The Rise, Decline, and Reemergence
of Classical Liberalism
Amy H. Sturgis
© The LockeSmith Institute, 1994
No part of this article may be reproduced in
any manner without the written permission of
THE LOCKESMITH INSTITUTE, except for
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Introduction: The Definition of Classical Liberalism
Contemporary Liberalism consists of separate and often contradictory streams of thought springing from a common ancestry; the intellectual parent of these variants has not only endured intact, it has outlived some of its offspring and shown more intellectual stamina than others. The tenets of this parent, known as classical liberalism, have answered the needs and the challenges of over three centuries in the West. By observing its past and discovering how it responded to the dramatic historical dynamics of economic, technological, political, and social changes we may understand how classical liberalism provides a strong foundation for the future.
In order to assign consistent terms in this study, I must first define classical liberalism. Scholars have offered different interpretations of this term. For example, E. K. Bramsted, co-editor of the monumental anthology Western Liberalism: A History in Documents from Locke to Croce (1978), asserts that the classical liberal champions the rights of individuals (with careful attention to the more endangered rights of minorities), the right of property in particular, the government’s obligation to protect property, limited constitutional government, and a belief in social progress (36). John Gray broadens this description in Liberalism (1986) to include philosophies demonstrating individualism, egalitarianism, and universalism (x). In Liberalism Old and New (1991), J. G. Merquior argues that the theories of human rights, constitutionalism, and classical economics define classical liberal thought.
These scholars and others actually agree far more than they differ concerning the philosophy’s components. For the purpose of this chronology and analysis, I shall apply a broad set of criteria to determine if an idea or individual fits within this intellectual tradition. In this context, classical liberalism includes the following:
an ethical emphasis on the individual as a rights-bearer prior to the existence of any state, community, or society,
the support of the right of property carried to its economic conclusion, a free-market system,
the desire for a limited constitutional government to protect individuals’ rights from others and from its own expansion, and
the universal (global and ahistorical) applicability of these above convictions.
These characteristics do exclude certain thinkers commonly linked with classical liberalism, although they embrace far more individuals than they dismiss. Failure to exhibit them, however, does point to a very fundamental difference with the minds that compose the tradition. Two diverse cases of thinkers associated with yet not belonging to this ideology may serve as examples. First, Jeremy Bentham and the utilitarians accepted limited rights and market economics as long as they provided the greatest happiness for the greatest number. Classical liberal ends thus served as convenient means to them, but the eventual ends they sought betrayed an intellectual collectivism incompatible with the above criteria. From a different angle, Jean Jacques Rousseau’s vision of the social contract, while also noteworthy, included an almost mystic notion of a general will. Such a concept created an unaccountable power elite to interpret and impose this will, by force if necessary. Again, vital components of classical liberal thought are offended. Neither Bentham nor Rousseau therefore are members of this legacy.
Any single attempt to chronicle the history of classical liberalism cannot do justice to the immense richness and diversity of the individuals or movements within it. In this story three distinct flavors coexist and often blend: the realistic English tradition of law, the rationalistic French tradition of humanism, and the organic German tradition of individualism. Gray characterizes these three as competing yet complementary definitions of liberty, with Britain representing independence, France self-rule, and Germany self-realization (13). Beyond these national differences, two parallel concepts survive throughout the history of classical liberalism irrespective of geographical boundaries. One is predicated upon a negative view of human nature, accepting that people are equally fallen and incapable of perfection. It follows from this perspective that power must be limited because it would allow some corrupt individuals to do more harm than others. The other view maintains that all people are inherently good and perfectible, so power must be limited to allow humanity to evolve toward a more perfect order of self-government.
This chronology admittedly cannot discuss every contributor or school of thought in such a multi-dimensional and lasting tradition. For example, the contributions of Lysander Spooner and the 19th century American anarchists or Albert Jay Nock and the American Old Right could easily have been included. I have made an effort to note leaders that symbolize the ideology’s historical stages. The absence of names or works does not necessarily signify any defensible judgment of importance. This treatment is meant to provide a general introduction to the rise, decline, and reemergence of classical liberalism and therefore is limited by space and purpose. As the decision to include and omit facts was difficult and, to a degree, arbitrary, I beg the indulgence of the reader as I begin this historical overview.
The phrase “the rise of classical liberalism” does not mean that a consistent and unified set of beliefs emerged intact in the late 17th century from the mind of John Locke. The fragmented tenets of classical liberalism had actually existed for centuries; Locke drew them together. Before they were joined to form classical liberalism and “rise” to philosophical credibility and acceptance, however, these tenets were part of the West’s ongoing dialogue of ideas.
It is appropriate to pause and mention the lineage of some of these principles chronologically. Although the mainstream Greek and Roman conceptions of the individual were dependent upon membership in the community, ancient precursors to the idea of the a priori rights-bearer existed. For example, the skeptical Greek Sophists possessed a conception of equality that caused rhetoricians such as Alcidamas to denounce belief in natural slavery. Both Plato and Aristotle referred to Sophists elaborating the theories of the social contract (Glaucon and Lycophron, respectively). Pericle’s Funeral Oration praises how the Greek polis treated the citizens equally beneath one law and provided for their freedom. Cicero, whom Nobel Laureate F. A. Hayek credits as main precursor to classical liberalism, represented the individualist phase of the Roman code by his defense of natural law.
Although stained by intolerance in the post-Constantinian era, Christianity offered a religion far less collectivist than the pagan pantheons or Hebraic law. As the Alexandrine Church Fathers rediscovered the classics and contemplated perfectibility, notions of self-cultivation gained wider acceptance. During the medieval period, the Scholastics broadened the study of the classics to include economics and political science. Spanish Fathers from the School of Salamanca, for example, synthesized Greek, Islamic, and Patristic thought to produce a theory of market prices which anticipated later Scottish Enlightenment arguments.
The Reformation divided Christian teaching, leaving individualism in the hands of Protestantism via the “priesthood of the believer” doctrine and natural law theory to Catholicism. In fact, Dutchman Hugo Grotius served as a natural law apologist in the face of Renaissance skepticism at the dawn of the 17th century and offered an early explanation of what later would be termed minimalism. The rise of absolutism in the West challenged liberty from economic, political, and philosophical angles. Some English citizens rebelled by building onto the myth of an ancient constitution that provided liberty to the Anglo-Saxons before the Norman conquests. Thus the vision of a constitutionally limited state with equality under the law gained desperate attention. By the time of the English Civil War, a group called the Levellers produced Agreements of the People calling for a written constitution derived from a compact of the people. Movement leader Richard Overton’s 1746 An Arrow Against All Tyrants reveals the sophistication and maturity of the classical liberal components of individualism, property, and limited government almost half a century before John Locke:
To every Individuall [sic], in nature, is given an individuall property by nature, not to be invaded or usurped by any: for every one as he is himselfe, so he hath a selfe propriety…mine and thine cannot be, except this be; no man hath power over my rights and liberties, and I over no mans; I may be but an Individuall, enjoy my selfe, and my selfe propriety, and may write my selfe no more than my selfe… (Pease 141-142).
John Locke serves as the founder of classical liberalism by tying these principles together in a definitive manner, providing a thorough foundation upon which later minds could build. He, in short, offered the theses around which the classical liberal dialogue revolves.
The period considered as the rise of this ideology refers to the eras in which classical liberal thought enjoyed philosophical credibility and some measure of popular acceptance. This may be measured by works’ publication, thinkers achieving positions of authority and prominence, the toleration of and perhaps aquiesance to classical liberal critiques of existing policies and practices, etc. I explore the chronology of this tradition in the following study of its thinkers and movements. Dates presented for movements address the times in which heavy publication or activity took place, and do not imply that the influence of these movements ceased at a particular point; in all instances I have attempted to justify the movements’ dates, but I recognize these are tools of expediency rather than demonstrable facts.
John Locke (1632-1704)
Puritan-born John Locke trained at Oxford to become a physician. History, however, recalls him as a political theorist, responsible for such works as A Letter Concerning Toleration (1689), Two Treatises of Civil Government (1690), Some Considerations of the Consequences of the Lowering of Interest, Raising the Value of Money (1692), and A Vindication of the Reasonableness of Christianity (1695). His remembrance of Cromwell’s dictatorship and his father’s participation in the Civil War led him to a great respect for the authority of law. Which laws should be observed, however, posed a question for this intellect. His first great foundational contribution to classical liberalism is his exploration of rights theory. Searching for the basis and importance of rights led him to an exposition of natural law. Individual rights, infused with divine origin, gain a priori significance; laws then can be organized into a hierarchy of sorts. For example, any state law in opposition to the natural law that recognizes individual rights should not be obeyed. Conversely, the Christian nature of these rights denies persons absolute autonomy, as Locke demonstrates in The Second Treatise:
(B)ut though this be a State of Liberty, yet it is not a State of License, though Man in that State have an uncontroleable [sic] Liberty, to dispose of his Person or Possessions, yet he has not Liberty to destroy himself, or so much as any Creature in his Possession, but where some nobler use, than its bare Preservation calls for it (68).
Locke’s second contribution is his view of humanity. Beginning his political analysis in the theoretical state of nature, Locke proposes that people coexisted in relative peace. Acquiring property by mixing labor with resources, they found few obstacles save the inconvenience of being their own judges in cases ideally wanting impartiality. This implies that humanity is generally good and capable of coexistence in liberty, an assertion opposing Thomas Hobbes’ earlier view and later opinions as well that hold humans are fallen and unable to achieve harmony or peace. Thirdly, Locke provides the principle that political sovereignty comes only from the consent of the governed. Following this point to its conclusion, Locke admits that a government’s breach of the contract between the state and the citizens (in which they agree to be under its authority) gives the people the right of revolution.
Perhaps most importantly, Locke perceives personal liberty as dependent upon private property. This property must be secure under the rule of law, else those without could manipulate a system to acquire from those who possessed. His definition of property hinges on the addition of personal labor, thus making ownership an intimate act of creation. He extends this definition to include religious beliefs, political ideas, and, as previously mentioned, one’s self to an almost absolute degree.
Locke’s contributions truly fathered a political philosophy that would spread and evolve for centuries. His descendants affirmed his justifications for inalienable rights and yet struggled with the unresolved tensions between divine natural law and the fallible humanity that must interpret it.
The Scottish Enlightenment (1714-1817)
One decade after the death of John Locke, Bernard Mandeville ushered in the era of the Scottish Enlightenment with his 1714 publication of Enquiry Into The Origin of Moral Virtue, or The Fable of the Bees. Mandeville’s rhyme, by using an extended analogy between humanity and bees, asserts that all individuals act on their self-interest. Its denial of conventional morality as primary personal motivation for action and its slogan “private vices, publick virtues” made it a very controversial publication. Its wide publicity, however, set the stage for Adam Smith, Adam Ferguson, David Hume, and Henry Homes (Lord Kames) to form a classical liberal movement. The Scottish Enlightenment offered a moral philosophy, or at least methodology, and an economic answer to the mercantilism which gripped Europe. The works and thoughts of its largest figure Adam Smith serve as a representative of both of these facets.
Although his name is largely associated with economics, Smith was the Chair of Moral Philosophy at the University of Glasgow. His 1759 work The Theory of Moral Sentiments explores the origins of moral approval or disapproval in the effort to judge what is necessary for orderly social existence. He admits that individuals are necessarily pulled toward interaction by interest in others and desire for their approval, yet they also care deeply about themselves.
Smith makes no clear division between his moral studies and his economic beliefs, instead allowing one to fuel the other. He recognizes that self-interest motivates all individuals, yet he sees a natural manner in which this could serve everyone’s needs. He explains this in An Inquiry into the Nature and Causes of the Wealth of Nations (1776):
Whoever offers to another a bargain of any kind, proposes to do this. Give me what I want, and you shall have this which you want, is the meaning of every such offer; and it is in this manner that we obtain from one another the far greater part of those good offices which we stand in need of. It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own self-interest (119).
In the atmosphere of free domestic and international trade, Smith argues, a division of labor leads to prosperity. He focuses on describing this division and the market processes that allow and enhance it. While doing so he discredits the ideas of mercantilism that bewitched Europe, such as the belief that hoarding specie made a nation wealthy. In critiquing this widely held perspective, Smith joined the French Physiocrats (to one of whom, Francois Quesnay, he dedicated Wealth of Nations). He also articulates the theory of absolute advantage, stating that the country with the lowest production costs for a given product will produce that good; the stepson of the Scottish Enlightenment, David Ricardo, would later alter and refine this point. His On The Principles of Political Economy and Taxation of 1817 marks the end of this movement.
Smith also produced Essays on Philosophical Subjects in 1795. By drawing on historical examples and observable subjects, Smith and his colleagues promoted an empirical methodology for studying human behavior. They also recognized that the characteristics of such behavior existed without human knowledge. Smith’s famous “Invisible Hand” description of the market refers to such patterns’ lack of human orchestration. Their united attack on mercantilism links the members of the Scottish Enlightenment with a concurrent movement across the English Channel.
The French Enlightenment (1717-1778)
The relationship between the French Enlightenment and the growth of French classical liberalism can best be explained in contrast to England’s experiences. In England, the Glorious Revolution of 1688 ushered in a long period of Whig leadership characterized by order, stability, and individualism. France’s feudalistic traditions and absolutist framework did not provide such a welcoming atmosphere for innovative thought. Authoritarianism arrived in the form of the government and also the Roman Catholic Church (which explains the strong anti-clerical classical liberal reaction in France that was absent elsewhere). The attempt to break free of such power caused Enlightenment reason and classical liberal individualism to progress together, providing mutual support and reinforcement (Gray 16-17). Several of the giant philosophes such as Montesquieu, Voltaire, and Condorcet therefore cross over into the ranks of great classical liberal thinkers.
The classical liberal branch of the French Enlightenment began with the 1717 publication of The Persian Letters, the first great contemporary criticism of the ancient regime and the first modern study of comparative governments, by Charles-Louis de Secondat, Baron de Montesquieu (1689-1755). In this work his concern both for toleration and for a productive citizenry is evident. He criticizes the powerful Church for persecuting the Huguenots, firstly because persecution is inherently offensive to personal rights of conscience and secondly because the Church is robbing the economy of the industry of hard workers. He brands such intolerance a “total eclipse of reason” (Bramsted 114).
Montesquieu understandably admired the British system. He traveled to observe it more closely between 1727 and 1731. This journey provided information for his great work The Spirit of the Laws (1748) in which he describes, albeit imperfectly, the British system as a series of checks, balances, and separations of power. Governments fall into the categories of republics, monarchies, and despotisms, he asserts, with the third ruled by arbitrary power instead of law. His insights concerning governmental structure would inspire many national leaders such as the United States’ constitutionalist James Madison and Russia’s reformer-Empress Catherine II, who praised it as “the prayer book of monarchs” and set aside daily study time for it (Florinsky 511-512).
Francois-Marie Arouet (1694-1778) wrote his plays, treatises, and books as Voltaire. Among his works are two compilations of articles, 1734’s Philosophical Letters and 1764’s Philosophical Dictionary. He also contributed to Diderot’s expansive volumes of the revolutionary, underground Encyclopedia. He argues for the use of reason as the guide for man’s actions and for toleration, to be manifested by acceptance of religious and philosophical diversity and adoption of a humane penal code (both no doubt came from his personal taste of imprisonment). Unlike Montesquieu before him and Condorcet after, Voltaire did not believe in an inherently evolving state of humanity. Driven by an anti-clerical passion causing him to compare contemporary Christians to Christ’s executioners rather than his fellow-martyrs, he expects periods of progress to be followed by regressions. This does not lessen his fervor for personal rights and reform, however. He ends his novel Candide with the injunction: “We must cultivate our garden” (Voltaire 120).
Antoine-Nicolas Caritat, Marquis de Condorcet (1743-1794), friend of Voltaire and Jacques Turgot, was active in the politics of France as well as its thought. A member of the Paris Commune beginning in 1789, he became a member of the Legislative Assembly in 1791 and drafted the new Declaration of Rights in 1793 as a Convention member. His academic pursuits included defining and analyzing ten stages of history; this sweeping perspective convinces him of the progressive evolution of humankind. J. G. Merquior notes that Condorcet stresses the political elements of knowledge and consent which were antithetical to the “Jacobin voluntarism” gaining momentum in France at that time, making him the “very opposite of Robespierre” (33). Imprisoned after criticizing the 1793 Constitution and being discovered without a passport, he was found mysteriously dead in his cell in 1794. His well-known Sketch for A Historical Picture of the Progress of the Human Mind captures the breadth of Condorcet’s beliefs in a single work. It is appropriate that classical liberalism’s first martyr provides an encouragement to his intellectual descendants in his posthumously-published masterpiece:
And how admirably calculated is this view of the human race, emancipated from its chains, released alike from the dominion of chance as well as from that of the enemies of its progress… It is the contemplation of this prospect that rewards him [the philosopher] for all his efforts to assist the progress of reason and establishment of liberty. He dares to regard these efforts as a part of the eternal chain of the destiny of mankind… (312).
The French Physiocrats (1759-1776)
Toward the end of the French Enlightenment an economic movement added its voice to that of the philosophes. Adam Smith admits that, with its faults, the Physiocratic movements produced “perhaps the nearest approximation to the truth that has yet been published upon the subject of Political economy” (Blaug 24). Its roots rest with Cantillon, whose pre-Smith Essay on the Nature of Commerce (written in the 1720s but not published until 1755) first systematized a comprehensive view of economics. He notes that specie flow creates different effects depending on how it is injected into the economy; exportation surpluses eventually prove more beneficial than increased domestic production, for example (Blaug 21).
The Physiocrats arose in response to French mercantilism, best personified by Louis XIV’s Controller General of Finance, Jean Baptiste Colbert. “Colbertism” included emphasizing planned industry to the neglect of agriculture and raising the land tax to fund both the War of Spanish Succession and the splendor of the Sun King’s court. Left a secondary power under Louis XV after the Seven Years’ War, France needed solutions; the Physiocrats proposed lifting trade restrictions, focusing on agriculture, reducing all taxes to a single rent tax, etc. Francois Quesnay’s Tableau Economique (1759) marks the movement’s beginning and describes the circular flow of money and the interdependency of different markets.
Classical liberalism found its champion in Anne Robert Jacques Turgot (1727-1781), Controller General of Finance under Louis XVI from 1774 to 1778. Departing from strict Physiocratic allegiance to agriculture, he argues for freedom of labor and trade as well as an increase in both agricultural and industrial production. A letter to Abbe Terray underscores Turgot’s foresight:
The price of food, the nation’s wealth, the price of labor, the growth of population are all linked together; they establish themselves in equilibrium according to a natural process of adjustment; and this adjustment is always made when commerce and competition are entirely free (Bramsted 138).
His policies did not find implementation, but his influential writings such as Elogy and Reflections on the Formation and Distribution of Riches state the position of physiocratic thought while anticipating future classical liberal economic arguments. For this reason, the date of the end of the movement coincides with his last publication.
The American Democratic-Republicans (1776-1820)
As both the French Enlightenment and Physiocratic movement drew to a close, the colonists on the North American continent prepared to prove that the classical liberal seeds of the past century had found fertile soil in the New World. One of those responsible for generating the momentum propelling America to independence was pamphleteer and author Thomas Paine (1737-1809). An Englishman arriving with personal recommendation letters from Benjamin Franklin, Paine had been in North America only two years when he anonymously published Common Sense (1776). Although he argues (in this work as well as in American Crisis, 1777, and the two volumes of Rights of Man, 1791 and 1792, respectively) from a Lockean framework of natural law, the passion with which he writes is reminiscent of French anti-authoritarianism: “Government even in its best state is a necessary evil; in its worst state an intolerable one…” (Bramsted 195).
His eloquent explanation of consent of the governed reached nearly every adult in the colonies through his pamphlet. Notably, after the conception of the United States of America, Paine journeyed to France to spread his message to the next set of revolutionaries. At this time he also challenged thinker Edmund Burke, calling for an overthrow of the British monarchy in Rights of Man. He was made a French citizen by the Legislative Assembly, elected as a member of the Convention, associated with Condorcet, and imprisoned with the fall of the Girondins. In 1802, he returned to the United States having written and spoken for his political vision in England, America, and France and participated in the two great revolutions of the 19th century.
Thomas Jefferson (1743-1826) consulted with Paine while drafting the American Declaration of Independence (1776). In this statement, Jefferson unites the myth of the ancient constitution and the Lockean natural rights tradition to prove that England had breached its contract with the colonists. The people therefore had the right to revolt and compact together to form a new government; in referring his case to a global audience, he emphasizes the universality of his philosophy. Beyond the Declaration, Jefferson’s perspective appeared in his letters, political papers, and policies as Secretary of State and President. He and his lifelong friend and colleague James Madison spearheaded the Democratic-Republican party to oppose the Federalists’ desire to centralize and increase governmental power, leading both of them to the nation’s highest office.
In particular, Jefferson focused on creating an independent citizenry capable of maintaining the democratic republic, and he found his key in the yeoman farmer. He believed the self-sufficient landowner possessed the ability to cultivate himself and therefore treasure his freedom. Jefferson’s emphasis on liberty as self-realization anticipated the German classical liberals to be mentioned later.
James Madison also served as Secretary of State and President but his contributions appeared well before he assumed these positions. The originator of the Virginia Plan at the Constitutional Convention and final father of the United States Constitution, Madison clearly revealed a Lockean natural law foundation coupled with a Montesquieu-style separation of powers. The federalism he created (and explained in The Federalist Papers, which he co-authored with Alexander Hamilton and John Jay in 1787 and 1788) pitted the self-interests of factions against each other to keep any group from acquiring the power to offend others’ rights. One right which he tried to define and explore throughout his life was the right of property. His 1792 “On Property” notes the radical extent to which he defined an individual’s claim to his own:
He has an equal property in the free use of his faculties and free choice of the objects on which to employ them. In a word, man is said to have a right to his property, he may be equally said to have a property in his rights (267).
Although his influence lived on in the very fabric of the United States governmental structure, Madison stepped out of the spotlight at the close of his second term as President in 1816 and the Democratic-Republican movement may be said to have ended.
William Godwin (1756-1836) and Mary Wollstonecraft (1759-1797)
In the midst of the American and French Revolutions, a British pair was concerned with revolutionary ideas of a different kind. William Godwin, hailed by some as the father of English anarchism, blended earlier forms of classical liberalism. His belief in the self-perfectibility of man and the law of progress reflected Enlightenment emphasis on reason and evolution. His theory of natural rights descended from John Locke; Herbert Spencer, discussed later, would credit Godwin’s exposition on natural law as highly influential to his own philosophy. He produced one powerful work, Political Justice, in 1798. Godwin’s wife is remembered as a pioneer in her own right. In her short life Mary Wollstonecraft paved the way for classical liberal feminism by expanding natural rights theory to apply to women. Her 1792 work Vindication of the Rights of Women names women as co-inheritors of the individualist tradition with men. It would be 56 more years before her words were followed by political action by Elizabeth Cady Stanton, the American who would write The Declarations of Sentiments and Resolutions (1848) and claim women’s rights with the language of the Declaration of Independence. (As Wollstonecraft’s intellectual heir, Stanton also fought the 14th Amendment because it defined citizens as male; she also organized the National Woman Suffrage Association in 1869.)
Anne Louise Germaine de Stael (1766-1817) and Benjamin Constant de Rebecque (1767-1830)
Unlike the case of Godwin and Wollstonecraft, de Stael and Constant framed their beliefs as responses to the throes of rebellion. They were native French citizens, published within the same decades and, for years, partners in an open romantic affair.
Germaine de Stael was the daughter of Louis XVI’s most popular Controller General of Finance, Swiss banker Jacques Necker. Well-educated and cosmopolitan, de Stael married a Swedish diplomat, maintained a relationship with Romantic August Schlegel, and held an intense personal rivalry with Napoleon Bonaparte, who for a time even restrained publication of her work in France. Her 1788 Letters to J.J. Rousseau and 1807 Corinne, of Italy were followed by her 1810 On Germany. In this work she asserts that Protestantism is a prerequisite for liberty, because only the “priesthood of the believer” doctrine creates the individualistic morality a free society requires. This argument would be echoed by Alexis de Tocqueville, treated later, and generations of thinkers. Her seminal work Considerations on the French Revolution (1818) offers a defense of the 1789 Revolution’s vision of civil equality and constitutionalism while condemning the 1793 Revolution’s terror and egalitarianism. Through this analysis de Stael provides a noteworthy exposition of French classical liberalism.
Unlike Whig and Anglophile de Stael, Benjamin Constant felt comfortable with democracy and actively participated in French government. From 1799 to 1802 he served as a member of the Tribunat, he acted as Councilor of State during the Hundred Days of 1815, he framed Napoleon’s Constitution for the monarchy after the Hundred Days, and he became a deputy to the Chamber in 1819. Like de Stael, however, he felt German philosophical influences. His assertion that “…it is for self-perfectioning that destiny calls us” reveals the thought of his friend, aesthetic individualist Wilhelm von Humboldt, discussed later (Constant 559).
He perceived history as an evolution from ancient liberty, or equal public involvement and powerlessness before the state, to modern liberty, or recognition of a private sphere untouched by government. He did not see this end achieved by the French revolution, however. Those who had fought the aristocracy were nonetheless unprepared for universal participation, he argues. The transitional medium between the two liberties resulted in both limited monarchy and limited popular rule, which he terms “le juste milieu” (Merquior 50-51).
Constant’s works include his plea for a parliamentary monarchy, Political Principles Applicable To All Governments (1815) and his novel Alphonse (1816). His characteristic vindication of liberty and constitutionalism is most effectively presented in Heart of Constitutional Politics (1818-1820). He stresses the need to limit the authority of a government through a constitution, which leads him to criticize Rousseau’s notions of the social contract and the general will. After witnessing the Terror and Jacobin dictatorship established using Rousseau’s rhetoric, Constant sees that his fellow Frenchman did not define any mechanism to limit the power he described; thus “…The Social Contract, so often invoked in favor of liberty, is the most terrible auxiliary of every form of despotism” (Constant 280).
Jean Baptiste Say (1767-1832)
Say gathered business experience in the economically advanced England before returning to France to support the Revolution. Like Constant, he became a member of the Tribunat in 1799. At this time many criticized England’s new industrial order; for example, the French Simonde de Sismondi expected capital investments would sometimes force production to outrun consumption, and the English William Spence argued capital investment in areas other than agriculture created insecurity and fluctuations (Fusfeld 49). In reply to such criticisms, Say produced the 1803 piece. Here debuts Say’s Law of Markets, which states that supply creates its own demand, or, the commercial creation of output generates income, making possible more investment, spawning a new production cycle. In short, a person cannot demand without supplying. Thus the criticisms of capital investments were erroneous, as the critics ignored the ongoing process such funds made possible.
After 1804, Say began a cotton spinning factory in northern France. The Bourbons sent him to study economic conditions again after Napoleon’s fall. He returned to teach political economics and eventually became the first Chair of Political Economy at the College of France. His later works include the Catechism of Political Economy (1817), Letters to Malthus, and The Complete Course of Political Economy (1828-1830). His law of markets dominated mainstream economics for years until eclipsed by the rise of collectivism and socialism in the early 20th century.
Wilhelm von Humboldt (1767-1835)
Wilhelm von Humboldt represents the melding of German Romanticism and classical liberalism, producing what E.K. Bramsted has termed aesthetic individualism. This philosophy of the person for his own sake and the self as art influenced other thinkers such as Constant; John Stuart Mill acknowledged his own tremendous debt by using his quote as the epigraph to the 1859 classic On Liberty.
The Prussian administrator, diplomat, and founder of the University of Berlin proposed that the individual’s highest purpose is bildung, or self-cultivation. In order for a person to achieve “the highest and most truly proportionate development of his powers to a complete whole,” each must possess freedom and a variety of experiences (Humboldt 340). The legitimate function of the state, therefore, is to act as the nachtwachterstaat (night watchman) protecting citizens by reacting to trespasses, not by proactively interfering. Isaiah Berlin later termed this concept “negative liberty,” denoting a “freedom from” rather than a “freedom to.” All other governmental activity robs people of individuality by imposing identical rules on unique people and of dignity by not allowing them to make decisions or take responsibility.
Humboldt’s political works consist of The Limits of State Action, written at the age of 24, and two essays, “The Purpose of Man” and “The Purpose of the State.” None were published during his lifetime. Limits, released in 1851, in fact appeared only nine years before the work it so influenced, Mill’s On Liberty.
David Ricardo (1772-1823)
London-born Ricardo ran his own successful business when he first became familiar with Adam Smith’s Wealth of Nations. He soon grew active in the Corn Law controversy and published letters and essays like 1810’s The High Price of Bullion. His major work arrived in 1817, The Principles of Political Economy and Taxation. In this work he proposes a labor theory of value and discusses income distribution between capital owners, landlords, and workers. Like Say, he sees investment capital as the catalyst for the production cycle; therefore, he believes capital accumulation feeds economic expansion and maximization of profits. His most vital contribution, however, is his addition to Adam Smith’s concept of absolute advantage.
Smith argued that the country with the lowest production costs for a given product should produce that product. Ricardo responds that trade would benefit two nations if each concentrated its production on the product at which it relatively excels. This is now called the Law of Comparative Advantage.
Ricardo continued his political involvement by serving in the House of Commons from 1819 until his death. His intellectual dialogue with Smith’s theories and his economic accomplishments lead some scholars to consider him a late (and English) stepson of the Scottish Enlightenment. Its completion may therefore be marked by the publication date of Ricardo’s classic.
Felicite Robert de Lamennais (1782-1854)
Lamennais made the significant attempt to reconcile the Church with classical liberalism and thus became the father of French liberal Catholicism. Ordained as a priest in 1816, Lamennais began a newspaper called L’Avenir, whose slogan read “God and Liberty,” to publicize his message. An 1830 issue explains: “We are afraid of liberalism. Catholicize it and it will be born again” (Bramsted 394).
His journalism defines the six political freedoms which he demanded of the French state. The first of these is freedom of religion, particularly important in France due to the intertwining of the Catholic Church and the government after the Concordat. The others include freedom of instruction, freedom of the press, freedom of association, freedom of election, and “abolition of the disastrous policy of centralisation” (Lamennais 498-501). In these demands he shows himself a true classical liberal; his innovation lies in combining his philosophy with the Church, when others before and after him argue that the only faith that holds compatible tenets is not Catholicism, but Protestantism.
Although he traveled to Rome to persuade the Pope of is philosophical convictions, the Vatican denounced him. He finally stopped performing his priestly duties and pursued a larger audience for his message. His 1835 work Words Of A Believer was a popular success, translated into several languages and read widely throughout his lifetime. Lamennais proved by his example that classical liberalism was not incompatible with Catholicism, and he planted the seeds of his thought among believers previously unexposed to it.
Herbert Spencer (1820-1903)
Like his American disciple William Graham Sumner, Spencer’s classical liberalism remains linked with the concept of Social Darwinism. Spencer wanted to apply scientific methods to the humanities and integrate social phenomena (such as societal evolution) into a larger, holistic pattern (as in evolution in general).
This philosopher, born in Derby into a Wesleyan home, produced many works including The Proper Sphere of Government (1843), Social Statics (1851), and Progress: Its Law and Cause (1857). From 1848 until 1858 he served as sub-editor of the influential publication The Economist. In his desire to unite the disciplines into an overarching study of humanity he produced the nine-volume The Synthetic Philosophy over the period from 1855 to 1893, addressing subjects from ethics to biology. His The Man Versus The State appeared in 1884.
Spencer’s greatest contribution to classical liberal thought is his explanation and consistent application of The Principle Of Equal Freedom; he asserts that, morally, every person should be free to do as he wills provided he does not infringe on anyone else’s freedom. Extending this reasoning proposes that no one is duty-bound to help or provide for another. Thus, those individuals capable of sustaining themselves will survive and further human evolution. Spencer recognizes this approach as the competitive laissez-faire model of economics expanded from economics to human experience in general (Greenleaf 59, 69).
Many criticisms of the state followed from this reasoning. In “Over-Legislation” (1853) he notes: “Though we no longer presume to coerce men for their spiritual good [Spencer’s emphasis], we still think ourselves called upon to coerce them for their material good: not seeing that the one is as useless and as unwarrantable as the other” (267-268). Although he was optimistic about the upcoming industrialism, his thoughts were overshadowed by increasing state action and dependency. He distrusted democracy and majoritarianism. By the time of The Man Versus The State, Spencer despaired over the regressive trend of “re-barbarization” he observed like Voltaire had before him; he compared modern man’s worship of the state to primitive, ignorant fetish-worship (Mack xix, Spencer 94). His defiant writings serve as powerful statements of classical liberal individualism applied across the lines of disciplines and eras. Similarly, his later thought foreshadows the despair of anticipated decline for classical liberalism.
The Manchester School (1835-1859)
The Manchester School originated in opposition to the Corn Laws in England. These laws, dating from the Middle Ages and strengthened in 1815, granted monopolies to domestic corn producers. As the population grew and the corn supply failed to expand accordingly, the House of Commons resisted attempts to allow importation. The loose collection of officials and writers known as the Manchester School proposed the repeal of the Corn Laws in favor of trade, and in 1846 their efforts were rewarded.
Richard Cobden (1804-1865), the momentum behind the school with his colleague John Bright, addressed more than this single issue. In 1835 he was penning anonymous letters to newspapers concerning Manchester’s incorporation. England, Ireland, and America (1835) and Russia (1836) display classical liberal perspectives on domestic and international subjects unified by Cobden’s desire to eliminate barriers to progress. For example, he argues that America had more resources to invest into private production than England because England tied many of its resources into its large military establishment. Trade brings peace because the trading parties’ self-interest demands it. Therefore, Cobden asserts, diverting military funds to production removes an obstacle to economic progress that trade will render useless anyway. Dedicated to laissez-faire economics, international trade and arbitration, pacifism, and reform, Cobden served after 1841 in the House of Commons and saw his philosophy grow to be the prevalent one in British office. Fellow British politician Joseph Chamberlain summarizes the Manchester School’s ideology well:
This doctrine of Mr. Cobden was a consistent doctrine. His view was that there should be no state in our domestic concerns. He believed that individuals should be left to themselves to make the best of their abilities and circumstances, and that there should be no attempt to equalise the conditions of life and happiness. To him, accordingly, protection of labour was quite as bad as protection of trade. To him a trade union was worse than a landlord. To him all factory legislation was as bad as the institution of tariffs (Greenleaf 33).
This expression of classical liberalism outlived the Manchester School, which ended with the 1859 retirement of the last of the active sympathizers from public office, Assistant Secretary of Treasury Sir Charles Trevely. Later thinkers such as Frederick Bastiat (who lived from 1801 to 1850 and penned the satirical “Petition from the Manufacturers of Candles” in 1845 and the celebrated The Law in 1849) acknowledged the influence of Cobden and his colleagues on their personal philosophies.
American Transcendentalism (1835-1882)
The American Transcendentalist movement follows in the optimistic, melioristic individualism of Condorcet and Humboldt and in certain ways precedes 20th century Objectivism. This strain of classical liberalism runs parallel to the more pessimistic thought of Madison, Spencer, de Tocqueville, Mises, and Hayek. These two perspectives reappear in the classical liberal tradition and reflect the basic assumptions about the nature of man: one that he is perfectible, and the other that he is fallen.
The movement began during the Jacksonian Era’s backlash against oppressive institutions. Popular renewed faith in humankind spilled over to the church, causing the Unitarians to call for a more direct relationship between man and God/Truth. William Ellery Channing spearheaded this new Reformation and “sought in effect a new priesthood of all believers”; the priesthood tenet, notably, is the fundamental reason why pre- and post- Lamennais thinkers called Protestantism a prerequisite for classical liberalism (Grimes 202). His publication of Essay On Slavery (1835) marks the beginning of Transcendentalism.
Lecturer and essayist Ralph Waldo Emerson (1803-1882) first gained attention from his 1837 Phi Beta Kappa address at Harvard entitled “The American Scholar.” In it he challenges people to become “Man Thinking” by using nature, history, and experience to discover truth instead of relying on others’ interpretations. Like Ayn Rand after him, he placed the greatest emphasis on the unlimited worth and potential of the individual: “The world is nothing, the man is all…in yourself slumbers the whole of Reason; it is for you to know all, it is for you to dare all (Emerson 62). He continued with Self-Reliance in 1841, furthering his “intellectual form of rugged individualism” (Grimes 204).
Henry David Thoreau (1817-1862) criticized the shallow materialism and lack of diversity in his modern society much like Emerson. His major work appeared in 1849 entitled Civil Disobedience. His interest in the individual produced an indifference to society and its institutions. From this perspective Thoreau outlines the political strategy of passive resistance to governmental policies individuals deem intolerable, which he calls civil disobedience. From actions of resistance and personal responsibility he pictures people eventually achieving self-government and the state atrophying into nonexistence. Thus when he says “That government is best which governs not at all,” he is calling less for immediate anarchy than for an evolution toward its final achievement (Thoreau 356).
The perceptions of the Transcendentalists reflect a Romantic past and influenced later optimistic thinkers. Although its influence lived on, the movement may be said to have ended with the death of the respected Emerson in 1882.
Alexis de Tocqueville (1805-1859)
While the Manchester School fought the Corn Laws and gained power within the British government, Alexis de Tocqueville of France was writing his reflections on the government and society of the young American nation. A magistrate in the Versailles law courts, de Tocqueville was sent to the United States to study its penal code. This observation led to the publication of his most powerful work, Democracy in America (released in two parts in 1835 and 1840). He followed Democracy with a decade-long tenure as Deputy in the French Chamber as an Independent, his 1856 work Ancient Regime and the Revolution, a period in the Constituent Assembly, and 1893’s Recollections at the end of the July monarchy and the Second Republic.
Unlike the personal nature of Transcendentalism or the economic nature of the Manchester School, de Tocqueville’s classical liberalism was political. His works focus on the issues of democracy and equality in particular. For example, he proposes that individualism, which he distinguishes from egoism, threatens the morality of the community and its institutions in the United States. He worries about the lack of civic virtue displayed in the land he observed. A tyranny of the masses will arise from ever-expanding equality, he warns, and prey on the bureaucracy-dependent citizens. He argues that both the bureaucracy and the masses in a democracy threaten the precious liberties of individuals. Anglophilic like Montesquieu and de Stael before him, de Tocqueville’s Jansenist heritage never allowed him to share the optimistic views of social progress some of his countrymen possessed. His works continue to provide one of the best critiques of the democracy and equality, revealing how they can grow to be threats to the freedom of individuals.
John Stuart Mill (1806-1873)
Perhaps the single best window into classical liberalism, John Stuart Mill represents the crossroads of English, French, and German strains of thought. The son of James Mill, utilitarian and author of the first English textbook of economics, John grew up with the teaching of Jeremy Bentham and his Hedonistic Calculus. He also read the Greek and Latin classics, Smith, Ricardo, and others; his intensive early study led to a breakdown in his twenties. After this period he turned to the private task of developing a more liberal utilitarianism to resolve the philosophical tensions he observed.
He joined the British East India Company at the age of 17 and retired 35 years later as the Chief of the Office. This business experience inspired the 1848 Principles of Political Economy in which Mill accepts the labor theory of value, defends the domestic price of a good as its natural price, and explains how profits are disseminated among trading countries, His 1869 On The Subjugation of Women expresses his support of women’s suffrage. Autobiography appeared in 1873. Mill’s most celebrated writings include On Liberty (1859), Considerations on Representative Government (1861), and Utilitarianism (1863) and develop his political theory. They provide the key to understanding the paradoxes with which he struggled.
Mill represents the English classical liberal tradition of independence by warning against the tyranny of opinion that silences other voices and calling for a form of intellectual toleration. He also shows sympathy for the French tradition of self-rule by creating an ethical sphere of privacy in his theory, a space for each individual which the state and the majority cannot touch. Neither toleration nor privacy fit easily with the Benthamite equation for imposing the system producing the greatest happiness for the greatest number. Most noteworthy, however, is Mill’s revision of the “greatest happiness” maxim itself. The strong influence of the German tradition, Humboldt’s aesthetic individualism in particular, dictated an emphasis on the individual and his act of self-cultivation. Mill therefore alters his view to include quality of happiness as well as quantity in judging utility, with those higher pleasures of self-realization ranking higher in quality:
…some kinds [Mill’s emphasis] of pleasure are more desirable and more valuable than others. It would be absurd that while, in estimating all other things, quality is considered as well as quantity, the estimation of pleasures should be supposed to depend on quantity alone (138-139).
In attempting to reform utilitarianism, Mill developed fusions of classical liberal thought. Tensions remained. When could the sphere of privacy be invaded? When must a dissident vote be silenced to keep others from harm? Who would or could determine the quality of happiness or pleasure? His works seem to agree that, in most instances, people, either alone or in voluntary associations, make decisions concerning themselves better than the government. Mill therefore advocated limiting the state. His wrestling ended in a pessimistic philosophy more aware of societal entropy than evolution, with later socialistic themes perhaps anticipating modern liberalism. His synthesis of different strains of thought, however, underscores the consistency and yet the diversity of the rich classical liberal tradition. His publications also mark the end of the rise of classical liberalism.
In retrospect, we may see the rise of classical liberalism as a thread of individuals and movements revealing both a continuity of ideas and a continual growth, as thinkers refined and added to the basic principles of the thought. The individuals and movements manifested themselves in two major ways. They asserted ideas, as with Locke’s defense of property and de Tocqueville’s analysis of democracy. Also, they reacted to policies, as with the Scottish Enlightenment and French Physiocratic responses to mercantilism. In both manners of expression, classical liberalism met with some measure of acceptance. Either it was widely read, like Emerson’s prose, granted legitimacy through positions of prominence, like Jefferson and Madison’s rise to the Presidency, or capable of directing change, like the Manchester School’s defeat of the Corn Laws.
Why did classical liberalism achieve this rise? First, the overriding European culture provided those with assertions the opportunity to travel, test their theses against observations, and communicate effectively. Second, the increasingly interdependent nations of Europe could no longer contain their people either economically (protectionism) or politically (absolutism), as the citizens could travel and exchange information concerning conditions elsewhere. For example, England’s lead in constitutionalism influenced the classical liberals of the other nations, as did the United States’ egalitarianism. Third, some policies such as mercantilism were not successful and thus there was an audience for any alternative, particularly one that worked. A number of combined conditions put Europe in need of economic, political, and philosophical answers, and classical liberalism responded.
By the late 19th century, individuals and movements still asserted classical liberal ideas and reacted to alternative policies. The measure of acceptance was gone, however, although some thinkers were tolerated as dissenters. The West’s rapid move toward industrialization created enormous short-term problems of working conditions, poverty or stratification, and displacement. Technological advances raced past the nations’ ability to adapt. The people turned to the government, often more democratic in nature than before, to regulate and legislate these transitional hardships away, thus substituting the long-term problem of unprecedented governmental growth for the temporary problems faced until the market adjusted to the new industrial economies.
The experiences of rising hostilities in Europe after the turn of the century replaced the uniting European culture with extreme nationalism and ethnic pride. Not only did World War I destroy international trade, every government expanded to meet military needs. World War II compounded this problem; the United States’ government, for example, was now engaged in everything from wage and price controls to rationing, censorship, and propaganda. Once the wars were over, the governments never decreased to their previous sizes. The Soviet embrace of communism, the response of a nation freed from feudalism in the midst of the industrial era without benefit of the European philosophical heritage, kept the nations at a heightened military position while spawning an international flirtation with collectivism. The cultures now accepting of government’s ever-broadening role, people expected economic and social needs to be met by legislation. The United States’ New Deal and Great Society are indicative of this trend. The states’ social involvement and centralized planning made the late 19th and early to mid-20th centuries a regression from freedom, an instance of Spencer’s “re-barbarization.” I explore those who preserved the message of classical liberalism during this time in the following chronology.
The Austrian School (1871-present)
The movement of longest duration in the classical liberal tradition, the Austrian School, began with the 1871 publication of Principles of Economics by German Austrian Carl Menger (1840-1921). His contributions to classical economics did not arise from historical influences. Alone, Menger developed the concepts of marginalism and subjectivism. Subjectivism suggests that, in a world of uncertainty, infinitely variable human factors render statistical links and formulas incapable of accurately predicting economic activity. Marginalism explains that goods derive value from the worth of an additional unit; for example, given usual scarcity, one more diamond is far more valuable than an additional gallon of water, thus its value is greater. He later remarked to a young Ludwig von Mises: “When I was your age, nobody cared about these things” (Mises 10).
Others soon cared, however. Menger’s first two intellectual heirs had left the University of Vienna before he became Professor of Political Economy in 1873, but they studied Principles and began writing themselves. Friedrich von Wiser (1851-1926) elaborated upon Menger’s theory of value and first termed it marginality. He also contributed the theories of cost as sacrificed utility and imputation (or market shares) and published Origin of Economic Value in 1884. Wieser’s friend and brother-in-law Eugen Bohm-Bawerk (1851-1914) wrote Capital and Interest (two volumes, 1884 and 1889), couching a theory of interest in terms of the previously-developed concept of marginalism. He also gained attention for identifying Karl Marx’s fundamental error as using a labor theory of value in his works rather than subjectivist utility theory (Shand 224).
Menger’s tenure at the University inspired many students to add to the tradition; the freedom provided from 1867 through 1918 by the Liberal Austrian Constitution allowed Vienna to become an intellectual magnet. The Austrian embrace of Smith and Ricardo’s classical economics soon met resistance from a rising tide of German nationalism, however (Mises 20). The German Historical School rejected any universal economic axiom. It dismissed Austrianism in particular for three reasons: it maintained that Austrian theory was not vindicated by historical experience, ignoring the multitude of factors Mises explains renders history incapable of proving or disproving any assertion; any study of “wealth” seemed too base for the Romantics in the Historical School; and it suspected John Stuart Mill of contaminating classical liberalism with utilitarianism (Mises 23). Thus the Methodenstreit, or clash over methods, or Menger-Schmoller Debate, began.
Menger questioned the epistemology of the Historical School, Gustav von Schmoller replied, and a series of publications and pamphlets ensued. Mises noted in retrospect that the debate never was truly concerned with conflicting methodologies, but rather over the question of whether there could ever be a science beyond history to treat human action (Mises 26, 28). Mises himself would provide an answer.
Ludwig von Mises (1881-1973) was first introduced to the Austrian School through Menger’s Principles and the University of Vienna lectures of his teacher, Bohm-Bawerk. While working for the Austrian Chamber of Commerce he wrote his work The Theory of Money and Credit (1912). After World War I he followed with Socialism (1922) which contained one of his greatest contributions, his criticism of economic calculation under socialism. He argues that calculation requires a responsive system of value like prices, not static like labor hours. The price system emerges from the market process; without a market, it follows that there can be no calculation. This assertion sparked the second great controversy involving Austrianism. The Calculation Debate involved such economists as H.D. Dickinson, who continued the reasoning from Barone’s 1908 treatment of production in the collectivist state, and Oskar Lange and Fred Taylor, who both argued from the “trial and error” method for discovering equilibrium (Hall 4). Although popular thought for part of the century accepted that central planning was theoretically possible, recent economists such as Don Lavoie have realized that Mises’ criticisms were never answered by his opponents (Hall 12).
During the 1920s, Mises organized a biweekly privat-seminar for scholars to discuss classical liberal issues which continued until he left Austria for Geneva in 1934. He fled Hitler’s menace in 1940 and came to the United States. After working at the National Bureau of Economic Research for four years, he accepted a Visiting Professorship at the Graduate School of Business Administration at New York University, a position he held until 1969. Some of his other works include Nation, State and Economy (1919), Liberalism (1927), Omnipotent Government (1944), and his magnum opus Human Action (1949).
Dr. Eamonn Butler, the Director of London’s Adam Smith Institution, distinguishes five key contributions made by Mises to the classical liberal tradition along with a sixth, the aforementioned critique of socialism’s economic calculation. Those five are developing a systematized methodology for Menger’s subjectivist theory; adding to monetary theory by demonstrating that there are different forms of “money” with different characteristics and showing that money may be subjected to utility analysis; explaining trade cycles by linking troughs and peaks to the politically-motivated governmental manipulation of interest rates and money supply (he also established the Austrian Institution for Trade Cycle Research, later the Austrian Institute for Economic research); deriving a theory of interests from individuals’ subjectivist views of the future; and teaching students who would later become greats in the tradition. His students in Vienna include Nobel Laureate F.A. Hayek and Harvard’s Gottfried Harberler, and the Neo-Austrian School he spawned in the United States includes Ludwig Lachmann, Israel Kirzner, and Murray Rothbard among many younger scholars.
Another overarching contribution, however, lies in Mises’ answer to the Methodenstreit query, praxeology. He asserts that humanity possesses certain a priori traits. It follows that through the study of individual action we may deductively understand civilizations. This science of human action called praxeology unites history, sociology, philosophy, philology, and psychology in a unique Misesian methodology.
If Menger, Bohm-Bawerk, and Wieser represent the first tier of Austrianism and Mises the second, the third generation arrived via native Austrian Frederick A. Hayek (1899-1992). The student of Wiser who termed himself “an unrepentant old Whig” worked in Mises’ office for five years; it was there that Mises weaned him from moderate Fabian socialism (Butler 3). Hayek then served as the Vice President of the Austrian Institute for Economic Research.
From 1931 through 1950, Hayek was the Took Professor of Economic Science and Statistics at the University of London. In 1947 he organized the Mont Pelerin Society, an international meeting to discuss the principles of classical liberalism and their preservation. The Society continues to meet over 45 years later. In 1950, Hayek became a Professor of Social and Moral Science at the University of Chicago. His last move relocated him to the University of Freiburg, where he taught from 1962 until 1967. He received the Nobel Prize in Economics in 1974.
Hayek published many books and articles, beginning with Monetary Theory and the Trade Cycle (1929) and The Pure Theory of Capital (1941). In 1944 he produced the ground-breaking work The Road to Serfdom; admittedly a political work, it nonetheless supports its thesis that socialism inevitably leads to totalitarianism (Butler, Hayek 10). His Counter-Revolution of Science (1952) asserts that physical science’s methodology cannot be applied to social studies due to human unpredictability (an answer to Herbert Spencer and others’ attempts to do just that). Hayek does disagree with Mises’ dismissal of the use of historical patterns, however. He feels certain patterns based on experience can be valuable, whereas Mises trusted deduction from a priori truths more exclusively (Hayek 42). Among his other works The Constitution of Liberty (1960) and Law, Legislation and Liberty (three volumes in 1973, 1976, and 1979) discuss the legal framework needed to maintain a free society. He argues that the spontaneous order, or cosmos , requires common playing rules but not common ends. His last publication, The Fatal Conceit, appeared in 1988.
A decades-long written and verbal rivalry also characterized Hayek’s career involving his personal friend and public opponent John Maynard Keynes. His widely accepted brand of economics eclipsed Hayek’s in popular thought only to be later discredited by a significant portion of the academic community. In contrast with Keynesianism’s centralized planning, Hayek’s fundamental message throughout his life depicted the market as the most efficient information system. State intervention only creates misleading signals leading to misallocation. The only way for efficient allocation is maximum freedom for individuals to receive and respond to market signals, utilizing a division of knowledge like Smith’s division of labor. In a sense he took Mises’ view of exchange in the market process, or catallactic, and expanded it. His intellectual ancestry reaches before the Austrian tradition, however, as Merquior notes: “Like Adam Ferguson and Adam Smith, he [Hayek] thinks that progress derives from man’s actions but not by man’s design” (126).
The next tier in the tradition, the Neo-Austrians, starts with a student of Hayek’s at the London School of Economics. Ludwig Lachmann (1906-1992) established the Austrian Graduate Program at New York University and wrote 1977’s Capitalism, Expectations and the Market Process, using subjectivism and Austrian methodology to critique the common mathematical models of popular economics (Shand 226). Mises’ student Israel Kirzner (1930-present) applies Austrian approaches to the study of entrepreneurship through such works as The Economic Point of View (1960), Competition and Entrepreneurship (1973), and Perception, Opportunity and Profit (1980) and serves as a Professor of Economics at New York University.
Murray Rothbard (1926-1995) presents a highly visible example of radical Austrianism. Also a student of Mises, Rothbard drew his a priori beliefs to more extreme conclusions and became prominent in the American Libertarian Movement. Believing all state intervention is not only disastrous but based on unconscionable force, he has authored such works as Man, Economy and State (1962), Power and the Market (1970), For A New Liberty (1973), and Ethics of Liberty (1982). Not only has Austrianism endured, it has seen recent revival as the Neo-Austrians have published and received teaching positions of their own.
The Chicago School (1927-present)
The University of Chicago has drawn a number of classical liberal faculty members from across the country, creating a school of thought that bears its name. The movement began with the 1927 addition of Professors Henry C. Simons and Frank H. Knight.
Henry C. Simons (1899-1946) influenced the Chicago School more as a teacher than a writer. His combined published works comprise one volume; a 1934 essay “A Positive Program for Laissez-Faire,” for example, details his reform proposal to protect the competitive private enterprise system he saw overshadowed by centralization in the 1930s. Among his suggestions is an overhaul of the monetary system and an abolition of all tariffs.
His colleague Frank H. Knight (1885-1972) balanced Simon’s policy emphasis with a specialty in theory. He answered the trendy 1930s attacks on classical economics through analysis and precise term definition. His theory of the free market recognized the individual as the key economic actor, and society as merely a collection of individuals. Although he recognized his methodology was not all-inclusive he counted it as “useful,” displaying the pragmatism characteristic of the entire school (Fusfeld 149).
The Chicago School has produced a number of economists and theorists, including Nobel Laureate George Stigler. Perhaps the best known of these is Nobel Laureate Milton Friedman (1912-present), originally a student of Simons. He focuses on proving that the market is a more efficient allocator of society’s resources than a command economy. Unlike other classical liberals, he accepts that the government may have a role in creating a stable framework for the market. This would include, for example, limiting the money supply. Not only would the Austrians disagree with such state action, they would use the term money as an adjective rather than a noun since Mises asserted that many things can take on the characteristics of money (Sampson 166).
An example of Friedman’s pragmatism is offered by journalist Geoffrey Sampson: “…if a belief in the desirability of an economic safety-net is widely shared (as it currently is) then it is reasonable for Milton Friedman to incorporate it into his model society” (183). Instead of maintaining the current system of benefits, however, Friedman proposes an extension of the income tax system where those beneath a certain level would receive cash rather than pay. The state would therefore be providing the poor the ability to buy from the private sector rather than forcing them to patronize less efficient state hospitals, schools, etc.
His works include Capitalism and Freedom (1962), Free To Choose (with his wife Rose Friedman, 1979), and the television series Free To Choose aired for 10 weeks on the Public Broadcasting Service in 1980. Interestingly, his son David Friedman is a leading anarcho-capitalist thinker and author of the influential The Machinery of Freedom (1973). Milton Friedman and others continue to lecture and teach the next generations of Chicago-minded economists in this pragmatic form of classical liberalism.
Ayn Rand (1905-1982) and Objectivism (1943-1976)
Born in St. Petersburg, Ayn Rand emigrated from the USSR to the United States after the Bolshevik Revolution. Her unique form of individualism was shaped by her personal experience with communist totalitarianism and her frustration with the West’s drift towards socialism. Her first novel, We The Living, appeared in 1936. It was not until the vital year of 1943 in which Rose Wilder Lane’s The Discovery of Freedom and Isabel Paterson’s The God of the Machine were published that Rand drew wide attention with The Fountainhead. She followed that success with non-fiction (Capitalism: The Unknown Ideal, 1946, The Virtue of Selfishness, 1964, etc.) and more fiction (Anthem, 1953, Atlas Shrugged, 1957, etc.).
As she continued to publish and gain a following, Ayn Rand chose the name Objectivism for her philosophy. She notes in For The New Intellectual:
Capitalism demands the best of every man – his rationality – and rewards him accordingly. It leaves every man free to choose the work he likes, to specialize in it, to trade his product for the product of others… His success depends on the objective [Rand’s emphasis] value of his work and the rationality of those who recognize that value (25-26).
Rand surrounded herself with a carefully chosen collection of thinkers to train to communicate her message. She argued that no person should live for another, that all persons’ highest moral ends was their own happiness, and that any notion of a group instead of the individual threatened every person. The foremost of these followers was Nathaniel Branden, who taught Objectivism on the national lecture circuit and at the Nathaniel Branden Institute until its demise in 1968. He continues to write today. Others include David Kelley and Leonard Peikoff.
Her fierce defense of the individual as his own ends spawned a publication known as The Objectivist Newsletter and later as The Objectivist from 1961 to 1971, replaced by The Ayn Rand Letter from 1971 through 1976. An active Center for Objectivist Studies still exists. Although her personal circle was small, her interest in other classical liberals was wide; a suggested reading list in Capitalism includes works by Bastiat, Bohm-Bawerk, and Mises. Many students in the 20th century in fact first met classical liberalism through Rand. In 1991, nine years after her death and fifteen years after her letter ended publication, a Gallop Survey concerning influential authors in America named her second in importance, surpassed only by The Bible (Boaz 62).
The acceptance of the growth of government during the late 19th and early to mid-20th centuries produced the economic reactions of the Austrian and Chicago Schools and the individualist ideology of Objectivism. As the 20th century progressed, it became clear that government was an inefficient force to meet the changing needs of an increasingly global culture and economy. As with the growing Europe in the mercantilist era that embraced the first classical liberals, communication and travel allowed citizens of different nations to know what they are missing without free trade and human rights. The persistence of those who endured through this time saw their assertions vindicated; collectivism, communism, Keynesianism, and militarism have been discredited on many fronts. Slowly attention has returned to those ideas so quickly abandoned in the panics of the last century.
Three years after 1943’s simultaneous publication of the works of Rand, Lane, and Paterson, the Foundation for Economic Education was founded as a haven for classical liberal economists. Soon after, the Volker Fund adopted the classical liberal cause, financing such individuals as Mises at New York University and Hayek at the University of Chicago. A “directory project” sought out thinkers to connect with different programs and offer a “publisher of last resort” (Critical Review 1). Through these channels an international network of classical liberals formed which would serve for decades. The prominence of journalists like Henry Hazlitt and Isabel Paterson and the creation of foundations and publications such as Cato, Reason, Liberty, The Institute for Humane Studies, etc. helped to maintain the momentum of this return from “re-barbarization.” The next generation of Austrians and Chicagoans began to enjoy increased acceptance and even international accolades. Others entered the tradition for the first time, responding to the new situations created by a rapidly advancing technological world increasingly free of totalitarianism.
The Public Choice School (1959-present)
Although Anthony Downs of the Brookings Institution planted the seeds of public choice theory with his 1950s work An Economic Theory of Democracy, the true parents of the school are James Buchanan (1919-present) and Gordon Tullock (1922-present). Their story began when Buchanan secured a five-year Volker grant to establish the Thomas Jefferson Center for Studies in Political Economy; his search for a post-doctoral fellow to work with the center ended with Tullock. By 1959, the pair had published The Calculus of Consent in which they analyzed “constitutional choice” and the problem of “nonmarket coordination” (Dorn 59). They then created the Center for the Study of Public Choice at the Virginia Polytechnic Institute in 1969, where the journal Papers in Non-Market Decision-Making became The Journal of Public Choice. Both men continued to publish and in 1982 the Center relocated to George Mason University in Fairfax, Virginia. In 1986, James Buchanan received the Nobel Prize in Economics for his work with public choice theory.
Public choice theory is an approach to analyzing public policy based on the acceptance of the motivation of self-interest and the understanding of politics as exchange. In short, the theorists assert that politicians, lobbyists, bureaucrats, and others involved in policymaking act with the same self-interest as private persons. If public servants do not act from selflessness and benevolence, privatization may be a more logical path to pursue than is first recognized. Even if a single policymaker wanted to act for the public good, public choice theory denies that a public interest exists apart from multiple individual interests. Another focus of the school is preventing the majority from limiting choice. The constitutional question becomes how to “channel individual self-interest so as to achieve social coordination” (Dorn 59). This is the same challenge faced by Madison in framing the United States Constitution, mirroring his decision to pit interest against interest to keep the government and the majority from infringing upon personal liberties. The link between the Madisonian model and public choice theory is strong, as David R. Henderson notes in 1987:
…the authors [Buchanan and Tullock]… defend a constitutional democracy with checks and balances, much like the one we started within this country. Their book [Calculus] is really a modern day version of The Federalist Papers, informed by a much more sophisticated knowledge of economics (40).
Today the school continues to grow, branching into new areas of public policy, adapting the classical liberal values of personal choice and individual responsibility to new problems. For example, one of the most recent areas in which the school has applied economic tools to political issues is free market environmentalism.
Robert Nozick (1938-present)
Born in Brooklyn in 1938, Robert Nozick was appointed to Harvard in 1965. His 1974 Anarchy, State and Utopia has sent shock-waves throughout the liberal and non-liberal communities. In part his work answered the thesis of John Rawl’s A Theory of Justice (1971), which outlines his concept of a just society. Rawls defends a kind of mixed economy socialism, as social policies/rules chosen behind a “veil of ignorance.” Behind this veil policymakers act as if they are ignorant of their status in the community as they create policy, so that puniary goods are distributed fairly across race, gender, and economic lines in a manner that always benefits the “least advantaged group” (Sampson 185, Merquior 139).
Nozick criticizes the redistribution inherent in Rawls’ proposals, defending each person’s claim to his own using the natural rights argument of Locke. In fact, he begins in a state of nature like Locke, then asks whether there should be a state at all. In the end he argues for a “minarchist” state, a minimalist government for protection only. He argues completely from individual consent-based morality, noting the effectiveness of Smith’s “Invisible Hand” of the market but not pausing to elaborate on economics. The state therefore cannot tax, for example, for that is analogous to forced labor (Nozick 169).
Notably, Nozick ends by “reclaiming for the liberal tradition the utopian vision which virtually all liberals (except Hayek) had rejected as uncongenial to the pluralism demanded by the liberal ideal” (Gray 41). Nozick asserts that the minimal state provides the framework for a meta-utopia in which individuals might join together to form communities of free entry and exit, competing for members. Within these smaller associations, members might choose to contract away certain rights in favor of receiving particular services; the communities which would emerge might not be ideally liberal. With the option of exit ever-present, however, each association must remain true to its contract and accountable to its members.
Nozick pioneered the exodus of other minimalists into public view such as John Hospers, chairman of the University of Southern California Philosophy Department and 1972 National Libertarian Party Presidential Candidate, and Tibor Machan, philosophy professor and author. Perhaps they shall compose the next major movement in the history of the tradition. Nozick’s other works include The Examined Life: Philosophical Meditations and The Nature of Rationality. Nozick explains the minimalist logic by noting:
…[the minarchist state] allows us, individually or with whom we choose, to choose our life and to realize our ends and our conception of ourselves, insofar as we can, aided by the voluntary cooperation of other individuals possessing the same dignity. How dare [Nozick’s emphasis] any state or group of individuals do more. Or less (Nozick 334).
Thus we leave classical liberalism in the early stages of its reemergence, as it begins again to enjoy attention and acceptance. Its history reveals the central continuity which has allowed it to endure so long; its most recent champion, Robert Nozick, can still directly draw upon its first father, John Locke. Classical liberalism’s ability to grow to address new situations and adapt to different cultures also reveals its universal applicability. Observing the chronology of its rise, decline, and reemergence provides today’s thinker with a rich heritage and a vital challenge; it also affirms Spanish philosopher Ortega y Gasset’s 1929 conclusion that (classical) liberalism is “the noblest cry that has ever resounded in the planet” (Merquior 1).
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