The History of Classical Liberalism

Steve Davies,

Release Date
June 28, 2011


Role of Government

Historian Stephen Davies describes classical liberalism as a comprehensive philosophy, which has had implications in all the major academic disciplines. At an abstract level, classical liberalism offers three key insights:

  1. The goal of life is human happiness and flourishing.
  2. Personal choice and individual liberty are crucial in explaining and appreciating how society develops.
  3. Commerce, wealth, and trade are preferable to war and conflict.
If you agree with these classical liberal insights, you might be a classical liberal!


The History of Classical Liberalism
In the US most people ask “what classical liberalism is?” Then they’ll say it’s essentially free market economics. It is all about low taxes, they say fair reducing the government intervention in the economy, but in fact that’s all an 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 which has implications for all of the major academic disciplines and as such it has made major contributions in all of the different disciplines over the last two hundred and fifty years or so and what I am going to do is explain what those are. Now, the key basic insights, the basic ideas, were first developed in the late eighteenth and early nineteenth century. At that time they weren’t split up into separate disciplines. Was Adam Smith an economist or was he a philosopher or was he a sociologist or was he a psychologist? In some sense he was all of them and that was true of the other people who were around at that time.
Today of course the different disciplines of all become very distinct and very different as we will see. In some ways, there’s a gain to this because it means you get in-depth study of knowledge of a particular subject. On the other hand there are also losses because it means that 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?
The first is that the goal of life in this world is happiness and human flourishing and well-being. 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 {inaudible 01:48} for the next world for example or serving your ruler or glory or a whole range of other things.
The second basic insight is that personal choice and hence individual liberty are crucial in explaining both how society develops and in the achievement of individual happiness and flourishing. Without these things you can’t have them, that’s the second key idea.
The third is 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 yet again many people historically have not for this. There’s 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 not the idea we still have around today.
There is the idea of the individual, the idea that people are distinct separate persons, and that each one is in some sense unique, as well as being self-governing. The idea of spontaneous order first found in Smith perhaps and since developed by many other scholars. The idea that much of the order and structure we see in society is not the product of conscious design or will or plans, is something that just happens when you have the right kinds of institutions and rules in place. The idea of improvement or progress, the idea that things can get better either a positive sense or more, what is good or in a negative, in an important sense less of what is bad. 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 and it’s a key liberal insight.
Finally there’s the idea that 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 know what is going on to understand what the next the world is, how he in a society works. The way to do this is not to rely on the sacred text, not through simply believing what we are told by authorities but through reason, empirical investigation, and study. Now, one of the subjects we have is history. The basic idea is of classical liberalism necessarily mean both in interest in history on a particular way of thinking about the past which poses distinctive questions.
In 2016 we are going to have the fiftieth anniversary of an event, which is of classical liberals, is one of those important events of the twentieth century. The sailing of the first container ship from Elizabeth, New Jersey to North Carolina, why is that important? Well for classical liberal as we see it’s an enormous important event and that reveals I think what the crucial classical liberal insights are in this area. What you have in classical liberalism is a view of history that concentrates on the fortunes of liberty and the range of actual freedoms because classical liberals thinks that freedom is the most important aspect of human life and essential for human flourishing then when you look at the past what you want to do is to trace the evolution of liberty, the way in which the freedom has grown or diminished in particular times and places.
The kinds of things that are necessary for it to exist are the kind of things that are inimical to it, that tend to destroy it. It’s also a view of history, which as I said a moment ago, the truly important people are not the generals, the politicians, the kings, the popes, the rulers, the people who have an exercised political power but ordinary people, the wealth creators, the people who live together through peaceful exchange and who create the good things in life, the wealth, the physical goods that we require but also the intellectual discussion of the cultural products that make life more rich in fulfilling and the particularly important are the inventors and entrepreneurs.
I mentioned a moment ago, the event in 1956 when the fist container ship sailed. Why was that so important? Well because it reduced the cost of shipping goods around the world by a factor of thirty. Suddenly it cost one thirtieth, of what it has done before, to move goods around the planet. What that did was to create an enormous increase in world trade. It tied the world together much more closely than it had been ever tied before and the result was a huge increase in human well-being and prosperity and in human interconnectedness around the world that did far more to shake the world in which we live than any amount of legislation, politics, and action by government. And 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 the world in which we live today is something novel, something unprecedented and generally speaking something much better than anything that has gone before.
One of the key liberal insights for history is to realize that modern world is the best world ever to have been born in. If you have been born in any other previous time for example then you would only have a one by fourth chance of dying before your first birthday. It would be almost certain but by the time you reach the age of twenty you would have experienced the death of a close relative, a parent or a sibling. the range of opportunities open to you would have been enormously constrained compared to those that even the lowest rank people in society now have open to them. In other words we are incredibly lucky and why is this so, this is the insight, this is due ultimately to our society being important respects freer than societies in previous times and history.
What about economics though? Economics is in many ways the first discipline to emerge in which those classical liberal insights are applied. In some ways it’s still the central one because of the important solve physical well-being, comforts, and wealth in human flourishing and in human life. However it’s not the only one. Also it is important to realize that economics is a much more wide ranging discipline than is commonly realized and this is particularly true when you apply the kind of classical liberal principles of progress, individuality and the importance of human flourishing and human happiness.
What economics looked at this way is really about how to organize the affairs of society so that each person has the maximum potential to realize their own goals and to maximize their own well-being. In other words the principle of economics, of 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, their chances of achieving their life goals are higher than they would otherwise be. And this is not the same thing as for example equality or any other kind of social goods that many of the people value it is all that is essentially people maximizing their own life plans their own individual flourishing and finding out also through discovery process, based on the choices they make, what is that they want to be? What is it that they want to do? What is best for them? What will, in fact, maximize their own happiness? Now, this is in fact undoubtedly unethically uplifting goal. One of the key classical liberal insights in economics is that economics is in fact about activities, goals, and ways of behaving that are ethically virtuous.
The view of many opponents is that economics is entirely about sordid money grubbing but it is entirely about back base crass materialism. They rejoined us 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 which has the maximum degree of free exchange between all autonomous individuals that means exchanges by which two people are both named better off than they were before. Surely that is something virtuous, something good, it’s not something that you should be deploring or regarded as being somehow morally disreputable. So when originally economics developed in the late eighteenth and nineteenth century it was a reaction against the hostility to trade and commerce and luxury, as it was called at the time, affluences we would now say. This way of thinking is still with us. We now have these people who think that somehow we should have all kind of taxes, on ways of behaving, products, and things that people consume, on the grounds that there are some people bad for us. Apparently, you should be paying a huge amount of tax on fast foods because that’s bad feelings about how pleasure it might bring you.
There is somebody out there from the amongst the elite someone like Cas Sunstein, who knows what is best than you do yourself and this kind of ideas are in fact a throwback to the ideas that were attacked by the early classical liberal economists. What it also means is hostility to the use of public power to benefit special or favored groups, so when you apply the classical liberal way of thinking, when you realize that the aim of policy should be to maximize the opportunities for any randomly chosen person, you are 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 company for example or the people in the financial services sector who have made major screw-ups and then suddenly gone running to their friends in the government, to try and bail them out. Finally the last key classical liberal insight in economics is the idea in many cases what we face in life is the alternatives of individual choice or collective choice.
Do you want to have the choices you make about how to dispose of your resources made by yourself through all kinds of market decisions and non market decisions or do you want to have the choices made collectively on your behalf through a collective political process and ultimately by a political class, and this I think is the choice that has been before is in terms of economics for the last 200 years. Now, psychology may not strike you as being an area where classical liberal insights apply but in fact this is very much the case. Now recently a well-known film star and television star has been appearing a lot on YouTube and in the media, creating what you might call products which are the least to say interesting you want to know what I am talking about of course, Mr. Sheen and this raises all kinds of interesting questions about well what is going on in his mind. Now you may think what that has to do with the classical liberalism. Well it does in a way because classical liberalism provides us with a distinctive way of thinking about the human mind, the human personality, psychology in other words which leads us to view Mr. Sheen in a particular light I would suggest. The key idea here is the key idea of the autonomous and choosing person. In other words it is the key insight for psychology that comes from those basic classical liberal principles, is the idea that human beings are in some final ultimate sense autonomous.
They are in a certain very 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. In some sense therefore yourself, your person, is a kind of project which you’re engaged in throughout your life. You in a very real sense make yourself, obviously other kind of things happening right upon you but it’s the way you respond to those the things you do the choices you make according to this way of thinking that really shape the kind of the person that you are, the kind of qualities that you have of mind and character. Now, this is obviously in contrast to the whole range of other ways of thinking about psychology which implies instead the degree to which you are not a choosing creature, the degree to which your personality, the kind of mindset you have is the product of forces over which you have no control.
So, for Freud for example there a whole structures of the human mind, which you really ultimately 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. He was a very cheerful chap as you may gather. All this idea that your psychology is essentially the product of social circumstances but the kind of a person you are, the kind of mind you have, will be determined by your social background, the physical environment in which you live and other matters of that sort or again there’s a currently very modish idea but a lot of this is genetic. It comes down to the way our paleolithic ancestors lived and the kind of genetic inheritance that we all have from them and there is a whole lot of things which that will mean you can’t help yourself. So apparently this is why many people can’t stop eating a lot of sugar is because they are driven to do so by some kind of genetic and pre determination. So my contrast in classical liberal psychology there’s a focus on self definition and autonomy and therefore ultimately of personal responsibility which leads us, I think to say in the case of the well-known actor to whom I alluded earlier, we would be both rather judgmental however much we might find what he is been producing, entertaining and comical at the same time.
Now in the history of psychology there’s been a whole number of classical liberal insights as well and schools. Some of these have proved to be sure we say wrong options. In the nineteenth century there was a great classical liberal interest in pseudo science of phrenology, which is the idea that different parts of the brain correspond to different human capacities and abilities and therefore to find out what someone’s psychology was like, you had to look for the bumps on the heads which indicated that that part of the brain well-developed and you can still go to junk shops and see these little china heads with little bumps on the side, that was clearly the way to go. On the other hand in the twentieth century you have the humanistic psychology of people such as Maslow and Rollo May and others which is very much at self consciously apart of a classical liberal approach to the human mind and the human psyche. There’s also of course, a longstanding tradition within cross liberal psychology of a critique of the corrosive aspects of modern psychiatry in particular in the work of people such as Thomas Szasz, who attacks the way in which mental health and the concept of mental illness, has been used to justify, elaborate a severe restrictions on personal freedom of home range and kinds. Another discipline that is often not associated with classical liberalism is sociology.
Today, we tend to think that sociology is the quintessential socialist or social democratic discipline. It is thought of being something inherently driven that way because of its interest and concern with the collective society as a whole. Certainly its the case that amongst for example sociology majors at major universities or of the sociology professors, the number who profess or hold classical liberal ideas is very small compared to some other disciplines but in fact this is something historically contingent I would argue. Many of the major figures in the development of sociology were in fact rate classical liberal thinkers, so for example Herman Spencer, very important figure in the development of sociology as a discipline, is also one of the great classical liberal thinkers in a number of disciplines but particularly in that one. William Graham Sumner, the man who invented the concept of the folkway while he was a professor of sociology at Yale, was also of course another great ardent out because of a laissez faire and a classical liberal principles, also a great opponent of imperialism as was Spencer of the point to bring out that.
In addition by the way, I should also oughtn’t point out that there are many great sociologists historically who were conservatives in fact you can make a stronger case than anything the same as sociology historic is associated with a conservative view of society and human nature. If we think of figures like Emile Durkheim, Francis Le Play or Talcott Parsons. Now, again what you have in the classical liberal approach to sociology is a view of human society that emphasizes the human agency the way in which things happen in the world happen because of decisions made by individuals, rather than some kind of supposedly autonomous and rarified structure.
Secondly, the key insight from classical liberalism, the principal of spontaneous order, the way in which the way to understand social processes, social developments, social change is through a focus not upon design or purpose, not upon either the use of power but rather upon spontaneous sort of the way in which things change quite dramatically and suddenly because of a process that no one person really understands, intends or designs. And this kind of insight enables us to understand a whole range of social phenomena that otherwise are extremely difficult to explain. For example, take criminal behavior and the levels of crime at any given time in society. This is an area where you do get significant changes in patterns over time. In the United States for example, from about the early nineteen sixties through to the early nineteen nineties, there’s a long run in a lot of increase in the per capita rate of crime. Since the early nineties there’s 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 and things of this sort and all kinds of people like Rudy Giuliani trying to claim the kudos and credit for declining crime and in his case in New York City. In fact when you look at it from a classical liberal viewpoint or your classical liberal criminologist, that is you realize this isn’t the case because the increase before 1992 roughly in the decline since then took place regardless what the public policy was. So the conclusion you need to come to is that what you’re dealing with here is a spontaneous social process, something else which is rather mysterious, in which public policy actually had a very small part to play.
The other big insight in classical liberal sociology is a constant tension in human society between power and voluntary social relations. In other words between social relation, social orders and structures which are based ultimately upon top down power, upon one party having the ability ultimately to coerce the other party so they can tell them what to do and they have to do it! On the other hand relations based upon free exchange voluntary agreement and voluntary private cooperation. This for example is a major feature in a work of recent classical liberal sociologist Stanislaw Andreski and he takes up the old Herbert Spencer idea of the military organization society, the society based upon the power and hierarchy as compared to the industrial organizational society, the society based upon the voluntary cooperation and exchange. 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, for example, have developed or worked as well as all economists institutions like that such as marriage and childhood.
Political theory is the other discipline, along with economics, which is most associated with classical liberalism. If you think about the history of physical philosophy, there are a whole number of important figures who are generally seen as being the part of the kind of genealogy or life story of classical liberalism, as far back, for example, as John Locke followed by other people in the eighteenth century, people like Adam Smith, maybe Montisque, Jeremy Bentham and then this nineteenth century people like John Stuart Mill, then in twentieth century Fredrick Hayek in his later career and number of other important things of that kind. And certainly this is an area where, you might say, the classical liberal tradition is still very much alive and well. So, what though are the key classical liberal insights of arguments in this area? It’s essentially for the view of politics which have the following big features: the first is that the goal of politics is human well-being, the aim of political arrangements, the aim of the forms of government; the aim of politics is a process to maximize human well-being and to minimize things which harm human well-being, above all to minimize conflict of various kinds, violent strife and the result of our settling differences or of achieving status or wealth.
Now, you might say but surely everyone wants that, is not that what everyone thinks, well no, historically to the degree that this is what many people think is because of intellectual victories gained by liberals in previous times. many people historically, has felt that the goal of life is for the individual to serve some kind of collective good he or to serve God, that the goal of politics is to promote glory or power or the spreading of the true faith. A whole range of other goals like this which has nothing to do necessarily and maybe actively hostile to the goal of human well-being and so that’s a very important to profound insight that this is what politics should really be about. The second crucial insight is the idea of individualism, the idea that human society derives its drive, its 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 is delegated or handed over to them temporary basis by the individuals hope of whom societies composed. So rulers, presidents, kings, people of that sort do not have any power of their own much less power derive from god or anything like that they only have what power that is given to them by the people of whom they exercise the power and of course the criteria that is that it can be withdrawn at any time.
So there is a classical liberal theory if you like a revolution I’m going back to Locke that develops by all the other type of thinkers who I mentioned. The third great insight is that because of this therefore the role of power in society and hence of government needs to be very strictly limited and guided. What classical liberal thinkers right from the eighteenth century almost are aware of, much more than the people of other traditions, is the enormous dangers of the political power the degree to which the political power while it may be necessary is incredibly dangerous and couldn’t do an enormous amount of harm to both people and to the onward development of the society. The classic example of this is the insight of the political scientist R. J. Rummel that in the course of the twentieth century you will more twice more likely to be killed by your own government then you will by somebody else’s government. When you add up all the people 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 are Russian for example you were twice as long as we killed by a Stalin as you will be killed by Hitler and his agents. And that kind of principle shows just how dangerous political power is.
Of course there are many other things classical liberals have argued about. What kind of government there should be, the mechanism you should have, the kind of function policies it should have in everyday life but those I would say are the key and crucial insights and they’re ones still to generate extremely rich kind of research agenda which is very much longer project. What I hoped you will gather from this is that it doesn’t really matter what intellectual discipline you’re talking about, the fundamental insights of the classical liberalism, the way of thinking about human life ,human society in the world they embody, will lead you to approach that subject to the distinctive way, to ask specific questions to be concerned with particular topics and subjects, to think about the discipline and the subject, in other words, in a distinctive way one that will explain what liberty is? Why liberty matters? Why the world in which liberty is greater is a better world than the one in which it is restrained? And in doing so and increasing our understanding in that discipline, to make it more likely, that we know what to do and what to do in order to promote liberty in the world in which we live.