The idea of Ludwig Mises, Friedrich Hayek and Milton Friedman, that there was once an ultra-individualist ‘classical liberalism’ promoting unrestrained markets, is a myth.
So-called neoliberals such as Ludwig Mises, Friedrich Hayek and Milton Friedman described themselves as ‘classical’ or ‘old-style’ liberals.1 Their declared mission was to revive an economic and political liberal tradition of the eighteenth and nineteenth centuries. They believed that this earlier liberal tradition had been perverted in the English-speaking world: it had come to signify extensive government intervention.
In his 1962 preface to his book now titled Liberalism: The Classical Tradition, Mises complained that in the US the term liberal ‘means today a set of ideas and political postulates that in every regard are the opposite of all that liberalism meant to the preceding generations.’ This account of the evolution of the term liberalism is widely taken for granted, by both its supporters and its critics.2
Ludwig von Mises
But in key respects it is false. Mises, Hayek and others adopted the following methodology. First, they conjured a picture of what classical liberalism means. In their case it is a doctrine of liberty seen as the absence of individual coercion, treating the individual as the best judge of his or her interests, with an emphasis on rights over duties, and the proselytization of a minimal state.
Then they read back into the history of ideas, searching for statements and writers who espouse such views. A history of classical liberalism is then constructed, typically going back to early Enlightenment thinkers like Locke in the seventeenth century.
There are major problems with this methodology. First it paints the portrait before studying its historical subject in the round. Given the scale and diversity of political and philosophical thought in over three hundred years, it is quite conceivable that one or more persons resembling the portrait can be found.
Thomas Paine
But this retro-constructivist methodology has to quickly pass over writers such as Thomas Paine, who were strong on social obligation, redistribution and economic equality, as well as on rights and liberty.
It
also has problems dealing with people who have important distinctive features that
are additional to those in the preconceived painting. A foremost example is
Adam Smith, who is applauded for his recognition of individual incentives and
for his celebration of markets and of spontaneous order. But other prominent features
of his thought – including his extensive discussions of unselfishness, sympathy,
justice and moral sentiments – are given less emphasis.
This
retrospective methodology works backwards. Sure enough, it finds what it was
looking for. But it becomes blind to much else. It constructs a history that is
blinkered by its contemporary prejudices. It has no answer to a rival retrospective
attempt that might start from a different preconception of classical liberalism and looks back to find thinkers that fit a
different portrait. For example, it might accent an emphasis on moral
motivation, sympathy, duty and justice, as virtues in themselves rather than as
means to other ends, to find that Adam Smith, Edmund Burke, Thomas Paine and William
Cobbett were classic liberals, whereas others such as Bernard Mandeville and Frédéric
Bastiat were not.
An important corrective to this one-sided, retro-constructivist methodology is to look at the past usage of terms such as liberal and liberalism and to find the thinkers and ideas to which they adhered.3 Helena Rosenblatt performs this task in her Lost History of Liberalism. She is fully aware of the difficulties, as term such as liberal have shifted in meaning. But the origins of the word are still important.
In ancient Rome: ‘liberalitas signified the moral and magnanimous attitude that the ancients believed was essential to the cohesion and smooth functioning of a free society.’ In the fourteenth century the adjective liberal was used to mean ‘generous’, ‘noble’, ‘selfless’, ‘magnanimous’ or ‘admirable’. In the King James version of the Bible (1604-11) the word liberal appears several times, ‘each time referring to generous giving, especially to the poor.’ The first edition of the Dictionary of the Académie française (1694) saw a liberal as ‘he who likes to give … to people of merit’.
Then the term shifts slightly in meaning. The Oxford English Dictionary records that by 1772 the word ‘liberal’ had come to mean ‘free from bias, prejudice, or bigotry; open-minded, tolerant.’ Rosenblatt found such sentiments in early liberal writings:
‘At heart, most liberals were moralists. Their liberalism had nothing to do with the atomistic individualism we hear of today. They never spoke about rights without stressing duties. Most liberals believed that people had rights because they had duties, and most were deeply interested in questions of social justice. They always rejected the idea that a viable community could be constructed on the basis of self-interestedness alone. Ad infinitum they warned of the dangers of selfishness. Liberals ceaselessly advocated generosity, moral probity, and civic values.’
As Rosenblatt explained, the term liberalism ‘owes its birth to the French Revolution. The word itself was coined around 1811, and it was men and women like the Marquis de Lafayette and his friends, Madame de Staël and Benjamin Constant, who first formulated the ideas to which it referred.’ The word first appeared in English in 1815. Rosenblatt thus offered an entirely different account of early liberalism:
‘Contrary to what is often said today about nineteenth-century liberalism, early liberals were not doctrinaire about laissez-faire. They did not stress property rights or celebrate the virtues of unbounded self-interest. What today is called ‘classical’ or ‘orthodox’ liberalism did not exist. … In fact, the concept … never actually existed during the period under consideration. Liberals held a spectrum of economic views … the great majority of nineteenth-century liberals, whether British, French, or German, were not all that adverse to government intervention. Nor did they advocate absolute property rights. And they certainly did not believe that individuals pursuing their own self-interest would spontaneously create a healthy wealth distribution or social harmony. They denounced selfishness and individualism at every opportunity.’
It is true that
many (if not most) early liberals argued for a small state. But they lived in a
period when the state and its tax levels were much smaller than they became in
the twentieth century. We cannot automatically assume that they would have
taken the same small-state view in the present context, especially if they were
responsive to practical experiment and historical experience.
Consequently,
classical liberalism does not denote
one distinctive type or phase of liberalism. The original Liberalism from the
seventeenth to the mid-nineteenth century contained widely diverging variants. Contrary
to Mises and Hayek, the kind of government-interventionist and welfarist liberalism
that we find today in Britain and North America is not an abuse of the classical
label. It can trace its origins and legitimacy back to variants of liberalism
that emerged during and after the French Revolution. Mises, Hayek and Friedman
have no greater claim to the title of classic
liberalism than interventionists such as John A. Hobson, John Dewey, John
Maynard Keynes and Michael Polanyi.
In
liberal chaos of miss-labelling we have to build up again from the remnants of history
that have survived critical scrutiny. With such hindsight, and in terms of core
sentiment rather than detailed argument, there is nothing ‘new’ or ‘neo’ in the
interventionist liberalism of Hobson, Dewey or Keynes, or in the so-called ordoliberalismus of Eucken, Röpke or Rüstow.
Despite their novelty, their justifications of some state intervention build on
considerations raised within liberalism for more than two hundred years.
Furthermore,
taking the historical panoply of liberalism as a whole, and even if we confine
our gaze to the nineteenth century, Mises, Hayek and Friedman do not come
across as classical or typical, but as rather extreme. This is evident not only
in their persistent devotion to a minimal state in an era of complex trading
relations where it is arguably unfeasible, but also in their emphasis on
individual gain, and in their lack of stress on duties, social justice and
moral motivation as intrinsic virtues. If it can apply to any liberal, then the
‘neo’ epithet can apply to them. We need to restore much of classical liberalism,
against the so-called neoliberal axis
of Mises, Hayek and Friedman.
2. Hayek’s (1960, pp. 55-57) position was more nuanced. He contrasted the ‘British’ and ‘empiricist’ tradition of liberalism, including David Hume, Adam Smith and Edmund Burke, with the ‘rationalist’ and ‘French’ tradition.
2. Similar
problems and possible remedies occur with the contested term social Darwinism. In this case too, a
practice of first assuming what it meant, and then looking back to find
exponents, is commonplace. But a systematic search for appearances of the term
(in Anglophone journals) revealed a very different story. It was discovered that
in its early years the term was often a label attached by critics of belligerent
nationalism or racism. Accordingly, Herbert Spencer and William Graham Sumner
(who were critical of imperialist wars) were not described as social Darwinists until the 1930s, and
that meaning of the term then shifted to downplay nationalism in favour of notions
of competitive individualism (Hodgson 2004, 2006).
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