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The Rise, Fall, and Renaissance of Classical Liberalism, Part 2: Triumphs and Challenges

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As the nineteenth century began, classical liberalism — or just liberalism as the philosophy of freedom was then known — was the specter haunting Europe — and the world. In every advanced country the liberal movement was active.

Drawn mainly from the middle classes, it included people from widely contrasting religious and philosophical backgrounds. Christians, Jews, deists, agnostics, utilitarians, believers in natural rights, freethinkers, and traditionalists all found it possible to work towards one fundamental goal: expanding the area of the free functioning of society and diminishing the area of coercion and the state.

Emphases varied with the circumstances of different countries. Sometimes, as in Central and Eastern Europe, the liberals demanded the rollback of the absolutist state and even the residues of feudalism. Accordingly, the struggle centered around full private property rights in land, religious liberty, and the abolition of serfdom. In Western Europe, the liberals often had to fight for free trade, full freedom of the press, and the rule of law as sovereign over state functionaries.

In America, the liberal country par excellence, the chief aim was to fend off incursions of government power pushed by Alexander Hamilton and his centralizing successors, and, eventually, somehow, to deal with the great stain on American freedom — Negro slavery.

From the standpoint of liberalism, the United States was remarkably lucky from the start. Its founding document, the Declaration of Independence, was composed by Thomas Jefferson, one of the leading liberal thinkers of his time. The Declaration radiated the vision of society as consisting of individuals enjoying their natural rights and pursuing their self-determined goals. In the Constitution and the Bill of Rights, the Founders created a system where power would be divided, limited, and hemmed in by multiple constraints, while individuals went about the quest for fulfillment through work, family, friends, self-cultivation, and the dense network of voluntary associations. In this new land, government — as European travelers noted with awe — could hardly be said to exist at all. This was the America that became a model to the world.

One perpetuator of the Jeffersonian tradition in the early 19th century was William Leggett, a New York journalist and antislavery Jacksonian Democrat. Leggett declared:

“All governments are instituted for the protection of person and property; and the people only delegate to their rulers such powers as are indispensable to these objects. The people want no government to regulate their private concerns, or to prescribe the course and mete out the profits of their industry. Protect their persons and property, and all the rest they can do for themselves.”

This laissez-faire philosophy became the bedrock creed of countless Americans of all classes. In the generations to come, it found an echo in the work of liberal writers like R L. Godkin, Albert Jay Nock, H. L. Mencken, Frank Chodorov, and Leonard Read. To the rest of the world, this was the distinctively, characteristically American outlook.

Meanwhile, the economic advance that had been slowly gaining momentum in the Western world burst out in a great leap forward. First in Britain, then in America and Western Europe, the Industrial Revolution transformed the life of man as nothing had since the neolithic age. Now it became possible for the vast majority of mankind to escape the immemorial misery they had grown to accept as their unalterable lot. Now tens of millions who would have perished in the inefficient economy of the old order were able to survive. As the populations of Europe and America swelled to unprecedented levels, the new masses gradually achieved living standards unimaginable for working people before.

The birth of the industrial order was accompanied by economic dislocations. How could it have been otherwise? The free-market economists preached the solution: security of property and hard money to encourage capital formation, free trade to maximize efficiency in production, and a clear field for entrepreneurs eager to innovate. But conservatives, threatened in their age-old status, initiated a literary assault on the new system, giving the Industrial Revolution a bad name from which it never fully recovered. Soon the attack was gleefully taken up by groups of socialist intellectuals that began to emerge.

Still, by mid-century the liberals went from one victory to another. Constitutions with guarantees of basic rights were adopted, legal systems firmly anchoring the rule of law and property rights were put in place, and free trade was spreading, giving birth to a world economy based on the gold standard.

There were advances on the intellectual front as well. After spearheading the campaign to abolish the English Corn Laws, Richard Cobden developed the theory of nonintervention in the affairs of other countries as a foundation for peace. Frederic Bastiat put the case for free trade, non intervention, and peace in a classic form. Liberal historians like Thomas Macaulay and Augustin Thierry uncovered the roots of freedom in the West. Later in the century, the economic theory of the free market was placed on a secure scientific footing with the rise of the Austrian School, inaugurated by Carl Menger.

The relation of liberalism and religion presented a special problem. In continental Europe and Latin America, freethinking liberals sometimes used the state power to curtail the influence of the Catholic Church, while some Catholic leaders clung to obsolete ideas of theocratic control. But liberal thinkers like Benjamin Constant, Alexis de Tocqueville, and Lord Acton saw beyond such futile disputes. They stressed the crucial role that religion, separated from government power, could play in stemming the growth of the centralized state. In this way, they prepared the ground for the reconciliation of liberty and religious faith.

Then, for reasons still unclear, the tide began to turn against the liberals. Part of the reason is surely the rise of the new class of intellectuals that proliferated everywhere. That they owed their very existence to the wealth generated by the capitalist system did not prevent most of them from incessantly gnawing away at capitalism, indicting it for every problem they could point to in modern society.

At the same time, voluntary solutions to these problems were preempted by state functionaries anxious to expand their domain. The rise of democracy may well have contributed to liberalism’s decline by aggravating an age-old feature of politics: the scramble for special privilege. Businesses, labor unions, farmers, bureaucrats, and other interest groups vied for state privileges — and found intellectual demagogues to rationalize their depredations. The area of state control grew, at the expense, as William Graham Sumner pointed out, of “the forgotten man” — the quiet, productive individual who asks no favor of government and, through his work, keeps the whole system going.

By the end of the century, liberalism was being battered on all sides. Nationalists and imperialists condemned it for promoting an insipid peace instead of a virile and bracing belligerency among the nations. Socialists attacked it for upholding the “anarchical” free-market system instead of “scientific” central planning. Even church leaders disparaged liberalism for its alleged egotism and materialism. In America and Britain, social reformers around the dawn of the century conceived a particularly clever gambit. Anywhere else the supporters of state intervention and coercive labor-unionism would have been called “socialists” or “social democrats.” But since the English-speaking peoples appeared for some reason to have an aversion to those labels, they hijacked the term “liberal.”

Though they fought on to the end, a mood of despondency settled on the last of the great authentic liberals. When Herbert Spencer began writing in the 1840s, he had looked forward to an age of universal progress in which the coercive state apparatus would practically disappear. By 1884, Spencer could pen an essay entitled, “The Coming Slavery.” In 1898, William Graham Sumner, American Spencerian, free-trader, and gold-standard advocate, looked with dismay as America started on the road to imperialism and global entanglement in the Spanish-American War: he titled his response to that war, grimly, “The Conquest of the United States by Spain.”

Everywhere in Europe there was a reversion to the policies of the absolutist state, as government bureaucracies expanded. At the same time, jealous rivalries among the Great Powers led to a frenzied arms race and sharpened the threat of war. In 1914, a Serb assassin threw a spark onto the heaped-up animosity and suspicion, and the result was the most destructive war in history to that point. In 1917, an American president keen to create a New World Order led his country into the murderous conflict “War is the health of the state,” warned the radical writer Randolph Bourne. And so it proved to be. By the time the butchery ended, many believed that liberalism in its classical sense was dead.

Part 1 | Part 2 | Part 3

This is the second part of a three-part series. The series is dedicated to the memory of Roy A. Childs Jr. (1949-1992).

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    Ralph Raico is originally from New York City. He received his B.A. from the City College of New York and his Ph. D. from the University of Chicago. He attended the Ludwig von Mises's Seminar at NYU and translated Mises's Liberalism. He is the Editor of the New Individualist Review and a Senior Editor of Inquiry Magazine. Among Ralph Raico’s recent publications are the introduction to the 50th-anniversary edition of John T. Flynn’s "The Roosevelt Myth" and the essay on World War I in the second, paperback edition of "The Costs of War", edited by John V. Denson, both available from Laissez Faire Books. He is also a contributor to "The Failure of America’s Foreign Wars", published by The Future of Freedom Foundation. Professor Raico is professor of history at the State University of New York College at Buffalo.