Unlike radicals, liberals subscribe to the core values of society. But liberals are open to reform for correctingthedefects of society. Historically, liberals pioneeredpolitical, social andeconomicreforms in England, America and Europe. Liberals also differ from radicals in upholding laws. Radicals see laws as instruments which elites use to ensure their hegemony. Liberals regard laws as essential to protect individual liberty and orderly social life. While they may try to change some laws, they value legal system as a whole. Liberalism, like other doctrines, changed overtime.
We briefly outline these changes.
Liberalism aims primarily at protecting and increasing an individual’s freedom. Liberals believe that government is necessary to protect individuals from being harmed by others; but they also fear that government itself, by usurping excessive power, can threaten individual liberty. Over time, liberalism got divided into classical liberalism and modern liberalism. Classical liberalism argues that government should merely protect individual liberty. Modern liberalism believes that government
should enhance individual freedom by promoting conditions for its enjoyment by the poor. Classical liberalism is said to be based on negative freedom and modern liberalism on positive freedom.
Political foundations
John Locke, the founder of classical liberalism, argued that absolute monarchical rule negates the very basis and justification of political authority. Its raison d’être is to protect the life and property of individuals and to guarantee their natural rights to freedom of thought, speech, and worship. The early liberals aimed to free individuals from two kinds of social constraint—religious conformity and aristocratic privilege—both enforced by state power. While trying to limit state power over the individual, early liberals wanted government to be accountable to people. This required a system of government by majority rule in which government implements the expressed will of a majority of the electorate. This would imply periodic election of government by popular vote. Thus, liberalism is the progenitor of democracy.
Early liberals feared popular sovereignty or what they considered mob rule. They preferred that power should rest with property owners and other natural elites. As they saw the likely ascendancy of masses, they devised mechanisms for protecting individual liberties. They advocated separation of powers or dividing governmental power between three wings: legislature, executive, and judiciary. Next, they wanted periodic elections. The third safeguard was creation of individual rights of three sorts. One set of rights confers freedom to speak and write freely, freedom to associate and organize and, above all, freedom from fear of reprisal. But the individual also has rights, apart from his role as a citizen. These rights secure his personal safety and hence his protection from arbitrary arrest and punishment. The third type of rights preserve large areas of individual privacy. In a liberal democracy, these are affairs that do not concern the state such as the practice of religion, creation of art and the raising of children by their parents.
Economic foundations
Economic policy at the start of industrial revolution was driven by mercantilism which strictly regulated the economy internally and externally. Mercantilism regarded international trade as a zero-sum game—in which gain for one country meant loss for another. National governments intervened to determine prices, protect their industries from foreign competition, and avoid thesharing of economic information. Liberals challenged these policies. The French thinkers known as physiocrats argued that the best way to increase wealth is to allow unrestrained economic competition. Their advice to government was “laissez faire, laissez passer” (“let it be, leave it alone”).
Adam Smith expounded this laissez-faire doctrine in The Wealth of Nations (1776). He favoured free trade and markets. If economic agents are allowed to pursue their self-interest in a market economy, the welfare of all will be optimized. The self-seeking individual promotes public good because in a market economy he must serve others in order to serve himself. Adam Smith spoke of ‘an invisible hand’ transforming private interest into public good. However, only a truly free market can ensure this happy outcome; other arrangements, whether state control or monopoly, sap initiative and cause inefficiency and economicstagnation.
The task of any economic system is to produce and distribute goods and services people. This process also leads to a particular distribution of wealth and income. In a market economy, the price mechanism governs production and distribution. Well functioning markets generate the best outcomes in terms of production, prices and distribution. Markets are self adjusting or cybernetic systems. They factor in consumer choices. Markets create wealth patterns which assure reward in proportion to merit. Economic agents rationally and self-interestedly minimize costs and maximize gains. As each one knows what is best for him, government interference in his economic activities will only hinder and never enhance his interests.
Thus both from political and economic perspectives, liberals wanted to limit government activity. Jeremy Bentham’s sole advice to the state was: “Be quiet.” Classical liberals however acknowledged that government must provide education, sanitation, law enforcement, a postal system, and other public services that were beyond the capacity of any private agency. But apart from these functions, government must not try to do for the individual what he is able to do for himself.
Problems of market economies
People became disenchanted with classical liberalism by the end of the 19th century because of serious unforeseen consequences of the Industrial Revolution. A few became enormously wealthy, many became abjectly poor, and sprawling slums sprang up in industrial towns. Trade cycles appeared with alternating booms and busts---the latter throwing people en masse into unemployment. The rich corrupted and controlled governments.
T.H. Green argued that excessive government powers which hindered freedom earlier shrank by mid 19th century. But other hindrances such as poverty, disease, discrimination, and ignorance have emerged. Governments should positively help needy individuals to overcome these problems and enjoy their freedom. Modern liberalism enlists government to establish public schools and hospitals, aid the needy, and regulate working conditions to promote workers’ health and well-being. It is only through public support that the poor and powerless can truly become free. This is the logic which supports the pro-poor and inclusive growth strategies. Modern liberalism has borrowed many elements from socialism. Its approach is more socialist than conservative.
Liberalism in twentieth century
The First World War and its turbulent aftermath shattered many liberal illusions. Between the two Great Wars, people turned to anti-democratic and to anti-liberal alternatives on the extremes of the political spectrum. Germany, Italy and Spain became fascist dictatorships. Russia took to communism. In the 1930s, the Great depression hit the world economy. US president Roosevelt introducedthe NewDeal (1933–39) involving massive government interventions totackledepression. British economist JM Keynes propounded an economic doctrine that government management of the economy could smooth out the highs and lows of the business cycle to produce more or less consistent growth with minimalunemployment.
Liberal policies in post War era brought about phenomenal growth in Western Europe, North America, and Japan. Western industrialized nations pursued full employment, maximum use of
industrial capacity, and the maximizing of peoples’ purchasing power. Instead of the old policy of “sharing the wealth”, liberals used the government’s power to borrow, tax, and spend not merely to counter contractions of the business cycle but to encourage expansion of the economy. It appeared to create class harmony and the basic consensus essential to a democracy.
Limited intervention in the market
Modern liberals recognize the achievements of the market system. They want to modify and control the system rather than abolish it. Regimentation in centrally planned Soviet style economies and bureaucratization even in mixed economies deterred them from giving up on the market for an omnipotent state. But in contrast to classical liberalism, modern liberalism intervenes in the market for following reasons:
♤ The rewards market fail to correctly measure contributions of most people to society.
♤ Market ignores the needs of those who lack opportunity or who are economically exploited.
♤ The enormous social costs incurred in production are not reflected in market prices and resources are often wasted.
♤ Market allocates human and physical resources toward satisfaction of consumer appetites—e.g., for automobiles, home appliances, or fashionable clothing. It often ignores basic needs such as schools, housing, public transit, and sewage systems.
♤ Although prices, wages, and profits should be based on negotiation among the interested parties and market trends, those affecting theeconomy as a whole must be reconciled with public policy.
Greater equality of wealth and income
Liberals usually rely on following approaches for mitigating inequality:
♤ Organization of workers into trade unions for increasing their power to bargain with employers
♤ Undertaking variety of government-funded social services for helping the poor
♤ Progressive taxation
♤ Employment and income generating programmes and provision of minimum needs of housing, health, sanitation and education as in India.
The revival of classical liberalism
Modern liberalism faced problems with declining economic growth from the mid-1970s in western economies. Economic stagnation and high costs of social benefits of the welfare state forced governments into unsustainable levels of taxation and debt. The Keynesian prescriptions lost their efficacy.
These led to a revival of classical liberalism notably through efforts of Friedrich von Hayek and Milton Friedman. Hayek argued that interventionist measures aimed at the redistribution of wealth lead inevitably to totalitarianism. Friedman, a founder of the modern monetarist school of economics, held that the business cycle is determined mainly by the supply of money and by interest rates, rather than by government fiscal policy—contrary to the long-prevailing view of Keynes and his followers. Students should note that these are actually conservative arguments extolling the ideal
of markets and sharply limited governments. Prime Minister Margaret Thatcher (1979–90) in Britain and President Ronald Reagan in USA (1981–89) embraced these ideas. These ideas represent neo- liberalism which is a form of conservatism. Incidentally, our economic reforms of 1991 are based on neo-liberalism and on Washington Consensus, though ‘with a human face’ in the words of P. V. Narsimha Rao.
Students should understand the connotation of terms which have changed in confusing ways. Classical liberalism is equivalent to modern conservatism and neo-liberalism. Modern liberalism has become socialism with heavy emphasis on welfare state. Further, many radical ideas migrated into socialism and into modern liberalism. The scope of the terms has become ambiguous. As we shall see, these ideological orientations explain the positions which academics and journalists take on current controversies in India. Modern liberalism has become the dominant academic orthodoxy.
Civil rights and social issues
Contemporary liberalism tried to extend individual rights in new directions. Liberals see rights as bulwark against tyranny and oppression; in late 20th century claims to rights are used as tools in struggles for social justice. Thus the American civil rights movement of the 1950s and ’60s led to laws forbidding discrimination against African Americans; and movements for equal rights for women, gays and lesbians, the physically or mentally disabled, and other minorities or disadvantaged social groups. Thus, liberalism historically has sought to foster a plurality of different ways of life, or different conceptions of the ‘good life’, by protecting the rights and interests of first the middle class and religious minorities, then the working class and the poor, and finally of racial minorities, women, gays and lesbians, and the physically or mentally disabled.
Liberalism has altered the Western society in other ways as well. It removed restrictions on contraception, divorce, abortion, and homosexuality based on the right of individual choice. Emphasis on right to freedom of speech reduced restrictions on depicting sexual content in works of art and culture. Students should connect frequent public debates on censorship of films and homosexuality with liberal thoughts imported fromwest.