Liberalism
politics
Overview
Political and economic doctrine that emphasizes the rights and freedoms
of the individual and the need to limit the powers of government.
Liberalism originated as a defensive reaction to the horrors of the
European wars of religion of the 16th century (see Thirty Years’ War).
Its basic ideas were given formal expression in works by Thomas Hobbes
and John Locke, both of whom argued that the power of the sovereign is
ultimately justified by the consent of the governed, given in a
hypothetical social contract rather than by divine right (see divine
kingship). In the economic realm, liberals in the 19th century urged the
end of state interference in the economic life of society. Following
Adam Smith, they argued that economic systems based on free markets are
more efficient and generate more prosperity than those that are partly
state-controlled. In response to the great inequalities of wealth and
other social problems created by the Industrial Revolution in Europe and
North America, liberals in the late 19th and early 20th centuries
advocated limited state intervention in the market and the creation of
state-funded social services, such as free public education and health
insurance. In the U.S. the New Deal program undertaken by Pres. Franklin
D. Roosevelt typified modern liberalism in its vast expansion of the
scope of governmental activities and its increased regulation of
business. After World War II a further expansion of social welfare
programs occurred in Britain, Scandinavia, and the U.S. Economic
stagnation beginning in the late 1970s led to a revival of classical
liberal positions favouring free markets, especially among political
conservatives in Britain and the U.S. Contemporary liberalism remains
committed to social reform, including reducing inequality and expanding
individual rights. See also conservatism; individualism.
Main
political doctrine that takes protecting and enhancing the freedom
of the individual to be the central problem of politics. Liberals
typically believe that government is necessary to protect individuals
from being harmed by others; but they also recognize that government
itself can pose a threat to liberty. As the revolutionary American
pamphleteer Thomas Paine expressed it in Common Sense (1776), government
is at best “a necessary evil.” Laws, judges, and police are needed to
secure the individual’s life and liberty, but their coercive power may
also be turned against him. The problem, then, is to devise a system
that gives government the power necessary to protect individual liberty
but also prevents those who govern from abusing that power.
The problem is compounded when one asks whether this is all that
government can or should do on behalf of individual freedom. Some
liberals—the so-called neoclassical liberals, or libertarians—answer
that it is. Since the late 19th century, however, most liberals have
insisted that the powers of government can promote as well as protect
the freedom of the individual. According to modern liberalism, the chief
task of government is to remove obstacles that prevent individuals from
living freely or from fully realizing their potential. Such obstacles
include poverty, disease, discrimination, and ignorance. The
disagreement among liberals over whether government should promote
individual freedom rather than merely protect it is reflected to some
extent in the different prevailing conceptions of liberalism in the
United States and Europe since the late 20th century. In the United
States liberalism is associated with the welfare-state policies of the
New Deal program of the Democratic administration of Pres. Franklin D.
Roosevelt, whereas in Europe it is more commonly associated with a
commitment to limited government and laissez-faire economic policies
(see below Contemporary liberalism).
This article discusses the political foundations and history of
liberalism from the 17th century to the present. For coverage of
classical and contemporary philosophical liberalism, see political
philosophy. For biographies of individual philosophers, see John Locke;
John Stuart Mill; John Rawls.
General characteristics
Liberalism is derived from two related features of Western
culture. The first is the West’s preoccupation with individuality, as
compared to the emphasis in other civilizations on status, caste, and
tradition. Throughout much of history, the individual has been submerged
in and subordinate to his clan, tribe, ethnic group, or kingdom.
Liberalism is the culmination of developments in Western society that
produced a sense of the importance of human individuality, a liberation
of the individual from complete subservience to the group, and a
relaxation of the tight hold of custom, law, and authority. In this
respect, liberalism stands for the emancipation of the individual. See
also individualism.
Liberalism also derives from the practice of adversariality in
European political and economic life, a process in which
institutionalized competition—such as the competition between different
political parties in electoral contests, between prosecution and defense
in adversary procedure, or between different producers in a market
economy (see monopoly and competition)—generates a dynamic social order.
Adversarial systems have always been precarious, however, and it took a
long time for the belief in adversariality to emerge from the more
traditional view, traceable at least to Plato, that the state should be
an organic structure, like a beehive, in which the different social
classes cooperate by performing distinct yet complementary roles. The
belief that competition is an essential part of a political system and
that good government requires a vigorous opposition was still considered
strange in most European countries in the early 19th century.
Underlying the liberal belief in adversariality is the conviction
that human beings are essentially rational creatures capable of settling
their political disputes through dialogue and compromise. This aspect of
liberalism became particularly prominent in 20th-century projects aimed
at eliminating war and resolving disagreements between states through
organizations such as the League of Nations, the United Nations, and the
International Court of Justice (World Court).
Liberalism has a close but sometimes uneasy relationship with
democracy. At the centre of democratic doctrine is the belief that
governments derive their authority from popular election; liberalism, on
the other hand, is primarily concerned with the scope of governmental
activity. Liberals often have been wary of democracy, then, because of
fears that it might generate a tyranny by the majority. One might
briskly say, therefore, that democracy looks after majorities and
liberalism after unpopular minorities.
Like other political doctrines, liberalism is highly sensitive to
time and circumstance. Each country’s liberalism is different, and it
changes in each generation. The historical development of liberalism
over recent centuries has been a movement from mistrust of the state’s
power on the ground that it tends to be misused, to a willingness to use
the power of government to correct perceived inequities in the
distribution of wealth resulting from economic competition—inequities
that purportedly deprive some people of an equal opportunity to live
freely. The expansion of governmental power and responsibility sought by
liberals in the 20th century was clearly opposed to the contraction of
government advocated by liberals a century earlier. In the 19th century
liberals generally formed the party of business and the entrepreneurial
middle class; for much of the 20th century they were more likely to work
to restrict and regulate business in order to provide greater
opportunities for labourers and consumers. In each case, however, the
liberals’ inspiration was the same: a hostility to concentrations of
power that threaten the freedom of the individual and prevent him from
realizing his full potential, along with a willingness to reexamine and
reform social institutions in the light of new needs. This willingness
is tempered by an aversion to sudden, cataclysmic change, which is what
sets off the liberal from the radical. It is this very eagerness to
welcome and encourage useful change, however, that distinguishes the
liberal from the conservative, who believes that change is at least as
likely to result in loss as in gain.
Classical liberalism » Political foundations
Although liberal ideas were not noticeable in European politics
until the early 16th century, liberalism has a considerable “prehistory”
reaching back to the Middle Ages and even earlier. In the Middle Ages
the rights and responsibilities of the individual were determined by his
place in a hierarchical social system that placed great stress upon
acquiescence and conformity. Under the impact of the slow
commercialization and urbanization of Europe in the later Middle Ages,
the intellectual ferment of the Renaissance, and the spread of
Protestantism in the 16th century, the old feudal stratification of
society gradually began to dissolve, leading to a fear of instability so
powerful that monarchical absolutism was viewed as the only remedy to
civil dissension. By the end of the 16th century, the authority of the
papacy had been broken in most of northern Europe, and each ruler tried
to consolidate the unity of his realm by enforcing conformity either to
Roman Catholicism or to the ruler’s preferred version of Protestantism.
These efforts culminated in the Thirty Years’ War (1618–48), which did
immense damage to much of Europe. Where no creed succeeded in wholly
extirpating its enemies, toleration was gradually accepted as the lesser
of two evils; in some countries where one creed triumphed, it was
accepted that too minute a concern with citizens’ beliefs was inimical
to prosperity and good order.
The ambitions of national rulers and the requirements of expanding
industry and commerce led gradually to the adoption of economic policies
based on mercantilism, a school of thought that advocated government
intervention in a country’s economy to increase state wealth and power.
However, as such intervention increasingly served established interests
and inhibited enterprise, it was challenged by members of the newly
emerging middle class. This challenge was a significant factor in the
great revolutions that rocked England and France in the 17th and 18th
centuries—most notably the English Civil Wars (1642–51), the Glorious
Revolution (1688), the American Revolution (1775–83), and the French
Revolution (1789). Classical liberalism as an articulated creed is a
result of those great collisions.
In the English Civil Wars, the absolutist king Charles I was defeated
by the forces of Parliament and eventually executed. The Glorious
Revolution resulted in the abdication and exile of James II and the
establishment of a complex form of balanced government in which power
was divided between the king, his ministers, and Parliament. In time
this system would become a model for liberal political movements in
other countries. The political ideas that helped to inspire these
revolts were given formal expression in the work of the English
philosophers Thomas Hobbes and John Locke. In Leviathan (1651), Hobbes
argued that the absolute power of the sovereign was ultimately justified
by the consent of the governed, who agreed, in a hypothetical social
contract, to obey the sovereign in all matters in exchange for a
guarantee of peace and security. Locke also held a social-contract
theory of government, but he maintained that the parties to the contract
could not reasonably place themselves under the absolute power of a
ruler. Absolute rule, he argued, is at odds with the point and
justification of political authority, which is that it is necessary to
protect the person and property of individuals and to guarantee their
natural rights to freedom of thought, speech, and worship.
Significantly, Locke thought that revolution is justified when the
sovereign fails to fulfill these obligations. Indeed, it appears that he
began writing his major work of political theory, Two Treatises of
Government (1690), precisely in order to justify the revolution of two
years before.
By the time Locke had published his Treatises, politics in England
had become a contest between two loosely related parties, the Whigs and
the Tories. These parties were the ancestors of Britain’s modern Liberal
Party and Conservative Party, respectively. Locke was a notable Whig,
and it is conventional to view liberalism as derived from the attitudes
of Whig aristocrats, who were often linked with commercial interests and
who had an entrenched suspicion of the power of the monarchy. The Whigs
dominated English politics from the death of Queen Anne in 1714 to the
accession of King George III in 1760.
Classical liberalism » Liberalism and democracy
The early liberals, then, worked to free individuals from two
forms of social constraint—religious conformity and aristocratic
privilege—that had been maintained and enforced through the powers of
government. The aim of the early liberals was thus to limit the power of
government over the individual while holding it accountable to the
governed. As Locke and others argued, this required a system of
government based on majority rule—that is, one in which government
executes the expressed will of a majority of the electorate. The chief
institutional device for attaining this goal was the periodic election
of legislators by popular vote and of a chief executive by popular vote
or the vote of a legislative assembly.
But in answering the crucial question of who is to be the electorate,
classical liberalism fell victim to ambivalence, torn between the great
emancipating tendencies generated by the revolutions with which it was
associated and middle-class fears that a wide or universal franchise
would undermine private property. Benjamin Franklin spoke for the Whig
liberalism of the Founding Fathers of the United States when he stated:
As to those who have no landed property in a county, the allowing
them to vote for legislators is an impropriety. They are transient
inhabitants, and not so connected with the welfare of the state, which
they may quit when they please, as to qualify them properly for such
privilege.
John Adams, in his Defense of the Constitutions of Government of the
United States of America (1787), was more explicit. If the majority were
to control all branches of government, he declared, “debts would be
abolished first; taxes laid heavy on the rich, and not at all on others;
and at last a downright equal division of everything be demanded and
voted.” French statesmen such as François Guizot and Adophe Thiers
expressed similar sentiments well into the 19th century.
Most 18th- and 19th-century liberal politicians thus feared popular
sovereignty; for a long time, consequently, they limited suffrage to
property owners. In Britain even the important Reform Bill of 1867 did
not completely abolish property qualifications for the right to vote. In
France, despite the ideal of universal male suffrage proclaimed in 1789
and reaffirmed in the Revolutions of 1830, there were no more than
200,000 qualified voters in a population of about 30,000,000 during the
reign of Louis-Philippe, the “citizen king” who had been installed by
the ascendant bourgeoisie in 1830. In the United States, the brave
language of the Declaration of Independence notwithstanding, it was not
until 1860 that universal male suffrage prevailed—for whites. In most of
Europe, universal male suffrage remained a remote ideal until late in
the 19th century. Racial and sexual prejudice also served to limit the
franchise—and, in the case of slavery in the United States, to deprive
large numbers of people of virtually any hope of freedom. Efforts to
extend the vote to women met with little success until the early years
of the 20th century (see woman suffrage). Indeed, Switzerland, which is
sometimes called the world’s oldest continuous democracy, did not grant
full voting rights to women until 1971.
Despite the misgivings of men of the propertied classes, a slow but
steady expansion of the franchise prevailed throughout Europe in the
19th century—an expansion driven in large part by the liberal insistence
that “all men are created equal.” But liberals also had to reconcile the
principle of majority rule with the requirement that the power of the
majority be limited. The problem was to accomplish this in a manner
consistent with democratic principles. If hereditary elites were
discredited, how could the power of the majority be checked without
giving disproportionate power to property owners or to some other
“natural” elite?
Classical liberalism » Liberalism and democracy »
Separation of powers
The liberal solution to the problem of limiting the powers of a
democratic majority employed various devices. The first was the
separation of powers—i.e., the distribution of power between such
functionally differentiated agencies of government as the legislature,
the executive, and the judiciary. This arrangement, and the system of
checks and balances by which it was accomplished, received its classic
embodiment in the Constitution of the United States and its political
justification in the Federalist papers (1787–88), by Alexander Hamilton,
James Madison, and John Jay. Of course, such a separation of powers also
could have been achieved through a “mixed constitution”—that is, one in
which power is shared by, and governing functions appropriately
differentiated between, a monarch, a hereditary chamber, and an elected
assembly; this was in fact the system of government in Great Britain at
the time of the American Revolution. The U.S. Constitution also contains
elements of a mixed constitution, such as the division of the
legislature into the popularly elected House of Representatives and the
“aristocratic” Senate, the members of which originally were chosen by
the state governments. But it was despotic kings and functionless
aristocrats—more functionless in France than in Britain—who thwarted the
interests and ambitions of the middle class, which turned, therefore, to
the principle of majoritarianism.
Classical liberalism » Liberalism and democracy »
Periodic elections
The second part of the solution lay in using staggered periodic
elections to make the decisions of any given majority subject to the
concurrence of other majorities distributed over time. In the United
States, for example, presidents are elected every four years and members
of the House of Representatives every two years, and one-third of the
Senate is elected every two years to terms of six years. Therefore, the
majority that elects a president every four years or a House of
Representatives every two years is different from the majority that
elects one-third of the Senate two years earlier and the majority that
elects another one-third of the Senate two years later. These bodies, in
turn, are “checked” by the Constitution, which was approved and amended
by earlier majorities. In Britain an act of Parliament immediately
becomes part of the uncodified constitution; however, before acting on a
highly controversial issue, Parliament must seek a popular mandate,
which represents a majority other than the one that elected it. Thus, in
a constitutional democracy, the power of a current majority is checked
by the verdicts of majorities that precede and follow it.
Classical liberalism » Liberalism and democracy » Rights
The third part of the solution followed from liberalism’s basic
commitment to the freedom and integrity of the individual, which the
limitation of power is, after all, meant to preserve. From the liberal
perspective, the individual is not only a citizen who shares a social
contract with his fellows but also a person with rights upon which the
state may not encroach if majoritarianism is to be meaningful. A
majority verdict can come about only if individuals are free to some
extent to exchange their views. This involves, beyond the right to speak
and write freely, the freedom to associate and organize and, above all,
freedom from fear of reprisal. But the individual also has rights apart
from his role as citizen. These rights secure his personal safety and
hence his protection from arbitrary arrest and punishment. Beyond these
rights are those that preserve large areas of privacy. In a liberal
democracy there are affairs that do not concern the state. Such affairs
may range from the practice of religion to the creation of art and the
raising of children by their parents. For liberals of the 18th and 19th
centuries they also included most of the activities through which
individuals engage in production and trade. Eloquent declarations
affirming such rights were embodied in the British Bill of Rights
(1689), the U.S. Declaration of Independence (1776) and Constitution
(ratified 1788), the French Declaration of the Rights of Man and of the
Citizen (1789), and the basic documents of countries throughout the
world that later used these declarations as their models. These
documents and declarations asserted that freedom is more than the right
to cast a vote in an occasional election; it is the fundamental right of
people to live their own lives.
Classical liberalism » Economic foundations
If the political foundations of liberalism were laid in Great
Britain, so too were its economic foundations. By the 18th century
parliamentary constraints were making it difficult for British monarchs
to pursue the schemes of national aggrandizement favoured by most rulers
on the Continent. These rulers fought for military supremacy, which
required a strong economic base. Because the prevailing mercantilist
theory understood international trade as a zero-sum game—in which gain
for one country meant loss for another—national governments intervened
to determine prices, protect their industries from foreign competition,
and avoid the sharing of economic information.
These practices soon came under liberal challenge. In France a group
of thinkers known as the physiocrats argued that the best way to
cultivate wealth is to allow unrestrained economic competition. Their
advice to government was “laissez faire, laissez passer” (“let it be,
leave it alone”). This laissez-faire doctrine found its most thorough
and influential exposition in The Wealth of Nations (1776), by the
Scottish economist and philosopher Adam Smith. Free trade benefits all
parties, according to Smith, because competition leads to the production
of more and better goods at lower prices. Leaving individuals free to
pursue their self-interest in an exchange economy based upon a division
of labour will necessarily enhance the welfare of the group as a whole.
The self-seeking individual becomes harnessed to the public good because
in an exchange economy he must serve others in order to serve himself.
But it is only in a genuinely free market that this positive consequence
is possible; any other arrangement, whether state control or monopoly,
must lead to regimentation, exploitation, and economic stagnation.
Every economic system must determine not only what goods will be
produced but also how those goods are to be apportioned, or distributed
(see distribution of wealth and income). In a market economy both of
these tasks are accomplished through the price mechanism. The
theoretically free choices of individual buyers and sellers determine
how the resources of society—labour, goods, and capital—shall be
employed. These choices manifest themselves in bids and offers that
together determine a commodity’s price. Theoretically, when the demand
for a commodity is great, prices rise, making it profitable for
producers to increase the supply; as supply approximates demand, prices
tend to fall until producers divert productive resources to other uses
(see supply and demand). In this way the system achieves the closest
possible match between what is desired and what is produced. Moreover,
in the distribution of the wealth thereby produced, the system is said
to assure a reward in proportion to merit. The assumption is that in a
freely competitive economy in which no one is barred from engaging in
economic activity, the income received from such activity is a fair
measure of its value to society.
Presupposed in the foregoing account is a conception of human beings
as economic animals rationally and self-interestedly engaged in
minimizing costs and maximizing gains. Since each person knows his own
interests better than anyone else does, his interests could only be
hindered, and never enhanced, by government interference in his economic
activities.
In concrete terms, classical liberal economists called for several
major changes in the sphere of British and European economic
organization. The first was the abolition of numerous feudal and
mercantilist restrictions on countries’ manufacturing and internal
commerce. The second was an end to the tariffs and restrictions that
governments imposed on foreign imports to protect domestic producers. In
rejecting the government’s regulation of trade, classical economics was
based firmly on a belief in the superiority of a self-regulating market.
Quite apart from the cogency of their arguments, the views of Smith and
his 19th-century English successors, the economist David Ricardo and the
philosopher and economist John Stuart Mill, became increasingly
convincing as Britain’s Industrial Revolution generated enormous new
wealth and made that country into the “workshop of the world.” Free
trade, it seemed, would make everyone prosperous.
In economic life as in politics, then, the guiding principle of
classical liberalism became an undeviating insistence on limiting the
power of government. The English philosopher Jeremy Bentham cogently
summarized this view in his sole advice to the state: “Be quiet.” Others
asserted that that government is best that governs least. Classical
liberals freely acknowledged that government must provide education,
sanitation, law enforcement, a postal system, and other public services
that were beyond the capacity of any private agency. But liberals
generally believed that, apart from these functions, government must not
try to do for the individual what he is able to do for himself.
Classical liberalism » Liberalism and utilitarianism
In the late 18th and early 19th centuries, Bentham, the
philosopher James Mill, and James’s son John Stuart Mill applied
classical economic principles to the political sphere. Invoking the
doctrine of utilitarianism—the belief that something has value when it
is useful or promotes happiness—they argued that the object of all
legislation should be “the greatest happiness of the greatest number.”
In evaluating what kind of government could best attain this objective,
the utilitarians generally supported representative democracy, asserting
that it was the best means by which government could promote the
interests of the governed. Taking their cue from the notion of a market
economy, the utilitarians called for a political system that would
guarantee its citizens the maximum degree of individual freedom of
choice and action consistent with efficient government and the
preservation of social harmony. They advocated expanded education,
enlarged suffrage, and periodic elections to ensure government’s
accountability to the governed. Although they had no use for the idea of
natural rights, their defense of individual liberties—including the
rights to freedom of religion, freedom of speech, freedom of the press,
and freedom of assembly—lies at the heart of modern democracy. These
liberties received their classic advocacy in John Stuart Mill’s On
Liberty (1859), which argues on utilitarian grounds that the state may
regulate individual behaviour only in cases where the interests of
others would be perceptibly harmed.
The utilitarians thus succeeded in broadening the philosophical
foundations of political liberalism while also providing a program of
specific reformist goals for liberals to pursue. Their overall political
philosophy was perhaps best stated in James Mill’s article Government,
which was written for the supplement (1815–24) to the fourth through
sixth editions of the Encyclopædia Britannica.
Liberalism in the 19th century
As an ideology and in practice liberalism became the preeminent
reform movement in Europe during the 19th century. Its fortunes,
however, varied with the historical conditions in each country—the
strength of the crown, the élan of the aristocracy, the pace of
industrialization, and the circumstances of national unification. The
national character of a liberal movement could even be affected by
religion. Liberalism in Roman Catholic countries such as France, Italy,
and Spain, for example, tended to acquire anticlerical overtones, and
liberals in those countries tended to favour legislation restricting the
civil authority and political power of the Catholic clergy.
In Great Britain the Whigs had evolved by the mid-19th century into
the Liberal Party, whose reformist programs became the model for liberal
political parties throughout Europe. Liberals propelled the long
campaign that abolished Britain’s slave trade in 1807 and slavery itself
throughout the British dominions in 1833. The liberal project of
broadening the franchise in Britain bore fruit in the Reform Bills of
1832, 1867, and 1884–85. The sweeping reforms achieved by Liberal Party
governments led by William Gladstone for 14 years between 1868 and 1894
marked the apex of British liberalism.
Liberalism in Continental Europe often lacked the fortuitous
combination of broad popular support and a powerful liberal party that
it had in Britain. In France the Revolutionary and Napoleonic
governments pursued liberal goals in their abolition of feudal
privileges and their modernization of the decrepit institutions
inherited from the ancien régime. After the Bourbon Restoration in 1815,
however, French liberals were faced with the decades-long task of
securing constitutional liberties and enlarging popular participation in
government under a reestablished monarchy, goals not substantially
achieved until the formation of the Third Republic in 1871.
Throughout Europe and in the Western Hemisphere, liberalism inspired
nationalistic aspirations to the creation of unified, independent,
constitutional states with their own parliaments and the rule of law.
The most dramatic exponents of this liberal assault against
authoritarian rule were the Founding Fathers of the United States, the
statesman and revolutionary Simón Bolívar in South America, the leaders
of the Risorgimento in Italy, and the nationalist reformer Lajos Kossuth
in Hungary. But the failure of the Revolutions of 1848 highlighted the
comparative weakness of liberalism on the Continent. Liberals’ inability
to unify the German states in the mid-19th century was attributable in
large part to the dominant role of a militarized Prussia and the
reactionary influence of Austria. The liberal-inspired unification of
Italy was delayed until the 1860s by the armies of Austria and of
Napoleon III of France and by the opposition of the Vatican.
The United States presented a quite different situation, because
there was neither a monarchy, an aristocracy, nor an established church
against which liberalism could react. Indeed, liberalism was so well
established in the United States’ constitutional structure, its
political culture, and its jurisprudence that there was no distinct role
for a liberal party to play, at least not until the 20th century.
In Europe, by contrast, liberalism was a transforming force
throughout the 19th century. Industrialization and modernization, for
which classical liberalism provided ideological justification, wrought
great changes. The feudal system fell, a functionless aristocracy lost
its privileges, and monarchs were challenged and curbed. Capitalism
replaced the static economies of the Middle Ages, and the middle class
was left free to employ its energies by expanding the means of
production and vastly increasing the wealth of society. As liberals set
about limiting the power of the monarchy, they converted the ideal of
constitutional government, accountable to the people through the
election of representatives, into a reality.
Modern liberalism » Problems of market economies
By the end of the 19th century, some unforeseen but serious
consequences of the Industrial Revolution in Europe and North America
had produced a deepening disenchantment with the principal economic
basis of classical liberalism—the ideal of a market economy. The main
problem was that the profit system had concentrated vast wealth in the
hands of a relatively small number of industrialists and financiers,
with several adverse consequences. First, great masses of people failed
to benefit from the wealth flowing from factories and lived in poverty
in vast slums. Second, because the greatly expanded system of production
created many goods and services that people often could not afford to
buy, markets became glutted and the system periodically came to a near
halt in periods of stagnation that came to be called depressions.
Finally, those who owned or managed the means of production had acquired
enormous economic power that they used to influence and control
government, to manipulate an inchoate electorate, to limit competition,
and to obstruct substantive social reform. In short, some of the same
forces that had once released the productive energies of Western society
now restrained them; some of the very energies that had demolished the
power of despots now nourished a new despotism.
Modern liberalism » The modern liberal program
Such, at any rate, was the verdict reached by an increasing
number of liberals in the late 19th and early 20th centuries. As noted
above, modern liberals held that the point of government is to remove
the obstacles that stand in the way of individual freedom. In this they
followed the lead of thinkers and reformers such as the British
political philosopher T.H. Green. According to Green, the excessive
powers of government may have constituted the greatest obstacles to
freedom in an earlier day, but by the middle of the 19th century these
powers had been greatly reduced or mitigated. The time had come,
therefore, to recognize hindrances of another kind—such as poverty,
disease, discrimination, and ignorance—which individuals could overcome
only with the positive assistance of government. The new liberal program
was thus to enlist the powers of government in the cause of individual
freedom. Society, acting through government, was to establish public
schools and hospitals, aid the needy, and regulate working conditions to
promote workers’ health and well-being, for only through public support
could the poor and powerless members of society truly become free.
Although most liberals eventually adopted this new course, there were
some dissenters, notably the influential social Darwinists Herbert
Spencer in England and William Graham Sumner in the United States. As
the term Darwinists indicates, these writers thought of politics,
economics, and society in general in evolutionary terms. Like Paine,
they regarded government as at best a necessary evil—not, however,
because it coerces but because it too often interferes with the struggle
for survival that nature imposes on human beings as much as on other
species (see natural selection). Helping the poor and the weak, they
argued, impedes individual freedom and retards social progress by
holding back the strong and the fit. The social Darwinists concluded
that the sole responsibility of government must be to protect the lives
and property of the people—that is, to be nothing more than a “night
watchman.”
Modern liberalism » The modern liberal program » Limited
intervention in the market
Because they appreciated the real achievements of the market
system, modern liberals sought to modify and control the system rather
than to abolish it. They saw no reason for a fixed line eternally
dividing the private and public sectors of the economy; the division,
they contended, must be made by reference to what works. The spectre of
regimentation in centrally planned economies and the dangers of
bureaucracy even in mixed economies deterred them from jettisoning the
market and substituting a putatively omnicompetent state. On the other
hand—and this is a basic difference between classical and modern
liberalism—most liberals came to recognize that the operation of the
market needed to be supplemented and corrected. The new liberals
asserted, first, that the rewards dispensed by the market were too crude
a measure of the contribution most people made to society and, second,
that the market ignored the needs of those who lacked opportunity or who
were economically exploited. They contended that the enormous social
costs incurred in production were not reflected in market prices and
that resources were often used wastefully. Not least, liberals perceived
that the market biased the allocation of human and physical resources
toward the satisfaction of consumer appetites—e.g., for automobiles,
home appliances, or fashionable clothing—while basic needs—for schools,
housing, public transit, and sewage systems, among other things—went
unmet. Finally, although liberals believed that prices, wages, and
profits should continue to be subject to negotiation among the
interested parties and responsive to conventional market pressures, they
insisted that price-wage-profit decisions affecting the economy as a
whole must be reconciled with public policy.
Modern liberalism » The modern liberal program » Greater
equality of wealth and income
To achieve what they took to be a more just distribution of
wealth and income, liberals relied on two major strategies. First, they
promoted the organization of workers into trade unions in order to
improve their power to bargain with employers. Such a redistribution of
power had political as well as economic consequences, making possible a
multiparty system in which at least one party was responsive to the
interests of wage earners.
Second, with the political support of the economically deprived,
liberals introduced a variety of government-funded social services.
Beginning with free public education and workmen’s accident insurance,
these services later came to include programs of old-age, unemployment,
and health insurance; minimum-wage laws; and support for the physically
and mentally handicapped (see also social insurance; social welfare
program). Meeting these objectives required a redistribution of wealth
that was to be achieved by a graduated income tax and inheritance tax,
which affected the wealthy more than they did the poor. Social welfare
measures such as these were first enacted by the decidely nonliberal
government of Otto von Bismarck in Germany in the late 19th century, but
liberal governments soon adopted them in other countries of northern and
western Europe. In the United States such measures were not adopted at
the federal level until passage of the Social Security Act of 1935.
Modern liberalism » World War I and the Great Depression
The further development of liberalism in Europe was brutally
interrupted in 1914–18 by the prolonged slaughter of World War I. The
war overturned four of Europe’s great imperial dynasties—Germany,
Austria-Hungary, Russia, and Ottoman Turkey—and thus at first appeared
to give added impetus to liberal democracy. Europe was reshaped by the
Treaty of Versailles on the principle of national self-determination,
which in practice meant the breakup of the German, Austro-Hungarian, and
Ottoman empires into nationally homogeneous states. The League of
Nations was created in the hope that negotiation would replace war as a
means of settling international disputes.
But the trauma of the war had created widespread disillusionment
about the entire liberal view of progress toward a more humane world.
The harsh peace terms imposed by the victorious Allies, together with
the misery created by the Great Depression, beginning in 1929, enfeebled
Germany’s newly established Weimar Republic and set the stage for the
Nazi seizure of power in 1933. In Italy, meanwhile, dissatisfaction with
the peace settlement led directly to the takeover by the Fascist Party
in 1922. Liberalism was also threatened by Soviet communism, which
seemed to many to have inherited the hopes for progress earlier
associated with liberalism itself.
While liberalism came under political attack in the interwar period,
the Great Depression threatened the very survival of the market economy.
The boom-and-bust character of the business cycle had long been a major
defect of market economies, but the Great Depression, with its seemingly
endless downturn in business activity and its soaring levels of
unemployment, confounded classical economists and produced real
pessimism about the viability of capitalism.
The wrenching hardships inflicted by the Great Depression eventually
convinced Western governments that complex modern societies needed some
measure of rational economic planning. The New Deal (1933–39), the
domestic program undertaken by Pres. Franklin D. Roosevelt to lift the
United States out of the Great Depression, typified modern liberalism in
its vast expansion of the scope of governmental activities and its
increased regulation of business. Among the measures that New Deal
legislation provided were emergency assistance and temporary jobs to the
unemployed, restrictions on banking and financial industries, more power
for trade unions to organize and bargain with employers, and
establishment of the Social Security program of retirement benefits and
unemployment and disability insurance. In his influential work The
General Theory of Employment, Interest, and Money (1936), the liberal
British economist John Maynard Keynes introduced an economic theory that
argued that government management of the economy could smooth out the
highs and lows of the business cycle to produce more or less consistent
growth with minimal unemployment.
Modern liberalism » Postwar liberalism to the 1960s
Liberalism, in strategic alliance with Soviet communism,
ultimately triumphed over fascism in World War II, and liberal democracy
was reestablished in West Germany, Italy, and Japan. As western Europe,
North America, and Japan entered a period of steady economic growth and
unprecedented prosperity after the war, attention shifted to the
institutional factors that prevented such economies from fully realizing
their productive potential, especially during periods of mass
unemployment and depression. Great Britain, the United States, and other
Western industrialized nations committed their national governments to
promoting full employment, the maximum use of their industrial capacity,
and the maximum purchasing power of their citizenry. The old rhetoric
about “sharing the wealth” gave way to a concentration on growth rates,
as liberals—inspired by Keynes—used the government’s power to borrow,
tax, and spend not merely to counter contractions of the business cycle
but to encourage expansion of the economy. Here, clearly, was a program
less disruptive of class harmony and the basic consensus essential to a
democracy than the old Robin Hood method of taking from the rich and
giving to the poor.
A further and final expansion of social welfare programs occurred in
the liberal democracies during the postwar decades. Notable measures
were undertaken in Britain by the Labour government of Prime Minister
Clement Attlee and in the United States by the Democratic administration
of Pres. Lyndon B. Johnson as part of his Great Society program of
national reforms. These measures created the modern welfare state, which
provided not only the usual forms of social insurance but also pensions,
unemployment benefits, subsidized medical care, family allowances, and
government-funded higher education. By the 1960s social welfare was thus
provided “from the cradle to the grave” throughout much of western
Europe—particularly in the Scandinavian countries—and in Japan and
Canada and to a lesser extent in the United States.
The liberal democratic model was adopted in Asia and Africa by most
of the new nations that emerged from the dissolution of the British and
French colonial empires in the 1950s and early ’60s. The new nations
almost invariably adopted constitutions and established parliamentary
governments, believing that these institutions would lead to the same
freedom and prosperity that had been achieved in Europe. The results,
however, were mixed, with genuine parliamentary democracy taking root in
some countries but succumbing in many others to military or socialist
dictatorships.
Contemporary liberalism » The revival of classical
liberalism
The three decades of unprecedented general prosperity that the
Western world experienced after World War II marked the high tide of
modern liberalism. But the slowing of economic growth that gripped most
Western countries beginning in the mid-1970s presented a serious
challenge to modern liberalism. By the end of that decade economic
stagnation, combined with the cost of maintaining the social benefits of
the welfare state, pushed governments increasingly toward politically
untenable levels of taxation and mounting debt. Equally troubling was
the fact that the Keynesian economics practiced by many governments
seemed to lose its effectiveness. Governments continued to spend money
on programs aimed at stimulating economic growth, but the result too
often was increased inflation and ever-smaller declines in unemployment
rates.
As modern liberals struggled to meet the challenge of stagnating
living standards in mature industrial economies, others saw an
opportunity for a revival of classical liberalism. The intellectual
foundations of this revival were primarily the work of the Austrian-born
British economist Friedrich von Hayek and the American economist Milton
Friedman. One of Hayek’s greatest achievements was to demonstrate, on
purely logical grounds, that a centrally planned economy is impossible.
He also famously argued, in The Road to Serfdom (1944), that
interventionist measures aimed at the redistribution of wealth lead
inevitably to totalitarianism. Friedman, as one of the founders of the
modern monetarist school of economics, held that the business cycle is
determined mainly by the supply of money and by interest rates, rather
than by government fiscal policy—contrary to the long-prevailing view of
Keynes and his followers. These arguments were enthusiastically embraced
by the major conservative political parties in Britain and the United
States, which had never abandoned the classical liberal conviction that
the market, for all its faults, guides economic policy better than
governments do. Revitalized conservatives achieved power with the
lengthy administrations of Prime Minister Margaret Thatcher (1979–90) in
Britain and Pres. Ronald Reagan (1981–89) in the United States. Their
ideology and policies, which properly belong to the history of
conservatism rather than liberalism, became increasingly influential, as
illustrated by the British Labour Party’s official abandonment of its
commitment to the “common ownership of the means of production” in 1995
and by the cautiously pragmatic policies of Pres. Bill Clinton in the
1990s. The clearest sign, however, of the importance of this
“neoclassical” version of liberalism was the emergence of libertarianism
as a political force—as evidenced by the increasing prominence of the
Libertarian Party in the United States and by the creation of assorted
think tanks in various countries, which sought to promote the
libertarian ideal of markets and sharply limited governments.
Contemporary liberalism » Civil rights and social issues
Contemporary liberalism remains deeply concerned with reducing
economic inequalities and helping the poor, but it also has tried to
extend individual rights in new directions. With the exception of the
utilitarians, liberals have always invoked the concept of rights to
argue against tyranny and oppression; but in the later 20th century
claims to rights became the most common way of articulating struggles
for social justice. The prototypical mass movement in this regard was
the American civil rights movement of the 1950s and ’60s, which resulted
in legislation forbidding most forms of discrimination against a large
African American minority and which fundamentally altered the climate of
race relations in the United States. In the 1970s there arose similar
movements struggling for equal rights for women, gays and lesbians, the
physically or mentally disabled, and other minorities or disadvantaged
social groups. Thus, liberalism historically has sought to foster a
plurality of different ways of life, or different conceptions of the
“good life,” by protecting the rights and interests of first the middle
class and religious minorities, then the working class and the poor, and
finally racial minorities, women, gays and lesbians, and the physically
or mentally disabled.
Liberalism has influenced the changing character of Western society
in other ways as well, though its contribution in this regard has not
always been distinguishable from the effects of modernization,
technological change, and rising standards of living. For example, the
relaxation in most developed countries of long-standing restrictions on
contraception, divorce, abortion, and homosexuality was inspired in part
by the traditional liberal insistence on individual choice. In similar
fashion, the liberal emphasis on the right to freedom of speech led to
the loosening of inherited restrictions on sexual content and expression
in works of art and culture (see censorship).
Assessment and prospects
Liberalism remains a vibrant and influential, if divided, political
ideology. In the two decades following the elections of Thatcher and
Reagan in 1979–80, modern liberalism appeared to be in dispirited
decline. Most sectors of the British and American economies during this
period were deregulated or privatized to effect what Reagan called “the
magic of the marketplace.” Unregulated markets, it was claimed, produce
prosperity, abundance, and economic efficiencies. In keeping with this
vision, regulations governing the banking, insurance, and financial
industries—many in place since the New Deal—were watered down or
eliminated in the 1980s and ’90s. The resulting lack of oversight was a
major factor in a worldwide financial crisis that began in 2007–08 and
threatened to turn into a global depression. Almost overnight, the ideal
of the unregulated market was discredited in the eyes of many. Newly
elected U.S. Pres. Barack Obama undertook, with widespread popular
support, a “new New Deal” in which banks were re-regulated—many
effectively nationalized—and the automobile industry radically
restructured. Formerly overshadowed, modern liberalism gained a new
lease on life.
Harry K. Girvetz
Kenneth Minogue
Terence Ball
Richard Dagger
Encyclopaedia Britannica
