Origins of Classical Liberalism

Classical liberalism has its roots in the Enlightenment (late 17th – early 18th century)  a time period where logic and reason were promoted and the traditional authority of the Church was being challenged Increased interest in the individual during this point in time, expressed through art, literature, etc. People began to demand greater economic opportunities, individual rights and freedoms, and social equality.

Key Ideas of Classical Liberalism: Human nature is rational, good, all are equal Small & limited gov’t is best Protection of individual rights & freedoms Emphasis on private property rights Rule of law Democratic, elected governments Major focus on free-market economy, less concern for lives of ordinary citizens

Hobbes – society needs to ensure the security of all individuals, done through sacrificing sovereignty to a powerful leader (“Leviathan”) Locke – opposed authoritarianism of the Church and the state, gov’t needs to be directly accountable to the people (social contract) Montesquieu – believed in the equality of individuals and accountable gov’t, there should be a separation of powers in gov’t (executive, legislative, judicial branches) and a democratic system to allow citizen participation in gov’t

The U.S. system of checks and balances

Montesquieu’s separation of powers is a key concept in most democracies today, but at the time was a very radical idea. J.S. Mill – only limitations on individuals should be those that protect the liberty of others, emphasized importance of freedom of speech – it is important to have dissent in society (many different opinions)

Industrial revolution – shift from traditional rural, agricultural economy to an industrialized (factories) urban society  starts in Britain approx. 1750 Enclosure acts – changed the way rural land was controlled, forced thousands into towns and cities in search of work

New ideas about individualism, a gov’t looking to encourage business and economic growth, new inventions/technology, and a large supply of cheap labour combined to result in industrialization, mass production, the expansion of capitalism, and urbanization. Also resulted in terrible working/living conditions, extreme economic disparity, child labour, environmental damage

Until this time the main economic system in Europe was mercantilism which focused on strengthening the wealth of the state with strict regulations on imports/exports, the use of tariffs, and the accumulation of gold and other resources. Laissez-faire – literally means “leave alone” or “hands off” – belief that gov’t should leave businesses and individuals alone to follow self-interest  NO GOV’T INVOLVEMENT IN ECONOMY

Monopoly = no competition = poor products, high prices Adam Smith – popularized the idea of a laissez-faire, capitalist, free market economy Monopoly = no competition = poor products, high prices Competition encourages self-interest and leads to higher quality goods at lower prices Invisible Hand – in a free-market the “Invisible Hand” unintentionally improves prosperity for all makes sure consumers wants/needs are met by producers who are driven by profit motive Gov’t needs to stay out of the economy (“laissez-faire”) to allow this to happen These ideas are the heart of economic liberalism or capitalism