1.3 liberalism

3.1.1 Classical Liberalism

• Liberalism can mean more than one thing; Classical liberalism describes a major direction in western politics and is a subset of American liberalism.
• In the U.S., both Democrats and Republicans fall under the umbrella of classical liberalism; American politics are fairly homogenous in this framework.
• Two prominent features of classical liberalism:
  • $1)$ A reliance on markets for economic decision making.
  • $2)$ A reliance on democratic institutions for political decision making.
• Markets and economic decision making:
  • A market is the collective of producers, sellers, and buyers of a good or service (e.g., the market for smartphones).
  • In classical liberalism, markets are left to function with minimal state interference; individuals can own/invest in businesses; businesses decide what to produce and at what price.
  • This economic system is referred to as capitalism (a term first used, perhaps, by William Makepeace Thackeray in $1852$; the term “capitalist” predates that).
  • Capitalism aims to promote maximum wealth by letting people try, fail, and succeed in business.
• Adam Smith and the Wealth of Nations (publication year: $1776$):
  • Smith argued that letting people pursue their own interests generates wealth more effectively than mercantilist policies.
  • Smith’s famous idea of the “invisible hand” suggests that individuals pursuing self-interest can unintentionally benefit society through market coordination. He warned, however, that markets can be rigged by monopolies and anti-competitive practices.
  • Smith explicitly criticized attempts to restrict competition and monopolies (e.g., he criticized the East India Company for bad treatment of Indians and for monopoly power).
• Mercantilism (prevalent economic theory opposed by classical liberalism):
  • Euro-centric: focus on accumulating gold; maximize imports and minimize exports; maintain overseas colonies to supply raw materials and markets.
  • This policy helped spur the American Revolution by limiting colonial production and trade options.
  • Ironically, the same strategy contributed to later growth of the “Asian tigers” (Japan, South Korea, Taiwan, Hong Kong, Singapore) post-WWII by emphasizing export-led growth and domestic industry.
• The market vs. state tension:
  • Smith understood that capitalism could generate more wealth as long as markets were kept free from restraints; he also acknowledged that people may try to rig markets to limit competition, raise prices, and increase profits.
  • The East India Company serves as an example of monopoly power and government involvement in commerce.
• Democratic institutions in classical liberalism:
  • Political decisions are made through voting; the state sets rules on who is a qualified citizen and who can run for office, but individuals who meet the criteria can seek office.
  • Representatives are elected to make decisions on behalf of citizens; this form of government is a republic.
• Strengths of classical liberalism:
  • Higher individual liberty than many alternatives.
  • Creates opportunities to participate in economic and political life.
  • Market-based decision making tends to produce wealth more efficiently and at lower cost.
  • Elections provide a mechanism for conflict resolution and policy change.
• Weaknesses/risks of classical liberalism:
  • Wealth can be distributed unevenly, enabling the wealthy to dominate politics via campaign contributions and lobbying.
  • Illustration: “the U.S. Senate is pretty much a millionaires’ club.”
  • Market activity can generate social costs (e.g., pollution) that require state intervention; pollution controls may reduce profits, which some equate with a loss of liberty.
  • Inclusive political systems (more voice for more people) can be less efficient and slower to respond to immediate needs (e.g., long-term Medicare financing challenges due to interest groups and tax concerns).
• Key implication: the form of the republic (constitutional monarchy, parliamentary democracy, American-style separation of powers) is less important than the availability of free and fair elections.
• Illiberal democracies (illustrative concept): some republics have elections but are not fully free or fair, such as
  • Russia, Singapore, and portions of Mexico’s 20th-century history under the Institutional Revolutionary Party (PRI).

3.1.2 Illiberal Democracies and American Liberalism

• Illiberal democracy: elections exist, but not all democratic standards are upheld; civil liberties and political competition may be constrained.
• Examples discussed: Russia (illiberal tendencies), Singapore (dominant party with restricted civil liberties), Mexico (PRI dominance in the 20th century).
• American liberalism as a distinct strand within classical liberalism:
  • Originates from the Progressive era, reacting to late 19th/early 20th-century capitalism and its excesses (e.g., lack of protections for workers, child labor, unsafe working conditions).
  • Progressives advocated for reforms such as non-partisan elections, open primaries, and stronger government action in economic management (e.g., breaking up trusts).
  • American liberalism took on a more defined role after the Great Depression, with a push for broad protections for workers, unions, and a robust social safety net, plus health, safety, and environmental regulations.
• Costs and benefits of this approach:
  • Benefits: reduces starvation and provides safety nets; expanded protections for workers; environmental and health regulations.
  • Costs: higher taxes and increased costs for businesses and consumers due to regulatory expansion; more government involvement in private life in some contexts.
• The role of elections and governance:
  • The central question is not the form of the republic but whether elections are free and fair.
  • Illiberal practices can exist within democracies that still conduct elections, complicating the liberal label.

3.1.3 American Liberalism, Conservatism, and Populism

• American liberalism (as distinct from classical liberalism):
  • Roots in the Progressive era and magnified by the Great Depression; support for an active government role in the economy and in personal life.
  • Fights for worker protections, unions, a broader social safety net, and regulations in health, safety, and the environment.
  • Trade-offs: greater social protections and reduced hardship vs higher taxes and stricter business and private-sector regulation.
• American conservatism:
  • A subset of classical liberalism with a tendency toward less government involvement in the economy, especially in the post-World War II era.
  • Arguments focus on taxes, regulation, and the size/scope of government; conservatives often claim that government programs discourage work and self-reliance.
  • Traditional conservatives favor lower taxes, a balanced federal budget, and less regulation; some conservatives in later years emphasize social issues (abortion, gay marriage) and social legislation.
  • The political landscape includes both economic conservatism and social conservatism; some conservatives seek common ground with liberals on environmental concerns.
• Populism:
  • Not a strict ideology but a political approach emphasizing “the ordinary people” and a critique of “the elites” or the powerful.
  • Strengths: can mobilize broad support and draw attention to neglected issues; can democratize politics by appealing to common concerns.
  • Weaknesses: can be demagogic or simplistic, and may be oppressive or anti-pluralist when in power.
  • Notable populists: Huey Long, Ralph Nader, Ross Perot, Pat Buchanan; Hugo Chávez cited as a populist example from another country.
  • Populism often uses messaging that appeals to the average voter, as in cultural productions (e.g., the film Dave, 1993), which plays on the desire for honest, ordinary leadership.
• Tension and overlap:
  • Political figures can display both liberal and conservative traits in different issues (e.g., conservative on economy, liberal on social issues).
  • The quote attributed to Charles Dudley Warner: “Politics makes strange bedfellows” highlights that coalitions can be unusual when different groups align around certain issues.

3.1.4 Popularianism, Libertarianism, and Critical Reflections

• Populism in practice:
  • Populists often criticize big business and big government while claiming to defend the “little guy.”
  • When in power, they can govern in a high-handed or unresponsive manner, sometimes contradicting their original critique.
  • Huey Long (Governor of Louisiana, 1928):
  • Implemented progressive policies like oil tax, free textbooks, and infrastructure investments.
  • Also used coercive tactics (10% wage donations to his re-election fund, favoritism in contracts, punishment of opponents).
  • Ultimately assassinated in $1935$; his administration illustrates how populist leaders can overstep and centralize power.
• Libertarianism:
  • Core idea: minimal government—only national defense, police, and fire protection; otherwise limited government activity; social issues largely not addressed by government.
  • Origin: reaction to Soviet-style communism; proponents include Ayn Rand and economists Ludwig von Mises, Friedrich Hayek, Milton Friedman.
  • Core arguments:
  • Favors maximum individual freedom and limited taxation/regulation to spur growth.
  • Critiques/limitations:
  • Historical periods show that near-total laissez-faire can fail to address downturns, worker protections, or public safety (e.g., late 19th/early 20th century experiences).
  • Anti-trust laws were sometimes used to suppress labor organization rather than to promote competition; markets alone don’t automatically solve environmental and public health problems.
  • Environmental externalities and public goods (e.g., pollution, fishing rights, air/water quality) may require government intervention; property-rights theories can be insufficient in these contexts.
  • Distinctions within libertarian thought:
  • “Small ‘l’ libertarianism” (broad, non-partisan preference for limited government) vs. the Libertarian Party (active electoral pursuit of libertarian governance).
• Overall perspective:
  • Classical liberalism remains the dominant framework in many parts of the world, with various adaptations and critiques.
  • Each ideology has strengths and weaknesses and can yield different governance outcomes depending on institutional design and policy choices.

3.1.5 Exercises

• Exercise 1: What seems to be different between American conservatives and liberals at present? How would you describe your own conservatism or liberalism in political beliefs?
• Exercise 2: If Libertarians won enough elections to govern, what changes would occur? How would people respond to altered mixes of public services and taxes? How would such governance function?

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