Classical Liberalism – A Primer. Eamonn Butler

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СКАЧАТЬ diverse individuals, which in turn he saw as a basic condition for human happiness and prosperity. He dismissed the Utopian idea that moral education could curb those differences and make everyone’s aims coincide. The state was about enabling diverse individuals to come together for mutual benefit, and the constitution is what held it together.

      In the Rechtsstaat, the institutions of civil society – voluntary associations such as clubs, societies and churches – would have an equal role in promoting this social harmony. Government powers would be restrained by the separation of powers, and judges and politicians would be accountable to and bound by the law. The law itself would have to be transparent, explained and proportionate. The use of force would be strictly limited to the justice system. The test of a government is its maintenance of this just constitutional order.

      Success and reassessment

      A new home for classical liberalism

      Thomas Paine took many of Locke’s classical liberal ideas on natural rights and social contracts, and that government is a necessary evil that can become intolerable if unchecked. In January 1776 he wove them into his influential call to arms, Common Sense, indicting Britain as being in breach of its contract to the colonists.

      It was natural therefore that, after the hostilities, the Americans should seek a new classical liberal contract between themselves and the government they were creating. The Constitution would be infused with Locke’s ideas of natural, inalienable rights, and a Montesquieu-style division of government powers.

      The nineteenth century

      But new and radical classical liberal ideas returned to Britain. By 1833, classical liberal activists had secured the abolition of slavery throughout most of the British Empire, and by 1843 the reform was complete.

      Also on the social front, the British philosopher and economist John Stuart Mill (1806–73) articulated the ‘no harm’ principle – that people should be able to act as they please, provided they do not harm others in the process, and thereby diminish their freedom. He also argued for a ‘personal sphere’ that the state could not touch, and, following the utilitarian philosopher Jeremy Bentham (1746–1832), argued that freedom was the best way to maximise public benefit, or ‘utility’.

      In economics, the Anti-Corn-Law League, which sought to end protectionist taxes on imported wheat, grew into the Manchester School, whose leading figures such as Richard Cobden (1804–65) and John Bright (1811–89) called for laissez-faire policies on trade, industry and labour.

      Reappraisal and decline

      However, rapid industrialisation after the mid nineteenth century brought challenges for classical liberalism, such as poor working conditions, social stratification, displacement and urban poverty. Increasingly, people called on governments to regulate away such ills.

      Then in the twentieth century, hostilities and threats in Europe promoted a nationalist culture and greater faith in the role of the state. After each wartime expansion, governments failed to shrink back again. In 1913, before World War I, government expenditure was just 17 per cent of GDP in France, 15 per cent in Germany and 13 per cent in the United Kingdom. It is now roughly three times that as a percentage of GDP, and many times more in absolute terms.

      Meanwhile, just as the physical scientists were shaping the physical world, so economists and sociologists fancied that they could shape human society scientifically too. They saw central planning as more rational than the natural disorderliness of markets, with their externalities and their supposed tendency to monopoly or to unemployment. No longer was the onus on interventionists; now the classical liberals were the ones who had to justify their demands to let freedom prevail.

      The modern revival of classical liberalism

      Policy problems and the classical liberal response

      But the vaulting confidence of the interventionists was misplaced. Economies became racked with unemployment and inflation (sometimes, inexplicably for them, at the same time), low growth and crises in housing, energy, lending and foreign exchange markets where governments set prices or manipulated supply and demand. A growing welfare state was plagued by problems of dependence and lack of incentives. There seemed no way to reduce the size of government, nor the demands it was making on taxpayers.

      Even though they were on the defensive, classical liberals of many shades had been thinking about such problems for a long time. They went back to the old classical liberal principles and re-thought them, developing new or updated arguments that were better suited for the changed times. Eventually, in the 1980s, this intellectual revolution would inform the policies of world leaders such as Ronald Reagan in the United States and Margaret Thatcher in Britain.

      Intellectual developments

      The Austrian School economists, starting with Carl Menger (1840–1921), had recognised that economics was not a science but a matter of individual values and actions. Austrians like Ludwig von Mises (1881–1973) and F. A. Hayek (1899–1992) realised that state controls distort economic signals, setting off unpredictable consequences.

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