Classical Liberalism: A Guide on Its Definition and How It Came to Be

By | Updated February 10th, 2021

What is classical liberalism? 

And what does it mean to be a classically liberal?  

Classical liberalism refers to the philosophy of individual liberty, property rights, and rule of law that dominated the West from the late 1700s until the mid-1900s.

As history shows, however, words can take new meanings over time. The word liberalism has been in the English lexicon for centuries, but its definition has changed over the course of the 20th century. 

In fact, the changes have been so significant that political scientists have to qualify liberalism prior to the twentieth century as classical liberalism. By contrast, they have to refer to its modern variant as liberalism. 

Since most people generally understand what liberalism means according to how it is used in America, the classical liberalism definition becomes even more intriguing due to its gradual disuse in everyday speech. 

For the sake of preserving classical liberal ideas and the concepts that shape its definition, let’s take a deep dive into the definition of classical liberalism, the philosophy’s history, and how it developed in previous centuries. 

What is a Classical Liberal

A classical liberal is someone who advocates for private property, economic freedom, the rule of law, free trade, and a republican style of government that protects free speech and freedom of association.

As the late libertarian historian Ralph Raico noted in a piece for American Conservatism: An Encyclopedia, “Up until around 1900, this ideology was generally known simply as liberalism.” Raico continued by observing why classic liberalism must be qualified: 

The qualifying ‘classical’ is now usually necessary, in English-speaking countries at least (but not, for instance, in France), because liberalism has come to be associated with wide-ranging interferences with private property and the market on behalf of egalitarian goals. 

Due to the embrace of a more activist state, the classic liberals of yesterday would be left scratching their heads at how the classical liberal definition has changed. As is the nature of all political evolutions, which generally see terms and political practices transform form over time. 

Classical Liberal Economics

Classical liberal economics tends to be laissez-faire. This characterization holds true when comparing old liberalism to contemporary liberalism. 

Although classical liberals do not go as far as libertarians do when it comes to free-market adherence, they still maintain a healthy skepticism towards the government managing economic affairs. 

The works of Scottish economist Adam Smith are the fundamental pillars of classical liberal economics and have served as inspirations for libertarianism and anti-state conservatism in subsequent generations

Classical Liberalism Principles 

Looking at old school liberalism as a package deal is the best way to understand it.

In addition to respecting economic freedom, classical liberals promoted freedom of inquiry, rational thought, and individualism. For classical liberals, individual rights were sacred. 

One of the most revolutionary aspects of liberalism is its emphasis on the individual. Whereas most political orders during liberalism’s embryonic stage tended to be more monarchical in outlook, liberals brought a different perspective to governance.

Individual rights such as free speech, property rights, toleration of different religions, and due process soon entered the political discussion after various English philosophers broke the mold by advocating for a system of restrained government. 

Etymology of Classical Liberalism

The roots of the word liberalism can be traced back to the Latin word liber, which means “free”. Over time, the word liberal would take on a more positive connotation in regular English. The term would later signify freedom from coercion and other practices that inhibited people’s ability to act in a voluntary manner. 

Liberalism’s European Roots 

Britain was one of the principal incubators for liberal concepts. The signing of the Magna Carta in 1215 by King John of England marked one of the most pivotal historical moments in laying the groundwork for liberalism. The political charter subjected the English Crown to the laws of men and laid the foundation for civil liberties such as habeas corpus in Anglo-American jurisprudence. 

The Dutch Fight for Freedom 

Not far away from England, the Dutch engaged in a protracted conflict with the Spanish Empire from 1568 to 1648. In the Eighty Years’ War, the northern provinces of the Low Countries (the Netherlands) were able to break free from the absolutist rule of the Spanish Habsburgs. 

This successful revolt was viewed as an early triumph of democratic ideas, with the Dutch transitioning into a republican model of government that defended property rights, promoted religious freedom, upheld free speech, and considerably restrained the power of the central government. 

These factors made the Dutch Republic one of the most economically and politically dynamic politics of Europe during the late 1500s up until the late 1600s. The Dutch example became a model that other European countries looked at with envy at the time. 

The Bumpy Road for English Freedoms Continues 

The English Civil War (1642-1651) witnessed a bloody struggle concerning religious freedoms and the English monarchy’s overreach. Parliamentarians were able to eventually come out on top. The pro-Parliament faction’s victory later established the precedent that English monarchs cannot govern without Parliament’s consent. 

The English Levellers as the First Liberal Party

During this struggle, the first liberal party in European history emerged in the form of the Levellers. The Levellers, a group of libertarian-leaning English activists, wanted to put an end to state monopolies, called for the separation of church and state, demanded popular representation, pushed for a decentralized militia system, and even wanted to limit parliament’s powers. 

Although they were not successful politically, the Levellers’ respect for property rights, adherence to individual liberty, and distrust of centralized power provided inspiration for future libertarian-style movements in English-speaking political jurisdictions. 

How John Locke Changed Anglo-American Politics

British philosopher John Locke fundamentally transformed European political thought when he released the Two Treatises of Government in 1689.

In this seminal publication, Locke argued that sovereignty lied with the people not the British Crown. By contrast, absolutist monarchies of his time maintained that they possessed the divine right of kings as their mandate to govern.

The British philosopher firmly believed in the natural rights of life, liberty, and property. These concepts would be championed by the anti-absolute monarchist Whigs in the United Kingdom throughout the eighteenth century. Later on, these ideas eventually made their way across the pond to the 13 colonies, which became the center of the world’s most influential revolution.

Locke vs. Hobbes

Locke was renowned for his optimistic outlook on human nature. This contrasted to his predecessor, Thomas Hobbes.  

Hobbes was a political theorist whose political philosophy was rather cynical and based on the idea that humans were naturally corrupt. As a result, a powerful state was needed to reign in human beings’ most depraved behavior.

In his magnum opus, Leviathan, Hobbes made the case that without a state, mankind’s life would be “nasty, brutish, and short.”

Adam Smith Brings Economics to Liberalism

Liberalism wasn’t just about politics, It had an economic component as well. 

During the age of absolute monarchies, most European economies were mercantilist in nature. In other words, these economies were characterized by massive tariffs and restrictions on trade. 

When Adam Smith entered the scene, the field of economics was forever changed. Smith’s magnum opus, The Wealth of Nations made the case for a restrained government presence in the economy and put free trade on a pedestal. 

The Context of Smith’s Thought

The Scottish economist was very much a product of the 18th century Enlightenment and took the political logic of his contemporaries and predecessors and applied it to economics.

Since the publication of Smith’s work, free-market economics would become an integral plank of liberal thought up until the mid-twentieth century. 

Liberalism Goes to France 

Liberalism wasn’t just confined to the United Kingdom. France saw ideas of liberty spread within its borders thanks to the Enlightenment. Some of the greatest thinkers of that time Voltaire and Baron de Montesquieu helped define classical liberalism by stressing a commitment to limited government and freedom of expression.

The aforementioned concepts were generally alien to French political philosophy at the time. France was one of the principal centers of absolute monarchy in the European continent, which initially made ideas of freedom a hard sell in France.

Ideas of Limited Government Begin to Take Root in France

That said, powerful ideas can penetrate through even the most stubborn of despotic regimes. France was no exception to this rule. 

Philosophers like Montequieu were calling for the separation of powers in government, a concept that would have traditionally made the French royal family shudder. By the mid-1700s, it was clear that France was on the cusp of a major political shakeup due to the prominence of many intellectuals who remained committed to spreading the values of a restrained state.

America’s Freedom Experiment 

With over a century’s worth of self-government, colonists in America’s 13 colonies enjoyed some of the highest levels of human freedom at that point in history. 

They were proud of the freedoms they enjoyed as English subjects and this culture of liberty was at the crux of a new political identity. 

Taxation Without Representation Causes a Revolt

After the French and Indian War (1754-1763), the British Crown was desperate to find a revenue source to finance its costly military adventure. It turned to the Stamp Acts and Townshend Acts, which raised taxes on the colonists.

Angered by these taxes that were levied upon them without any form of parliamentary representation, the colonists turned to the slogan of “no taxation, without representation” as a form of protest against these arbitrary acts. 

The British Empire did not relent and only became more heavy-handed in its policies towards the colonies in America. The Crown’s refusal to listen to the colonists’ grievances forced the colonists to take bold action.

The American Revolution Puts Freedom at the Center Stage

In the fateful year of 1776, colonial leaders came together to sign the Declaration of Independence.

Authored by Virginia lawyer Thomas Jefferson, the signers of the declaration aired their grievances with the British government. They took the ideas of John Locke — natural rights and consent of the government — and applied it to their own circumstances.

After successfully breaking free from British rule, the statesmen of the newly formed United States of America were able to craft the Articles of Confederation, followed by the more durable United States Constitution.

By ratifying the constitution, America’s founding generation made it clear from the start that the rule of law, not the rule of men, is what a stable political order should be founded on. 

Liberalism’s Peak in the 1800s

Towards the latter half of the 19th century, America became the paragon of human freedom that nations around the world sought to emulate.

Following the destructive Civil War (1861-1865), politics in America stabilized and the country soon began to turn to individual freedom as the main principle that brought the nation together following previous decades of political tension. 

Cities such as New York embodied the ethos of the liberal tradition. A thriving market economy, a respect for individual liberty and property, and a tireless entrepreneurial spirit made New York City the Mecca of freedom and commerce. 

The Gilded Age represented the pinnacle of freedom in America, which motivated many Europeans to pack up their bags and start a new life in America.

The Gilded Age/Belle Époque

Across the pond, individual freedoms were greatly respected. For Europeans, the Gilded Age was the Belle Époque, where government intervention in the economy was minimal and citizens could do what they pleased so long as they did not violate the rights of others. 

In the United Kingdom, intellectuals like Herbert Spencer were leading the way in promoting the idea of spontaneous order and making the case for a society where the state had a minimal presence. 

It’s no coincidence that the Industrial Revolution took place during the Gilded Age/Belle Époque, a time in history when individual rights were held in high esteem by all corners of society, 

The Importance of Ideas 

None of these developments occurred in an ideological vacuum. The robust economic and social development of the Gilded Age was the product of liberal principles that developed over the course of centuries.

They originally started in Northern Europe, then made their way to North America. By the end of the 1800s, most of the West adopted these principles in some shape or form. 

The rise of Progressivism 

Some notable liberals such as the British philosopher John Stuart Mill became gradually more partial to the idea of a welfare state.

Mill was a liberal that was nominally in favor of a political economy centered around the market. However, his focus was not exclusively centered on the individual’s relationship with the state. He also believed that society was also capable of coercion.

To correct this, Mill called for a more robust state to fix some of the social deficiencies that he believed still afflicted society. Mill still conceded that the best economic policy would be market-based. 

The Gradual Shift Towards Welfarism

However, Mill’s gradual move towards statism became one of the first steps that liberals in the 1800s made in rejecting the classical liberal tradition of anti-statism. Mill and some of his more radical successors became more fixated with equal rights and egalitarianism, as opposed to natural rights that were prescribed in accordance with natural law. 

For Mill and his ilk, freedom should still be respected, but it could be optimized through state action. This is when the classic liberal definition of freedom began to take a new meaning among progressives

America’s Changing Political Landscape 

The economic transformation the Industrial Revolution brought to America was accompanied by a notable political transformation.

The progressive movement of the late 19th century challenged the previous laissez-faire order and promised to bring a “third way”, if you will, of scientific planning when it came to governing a country. 

The market would still be in place, but the state would be used to rectify the supposed flaws of human behavior. 

The two World Wars and the New Deal in the interwar period witnessed America’s federal government grow at exponential rates.

What once was a sleek, constitutional form of government, soon became an administrative behemoth that the Founding Fathers would likely never recognize. 

Classical Liberalism Examples in Modern Times

The consolidation of the progressive state during the first half of the 20th century was not absent of criticism. 

The Austrian economic thinkers Ludwig von Mises and F.A. Hayek stepped in to resuscitate the classic liberal ideals of the previous century in a time when social democracy, national socialism, and communism became the predominant ideological currents throughout the West. 

They insisted that the decentralized spirit of 19th-century liberalism was what made the West great and that the interventionism of their day was a radical departure from those principles. 

Novelist Ayn Rand also played a major role in bringing back liberal ideas of rational thinking, free markets, religious toleration, and individualism during a twentieth-century that largely took these concepts for granted.

The resurgence of liberalism assisted other movements such as conservatism in serving as alternatives to the dominant progressive narrative of the century’s first half. 

Libertarianism Enters the Picture 

The emergence of libertarianism towards the latter half of the 20th century gave the classical liberal definition a new twist.  

The historian Murray Rothbard became the face of this new political current, an ideology that was explicitly anti-state in nature. Rothbard and his companions made it clear that the vast majority of government agencies established during the Progressive Era and New Deal should be abolished.

In addition, Rothbard called for the U.S. to scale back its foreign policy adventurism and return to a gold standard after abolishing the Federal Reserve. 

Former Texas Congressman Ron Paul’s presidential runs in 2008 and 2012 were largely inspired by Rothbardrian principles. 

How is Liberalism Faring These Days?

Although liberalism has seen better days, its classical liberal principles still live on. 

Certain political figures such as Kentucky Congressman Thomas Massie, Kentucky Senator Rand Paul, and Michigan Congressman Justin Amash have worked diligently to make mainstream conservatism classically liberal on certain issues such as government spending and never-ending wars.

While liberalism may not be as prominent as it was in previous eras, the ideas of Jefferson and Locke will not go away so easily. 

Liberty Will Not Go Away

Even during the Trump era, when populist ideas swept across the United States and many foreign countries, old school liberalism had a clever way of creeping back into political discussions. 

The Trump approach to the Wuhan virus lockdowns was very federalist in nature and in line with how classical liberals viewed the state’s role in otherwise state or local-level affairs.

This goes to show that extinguishing the classical tradition will be a tall task for proponents of statism. It’s very much ingrained in America’s political psyche. U.S. culture still values individualism which allows dissident figures such as Ludwig von Mises to resurrect and spread ideas that people otherwise viewed as defunct. 

Classical liberalism is definitely not at its peak, but its ability to come back and re-invent itself cannot be underestimated.

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