{"id":1360,"date":"2022-04-21T17:46:00","date_gmt":"2022-04-21T06:46:00","guid":{"rendered":"http:\/\/davidmhart.com\/wordpress\/?p=1360"},"modified":"2026-04-12T08:38:30","modified_gmt":"2026-04-11T22:38:30","slug":"a-balance-sheet-of-the-success-and-failures-of-classical-liberalism","status":"publish","type":"post","link":"http:\/\/davidmhart.com\/wordpress\/a-balance-sheet-of-the-success-and-failures-of-classical-liberalism\/","title":{"rendered":"A Balance Sheet of the Success and Failures of Classical Liberalism"},"content":{"rendered":"

<\/p>\n

[Note<\/strong>: This post is part of a series<\/a> on the History of the Classical Liberal Tradition]<\/p>\n

Introduction<\/h2>\n

Following the rise to power of Louis Napoleon, who declared himself Emperor Napol\u00e9on III in 1852, the radical French CL and political economist Gustave de Molinari (1819-1912) gave a lecture at the Mus\u00e9e royale de l\u2019industrie belge<\/em> in October 1852 on \u201cLes R\u00e9volutions et le despotisme envisag\u00e9s au point de vue des int\u00e9r\u00eats mat\u00e9riel\u201d (Revolutions and despotism considered from the point of view of material interests). In this lecture he declared that it was the function of economists to be \u201cles teneurs de livres de la politique\u201d (the bookkeepers of politics) who should periodically draw up a balance sheet of the \u201cprofits and losses\u201d or the \u201ccosts and benefits\u201d of political activity. In his case it was the impact of the French Revolution in 1789 and another revolution on February 1848. [For the details of his political \u201cbookkeeping\u201d see my essay \u201cGustave de Molinari on Economists as the Bookkeepers of Politics: \u2018Unfortunately, No One Listens To Economists\u2019.\u201d (23 April, 2020). Online<\/a>.]<\/p>\n

I want to do much the same here, but this time to draw up a list of the costs and benefits of a political and economic ideology, or rather the \u201csuccesses\u201d and \u201cfailures\u201d of Classical Liberalism (henceforth \u201cCL\u201d). My conclusion is that the very considerable \u201cbenefits\u201d or achievements of CL have not been recognized as they should have been, and that modern day CLs and libertarians have not adequately recognized and discussed the very obvious costs or \u201cfailures\u201d of their tradition. What they can do to address the latter is a matter still to be resolved.<\/p>\n

The Achievements of Liberalism<\/h2>\n

The achievements of CL have been enormous since CL first began challenging the Old Order of the monarchical\/absolutist state (Throne) and the established church (Altar) in the 17th century, with most of its successes coming in the late 18th century (the American and French revolutions) and their aftermath in the 19th century.<\/p>\n

These achievements can be summarized as<\/p>\n

    \n
  1. the Great Emancipation, and<\/li>\n
  2. the Great Enrichment<\/li>\n<\/ol>\n

    The Great Emancipation<\/h3>\n

    Richard Ebeling has called this movement the CL \u201ccrusades\u201d for liberty and Peter Boettke \u201cthe emancipation project\u201d. This freed millions of people from the bondage (Boettke\u2019s word) of the Throne (the monarchy), the Altar (the established church), the Sword (the military), Slavery and Serfdom (the large land and plantation owners), the Plough (pre-industrial agriculture), and the Mercantile interests.<\/p>\n

    See the following posts for more information:<\/p>\n

      \n
    1. \u201cClassical Liberalism as a Revolutionary Ideology of Emancipation\u201d (13 Oct. 2021) here<\/a><\/li>\n
    2. \u201cClassical Liberalism as the Philosophy of Emancipation II: The \u201cTrue Radical Liberalism\u201d of Peter Boettke\u201d (17 Oct. 2021) here<\/a><\/li>\n<\/ol>\n

      My list of \u201cemancipations\u201d is a compilation and expansion of Ebeling\u2019s and Boettke\u2019s lists. As a result of CL reforms and revolutions much of western Europe, America, and the English colonies were emancipated:<\/p>\n

        \n
      1. from coerced labour such as slavery and serfdom (abolition)<\/li>\n
      2. from the arbitrary authority of kings and princes (constitutional limits to state power, the rule of law, freedom of speech, low taxation)<\/li>\n
      3. from \u201ccruel & unusual punishment\u201d, such as torture, the death penalty, arrest without court order, imprisonment without trial (trial by jury, independent judiciary, habeas corpus, punishments which \u201cfit the crime\u201d)<\/li>\n
      4. from violations of property rights (legal protection of property, enforcement of contracts)<\/li>\n
      5. from the arbitrary power of the Church (freedom of religion, freedom of speech, freedom from paying compulsory tithes)<\/li>\n
      6. from restrictions and bans on associating with others on a voluntary basis (marriage and divorce laws, private clubs and associations (\u201ccivil society\u201d))<\/li>\n
      7. from restrictions on trade and industrial activity (free trade and deregulation, freedom to enter and practice a profession or trade)<\/li>\n
      8. from restrictions on the movement of people, goods, and capital (freedom to move within the country, freedom to emigrate, free trade)<\/li>\n
      9. from strict limits on who could participate in political activity such as voting and standing for election (democracy, freedom of association, freedom of speech)<\/li>\n
      10. from war and conscription into the army (peace, low taxes and debt, laws of warfare, international arbitration)<\/li>\n<\/ol>\n

        Note<\/strong>: There were many aspects of life in the 19th century which were never regulated by the state in any systematic manner, such as private activities such as prostitution, or the production, sale, and consumption of alcohol and drugs. It would only be in the 20th century, when liberal ideas and institutions were severely weakened that the state began to prohibit, sometimes ruthlessly, so-called \u201cvictimless crimes\u201d like prostitution, alcohol, and drugs.<\/p>\n

        The Great Enrichment<\/h3>\n

        This is Deidre McCloskey\u2019s term and she has documented how the great emancipation led directly to an explosion of wealth creation (market driven innovation, greater productivity of free production and free trade) which in turn led to longer life expectancy, lower infant morality (and childbirth deaths of mothers), reduction of disease, less demanding physical labour (mechanization), and greater home comforts for the first time in human history, especially for ordinary working people (piped water, sewers, heating, light).<\/p>\n

        For a summary of her findings see this article:<\/p>\n

        Deirdre McCloskey, \u201cThe Great Enrichment\u201d Discourse (July 13, 2020 here<\/a><\/p>\n

        and note the accompanying table showing the extraordinary increase in wealth which 1.4 to 2% annual growth can achieve:<\/p>\n

        <\/p>\n

        The argument is that this modest annual growth was made possible for the first time in human history, and was only possible at all, because of CL reforms in ideas, behaviour, and institutions.<\/p>\n

        It is important to note that an important pre-condition for the Great Enrichment\u201d was a change in thinking about the merits of productive labour. Traditional elites considered productive labour undertaken by themselves to be demeaning to one\u2019s social status, thus one needed servants, serfs, and slaves to undertake the actual hard work to create wealth. For most of human history the ideal elites sought to copy was that of the warrior or the aristocratic land owner with the time and leisure and wealth to pursue \u201chigher\u201d ends. The sea change which made the Great Enrichment possible was for more and more people to see that productive labour (including running a business, engaging in trade, selling goods and services to ordinary consumers) was a \u201cnoble\u201d activity in itself and that all impediments to such activity should be removed. This applied not just to others but also to oneself and one\u2019s children, that it was no shame to \u201cgo into trade\u201d as it was called. For example, a key indicator of how these ideas about labour had changed during the course of the 19th century in Britain was the number of \u201cbeer barons\u201d who were awarded knighthoods and earldoms by the British monarchy.<\/p>\n

        The Failures of CL<\/h2>\n

        Although these emancipations and enrichment completely transformed European and American society and laid the foundation for our modern world they were left incomplete and unfinished, and, as a result, other ideologies less friendly, even very hostile to CL, have become dominant (socialism, welfare statism, fascism\/populism).<\/p>\n

        1.) The emancipation project was left incomplete<\/strong> with some groups left out or ignored (women, gays, indigenous people). This was due to a number of factors:<\/p>\n

          \n
        1. the inconsistent application of liberal principles<\/strong> by believing that not all human beings had equal \u201crights\u201d to life, liberty and property, or that if they had these rights they were already \u201cprotected\u201d by their \u201cguardians\u201d, whether they be their husbands, fathers, or more \u201cadvanced\u201d white men;<\/li>\n
        2. complacency<\/strong> on the part of many CLs who believed that the continuation of the liberal project was \u201cinevitable\u201d as it was part of an unstoppable evolutionary process, or<\/li>\n
        3. their religious arrogance<\/strong> since they believed that they had undertaken a Christian \u201ccivilizing mission\u201d to bring God and liberal order to the colonies.<\/li>\n<\/ol>\n

          The exclusion of these groups opened the door for other political and economic ideologies to step into the gap left by the CLs and to offer an alternative route to their eventual emancipation by means of much greater state intervention.<\/p>\n

          2.) CL political and economic theory suffered from a series of weaknesses<\/strong> which made it vulnerable to criticism and being replaced by other ideologies which seemed to be able to offer explanations and solutions to current problems. These other \u201csolutions\u201d usually involved much greater state regulation and control of both private life and the economy. Some of the theoretical problems within CL theory included:<\/p>\n

            \n
          1. viewing \u201cdemocracy\u201d as an end in itself rather than as a means<\/strong> to achieve a higher end (such as removing the power and privileges of the old elites, making politicians and government agents accountable \u201cto the people\u201d, placing strict limits on the power of the state; instead, democracy came to be seen as an end in itself which was applicable to larger and larger areas of human activity, such as economics, thus giving rise to the idea of \u201csocial democracy\u201d<\/li>\n
          2. the weakening of belief in natural rights<\/strong> as the foundation of liberty (which had radical implications) and its replacement by utilitarianism which was a far weaker defence of liberty in that it allowed many exceptions based upon bureaucratic and political calculations of \u201cthe greatest happiness of the greatest number\u201d principle<\/li>\n
          3. exaggerating the extent of and misunderstanding the reasons for \u201cmarket failure\u201d<\/strong> which led to the belief that the government (regulation) should be used to rectify these failures; the older \u201cpresumption of liberty\u201d as the guiding principle of government policy was replaced with \u201cthe presumption of government intervention\u201d to solve problems<\/li>\n
          4. ignoring the problem of \u201cgovernment failure\u201d<\/strong> by overestimating the ability of the state to regulate economic matters; the reasons for this failure of government would not be fully appreciated until the work of Mises and Hayek in the 1920s and 1930s (the problem of rational economic calculation under socialism, the problem of knowledge), and Buchanan and Tullock in the 1960s (the self-interested behaviour of politicians and bureaucrats)<\/li>\n
          5. not being able to explain the cause of the business cycle and the economic depressions which were the result<\/strong> which hurt the working class and seriously disrupted industry and commerce; again, this problem would not be fully understood until Austrian economists (Hayek and Mises) developed their theories of the connection between the expansion of the money supply by governments, the \u201cmalinvestments\u201d which this caused, resulting in a series of inevitable \u201ccorrections\u201d and the repricing of goods.<\/li>\n<\/ol>\n

            3.) Many CLs were politically naive<\/strong> in thinking that coercion by the state was an acceptable means of pursuing liberal ends. The \u201cnew liberals\u201d especially came to see the state not as a \u201cnecessary evil\u201d but as a \u201cpositive good\u201d for the spread of emancipation and enrichment. This \u201cpolitical na\u00efvet\u00e9\u201d took several forms, such as<\/p>\n

              \n
            1. their faith in the benevolence and omniscience of the state and its officials<\/strong>; CLs recognized that \u201cprivate predation\u201d undertaken by powerful private interests such as privileged landowners, manufacturers, merchants, and bankers and financiers had been a serious problem and was therefore the focus of many early CL reforms (abolition of serfdom, tariff protection, subsidies to favored industries), but they did not also recognize that \u201cpublic predation\u201d by the new democratic state itself was becoming a serious problem as well. To put this problem in the language of Public Choice (Buchanan and Tullock) it was naive of CLs to think that those who \u201cmake the rules of the game\u201d (the members of Parliament) should also \u201creferee the game\u201d, and even \u201cplay in the game\u201d. They too had their own vested interests which included the desire to wield power, to enjoy the \u201cperks of office\u201d, and to be re-elected.<\/li>\n
            2. their willingness to let the new democratic state be \u201ccaptured\u201d by vested interests (both old and new)<\/strong>; the new democratic state provided a mechanism for powerful political and economic elites to continue their predatory behaviour under cover of \u201cnational development\u201d or \u201cnational security\u201d; some of these elites were new, such as the newly wealthy and ambitious leaders of industry and commerce who sought the reintroduction of tariffs in the late 19th century, or supported the arms race as it provided large contracts for ship building among other things; others were members of the old elite who came from traditionally privileged groups who had benefited from the old order, such as wealthy landowning families who traditionally staffed the courts, the military, and the colonial administration; a third group were made of intellectuals who staffed the new bureaucracies which administered the expanded activities of the state in areas such as public works, transport, education, health, and welfare.<\/li>\n
            3. their faith in the ability and willingness of the \u201cmiddling class\u201d to make democracy work<\/strong>; the argument was that an educated and morally upright middle class would make sure that the new democratic state would remain very limited in its powers, that it would only ensure that \u201cthe rules of the game\u201d (the protection of life, liberty, and property) were adhered to and that the state would do nothing else; related to this idea was the notion that as the \u201cworking class\u201d became more affluent they would come to share the values of the liberal middle class and would do likewise; what became apparent was that all social and economic classes wanted to use the power of the state to grant themselves privileges at the expence of others; this is what Bastiat described as the definition of the modern state:<\/li>\n<\/ol>\n

              > \u201cL\u2019Etat, c\u2019est la grande fiction \u00e0 travers laquelle tout le monde<\/em> s\u2019efforce de vivre aux d\u00e9pens de tout le monde<\/em>\u201d (The State is the great fiction by which everyone endeavors to live at the expense of everyone else) “The State” (JDD<\/em>, 25 Sept. 1848) (CW2, p. 97)<\/p>\n

              4.) The inability to explain basic economic ideas simply to the ordinary person<\/strong>: this has been a long standing problem for CLs going right back to its origins; this is because many economic insights are not self-evident as they require a longer term perspective to appreciate (that a small amount of growth p.a. can lead to a doubling of income in a generation); that the results or consequences of government intervention cannot be seen immediately (Bastiat\u2019s notion of \u201cthe unseen\u201d) but emerge over time (such as shortages), whereas a government subsidy, price control, or welfare payments can<\/em> be seen immediately (Bastiat\u2019s \u201cthe seen\u201d); that some incentives (or disincentives) can be rather subtle, as with Smith\u2019s idea that the self-interest of a producer might lead as though an \u201cinvisible hand\u201d were at work, to improve the well-being of society as a whole. So long as people acted on moral principles (that it was wrong to seek and get government handouts or privileges) then they did not need to know the finer points of economic theory to realize that government intervention was not a good thing; however, as this moral belief waned, they needed to understand the other, more technical and theoretical reasons to avoid government intervention, and this understanding they did and still do not have.<\/p>\n

              5.) The \u201cLoss\u201d of the Intellectuals to Socialism<\/strong>: the group which might have persuaded the ordinary person of the moral and economic benefits of free markets were the \u201cintellectuals\u201d, however as the 19th century wore on the intellectual class increasingly moved away from CL and adopted socialist, nationalist, or other statist beliefs instead. This movement away from CL was noted by writers such as Julian Benda, La Trahison des Clercs<\/em> (The Treason of the Intellectuals<\/em> or The Betrayal by the Intellectuals<\/em>) (1927), Joseph A. Schumpeter, Capitalism, Socialism, and Democracy<\/em> (1942), and Friedrich A. Hayek, \u201cThe Intellectuals and Socialism\u201d (1949). Why the CL movement \u201clost\u201d the intellectual class to socialism and statism in the late 19th century is an important question which modern day CLs have to find an answer to and a way to reverse the situation. A common response is that the uncertainties of making a living in a free market where one\u2019s work is only rewarded if consumers value your work enough to voluntarily pay for it, drove intellectuals into the apparently more certain and predictable arms of the state which provided them with secure jobs in the administration or the state funded academy. Another explanation is that intellectuals adopted the old aristocratic disdain for \u201cproductive labour\u201d and did not want \u201cto dirty their hands\u201d with commerce. Why this was the case is unclear.<\/p>\n

              Of course, another response might be that CL is wrong both morally and economically speaking, that the \u201cintellectual class\u201d recognized this, and were therefore right to turn their backs on it.<\/p>\n

              [See Richard Ebeling, \u201cCan Capitalism Survive? 80 Years After Schumpeter\u2019s Answer\u201d The Future of Freedom Foundation (Apr. 19, 2022) Online<\/a> .]<\/p>\n

              6.) CLs lost their \u201cVision\u201d of what a free society should be like<\/strong>: CLs lost their \u201cvision\u201d of what a fully free society might look like and why this was desirable, and thus \u201clost\u201d the moral high ground to the socialists and statists. Their loss of vision made their ideology less attractive to the young, who found an alternate and more attractive and inspiring vision in socialism\/Marxism, nationalism, and fascism. One of the reasons why radical liberals in the late 18th and early 19th century were able to put forward an inspiring vision of what emancipation might achieve, and thus attract many people to the CL cause, was their passionate sense of justice, or rather their hatred of the injustice which they could see all around them. This passion came out in their polemical writing, best exemplified by Thomas Paine whose \u201cCommon Sense\u201d (1776) and \u201cThe Rights of Man\u201d (1791) inspired CLs on both sides of the Atlantic. Who in the late 19th century was writing similar inspiring essays to attract a new general of young people to CL? Very few – perhaps only the aging members of the last generation of \u201cold liberals\u201d like Gustave de Molinari (1819-1912) and Auberon Herbert (1838-1906).<\/p>\n

              This loss of \u201cvision\u201d was pointed out by Friedrich Hayek, James Buchanan, Murray Rothbard, and Robert Nozick in the second half of the 20th century, and again by Richard Ebeling and Peter Boettke in the 21st.<\/p>\n

              On CL Visions of the Future Free Society see:<\/p>\n

                \n
              1. \u201cClassical Liberal Visions of the Future I\u201d (27 August, 2021) here<\/a><\/li>\n
              2. \u201cClassical Liberal Visions of the Future II: The Contribution of Gustave de Molinari (1819-1912)\u201d (29 Aug. 2021) here<\/a><\/li>\n
              3. \u201cClassical Liberal Visions of the Future III: Liberal Experiments, Frameworks, and Archipelagos\u201d (11 Oct. 2021) here<\/a><\/li>\n
              4. \u201cHayek on a Liberal Utopia\u201d (11 Sept. 2021) here<\/a><\/li>\n<\/ol>\n

                What still needs to be done?<\/h2>\n

                I will reserve discussion of this matter to a future post. In the meantime see my thoughts on the problems we face and some strategies to solve them:<\/p>\n