Review, Vol. 92, No. 1 (Jan, 1992), pp 53-102. p. 76.
18. Friedman and Freedom, Interview with Peter Jaworski. The Journal, Queen's University, March 15, 2002 - Issue 37, Volume 129
19. Novak, William J. The Not-So-Strange Birth of the Modern American State: A Comment on James A. Henretta's "Charles Evans Hughes and the Strange Death of Liberal America", Law and History Review, Volume 24, Number 1, Spring 2006)
20. Hayek, F. A., The Fatal Conceit: The Errors of Socialism (University of Chicago Press, 1991), p. 110.
21. Christianity, Classical Liberalism are Liberty's Foundations, interview with Leonard Liggio. Religion & Liberty, Acton Institute, 2003
22. Kohl, B. and Warner, M., Scales of Neoliberalism International Journal of Urban and Regional Research Volume 28 (2004) pg1
23. Heywood, A. (1998) Political Ideologies: An Introduction Macmillan Press pg93
24. Friedman, Milton. Capitalism and Freedom, University of Chicago Press, Chapter 2
25. Hayek, F.A. (1960) The Constitution of Liberty University of Chicago Press chapter "Why I am not a Conservative"
26. Lessnoff, M. H. (1999) Political Philosophers of the Twentieth Century Blackwell; Heywood, A. (1998) Political Ideologies: An Introduction Macmillan Press pg155; Festenstein, M. and Kenny, M. (2005) Political Ideologies Oxford University Press
27. Gamble, A. (1996) "Hayek: The Iron Cage of Liberty" Blackwell Publishers pg 106
28. Freeman, S., Illiberal Libertarians: Why Libertarianism Is Not a Liberal View Philosophy & Public Affairs Volume 30 (2001) pg3
29. Haworth, A. (1994) Anti-libertarianism. Markets, philosophy and Myth Routledge pg 27
30. Cubeddu, Raimondo. Preface to Perspectives of Libertarianism, Etica e Politica, Università di Trieste. Vol. V, No. 2, 2003

External links

• A Guide to Classical-Liberal Think Tanks by Joseph L. Bast
• What is Classical Liberalism? by John C. Goodman
• The Liberal Institute A classical liberal think tank based in New York City
• Liberty Ideas - International platform for classical liberalism
• The Free Enterprise Institute ILE A classical liberal think tank based in Lima, Peru
• A Liberal Path to Sustainable Growth - Lessons from 20 years international Growth Differentials

• Liberalism
• Political ideologies
• Political economy
• Libertarianism