The History of Classical Liberalism – Learn Liberty
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The History of Classical Liberalism – Learn Liberty

November 23, 2019

If you ask most people what classical liberalism
is, then theyíll say, itís essentially free-market economics. Itís all about low taxes, laissez
faire, reducing the government intervention in the economy. But in fact, thatís a rather
impoverished and narrow idea of what classical liberalism is. Itís 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 250 years or so. And what Iím
going to do is explain what those are. Now, the key basic insights, the basic ideas,
were first developed in the late 18th and early 19th century. At that time, they werenít
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
have all become very distinct and very different, as we will see. In some ways, thereís 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 thatís 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 wellbeing. You may say, well, thatís 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, 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
canít have them; thatís 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 thought this. Thereís
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. 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 a 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,
itís 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
in a positive sense, of more of what is good, or in a negative, but still 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 itís a key liberal insight. Finally, thereís 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 nature
of the world is, how human society works, the way to do this is not to rely on a 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 ideas of classical liberalism necessarily mean both an interest in history and a particular
way of thinking about the past, which poses distinctive questions. In 2016, weíre going
to have 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. Why is that important? Well for a classical
liberal, as weíll see, itís an enormously 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 think that freedom is the most important aspect
of human life and essential for human flourishing then when you look at the past, what you ought
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, the kinds of things that are inimical to it, that tend to destroy it. Itís also a view of history, in 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 and exercise 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, the cultural products that make life more rich and fulfilling.
And particularly important are the inventors and entrepreneurs. I mentioned a moment ago
the event in 1956, when the first container ship sailed. Why was that so important? Well
because it reduced the cost of shipping goods around the world by a factor of 30. Suddenly,
it cost 1/30 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 ever been tied together before. And the result was a huge increase
in human wellbeing and prosperity and in 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. 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 the modern world is the best
world ever to have been born in. If you had been born in any other 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 by the time you reach the age of 20 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-ranked
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 in
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 itís still the central one because of the importance of physical
wellbeing, comforts, and wealth in human flourishing and in human life. However, itís not the
only one. Also itís 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 is 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 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, 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 other
people value. Itís all about, essentially, people maximizing their own life plans their
own individual flourishing and finding out also through the discovery process, based
on the choices they make, what it is that they want to be, what it is that they want
to do, what is best for them, what will, in fact, maximize their own happiness. Now, this
is, in fact, undoubtedly an ethically uplifting goal. One of the key classical liberal insights
in economics is that economics is in fact about activities, goals, ways of behaving
that are ethically virtuous. The view of many opponents is that economics
is entirely about sordid money grubbing, thatit is entirely about base crass materialism.
The rejoineder is to say, it is about money, it is about materialism, but this is good.
For example thereís the insight that a successful and functioning economy is one which 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. Itís not something that you should be deploring or regarding as being
somehow morally disreputable. So when originally economics developed in
the late 18th and 19th century, it was a reaction against the hostility to trade and commerce
and luxury, as it was called at the time, affluence as 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 kinds of taxes on ways of behaving, products, and things that people consume, on the grounds
that they are, in the views of some people, bad for us. Apparently, you should be paying
a huge amount of tax on fast foods because thatís bad for you, no matter how much pleasure
it might bring you. There is somebody out there, somebody amongst
the elite, someone like Cass Sunstein, who knows what is better for you than you do yourself.
And this kind of idea is in fact a throwback to the ideas that were attacked by the early
classical liberal economists. What this 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, youíre 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 have 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 that, 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
nonmarket 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 us 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 all know who 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 has that
got to do with 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. Sheenís antics in a particular
light, I would suggest. The key idea here is the idea of the autonomous and choosing
person. In other words, 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 youíre engaged
in throughout your life. You, in a very real sense, make yourself. Obviously, other kinds
of things have an impact upon you, but itís the way you respond to those, the things you
do, the choices you makeóaccording to this way of thinkingóthat 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 a 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 are a whole series of structures of the human mind which you really ultimately
canít control. In fact you have to repress them because thatís 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 is the idea that your psychology
is essentially the product of social circumstances, that the kind of a person you are, the kind
of mind that you have, will be determined by your social background, the physical environment
in which you live, and other matters of that sort. Or again, this is a currently a very
modish idea, that 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 thereís a
whole lot of things which, therefore mean you just canít help yourself. So apparently
this is why many people canít stop eating lots of sugar. Itís because they are driven
to do so by some kind of genetic predetermination. So by contrast, in classical liberal psychology,
thereís 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 heís been
producing entertaining and comical at the same time. Now in the history of psychology thereís
been a whole number of classical liberal insights, if you will, and schools. Some of these have
proved to be, shall we say, wrong options. In the 19th century, there was a great classical
liberal interest in the 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 someoneís psychology was like, you had to look for bumps on the head,
which indicated that that part of the brain was 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
not the way to go. On the other hand, in the 20th century you
have the humanistic psychology of people, such as Maslow and Rollo May and others, which
is very much self-consciously a part of a classical liberal approach to the human mind
and the human psyche. Thereís also, of course, a longstanding tradition within classical
liberal psychology of a critique of the coercive 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 and severe restrictions
on personal freedom of a whole range of kinds. Another discipline thatís often not associated
with classical liberalism is sociology. Today, we tend to think that sociology is the quintessential
socialist or social democratic discipline. Itís thought of as being something inherently
driven that way because of its interest in and concern with the collective society as
a whole. Certainly itís the case that amongst, for example, sociology majors at major universities
or among sociology professors, the number who profess or hold classical liberal ideas
is very, 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 great classical liberal thinkers. So for example, Herbert 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 advocate
of a laissez faire and of classical liberal principles, also a great opponent of imperialism,
as was Spencer, another point to bring outthere. In addition, by the way, I should also point
out that there are many great sociologists historically who were conservatives. In fact,
you can make a strong case, if anything, to say that sociology historically is associated
with a conservative view of society and human nature, if we think of figures like Emile
Durkheim, Frances 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 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, in many ways, 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 order, 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 1960s through to the early 1990s, thereís a long-run ineluctable
increase in the per-capita rate of crime. Since the early í90s, thereís 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 the sort. And all kinds of people, like Rudy Giuliani, trying
to claim the kudos and credit for the declining crime, in his case, in New York City. In fact,
when you look at it from a classical liberal viewpoint, if youíre a classical liberal
criminologist that is, you realize this isnít the case, because the increase before 1992
roughly and the decline since then took place regardless what the public policy was. So
the conclusion you need to come to is that what youíre 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 the constant tension in human society between power and voluntary social
relations. In other words, between social relations, 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 that they can tell them what to do and they have to do it,
and 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 Stanislav Andreski, and he takes up the old Herbert Spencer idea of
the military organization of society, the society based upon power and hierarchy, as
compared to the industrial organization of society, the society based upon 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 other kinds of institutions
related to that, such as marriage and childhood. Political theory is the other discipline,
along with economics, that 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 18th
century, people like Adam Smith, maybe Montesquieu, Jeremy Bentham, and then into the 19th century,
people like John Stuart Mill, then in the 20th century, Friedrich Hayek in his later
career, a number of other important thinkers 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 or arguments in this area? Itís to argue essentially for a view of politics
which has the following big features: 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 things which harm
human wellbeing, above all to minimize conflict of various kinds, violence, strife, and the
resort to violence as a way of settling differences or of achieving status or wealth. Now, you might say, but surely everyone wants
that, isnít that what everyone thinks? Well, no, historically, to the degree that this
is what many people think itís because of intellectual victories gained by liberals
in previous times. Many people historically, have thought that the goal of life is for
the individual to serve some kind of collective good 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 may be actively hostile to the goal of
human wellbeing. And so thatís a very important and 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 has been delegated or handed over to them on a temporary basis
by the individuals of whom society is composed. So rulers, presidents, kings, people of that
sort do not have any kind of power of their own, much less power derived from God or anything
like that. They only have what power is 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. So there is a classical liberal theory, if
you like, of revolution, going right back to Locke, but developed and articulated by
all the other kinds of thinkers who I mentioned. And 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 guarded. What classical liberal thinkers right from the 18th century
onwards have been very aware of, much more than people of other traditions, is the enormous
dangers of political power, the degree to which political power, while it may be necessary,
is incredibly dangerous and could 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 20th century you were
twice more likely to be killed by your own government then you were by somebody elseís
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. Of course there are many other things classical
liberals have argued about. Theyíve argued about what kind of government there should
be, the mechanisms that you should have, the kind of function policies should have in everyday
life. But those, I would say, are the key and crucial insights. And theyíre the ones
that still generate an extremely rich kind of research agenda, which is very much an
on-going project. What I hoped you will have gathered from this
is that it doesnít really matter what intellectual discipline youíre talking about, 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, 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 a world in which liberty is greater is
a better world than one in which it is restrained. And in doing so, in increasing our understanding
in that discipline to make it more likely that we will know what to do and what not
to do in order to promote liberty in the world in which we live.

Only registered users can comment.

  1. Yet the alternative typically offered is either the outright government seizure of all property (as in communism) or else the complete seizure of all functions of management viz a viz all corporations (as in fascism). One way or another, the solution is absolute government monopolization of the economy. We saw how well that worked in Nazi Germany and in the USSR. To denounce classical liberalism as and old 19th century idea is to embrace 17th century mercantilism.

  2. Funny, I don't hear you denouncing the Copernican heliocentric model of astronomy as a 15th century ideology that is simply not applicable in the 21st century, or the Newtonian law of gravity as an antiquated 17th century notion. Truth is eternal, and not contingent upon historical context. To dispute this is to fall into the error of the extinct German Historical School, now a century dead.

  3. ". . . while the government is an ally of the individual."

    Where did you get that silly idea? Surely not from the government's renege upon habeas corpus, the right to a trial, the right to privacy, the right to sovereignty over one's body, etc. Not to mention the fact that government meddling in the markets contributes to the formation of these transnational corporate monopolies and their survival through corporate socialism.

  4. That one corporation being the government, which has no ties to the ebb and flow of consumer demand. The most common example being too many public employees in one sector, too few in another, and then some who are completely superfluous because their status as an employee is nearly fully removed from their usefulness.

  5. Banks did make loans to people they were aware had a high likelihood of not being payed back, but they were required (by a law passed under Clinton) to have portfolios where a certain percentage of loans were given to people of lower-class or impoverished incomes. Clinton also passed a law which gave people the ability to put no money down on a loan. When they had nothing to lose, this made people more likely to take out loans they were aware they might not be able to pay back – go figure.

  6. Monopolies are almost impossible to achieve without the government's help. The government is a friend to corporations. The only difference between the parties is which companies they help when they are in power.

  7. Political power is not just dangerous to freedom, it is the exact opposite.
    The more political power there is, the less freedom. That is an axiom, like 2+2=4.

  8. it seemed like he was just trying to use revisionist theories to turn classical liberalism into an argument for socialism

  9. Dr. Davies seems to credit classical liberalism, as opposed to public policy, for the unprecedented decline in crime during the 1990s. In the documentary Freakonomics, the decline in crime is demonstrated to be an unintended consequence of Roe v. Wade about 20 years prior. Fewer unwanted pregnancies mean fewer unwanted children to grow up to commit crime. Public policy then, as opposed to the invisible hand of classical liberalism, is shown to be the main contributer to the reduction in crime.

  10. the only monopolies that are possible without government intervention are creative monopolies like Google, Apple  in the 2000's or Microsoft in the 90's. 

    Peter Thiel who is a Libertarian introduces the idea of a pure kind of monopoly in his amazing book Zero to One , a "creative monopoly" which ultimately benefits the public through its innovation instead of relying on government help or illegal bullying. In fact he goes so far as to argue that capitalism and competition are opposites, so if you're an entrepreneur you should always aspire to some sort of monopoly, to make something so unique and valuable that it ends up having little to no competition, I happen to think this would not only be great for someone who wants to become wealthy but also of great benefit to society as we'd create much more wealth and prosperity

  11. @20:00 Many sociologists are libertarians. Some professors I've met say their entire department is libertarian("classical liberal") in the USA.

  12. There is a difference between liberty of the individual and liberty of a corporation. Between liberty of a small business and a multi national business. The speech fails to take in to account that freedom cant be limitless. Because the freedom of one limits the freedom of the other.

  13. I think that we need to scale down. The huge societies that we have built (that suffer from the innate demographic problems that stem from overpopulation), are based on old concepts of work (which at that time was ample because poor technology and the need to build infrastructure). We don't need as many people now. Work is thinking work, not manual labor where many hands are needed.

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