This piece was adapted from the transcript of the Learn Liberty video, “What is Classical Liberalism?“
If you ask most people what classical liberalism is, they’ll say that it’s essentially free-market economics: low taxes, laissez faire, and reducing the government intervention in the economy.
But that’s a rather impoverished and narrow idea of what classical liberalism is. It’s actually a comprehensive philosophy, a way of thinking about human society, human life, and the world. And as such, it has made major contributions in all of the different academic disciplines over the last 250 years or so.
I’m going to explain what those are.
The Key Insights of Classical Liberalism
The key, basic insights of classical liberalism were first developed in the late 18th and early 19th century, at which time they weren’t split up into separate disciplines. Was Adam Smith an economist or a philosopher? A sociologist or a psychologist? In some sense he was all of them. And that was true of the other scholars who were around at that time.
Today, of course, the different disciplines have all become very distinct and very different. In some ways, there’s a gain to this because it means you get more in-depth study and knowledge of a particular subject. On the other hand, there are also losses because it means the connections between the various disciplines are not so apparent or so obvious to most people. And that’s particularly true here, because it means the way in which key classical liberal insights play out in different disciplines are often not appreciated. So what are the key basic ideas then?
- That the goal of life in this world is happiness, human flourishing, and wellbeing. You may say, well, that’s a no brainer. But in fact, there have been many people historically who think that the goal of human life should be something else, like winning kudos for the next world, serving your ruler, seeking glory, or a whole range of other things.
- That personal choice and, hence, individual liberty are crucial in explaining both how society develops and in the achievement of individual happiness and flourishing.
- That commerce, wealth, and trade are good, while war and conflict are bad. Again, you may think that this is something obvious and trivial, but many people historically have not thought this. There has been a long-standing tradition which says that war brings out the finest qualities in human beings and that wealth is actually bad for you. And this is an idea we still have around today.
- Individualism: That people are distinct, separate, and self-governing.
- Spontaneous order: That much of the order and structure we see in society is not the product of conscious design, but something that just happens when you have the right kinds of institutions and rules in place.
- That things can and will get better for society over time. Again you may think this is obvious, but this kind of optimistic view of the world—the idea that improvement is both possible and desirable—is a relatively recent development.
- Reason, rather than tradition or authority, is the way to understand the world and make sense of it. In other words, if you want to really understand the nature of the world—how human society works—the way to do this is not to rely on a sacred text or simply believe what we are told by authorities, but through reason, empirical investigation, and study.
How Classical Liberalism Plays Out in the Major Academic Disciplines
In 2016, we had the 50th anniversary of an event, which for classical liberals is one of the most important events of the 20th century: the sailing of the first container ship from Elizabeth, New Jersey to North Carolina.
This single event reduced the cost of shipping goods around the world by a factor of 30. Suddenly, it cost 1/30 of what it had cost before to move goods around the planet. This created an enormous increase in world trade. It tied the world together much more closely than it had ever been. The result was a huge increase in human wellbeing, prosperity, and human interconnectedness around the world. That did far more to shape the world in which we live than any amount of legislation, politics, and action by government.
Classical liberalism takes a view of history that concentrates on the fortunes of liberty, the evolution of liberty, the way in which freedom has grown or diminished in particular times and places, the kinds of things that are necessary for it to exist, the kinds of things that are inimical to it, and those that tend to destroy it.
It’s also a view of history in which the truly important people are not the generals, the politicians, the kings, the popes, the rulers, or the people who exercise political power, but ordinary people, the people who live together through peaceful exchange and create the good things in life: the wealth, the physical goods that we require, the intellectual discussion, and the cultural products that make life more rich and fulfilling. Particularly important are the inventors and entrepreneurs.
This is also, therefore, a view of history which emphasizes change, both for good and for bad. It emphasizes, in other words, the way in which today’s world is something novel, something unprecedented, and, generally speaking, something much better than anything that has been before. One of the key liberal insights for history is that the modern world is the best world ever to have been born in. If you had been born in any previous time, for example, then you would have had a one in four chance of dying before your first birthday. It would be almost certain that you would experience the death of a close relative by age 20.
The range of opportunities open to you would also have been enormously constrained compared to those that even the lowest-ranked people in society now have open to them. In other words, we are incredibly lucky. And this is ultimately due to our society being, in important respects, freer than societies in previous times.
Economics was in many ways the first discipline to emerge in which those key classical liberal insights were applied. In some ways, it’s still the central one because of the importance of physical wellbeing, comforts, and wealth in human flourishing and in life. But economics is a much more wide-ranging discipline than is commonly realized. And this is particularly true when you apply the classical liberal principles of progress, individuality, and the importance of human flourishing and human happiness.
One of the projects of economics as a discipline is to discover how to organize the affairs of society so that each person has the maximum potential to realize his own goals and to maximize his own wellbeing. In other words, the principle of economics from the classical liberal point of view is to understand how societies can be organized such that if you take any person at random in that society, his chances of achieving his life goals are higher than they would otherwise be.
This is not the same thing as, for example, equality or any other kind of social good that many other people value. It’s all about people maximizing their own life plans, their own individual flourishing, and discovering based on the choices they make what will, in fact, maximize their own happiness. Now, this is undoubtedly an ethically uplifting goal. One of the key classical liberal insights in economics is that economics is, in fact, about activities, goals, and behaviors that are ethically virtuous.
The view of many opponents of classical liberalism is that economics is entirely about sordid money grubbing and base materialism. The rejoinder is to say: it is about money, it is about materialism, but this is good. For example, there’s the insight that a successful and functioning economy is one that has the maximum degree of free exchange between autonomous individuals. That means exchanges by which two people are both made better off than they were before. Surely that is something virtuous, something good. It’s not something that you should be regarding as morally disreputable.
When economics originally developed in the late 18th and 19th century, it was a reaction against the hostility to trade, commerce, and luxury. This way of thinking is still with us. We have people who think that we should have all kinds of taxes on behavior, products, and things that people consume, on the grounds that they are bad for us.
There is somebody out there, somebody amongst the elite, who knows what is better for you than you do yourself. And this kind of idea is a throwback to the ideas that were attacked by the early classical liberal economists. But when you apply the classical liberal way of thinking, you realize that the aim of policy should be to maximize the opportunities for any randomly chosen person. You’re certainly not going to support a policy which involves taking large amounts of resources from ordinary people and giving them to specially privileged groups, such as the incompetent managers of large automobile manufacturing companies, for example, or the people in the financial services sector who have made major screw-ups and go running to their friends in government to bail them out.
The last key classical liberal insight in economics is that, in many cases, we face the alternatives of individual choice and collective choice. Do you want to have the choices you make about how to dispose of your resources made by yourself, or do you want to have the choices made on your behalf through a collective political process and, ultimately, by a political class? This, I think, is the choice that has been before us in terms of economics for the last 200 years.
Classical liberalism provides us with a distinctive way of thinking about the human mind and personality. The key idea here is the idea of the autonomous and choosing person.
Classical liberalism promotes the idea that people are, in a fundamental sense, not controlled by other impersonal forces or structures. What they are, the kind of person that they are, is the product of the choices they have made, for good or bad. Your self, your person, is a kind of project in which you’re engaged throughout your life. You, in a very real sense, make yourself. Obviously, external things have an impact upon you, but it’s the way that you respond to those things, the choices you make, that really shape the kind of person you are, the kind of qualities of mind and character you have.
This is in contrast to a whole range of other ways of thinking about psychology, which emphasize the degree to which you are not a choosing creature, the degree to which your personality and mindset are the products of forces over which you have no control. So, for Freud, for example, there are a whole series of structures of the human mind which you really can’t control. In fact, you have to repress them because that’s the only way you can live in a human society, which means you are going to be miserable all the time. This is the idea that your psychology is essentially the product of social circumstances, that the kind of a person you are and the kind of mind that you have will be determined by your social background and physical environment.
Another way of thinking about psychology that is antithetical to classical liberalism is that psychology can be reduced to genetics. It comes down to the way our Paleolithic ancestors lived and the kind of genetic inheritance we have from them. And this explains a whole bunch of compulsive behaviors. Apparently this is why many people can’t stop eating lots of sugar, for example. It’s because they are driven to do so by some kind of genetic predetermination.
By contrast, classical liberal psychology focuses on self-definition, autonomy, and, therefore, personal responsibility. And we can hold people responsible for their actions, both good and bad.
The history of psychology has a rich classical liberal history. In the 20th century, Maslow and Rollo May contributed to the classical liberal tradition with their humanistic approach to the human psyche. There’s also a longstanding critique within classical liberal psychology of the coercive aspects of modern psychiatry. The work of Thomas Szasz, for example, attacks the way in which the concept of mental illness has been used to justify elaborate and severe restrictions on personal freedom.
Today, we tend to think of sociology as the quintessentially socialist or social democratic discipline. It’s thought of as being something inherently driven that way because of its interest in the collective society as a whole. Certainly it’s the case that there are few sociology professors and students who hold classical liberal views compared to some other disciplines. But, in fact, many of the major figures in the development of sociology were great classical liberal thinkers.
For example, Herbert Spencer, a very important figure in the development of sociology as a discipline, is also one of the great classical liberal thinkers. William Graham Sumner, the man who invented the concept of the folkway while he was a professor of sociology at Yale, was an ardent advocate of laissez faire and a great opponent of imperialism.
The classical liberal approach to sociology takes a view of human society that emphasizes human agency, how things happen in the world because of decisions made by individuals rather than by some kind of autonomous and rarified structure.
But perhaps the key insight from classical liberalism applicable to sociology is the principle of spontaneous order—how social processes, social developments, and social change arise not through design, purpose, or the use of power, but through a process that no one person really understands, intends, or designs.
This kind of insight enables us to understand a whole range of social phenomena that otherwise are extremely difficult to explain. In the United States, for example, from the early 1960s to the early 1990s, there is a long-run ineluctable increase in the per-capita rate of crime. Since the early ’90s, there has been a very steep decline, which is still continuing. Now, there are many people who claim that this is because of some shift in public policy or some actions taken by governments or police departments. People like Rudy Giuliani have tried to take credit for the declining crime. But when you look at it from a classical liberal viewpoint, you realize that this isn’t the case. The increase in crime before 1992 and the decline since then took place regardless of what the public policy was. The conclusion you need to come to is that you’re dealing with a spontaneous social process, something rather mysterious, in which public policy actually had a very small part to play.
The other big insight in classical liberal sociology is the constant tension in human society between power and voluntary social relations. This enables you to understand the whole range of human institutions and large-scale patterns of human social interaction as arising from the fluctuating balance between these two things. It also gives you great insights into the way in which institutions like the family, marriage, and childhood have developed.
There are many important figures in political theory who are generally seen as being a part of the genealogy or life story of classical liberalism. In the 17th century, you have John Locke. In the 18th, you have Adam Smith, Montesquieu, and Jeremy Bentham. In the 19th century, you have people like John Stuart Mill, and in the 20th century, Friedrich Hayek.
There are a few key classical liberal insights common to all these thinkers. The first is that the goal of politics is human wellbeing. The aim of political arrangements, the aim of forms of government, the aim of politics as a process, is to maximize human wellbeing and to minimize that which harms human wellbeing. It is to minimize conflict, violence, and strife as a means of settling differences or of achieving status or wealth.
The second crucial insight is the idea of individualism, that human society derives its drive and function from individual choice and individual agency. Now, when this is applied to government, the key liberal insight is that governments are essentially exercising only a delegated power. They are only exercising a power which has been handed over to them on a temporary basis by the individuals of whom society is composed. Rulers, presidents, and kings do not have any kind of power of their own, much less power derived from God or anything like that. They only have the power given to them by the people over whom they exercise the power. And of course, the corollary of that is that this can be withdrawn at any time.
Because of this, the third great insight is that the role of power in society needs to be very strictly limited and guarded. What classical liberal thinkers have always been aware of is the enormous dangers of political power to individuals and to societies.
The classic example of this is the insight of political scientist R. J. Rummel that in the course of the 20th century you were twice more likely to be killed by your own government then you were by somebody else’s government. When you add up all the people who died in wars and then you add up all the people who were murdered by their own government, there are more than twice as many in the second category. So if you were a Russian, for example, you were twice as likely to be killed by a Stalin as you were to be killed by Hitler and his agents. And that kind of principle shows just how dangerous political power is.
What I hoped you will have gathered from this is that no matter the intellectual discipline, the fundamental insights of classical liberalism, the way of thinking about human life, human society, and the world that they embody will lead you to approach that subject in a distinctive way, one that will explain what liberty is and why liberty matters.