Lecture 2: Classical Liberalism

Lecture 2

Classical Liberalism

This lecture will concern classical liberalism itself.

Now, I think that you’ve been given—free of charge, in the usual generous tradition of the Mises Institute—or somewhere along the line gotten hold of a copy of Mises’s book called Liberalism. In the original German it’s called just Liberalism, and in the current English version, Liberalism in the Classical Tradition.1 At the very beginning of the book, Mises talks about liberalism and says, The philosophers, sociologists, and economists of the eighteenth and early part of the nineteenth century formulated a political program that served as a guide to social policy first in England and the United States, then on the European continent, and finally in the other parts of the inhabited world as well. Nowhere was this program ever completely carried out. Even in England, which had been called the homeland of liberalism.2

Mises says liberalism was never permitted to come to full fruition: “Nevertheless, brief and all too limited as the supremacy of liberal ideas was, it sufficed to change the face of the earth.”3

1The English version of Liberalism was translated by Raico himself, and in an aside Raico jokes that the “rather brilliant” English translation has been “compared by many to Chapman’s Homer.”

2Mises, Liberalism: In the Classical Tradition (Irvington-on-Hudson, NY: Foundation for Economic Education, 1985), p. 1.

3Ibid.

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And it goes on in that vein. Well, as I say, he uses the term liberalism, which for a long time was the word associated with this program that he’s developing. But it may seem strange to you to associate liberalism with basically laissez-faire and the other elements of the liberal program, considering that liberalism—not only in the United States but now in other countries as well—has come to mean something quite different.

There’s a rather well-known story how, in English-speaking countries first of all, and then elsewhere, around the turn of the century— that is, the turn of the nineteenth to the twentieth century—the term liberal was hijacked by people who were essentially social democrats.

WHAT IS LIBERALISM, AND WHY DO SOCIALDEMOCRATS CALL THEMSELVES LIBERALS?

Joseph Schumpeter is an economist from Austria—but not what we would call an Austrian economist—and a very famous social philosopher and well worth consulting. He wrote a very big book that I think is still in print from Oxford called History of Economic Analysis. In a famous passage there, he ironically states that it was a kind of compliment, if an unintended one, when the enemies of the system of free enterprise confiscated the name liberal for what was basically the opposite of what liberalism had stood for from the start.4 Nowadays, you can find writers who express astonishment that free market economists still sometimes insist on calling themselves liberals rather than conservatives.

Some might say, Why argue over a name? Why not just call your position anything at all and go on from there to argue the case for it? Stephen Holmes, a political scientist from Chicago, has called the dispute over the term liberal a matter of bragging rights; the right to brag, “I’m the real liberal in the liberal tradition and you’re not.” On the other hand, he insists that he’s in the real liberal tradition and thinks it’s worth arguing about.5

4The passage reads, “The term has acquired a different—in fact almost the opposite—meaning since about 1900 and especially since about 1930: as a supreme, if unintended, compliment, the enemies of the system of private enterprise have thought it wise to appropriate its label.” See Schumpeter, His-tory of Economic Analysis (New York: Routledge, 1954), p. 394.5Holmes, “Liberal Guilt: Some Theoretical Origins of the Welfare State,” in Responsibility, Rights, and Welfare: The Theory of the Welfare State, ed. Donald J. Moon (Boulder, CO: Westview, 1988), p. 101.

It seems to me there are good reasons to hold on to the name liberal from the point of view, say, of Ludwig von Mises and not of John Kenneth Galbraith. First, we must hold on to the name in order to preserve a conceptual coherence when dealing with an intellectual history. How can you make sense of the history of ideas if you say there was an important school of thought called liberalism while Galbraith, John Maynard Keynes, John Rawls, and Franklin Roosevelt are just as entitled to the name liberal as Mises, Hayek, Nozick, and, say, Grover Cleveland? Second, there was, demonstrably, a very deliberate political aim when Leonard Hobhouse, J.A. Hobson, John Dewey, Friedrich Naumann, and others in Germany promoted the transformation of the term. There was a theory underlying the terminological change, a kind of ideological subtext, one might say, that is still operative. This is what the idea was: there was an old liberalism of laissez-faire that is now antiquated and obsolete, made so by massive changes in society.

Those writers at the turn of the century that pioneered the new liberalism, as they sometimes called it, based their claims on a ridiculously inflated view of the power of business enterprise vis-à-vis the individual workers or the labor market. This was accompanied by an equally inflated view of the business corporation’s alleged enormous power vis-à-vis the individual consumer. In any case, the hijacking of the term liberal implied that the old liberalism—the liberalism of Mises, for instance, in his book—was dead and certainly need not be considered a plausible candidate for support.

Then, some of the English old-fashioned liberals like Auberon Herbert and the extreme followers of Herbert Spencer started saying, “Let’s call ourselves something else, let’s call ourselves individualists.” Then, John Dewey started saying, “Well, you know, there was an old individualism that is now obsolete.”6 The new individualism, which is the same thing as the new liberalism, called on all of the powers of society to support the individual in his or her self-development, and on and on in that vein. Finally, I submit that there is no intellectually honest reason to bestow the term liberal on those nowadays who favor a never-ending list of government-funded programs. These programs, we are told, are necessary to deal with every real or imagined ill of society and favor a constantly expanding state apparatus to wage war on the traditional ways and values of civil society. The people who support this are the people who are called liberal nowadays.

6See Dewey, Individualism Old and New (New York: Minton, Balch, 1930).44 Ralph Raico

Peculiarly enough, to complicate it even further, in some cases the term liberal does retain its old meaning. In the case of France, for instance, the term liberal or sometimes ultraliberal means a believer in laissez-faire or an extreme believer in laissez-faire. So, the French— unlike the English, the Americans, the Canadians, even the Germans to an extent—have preserved the older meaning. In those countries, there is a name for the position that calls itself liberal or liberalism in America. It is called social democracy or democratic socialism. These are perfectly legitimate names. Why do they want to take over the name liberal?

The “new” liberalism of Hobhouse and Hobson is indistinguishable from the position, for instance, of Eduard Bernstein, the founder of the vision of socialism in Germany. This has today become socialism altogether in the modern world, just as the position of American liberal intellectuals is indistinguishable from that of people who call themselves social democrats in Europe. This is what Eduard Bernstein said around 1920 or so: The development and protection of the free personality is the goal of all socialist measures, even of those which superficially appeared to be coercive measures. A closer examination will always show that it is a question of a coercion that increases the sum of freedom in society, that gives more freedom and to a wider group than it takes away.7

Now, I submit that this is what so-called liberals in America hold, that yes, we have to be coercive in this respect. We have to force employers to behave in this way, forcing consumers to behave in this way and indoctrinating children in the public schools in this way—in order to promote a greater freedom and the total development of the human personality. Fine, if that’s what you believe. But Bernstein never called himself a liberal; he was a socialist, and he said that this is the socialist vision. Why, in English-speaking countries, democratic socialists should shy away from calling themselves by their proper name is a matter of political expediency more than anything else. For some

7This may be Raico’s own translation of the original German text. The passage is found in Bernstein’s Die Voraussetzungen des Sozialismus und die Aufgaben der Sozialdemokratie, originally published in 1899. A similar, often-used English translation of this passage can be found in the 1907 English translation by Edith C. Harvey. See Bernstein, Evolutionary Socialism: A Criticism and Affirma-tion, trans. Harvey (New York: B.W. Huebsch, 1909), p. 176.

reason or other, political labels suggestive of socialism have not been very popular in countries of the English heritage. As a result, what is essentially the social democratic party in the United States—the Democrats—or people who call themselves liberals in Canada—the Labor Party—or even the “liberal” Social Democratic Party in England call themselves liberals.

Now, it is sometimes maintained that underlying liberalism is a particular philosophical system, in the sense of a particular metaphysics and epistemology. Often, this philosophical system is taken to be British empiricism from John Locke to John Stuart Mill, but I don’t find this satisfactory. There are simply too many divergent and conflicting philosophical traditions within the history of liberalism, from Aristotelianism and Thomism to Kantianism to Empiricism, and so on, for this to be convincing.

The working definition of liberalism that I will adopt is this: it is the ideology that holds that civil society—understood as a sum order of society, the sum of the social order minus the state—by and large runs itself within the bounds of a principle of private property. This is liberalism as I’ll be discussing it here.

Well, with the collapse of Marxism—especially the real, existing socialist regimes, and Marxism especially—liberalism has become enormously popular. It seems that everybody wants to call themselves a liberal, and this reflects itself in the scholarly world. There’s much more attention being paid to liberalism than there ever was before. Scholars appear to be waking up to a few facts after decades of concentrating on the history of socialism, especially of Marxism. After having examined over and over again in mind-numbing detail all of the minutia of the annals of socialist doctrine and education, academics have finally woken up to the fact that the foundations of our own society are worthy of attention as much as the sterile dreams of socialist visionaries. That is certainly a hopeful sign.

THE HISTORICAL ORIGINSOF LIBERALISM

Let’s take up the story where I more or less left off last time: the end of the Middle Ages. The first thing we might mention is the Renaissance, and often, especially in older histories of the liberal idea, a lot of attention was devoted to the Renaissance. There was even a certain novelist, well-known in American and libertarian circles, whose philosophy of history can be encapsulated as, “First came Aristotle, then 46 Ralph Raico

the Renaissance, and then came the railroads.”8 I must confess that I am dubious of the contribution of the Renaissance in general, and especially of Renaissance philosophy, as it is ordinarily understood through the rise of liberalism. It used to be that great stress was placed on writers like Marsilio Ficino and Giovanni Pico della Mirandola. One example is Pico’s famous “Oration on the Dignity of Man,” in which he states, “God hails man” as a “maker and molder of thyself, who art free to fashion thyself in whatever shape thou shalt prefer.”

Well, this has more in common, it seems to me, with Marx’s Pro-methean vision of man than it does with the liberal tradition, which has usually been based in one way or another on the view of a given nature of man ascertainable by reason. As Acton, who very much val-ued the Middle Ages, pointed out, the great political philosopher of the Italian Renaissance is Machiavelli.

The contrast between the Middle Ages and the Renaissance can be illustrated by the example of what is sometimes called the School of Salamanca, not entirely correctly, because it includes Spanish thinkers not connected with the University of Salamanca. It also includes some Italian and Portuguese thinkers. These are better referred to as the late Scholastics. For more on this, I recommend Rothbard’s History of Economic Thought in two volumes. It was Murray’s last book, and he never completed it. He never got into the Austrian school itself of the twentieth century, which he had planned to do. Still, as it stands, it’s a magnificent work of scholarship, a liberal education in itself, in my view. Murray has an important chapter in the first volume of his book on the late Scholastics, the so-called School of Salamanca.

THE IBERIAN SCHOOLOFTHE LATE SCHOLASTICS

The story of these writers provides another example of anti-Catho-lic bias. They were consistently ignored or downplayed, and it was conventional wisdom that the traditional Catholic position on economics was based on the prohibition of usury and the “just price.” In other words, it is a kind of reactionary medieval view that runs totally contrary to basic economic thinking. This was the older view, and this is maybe the view that’s come down to you. Then, in the 1950s, Marjorie Grice-Hutchinson and Raymond de Roover, professor in New York,

8This is a reference to the philosopher Ayn Rand. Raico here condemns Rand’s simplistic view of history.

published books and articles that began to do justice to these remarkable thinkers. A short and good study of them is by a friend of ours, Alexander Chafuen (who is the president of the Atlas Foundation in Fairfax), in a book called Christians for Freedom.9

Now, briefly, these writers include Luis de Molina, Juan de Mariana, Francisco di Vitoria, Francisco Suarez, and others. They presented a sophisticated analysis of many economic phenomena, starting off from a baseline with a subjective theory of value as based on utility as understood by the economic actor.

Now, if you think about that a minute, we’re talking about—in the case of some Italians—the late fifteenth century, basically the sixteenth century and early seventeenth century. Already, we have the germ of a modern theory of value that has nothing to do with the English school’s theory of value based on labor—the famous theory of value that became standard in Britain. This theory was David Ricardo’s and then was accepted by Karl Marx. It was a totally different tradition, and Rothbard emphasizes throughout his History of Economic Thought how the Iberian Scholastic tradition then becomes the standard European tradition of Italian economic thought and especially in French economic thought. This is in sharp contrast to what’s happening in Britain. Economics, and economic phenomena, in this Continental tradition is based then on a subjective theory of value—on the individual actor’s sense of utility—as against some so-called objective theory of value based on labor input. These writers maintain the legitimacy of private property. They were for low taxes and against using taxation for the redistribution of wealth, and they opposed the debasement of money.

Since most of them were Spaniards who lived at the time of the Spanish conquest of the New World and the influx of precious metals into Europe—which created a precious-metals inflation—they were very sensitive to the issue of inflation and the debasement of money. The Mises Institute has a number of economists who know many, many times more about these issues than I do, but according to them— according to Rothbard—these Spaniards had very sophisticated analysis of how inflation works. Here’s one of the writers: “The origin of

9Alejandro A. Chafuen, Christians for Freedom: Late-Scholastic Economics (San Francisco: Ignatius, 1986).

poverty is high taxes. In continual fear of tax collectors, [the farmers] prefer to abandon their land, so they can escape their vexations.”10

That was the story of the late Roman Empire, where, in order to flee the tax collector, many simply fled the towns and went to put themselves under some local landlord as part of his clientele. They set up little villages of their own because taxation had become so onerous. Molina says that’s happening in Castile.11 Castile was a very well-developed part of Europe in the later Middle Ages. What happened—again, because of their imperialism and their religious intolerance—was the Spanish Habsburgs were able to impoverish Spain by their high taxes. In the course of that, by the way, they had to fight it out with the Cortes, this medieval institution. The fight came down to battles between the Spanish towns and the Spanish crown, and the towns were defeated. The Cortes was rendered impotent, and then the Spanish kings could do anything that they wanted. With time, Spain turned into what it became: the backwoods of Europe, the decadent power, when it had once been rich and powerful.

Another writer, Henrique de Villalobos:

Taxes severely weaken towns and impoverish farmers. We can see places that yesterday were flourishing and had many inhabitants and now lie fallow because farmers cannot toler—ate high taxes.12

By the way, all of these men were clerics, were monks or priests, and I think it’s clear that part of their concern here is the duty that such a person felt—or a high-minded person of that calling—felt towards the poor and towards productive working people who are suffering because of the bad policies of their rulers. Here’s Bartolomé de Albornoz, and he sounds like the nineteenth-century liberal Frédéric Bastiat: Buying and selling is the nerve of human life that sustains the universe. By means of buying and selling the world as united, joining distant lands and nations, people of different languages, laws and ways of life.13

10Pedro Fernandez Navarette, quoted in Chafuen, Faith and Liberty: The Eco-nomic Thought of the Late Scholastics (Lanham, MD: Lexington, 2003), p. 54.11Raico here may be attributing the quotation to Molina. The author is Navarette, however.

12Quoted in Chafuen, p. 58.

13Quoted in Chafuen, p. 75.

And that, you know, was part of the philosophical undergirding of the free trade position from the eighteenth century on. If you were of a religious mind, one of the things that occurred to you was that the earth is given different resources, different climates, and so on, in order for the peoples to trade with one another. This providential fact brought together many different people and groups in a universal harmony. They were all, of course, as late Scholastics, followers of Thomas Aquinas, who had written, “Any exchange is for the mutual benefit of both parties, with the result that they are better-off than previously.”14 How long it took British political economy to learn this. The British idea was that exchange was an exchange of equal values, as if people sat around trading dollar bills with each other. The Scholastics understood that in order for an exchange to take place, the two parties have to have a differential valuation of what is exchanged. And many other quotations along these lines could be quarried.

That Spanish or late Scholastic school went into oblivion, although some of them, Suarez and Vitoria especially, were occasionally remembered. Everybody admitted the Scholastics had a tremendous influence on political theory in the line of Samuel Pufendorf and Hugo Grotius that winds up with John Locke. But somehow these Iberians were later left out of the picture.

EARLY ENGLISH LIBERALISMANDTHE LEVELLERS

The Dutch, interestingly enough, did produce a very close approximation of a free society in the context of Europe at the time, but as far as I’ve been able to find out, not very much in the way of a political philosophy that mirrored that freer kind of society. So, now our attention turns to England. The history of liberalism in the strict sense begins with the Levellers in the mid-seventeenth century. And since they are an authentic, echt product of the great English people, we will spell their name with the double L, which your spellcheck would reject if you’re an American: “the Levellers.”

Now, I mentioned that the attack on the traditional inherited chartered immunities and privileges of the Dutch people by the Spanish Habsburgs was the occasion for the revolt of the Dutch. In a parallel kind of way, at the beginning of the seventeenth century, a family, a dynasty, comes to the throne of England that has similar absolutist

14Quoted in Chafuen, p. 92.

ideas. You have to understand, the time we’re talking about is a time of monarchical absolutism. This is the idea that the king owns the country as Louis XIV thought—or stated, at least—the idea that the king is above the law. It is the idea that the country should be run by the king and his bureaucracy and his paid military mercenaries. This was considered the wave of the future, just as, believe it or not, for a time in the late 1920s and 1930s, fascism was considered the wave of the future, and people sort of defensively apologized for not having a fascist regime because fascism was so obviously au courant and modern.

In England, this new regime, this Scottish family now on the throne of England, decided to introduce many of the Continental ways that we know of collectively as royal absolutism. This was the House of Stuart. Like other rulers and their henchmen, the Stuarts and their apologists for absolutism, considered it the modern form of government, more streamlined than the older form that was hedged around by limitations and restrictions of a kind that we find in the Magna Carta.

The Stuarts were going to change things. The Stuarts decided to rule on their own, without the benefit of the representatives of the people and the taxpayers in Parliament. When the time came that Charles I needed to raise money, he did it on his own authority. He levied “ship money” on the towns of England that had never had to pay it before. This was a special tax levied to support the navy, and the seacoast towns had traditionally paid it because they were assumed to have more to gain from the navy than other people. But now the same tax was levied simply on royal authority, on inland towns. It did not amount to very much, just as the stamp tax or the tax on tea in the American colonies did not amount to very much. But the principle was unacceptable to the people. Sometimes, apologists for the first American war of secession, the Revolutionary War, said, “Why did they go to war? Why did they risk their lives, their fortune, and their sacred honor for a couple of pennies in the pound?” Well, it really was the principle—that is, that the king can do this. On the small scale, if we accept that principle, he can do anything. The leaders of the English resistance came to say that under this king, there’s nothing a man can call his own, which is I think more becoming the slogan of the modern democratic state: there is, in the end, nothing that you can really call your own, once the state demands it.

So, the English Civil War came and the parliamentary forces eventually defeated the Royalists. Charles was captured, put on trial, The Struggle for Liberty 51

and executed, and a new regime was set up under the military leader Oliver Cromwell and what remained of Parliament. However, there were radical ideas that had been let loose, and there were some people who began to say, “This Cromwell and this Parliament—or what’s left of it—are beginning to act in the same way that the Stuarts did.” It doesn’t matter that the Stuarts were kings—that’s not the important point. What matters is how the government acts.

A group of writers joined together. Their major spokesman was John Lilburne, and the Leveller manifestos are available in a number of editions. Others included Richard Overton and William Walwyn. Lilburne had been arrested under Charles I for having violated the monopoly of the Stationers’ Company by importing books from Holland.

One of the characteristics of the absolute monarch, and especially of the Stuarts, was the creation of monopolies. Monopolies, as they were understood in those days, were special privileged grants given to private individuals by the state. Monopolies were not considered a natural outgrowth of the free market. This was purely a state invention, and in this case, this particular stationer’s guild or printer’s guild had a monopoly on importing books. Lilburne tried to import books and he was arrested. For this he was whipped down the length of Fleet Street and thrown into prison. But Lilburne noticed that the stationer’s monopoly was not abolished by the new revolutionary government but only renamed. The monopoly remained, and it was a thorn in his side and it turned him to thinking about whether this new regime was really much different from the previous one. (There was also a monopoly granted to the Merchant Adventurers company in foreign trade.) What the Levellers demanded was this—here is a statement of theirs: “It shall not be in their power”—shall not be in Parliament’s power, not just the king’s power—“to continue or make any Laws to abridge or hinder any person or persons from trading or merchandising into any place beyond the Seas where any of this Nation are free to Trade.”15 The Levellers favored the abolition of foreign trade monopolies. They favored the abolition of tithes of any religion whatsoever. There should be no coerced support of religion. They were the first to present a comprehensive program, including the abolition of government monopolies,

15Lilburne, Walwyn, Thomas Prince, and Overton, “An Agreement of the Free People of England,” in Leveller Manifestoes of the Puritan Revolution, ed. Don M. Wolfe (New York: Thomas Nelson and Sons, 1944), pp. 405–7.

the total separation of religion and the state, freedom of the press, lower taxes, and a democratic reform of the franchise. They also believed that it was kind of mean of the English to try to exterminate the Irish.

They were given the name Levellers by their enemies who accused them of advocating an egalitarian leveling of all economic and social distinctions, which is patently untrue. As a matter of fact, the Canadian C.B. MacPherson maintained that the Levellers were a typical product of bourgeois liberalism and in fact favored restricting the franchise to those who paid taxes.16 So that paupers could not vote and domestic servants could not vote because they were considered too much under the influence of others; so that on the left, the Levellers are accused of being too bourgeois and pro–private property.

It’s odd that Russell Kirk accepted the interpretation of the Levellers as egalitarians and grouped them together with the Diggers, who were in fact a communist sect at the time. Gerrard Winstanley and the Diggers—those were the communists of this turbulent period, and Russell Kirk neglected to make that slight distinction. The Levellers were important on two theoretical counts. First, they opposed the infringement on individual rights that came now not from the king but from Parliament. Second, they disconnected the ideas of liberty and right from the ancient metrics of historical privilege that characterized them in the Middle Ages. They did, from time to time, talk about the “Norman yoke.” That is a reference to how Anglo-Saxon Britain had enjoyed basic freedom and then the Normans came over and imposed a centralized oppressive government. They did talk in that way.

The Levellers are a transitionary group. However, they went beyond that, and as one Leveller manifesto famously put it, Magna Carta itself is “but a beggarly thing”17—that is, we have to go beyond Magna Carta, which lists certain rights, to universal natural rights. Richard Overton, one of the main Leveller pamphleteers, put it in a very good quotation.

16According to J.C. Davis, Macpherson maintained that the Levellers sought to deny the vote to “criminals, delinquents, servants and alms takers.” See Davis, “The Levellers and Democracy,” Past and Present 40, no. 1 (July 1968): 175, https://www.jstor.org/stable/650074.

17Walwyn, quoted in Andrew Sharp, “John Lilburne and the Long Parliament’s ‘Book of Declarations’: A Radical’s Exploitation of the Words of Authorities,” History of Political Thought 9, no. 1 (Spring 1988): 37, https://www.jstor.org/stable/44797088.

This is what Overton said: “To every individual in nature is given an individual property by nature, not to be invaded or usurped by any: for every one as he is himself, so he has a self property”—property in your own self—“else he could not be himself, and on this, no second may presume or deprive of, without manifest violation and affront to the very principles of nature”—making it kind of metaphysical—“and of the Rules of equity and justice between man and man; mine and thine”—that is, private property—“cannot be, except this be; No man hath power over my rights and liberties, and I over no man’s.”18

This is a kind of pre-echo of Herbert Spencer’s law of equal freedom.19 And you can see we’re now in a different intellectual world from having recourse to ancient documents and promises of kings and pledges, and so on. This is the world of abstract natural rights. Now, although they were defeated, the Levellers left an important legacy of radical liberal thought among the English-speaking people.

They were defeated. Cromwell died, and Charles II returned in the Restoration. The Levellers tried to influence things through the New Model Army—that is, through actually gaining influence over the military personnel—but Cromwell and his people were able to thwart that. So, they never got very far. However, they left this legacy. Murray Rothbard calls them “the world’s first self-consciously libertarian mass movement.”20 And he refers to Locke and his patron the Earl of Shaft-esbury as working out a “neo-Leveller” synthesis.21

One of the Levellers was named Richard Rumbold, and he famously said, “None comes into this world with a saddle upon his back, nor any booted and spurred to ride him.”22 And that was later

18Quoted in Carl Watner, “‘Come What, Come Will!’: Richard Overton, Libertarian Leveller,” Journal of Libertarian Studies 4, no. 4 (Fall 1980): 410.19George Bragues, “Herbert Spencer’s Principle of Equal Freedom: Is It Well Grounded?,” Independent Review 25, no. 2 (Fall 2020): 207–28, https://www.jstor.org/stable/48617482.

20Rothbard, An Austrian Perspective on the History of Economic Thought, vol. 1, Eco-nomic Thought before Adam Smith (Cheltenham, UK: Edward Elgar, 2006), p. 313.21Ibid., p. 315.

22Rumbold, “The Last Speech of Col. Richard Rumbold at the Market Cross at Edinburgh, with Several Things That Passed, at His Trial, June 26, 1685,” in A Complete Collection of State Trials and Proceedings for High Treason and Other Crimes and Misdemeanors (London, 1816), 11:881.

quoted by Thomas Jefferson—it was a premise of Jefferson’s. The idea extends from Jefferson and Tom Paine, in the American Revolution, to Richard Price and Joseph Priestly at the time of the French Revolution. It extends through the Jeffersonian and Jacksonian traditions in America, the Anti–Corn Law movement in Britain—and many other classical liberal and libertarian movements can be traced back to the Levellers.

THE IMPORTANCEOF JOHN LOCKE

Now, a name that everybody knows in the history of classical liberalism is that of John Locke. Locke is a great fountainhead of liberal thought in the English-speaking world. His ideas were crucial in the American colonies, especially as spread through the writings of Thomas Gordon and John Trenchard.23 And with Locke, we have the conception of society as ruled before the establishment of government. Imagining government out of the picture, what would we have? Well, not a Hobbesian state of war of all against all but a state of being ruled by the law of nature and the fundamental idea of the law of nature being the right of each individual to his property. Property, if you read Locke carefully enough—or at least a little more carefully than some professors do—is a term that Locke gives not simply to material goods. It is the collective term he uses for the individual’s right to life, liberty, and estates. In agreement with Overton, Locke says you belong to yourself. Governments are established for no other purpose than to secure these rights better than they can be secured in a state of nature. When, instead, the government becomes a violator of the rights of the people, the contract is broken and the people’s right of resistance comes into operation.

This is very familiar to us, right? This is a certain part of the key conception in the first part of the Declaration of Independence. Jefferson said, in writing the Declaration of Independence, he didn’t consult any other works. Well, he didn’t have to, because he knew Locke by heart, on these points anyway. This Lockean view of what government

23Thomas Gordon and John Trenchard wrote a lengthy series of essays for the London Journal during the 1720s. These essays were collected and printed as Essays on Liberty, Civil and Religious and popularized Locke’s writings and ideas. The essays became influential among many later liberals, including many American revolutionaries in the late eighteenth century.

is—and how it’s related to protection of the rights of the individual and what those rights are—became standard for quite a while among English-speaking people. I would say it is still standard among the American people on some level.

It is now known through the work of Peter Laslett that Locke had developed these ideas long before the Glorious Revolution of 1688, which threw out James II and brought in William and Mary.24 What has come out of the work of Richard Ashcraft now is a better understanding of Locke as a radical.25 It turns out that Locke was deeply dissatisfied with the Glorious Revolution, the idol of so many weak writers afterwards. In a letter to a close friend, he criticized the new government for busying itself with “small matters” when “now they have an opportunity offered to find remedies and set up a constitution, that may be lasting, for the security of civil rights and the liberty and property of all the subjects of the nation.”26

Well, there was, in other words, this more radical Locke that has been buried for quite a while.

A main consideration and a main thing to keep in mind in discussing the history of liberalism—unlike the way so many people, especially philosophers, do—is that liberalism was not simply a col-loquy among talking heads, among philosophers, over the centuries. I started this series of talks by discussing the miracle of Europe and the institutional arrangements that came into existence. Liberalism is an ideology; it’s an intellectual product. However, it developed over time, came into existence and developed over time, in close interaction with social reality. People saw society as it operated around them, they reflected on it, they distilled their ideas—that is, they went to a higher stage than what they saw prevalent in the society of their time, but it was a matter of a constant interaction. One of the best historians of Anglo-American liberalism, although she certainly is not a great

24See Locke, Two Treatises of Government: A Critical Edition with an Introduction and Apparatus Criticus, ed. Peter Laslett (Cambridge: Cambridge University Press, 1963), pp. 46–47.

25Richard Ashcraft, “Revolutionary Politics and Locke’s Two Treatises of Gov-ernment: Radicalism and Lockean Political Theory,” Political Theory 8, no. 4 (November 1980): 429–86, https://www.jstor.org/stable/190657.26Locke to Edward Clarke, February 8, 1689, in The Correspondence of John Locke and Edward Clarke, ed. Benjamin Rand (Cambridge, MA: Harvard University Press, 1927), p. 289.

fan of the free market, is Joyce Appleby, of UCLA. Appleby wrote of England in the seventeenth century that it was then that people discovered the underlying regularity of free market activity . . . and in so doing they had come upon a possibility and a reality. The reality was that individuals making decisions about their own persons and property were the determiners of price in the market. The possibility was that the economic rationalism of market participants could supply the order to the economy formerly secured through authority.27

That is the mercantilist economy. She also wrote about America and the Jeffersonian tradition in America. This is of America in the later eighteenth century. She says, In the eighteenth century, two features of the market economy fascinated contemporaries: the reliance upon individual initiative and the absence of authoritarian direction. . . . A century and a quarter of economic development had dra—matically enhanced public opinion about voluntary human actions, and society [emphasis in the original] was the word that emerged to represent the uncoerced relations of people living under the same authority. It is this vision which animated the Jeffersonians.28

This is easily illustrated by many authorities, such as we find with a famous statement by Thomas Paine that society under every condition is a good. The state, our government, on the other hand, is at best a necessary evil.29 This contrast is between society—the realm of individual, voluntary interaction—and the state, which is the realm of coercion. Appleby says, since England was far away and there was no standing army and coercive policies were very hard to put into effect, pretty much a de facto laissez-faire society had come into existence in America. People saw that it worked—worked real fine—reflected

27Appleby, Economic Thought and Ideology in Seventeenth-Century England(Princeton, NJ: Princeton University Press, 1978), pp. 187–88.28Appleby, Capitalism and a New Social Order: The Republican Vision of the 1790s(New York: New York University Press, 1984), pp. 22–23.29The original Paine quotation reads, “Society in every state is a blessing, but government even in its best state is but a necessary evil, in its worst state an intolerable one.” Paine, Common Sense and other Political Writings (Indianapolis, IN: Bobbs-Merrill, 1953), p. 4.

on that and then, as I say, raised the reflection to a higher level in the works, for instance, of Jefferson or Tom Paine.

EIGHTEENTH-CENTURY CONTINENTAL LIBERALS

So, the role of exemplary experiments in the development of liberalism in Europe was crucial. As Holland was the example to Europe, especially to England, so England became the example to Europe, especially to France and to Germany. Later, the example of America, the colonies and then the republic, exerted a strong influence on Germany, France, and elsewhere in Europe.

Poland, to take one example at random: the final attempted reforms of King Stanislaw Poniatowski and the Constitution of 1791 were affected by American ideas through Phillip Mazzei, the friend of Jefferson. Other examples could be given. Gradually, observation and deduction distilled and refined the basic concept of liberal social theory which I mentioned at the beginning of my talk. “Laissez-faire,” the idea that, by and large, civil society runs itself, was put in precisely these terms by the French: “Laissez-faire et laissez-passer, le monde va de lui même.” Laissez-faire, laissez-passer: the world goes by itself.

One of the prime advocates of this doctrine was “the Great Tur-got,” Anne Robert Jacques Turgot. This use of “great” is unusual in historical discourse. Usually, historians reserve the term “great” for mass murderers or people who murder, maim, and blind their brothers so that nobody else should have a claim to the throne. These are people who enserfed whole classes of the population, as Catherine the Great helped do in Russia, and so on—or people who unleashed world wars, in eighteenth-century terms, as Frederick the Great did in Prussia. But Turgot was an actual benefactor of the people and is sometimes, at least, called “the Great.”

In his chapter on Turgot in his History of Economic Thought, Rothbard considers Turgot to be a dazzling economist.30 I think that the chapter begins something along these lines: at a chess tournament—Murray loved chess—they give prizes for the most brilliant play, not necessary the most successful or most smashing; but stylistically brilliant, or really

30See Rothbard, History of Economics Thought, vol. 1, chap. 14, “The Brilliance of Turgot.”

chic, you might say. And Murray thought that Turgot was such an economist in what he did with his short book on economic theory, which appeared considerably before Adam Smith.31

Turgot was one of the philosophes. He was not a militant anti-Catholic or atheist, as some of the others were. He was the mentor of the Marquis de Condorcet, who was very highly thought of among the philosophes. And then, for a very brief while, Louis XVI became king. Turgot was brought in as finance minister in order to save the very troubled French monarchy, and he brought in some reforms, very needed reforms, and was planning on doing away with the corvée— forced labor—for instance. Turgot was doing away with the guilds and was planning other reforms, such as toleration of the Protestants and regional representative institutions. But he was done in, in very clear public choice terms, by the cabal of the court, headed by Marie Antoinette. Without Turgot’s reforms, probably the last chance of the Bourbon monarchy was gone, and Louis XVI and his wife were going to be paying for that in a few years’ time.

Nonetheless, he was remembered very fondly by lovers of freedom in France. To give an example of how social thought, and liberal thought, was being advanced at the time, this is what Turgot wrote: Thus our policy should surrender itself to the course of nature, and the course of commerce, which is no less necessary and no less irresistible than the course of nature, without seeking to direct this course. For, in order to guide it without disturbing it, and without injuring ourselves, it would be necessary for us to be able to follow all the changes in the needs, the interests, and the industry of mankind. It would be necessary to know these in such detail as would be physically impossible to obtain. . . . Even if we had for all these particulars the mass of knowledge which is impossible to gather, the result would only be to let things go precisely as they would have gone by themselves, by the simple action of the self-interest of man, enlivened and held in check by a free competition.32

31Turgot, Reflections on the Formation and Distribution of Wealth. The original French version was written in 1766 and first published in 1770.32Turgot to l’Abbé Terray, December 24, 1773, in The Turgot Collection: Writings, Speeches, and Letters of Anne Robert Jacques Turgot, Baron de Laune, ed. David Gordon (Auburn, AL: Ludwig von Mises Institute, 2011), p. 256, https://mises.org/library/book/turgot-collection. In the original lecture, Raico employs aThe Struggle for Liberty 59

Those of you who are familiar with the history of the Austrian school, I think, can see that this rings a bell. This is Mises’s, and then Hayek’s, amplification of the theory of the role of knowledge and society and why central planning is ultimately impossible and futile.33 The decentralized, even tacit, knowledge of the economy that exists everywhere, and scattered, cannot be brought together, and the central planners are doomed from the start. Here we have that central idea as expressed by Turgot.

ADAM SMITHANDTHE SCOTTISH ENLIGHTENMENT

Now, in the eighteenth century, there was, of course, the French Enlightenment, much of which can be considered dubious. I’m going to be talking about Rousseau later on. There was also, however, something that has gotten more attention recently, and that is the Scottish Enlightenment—well, “recently,” in the past thirty years or so. The chief figures of this were Adam Smith, David Hume, Adam Ferguson.

Hayek was very fond of the Scottish school and loved Adam Smith in particular. Rothbard was not nearly so fond. In regards to Adam Smith, Murray could never really take some intellectual figure and say, “Well, this is where I disagree with the man, and he has a right to his own opinion.” Murray had to totally smash him. And he does this in regard to Adam Smith and thinks of him as a retrogression from what the Spanish Scholastics, let alone French economists like Turgot, had accomplished.

There’s a debate whether Adam Smith believed in the labor theory of value, but certainly he gives enough reason in Wealth of Nations to support the labor theory of value. In criticizing Smith, though, it’s not as if Rothbard was going in some crazy direction all by himself. Joseph Schumpeter pretty much says the same thing. People who attacked Rothbard—some of the reviewers attacked Murray for being too critical of Smith—should look up Schumpeter.34 What I would say is this:

different translation and paraphrases slightly. Here, I have used the quotation as it appears in the Gordon edition.

33See Mises, Economic Calculation in the Socialist Commonwealth, trans. S. Adler (Auburn, AL: Mises Institute, 1990), https://mises.org/library/book/economic-calculation-socialist-commonwealth.

34Among Schumpeter’s many criticisms of Smith was his contention that Smith was unoriginal, and “the fact is that the Wealth of Nations does not 60 Ralph Raico

leaving aside Smith as an original economist and contributor to the development of economic theory, Smith’s influence—the influence of his implied and sometimes-made-explicit social policy and political policy—was for the good.

This was the impact that he had on the Continent. To take one example of a view that Smith expressed, Little else is a requisite to carry a state to a highest degree of opulence from the lowest barbarism, but peace, easy taxes and tolerable administration of justice, that is the rule of law, peace, low taxes and the rule of law, all the rest being brought about by the natural course of things.35

That was, in fact, quoted by the Australian economist E.L Jones I mentioned in the last lecture in his book on the European miracle.36 That is the position of these European-miracle-, institutional-approach-type economists: that what we have to explain is the lack of economic progress in many places. That’s explained by the state acting, among other things, in its traditional role as predator on society. If, instead of that, we had what Smith recommended—that is, peace, easy taxes, and the rule of law—then you would find some economic development, at least, everywhere. This general view and this idea of the invisible hand, which lends itself to the laissez-faire idea, did help in a positive direction in the decades after. An example of this, an example of the power of ideas, is a man who wrote the first biography of Adam Smith, his own student Dugald Stewart. Stewart occupied the chair of moral philosophy at the University of Edinburgh for twenty-five years until 1810. He taught that a great part of the order which “we are apt to ascribe to legislative sagacity is the natural result of the selfish pursuits of individuals.”37 These are practically the same words used contain a single analytic idea, principle, or method that was entirely new in 1776.” Schumpeter, History of Economic Analysis (New York: Routledge, 1954), p. 184.

35Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (Glasgow, 1870), p. 13.

36See Jones, European Miracle, p. 235.37Stewart, Elements of the Philosophy of the Human Mind (Albany, NY, 1821), 2:122.

by Tom Paine.38 Much of the order we find in society comes from individuals pursuing their own self-interest.

For twenty-five years, Stewart taught at the University of Edinburgh. Among his students were Francis Jeffrey, the first editor of the Edinburgh Review. The Edinburgh Review was the great review of Whig classical liberal thought in the first half of the nineteenth century in England. Thomas Babington Macaulay, for instance, wrote almost all of his essays for the Edinburgh Review. Also among Stewart’s students were Henry Brougham, the famous Whig member of Parliament; Henry Reeve, who was the first translator of Tocqueville’s Democracy in America; Sydney Smith was a great Anglican clergyman, liberal politician, and liberal polemicist and favored Catholic emancipation and other liberal reforms. There’s a great quotation that Murray Rothbard liked from Sydney Smith—who was kind of a wit—about all of the unfortunate, deplorable consequences of England involving itself in everybody’s troubles throughout the world. He was an isolationist as well, and Smith wrote an aristocratic friend of his, I am sorry for the Spaniards—I am sorry for the Greeks; I deplore the fate of the Jews; the people of the Sandwich Islands are groaning under the most detestable tyranny; Baghdad is oppressed; I do not like the present state of the Delta; Tibet is not comfortable. Am I to fight for all these people? The world is bursting with sin and sorrow. Am I to be champion of the Decalogue, and to be eternally raising fleets and armies to make all men good and happy? We have just done saving Europe, and I am afraid that the consequence will be, that we shall cut each other’s throats. No war, dear Lady Grey!—No eloquence; but apathy, selfishness, common sense, arithmetic!39

38Paine’s version of this statement is found in Rights of Man: “A great part of that order which reigns upon mankind is not the effect of government . . . society performs for itself almost everything which is ascribed to government.” See Paine, Common Sense and other Political Writings (Indianapolis, IN: Bobbs-Merrill, 1953), p. 116.

39In the original lecture, Raico parahrases Smith, but I have included the original quotation, which is quoted by Rothbard in a 1962 memo to Kenneth Templeton of the William Volcker Fund. The Smith quotation is from a letter to Lady Grey, dated February 19, 1823. See Smith, The Wit and Wisdom of the Rev. Sydney Smith (London, 1869), p. 343.

Among the other students of Stewart was a man named James Mill, also Lord Palmerston—not that he was such a great liberal—and Lord John Russell. Palmerston and Russell were the two most influential Whig politicians of the middle-nineteenth century, and these people all had studied under Stewart. It was not necessarily that they learned all of liberal philosophy from him, but they were influenced, in some cases to a large degree, in some cases to a somewhat lesser degree.

THE FRENCH REVOLUTIONAND ITS EFFECTSON LIBERALISM

Then comes the French Revolution. In discussing the history of liberalism, there are a number of distorting factors. One is to consider the French Revolution, even fundamentally, a liberal revolution. Yes, in the end, there were some liberal reforms made. Religious toleration, for instance, and equality of classes before the law. But these were reforms that were in the cards. These were reforms that the French monarchy was edging towards—it was not going to happen in two years.

On the other hand, what did the French Revolution do? It brought in twenty-five years of war that only ended at Waterloo, so it put back reform in many respects. You have to ask yourself whether the quick-ening of the pace of reform, of the necessary and liberal reforms, was worth what they had to go through.

We further see the lack of liberalism among the revolutionaries in the fact that the French revolutionaries’ “Declaration of the Rights of Man and of the Citizen” is in no way as unequivocal as the American Bill of Rights. The French declaration says, for instance, there shall be freedom of thought, even for religion, “within the limits of the law.” They never got to the American point, which was that Congress shall make no law regarding the establishment of a religion or prohibiting the free exercise thereof. Now, of course, this didn’t mean separation of church and state within the American states, but it meant that the federal government could do nothing along these lines. And then, to my mind, you didn’t need the Fourteenth Amendment and incorporation of the Fourteenth Amendment toward using the Bill of Rights against states.

What would have happened along the lines of ordinary federal-ism—that is, if people of a certain denomination were discriminated against or taxed in a certain state? There’d be a tendency to move somewhere else. The states that continued such discrimination—or establishment of a religion to some degree or another—would suffer for it, The Struggle for Liberty 63

economically and otherwise. Eventually—I don’t know how long, but in a few decades—the state in question would abolish its favoritism among denominations.

This is, in fact, what happened even before the period of the time of the incorporation of the Bill of Rights through the Fourteenth Amendment. The states in virtually every case, even before the Civil War, had abolished any kind of religious superiority among denominations such as the Episcopal Church, which had at first been privileged in Virginia. The Congregationalists had been privileged in Massachusetts. That did fade away, even without a central government forcing the states to do it.

In France, we could have had these reforms eventually—and peaceful organic reforms are always superior to revolution and subsequent war unless we’re talking about extreme cases.

The French Revolution led to a series of disasters, one after the other. The inflation of the assignat paper money brought about price controls and other measures. The confiscation of the church land, which not only shook the principle of private ownership of land but also presented the problem of what to do about the church now. How is the church to be supported? That brought the state into the question. The French state, from then on, as in most European countries, continued to support the church afterwards. It wasn’t just the Catholic Church but other denominations as well.

They did not learn the American principle of “there shall be no law”—shall make no law establishing a religion. That would have been total separation, leaving religion, among many other things, to society rather than monopolizing the religious realm by the state.

The French Revolution—having been lived through and experienced and witnessed—led to changes in liberalism itself. The liberals, by and large, had welcomed certain of the early reforms and the so-called first phase of the revolution. But there had also been the emer-gence of unexpected—of unheard of—violations of individual liberty. There was, for example, the Reign of Terror of 1793–94, which was claimed to be warranted by popular sovereignty.

And then there was the reign of Napoleon, whose actions were confirmed by democratic plebiscites and who brought centralization of government power to new heights. This was an important innovation of Napoleon’s, followed then by his nephew Napoleon III and also 64 Ralph Raico

by the dictators of the twentieth century: that they have their actions confirmed, okayed, in a pseudodemocratic way, by having plebiscites.

Two things the liberals learned: First, that democracy, the alleged rule by the people, may in fact represent the rule of a determined minority that aims to control society. Second, the liberals were infused with what has been called “state hatred.” Before this, the liberals— many of them—had felt that the state was essentially a neutral device that could be utilized in favorable conditions to bring about many valuable reforms in society. After the revolution, many liberals now saw the state as a locus of constant threats to freedom and as a self-interested enemy—a standing enemy—and perpetual enemy of civil society.

Earlier on, someone like Turgot—certainly someone like Voltaire—thought and said, “How do you bring about these necessary reforms towards individual freedom in society?” The idea was, “Well, you whisper in the ear of the king, and the king now has all the power that’s necessary, and he will bring about the reforms so the society can be improved in this way.” Afterwards, many liberals understood that whoever controlled the state apparatus—whether they said that they were legitimized by democratic majorities, as revolutionary governments did, or if they claimed, like Napoleon, to be legitimized by plebiscite once in a while—could use the state to seriously damage civil society. Thus, the state had to be looked on with suspicion.