CONTENDING LIBERALISMS
James L. Richardson
Part I
This chapter offers an interpretation of the normative tensions within liberalism. First, drawing
attention to issues raised by the definition of liberalism, it supports the view that it involves a
commitment to a plurality of political values, not the pursuit of one supreme value such as freedom.
It sees the history of contending elitist and radical liberalisms as falling into three partially
overlapping phases: the first over equal political rights (elitism versus democracy); the second over
the economic and social implications of liberal values ("classical" versus "social" liberalism); and
most recently, over the extension of liberal principles to those who are especially disadvantaged for
a variety of reasons ("inclusive" liberalism).
THE CONCEPT OF LIBERALISM
Liberalism resists sharp definition: "it is hardly less a habit of mind than a body of doctrine," or
"often a matter of broad cultural allegiance and not of politics at all" (Laski 1936, 15; Dunn 1993,
30). Yet most historians are in broad agreement in identifying a cluster of values that have
characterized liberalism since its inception. John Dunn sums them up as "political rationalism,
hostility to autocracy, cultural distaste for conservatism and for tradition in general, tolerance,
and . . . individualism" (Dunn 1993, 33). For John Gray the distinctive liberal values are
individualism, egalitarianism, universalism, and meliorism (Gray 1986, x). And Anthony Arblaster
lists them as freedom; tolerance; privacy; constitutionalism and the rule of law; reason, science, and
progress; and—implicitly—property. But he also maintains that individualism is the "metaphysical
and ontological core" (Arblaster 1984, 15, 55-91). The characteristic liberal values can be
contrasted with those of other traditions. Conservatism, for example, places high value on order,
authority, community, and established institutions and tends to favor stability over change; it is
comfortable with hierarchy and inequality, hostile or sceptical toward radical reform, and quick to
condemn the perceived excesses of individualism or egalitarianism. Socialism, and especially social
democratic thought as it developed in Western Europe, shares many liberal values but gives greater
weight to equality alongside freedom and to community against individualism. Historically, the
differences between liberals and socialists were less over values than over the means for realizing
them.
Viewed historically, liberalism is first and foremost normative: a body of ideas about social and
political values, the principles that should govern political life, the grounds for political legitimacy.
The cluster of values now identified with liberalism came into being over a long period. Not all
commentators are satisfied with the concept of liberalism as a cluster of values; it lacks sharpness
and does not indicate which value has priority. For many there is a clear answer: "liberty ... is the
highest political end" (Acton, quoted in Arblaster 1984, 56). For Alan Ryan the most plausible brief
definition is "the belief that the freedom of the individual is the highest political value, and that
institutions and practices are to be judged by their success in promoting it" (Ryan 1993, 292-293).
He acknowledges that this presents difficulties: there are serious disagreements over the meaning of
freedom, and indeed it is an "essentially contested concept."
This definition presents a number of other difficulties. For the utilitarians, for example, the
supreme value is not freedom but the greatest happiness of the greatest number. And there are other
candidates for the defining concept. The classic liberal manifestos were multivalued: liberty,
equality, and fraternity; life, liberty, and the pursuit of happiness.
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Like other modern political traditions, liberalism consists in a sequence of debates, literal or
figurative—the spelling out of contending positions with some reference to what went before. The
present interpretation—accentuating one of the subthemes in Arblaster (1984) and in Hartz
(1955)—is that the central tension is between two liberalisms, elitist and radical. The former may
also be termed, in differing contexts, the liberalism of privilege or liberalism from above; the latter
egalitarian, social, or inclusive liberalism or liberalism from below.
For some historians, liberalism does not emerge until the eighteenth century; more precisely,
their narratives begin with the "Glorious Revolution" of 1688 and the publication in 1690 of John
Locke's Two Treatises on Civil Government (see, for example, de Ruggiero 1927/1959; Bramsted
and Melhuish 1978). In Locke, as Gray expresses it, "the central elements of the liberal outlook
crystallized for the first time into a coherent intellectual tradition expressed in a powerful, if often
divided and conflictual, political movement" (1986, 11). It has been argued convincingly, however,
that political movements propounding liberal values first appeared in the mid-seventeenth century,
when characteristic liberal themes and debates were articulated in the English Revolution (Laski
1936, 104-118; Arblaster 1984, 146-161; Patterson 1997). This narrative therefore begins with these
debates. It is necessarily selective, highlighting certain developments and debates in order to bring
out what is familiar and what is distinctive in contemporary liberal doctrine.
Seventeenth-Century England
The English Civil War and the Commonwealth during the two decades 1640-1660 provided the
setting for the first open political debate in modern Europe. Fifteen thousand pamphlets appeared
during these decades (Arblaster 1984, 153), as did the main political works of Hobbes, Harrington,
and Filmer. Historians dispute whether there was a genuine revolution, but irrespective of that issue,
it was not a revolution (or movement) in the name of a new political philosophy. Rather, the
ferment of ideas, the debate over political fundamentals, was occasioned by the breakdown of
political order, and the Commonwealth was an improvisation. Following Cromwell's death, no
ideological rallying point stood in the way of the Restoration.
While there was no fully developed liberal position in these debates, there was an eloquent
assertion of certain liberal values and, more important, the clearest possible expression of the
tension between the two poles of liberalism. At the heart of the seventeenth-century arguments,
writes Arblaster,
lies a hard issue which is central to liberalism: the question of the relations between freedom and
property. It was increasingly asserted and accepted that a man may do what he will with his own . . .
"every free subject of this realm hath a fundamental property in his goods and a fundamental liberty
of his person." But who counted as a free subject? This was the subject of much dispute, yet in the
end it was the property-owners who triumphed. It was accepted that they had the right, not only to do
as they pleased with "their own," but also to control the state itself. (1984, 150)
These issues were argued out in the debates between the Levelers and the army leaders (the
"Grandees") at Putney in 1647. Levellers are seen as genuine radicals, seeking to uphold the rights
of all—that is to say, all English men. Against this, the army leaders defended the traditional
principle that the vote was for those with a stake in the country, in other words, for owners of
property. The army leaders prevailed, but the debate served to highlight the gulf between the claims
of equal rights and the actual principles of English parliamentary representation, which were to
survive for two centuries.
Locke
If the Levelers were the first to expose fundamental issues that would divide liberals, John Locke
wrote what came to be regarded as the first great liberal texts: The Second Treatise of Government
and A Letter Concerning Toleration. Initially, his work was seen as too radical to be welcome to
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England's new rulers after 1688—too forthright a defense of the right of revolution against an
oppressive monarchy.
Much of what became characteristic of liberal thought is not yet present in Locke's work or no
more than hinted at—for example, constitutionalism and the separation of powers—and the idea of
limited government is discussed only by way of example, admittedly a crucial one: property. What
he does offer is the classic formulation of the liberal view of the conditions of political legitimacy.
We may note some of his central themes.
First, individualism: Locke begins with individuals in the state of nature, enjoying freedom and
equality. Although he does not develop a systematic account of natural rights, they provide the
foundation, and the individual remains his point of reference, not the community or its institutions,
for example. Second, consent: the idea of the social contract is a metaphor, not a historical account
of when or how people give their consent to live under a particular government. The idea that the
right to rule depends on consent—that authority derives from below, not from above—has been one
of the most powerful political ideas since that time, with revolutionary implications for traditional
hierarchical societies.
Third, and closely related, are the ideas of the rule of law and of government as trustee. The latter
was to influence liberal theory on colonial administration, but for Locke it served to underline
governments' obligation to act in the interests of the people, not the rulers. Governments are
dissolved when they act contrary to their trust—when they "invade the Property of the Subject" or
make themselves "arbitrary Disposers of the Lives, Liberties or Fortunes of the People" (Locke
1690/1965, 460). Arbitrary power is illegitimate; rulers are obliged to respect the laws enacted by
the legislature.
A fourth theme was the significance of property: "The great and chief end, therefore, of Men
uniting into Commonwealths, and putting themselves under Government, is the Preservation of
their Property" (1690/1965, 395). It was this ringing affirmation not the ambiguities of his
definition of property, that explain Locke's appeal to the propertied classes. It offered reassurance,
balancing his political radicalism—"a charter for political revolution which would be in no way
socially subversive" (Dunn 1969a, 50).
Finally, on toleration, Locke offered a variety of arguments for the individual's right and duty to
seek salvation in accordance with his own religious beliefs, and the inadmissibility as well as
ineffectiveness of the state's seeking to impose a religion against the convictions of those who
dissented. Today his exceptions arouse adverse comment; he denied toleration to atheists for their
amorality and to Catholics, since their allegiance to the Pope took precedence over their loyalty to
the government. But his central argument remains a powerful statement of one of the core liberal
values (Dunn 1984, 22-27, 57-59).
The United States: The Formative Period
Hartz offers an explanation of U.S. political culture—'American exceptionalism"—in terms of
the fit between individualist liberalism and America's unique historical experience and social structure. In Europe liberalism emerged in the context of a highly stratified, hierarchical society. The
early liberal elites sought to overcome political absolutism and the closed aristocratic elites that
supported it, but without risk to property or opening the way to rule by the "mob." In the United
States, however, landed property was widely diffused, and opportunities for individual
advancement were sufficient to remove the sense of threat from below that was so strong in Europe.
In the American setting an individualist philosophy (Locke) could win acceptance at all levels of
society. As Hartz expresses it, with reference to de Tocqueville:
In a society evolving along the American pattern of the Jeffersonian and Jacksonian eras, where the
aristocracies, peasantries, and proletariats of Europe are missing, where virtually everyone, including
the nascent industrial worker, has the mentality of an independent entrepreneur, two national
impulses are bound to make themselves felt: the impulse toward democracy and the impulse toward
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capitalism. The mass of the people, in other words, are bound to be capitalistic, and capitalism,
with its spirit disseminated widely, is bound to be democratic. (1955, 89)
In practice, the individual American states moved at different times from a franchise based on
landed property, along English lines, through a broadening of the property qualifications and their
replacement by a taxpayer qualification, to eventual manhood suffrage, such that by the time of the
very limited British electoral reform of 1832, most American states had white male suffrage or at
least a taxpayer franchise. This democratizing process went along with the opening up of the
country to the west, offering opportunities to those willing to pursue them. Jacksonian democracy in
the 1830s gave strong expression to the individualist ethos and supported a pragmatic laissez-faire
approach to the economy, its particular targets being corporations and financial institutions granted
monopolistic privileges by the state. In the absence of the kind of social tensions that were so acute
in Europe, there was no ideological conflict and no impetus to political theorizing (Hartz 1955,
141). It was perhaps the easy triumph of American democracy in these circumstances that
consolidated the individualist political culture.
France: Enlightenment/ Revolution/ and Restoration
The liberal values expressed complacently and unreflectively in eighteenth-century England found
fuller and sharper expression in the French Enlightenment, where the defense of toleration and
freedom of speech incurred the deep hostility of the Church and risked imprisonment or exile by the
state, as Voltaire's experience made clear. In this setting the enthusiasm for science and education,
the early expression of the basic ideas of utilitarianism, and above all, the subjection of all beliefs to
the test of reason had the effect of gradually undermining the legitimacy of the absolutist monarchy.
The Enlightenment thinkers did not put forward a program of political reform, but their praise for
the English system meant that it was the example of constitutional monarchy that came to hand
when absolutist rule collapsed in 1789. The Enlightenment thinkers by and large shared the social
conservatism of the English rulers; the existing deep social divisions were taken as given. There
were the same expressions of concern about the mob, and Diderot was representative in assuming
that citizenship rights should be tied to property (Arblaster 1984, 189-191).
The constitutional monarchy, needless to say, could not survive the turmoil of the French
Revolution. As the moderate Girondins gave way to the radical Jacobins, followed by the Terror
and the Dictatorship, the initial liberal enthusiasm for the revolution gave way to dismay, both in
France and elsewhere. The Declaration of the Rights of Man (August 1789) had invoked both the
classical liberal freedoms and equal rights: "Men are born and remain free and equal in rights.
Social distinctions can only be based on common utility." But if this was open to a democratic
interpretation, the course of the revolution confirmed all the liberals' worst fears of democracy—
rule by the mob. For several generations most European liberals would reject democracy, and the
egalitarian values that had surfaced briefly in 1789 were firmly subordinated to the values of
freedom and constitutionalism.
It is occasionally questioned whether utilitarianism should be included within liberalism. As
Arblaster notes, there is potential conflict between the liberal principle of freedom and the
utilitarian principle of happiness or pleasure (1984, 350). This may be regarded, however, as one of
those tensions within liberalism normally left unexamined—not surprisingly, since utilitarianism is
usually seen as the dominant ethical theory in twentieth-century liberal societies (Rawls 1972, viiviii), providing the normative rationale for public policies and, in particular, for welfare economics.
Bentham and his followers affirmed most of the Enlightenment themes—reason, science, education,
the rejection of arbitrary government—and offered the principle of utility in place of the appeal to
tradition or authority. Above all, the utilitarians shared the liberals' individualism—in their image of
society as consisting of self-interested individuals and in making the individual the point of reference for their normative thinking.
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The fear of democracy was widely shared in early-nineteenth-century England, but even so, the
early utilitarian thinkers drew the logical—radical—conclusion from their principle of the greatest
happiness of the greatest number. Bentham went so far as to endorse universal suffrage, and James
Mill a franchise sufficiently wide to ensure all interests were represented (Plamenatz 1949, 82-84,
105-109). Only then could there be any assurance that governments would take the interests—the
"happiness"—of the greatest number into account. Mill responded to conservative objections by
arguing for broad-based education; an educated populace would respond to reasoned argument and
would respect property. Such arguments wholly failed to persuade the political elite. Electoral
reform proceeded very slowly through extensions of the property qualification for the vote, and
universal suffrage came only in 1918. Rather surprisingly, it was a utilitarian of the next generation,
John Stuart Mill writing in the 1860s, who expressed greater concerns over democracy. By then the
elemental fear of the threat to property had given way to the liberal individualist's fear of the
tyranny of the majority—the tyranny of conformism, the threat to intellectual and cultural freedom.
Mill proposed electoral schemes for weighted voting intended to enhance the position of the
educated, not the wealthy—a liberal compromise that failed to win support (Arblaster 1984, 277282).
Nineteenth-century liberals, then, remained ambivalent toward democracy, even though the
logic of equal rights, no less than utilitarianism, pointed in this direction. Radical liberals had given
the initial impetus, but the liberal elite, primarily concerned with individual freedom and
constitutionalism, remained a brake on its development.
Part II
SECOND PHASE: LAISSEZ-FAIRE VS. SOCIAL LIBERALISM
The nineteenth century saw the emergence of a second major cleavage within liberalism, this time
relating to political economy. Liberals retained a shared commitment to freedom and
constitutionalism but divided over the implications of liberal values for organizing society under the
conditions of industrialization, which, along with massive problems, created entirely new
opportunities for realizing liberal rights and freedoms for the people as a whole. The cleavage was
not articulated as one between elitism and egalitarianism but was readily recognized by
contemporaries as such. It will be argued that there is normative continuity between the two
overlapping phases. The central issue remained essentially the same: were liberal rights and
freedoms to be genuinely extended to all?
Political Economy
Utilitarianism provided the political framework for the thinking of the early political economists,
which in turn gave rise to laissez-faire economic policy (Coats 1971, 4-17). This was by no means a
necessary consequence of utilitarianism. Initially, Bentham's thought prompted wide-ranging
legislative and administrative reforms, and by midcentury John Stuart Mill foreshadowed the later
development of utilitarian thought in favor of the welfare state. But for more than a generation,
starting in the 1830s, utilitarianism was enlisted in support of laissez-faire, to the point of
legitimizing the excesses and urban misery of the early Industrial Revolution. Adam Smith's
sanguine expectation of the general benefits of the "hidden hand" was now overshadowed by
Thomas Malthus's doctrine of population expanding to the limits of subsistence and David
Ricardo's assumption of conflicting class interests. Nonetheless, faith in laissez-taire remained
unshaken. Whatever ills might be apparent, government intervention could not ameliorate them.
"There is no one to blame for this; it is the result of Nature's simplest laws!"
Some historians deny that the classical economists were committed to laissez-faire; it is
claimed, for example, that their recommendations "were on the whole cautious and reasonable"
(Coats 1971, 17). It is true that individual economists were prepared to support state initiatives in a
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number of areas such as public works and education. Moreover, the classical economists were
surprisingly pragmatic on free trade, so much an article of faith for the contemporary economics
profession (Coats 1971, 28-29). Ricardo, for example, implied that the abolition of the grain tariff
would not have the general benefits proclaimed by Richard Cobden and the Anti-Corn Law League.
Most of them accepted the need to regulate children's hours of work in factories, and they were not
uniformly opposed to factory legislation generally.
Nonetheless, allowing that classical economists were not "dogmatic exponents of laissez-faire,"
it was the simple, dogmatic version of their views that entered into political discourse. The most
indefatigable defender of laissez-faire was the Economist, founded in 1843 by James Wilson.
It may not be correct, however, to attribute the oversimplification of laissez-faire entirely to
popularizers and politicians. The economists themselves were not free from simplification. This
was facilitated by the style of reasoning introduced by Ricardo, which profoundly influenced the
development of the discipline. In a world of complexity and contingency, the Ricardian style of
reasoning encouraged policymakers to posit simple, uniform relationships. Joseph Schumpeter
addresses the issue at some length:
The comprehensive vision of the universal interdependence of all the elements of the economic system . .
. probably never cost Ricardo as much as an hour's sleep. His interest was in the clear-cut result of direct
practical significance. In order to get this he cut that general system to pieces, bundled up as large parts
of it as possible, and put them in cold storage—so that as many things as possible should be frozen and
"given." He then piled one simplifying assumption upon another until ... he was left with only a few
aggregative variables between which, given these assumptions, he set up simple one-way relations so
that, in the end, the desired results emerged almost as tautologies. (Schumpeter 1954, 472-473)
Schumpeter terms this the "Ricardian vice," and John Maynard Keynes comments that "the almost
total obliteration of Malthus's line of approach and the complete domination of Ricardo's for a
period of a hundred years has been a disaster for the progress of economics" (Keynes 1956, 33).
Ricardian economics, then, encouraged the oversimplification of policy issues; a later chapter will
suggest that Schumpeter and Keynes are correct in seeing this as a recurring problem.
Along with this fundamental analytical weakness, laissez-faire economics illustrates a mode of
normative one-sidedness that became a recurring feature in liberal thought. Until then, economic
freedom had not been the overriding value promoted by liberalism but had been balanced by the
idea of moral equality—whether in the form of natural/ universal rights; Kant's imperative that
every person be treated as an end, not a means; Adam Smith's assumption that economic development should benefit all levels of society; or the utilitarian norm of the greatest happiness of the
greatest number. In laissez-faire economics the egalitarian commitment disappears entirely. The
principle that the state not intervene in the economy—and indeed refrain from any social
initiative—is elevated into a categorical imperative. The currently existing distribution of property
rights (and the ensuing unequal chances) is treated as sacrosanct; the realization of individual values
is entirely subordinated to it.
It is not surprising that the extreme conditions of early industrializing England and the extreme
doctrine of laissez-faire provoked extreme reactions. For more than a century, though not initially in
England itself, the most important of these was socialism. Normatively, it elevated equality
alongside or even above freedom; analytically, it replaced individualism with an emphasis on social
class. And its approach to policy was the opposite of the liberal's minimal state, although how great
a role to accord the state varied. The initial English reaction against laissez-faire, however, was led
by conservatives, drawing occasionally on European anti-Enlightenment thought but more on a
benign reading of the English conservative tradition as one committed to social balance and the
good of the community as a whole (Disraeli voiced the concern that England had been split into
"two nations"). It was a Conservative, Shaftesbury, who led the movement for factory legislation
against what was depicted as the ruthless class interest of the manufacturers. Such critics had no
hesitation in identifying laissez-faire liberalism as elitist. There was also a strong cultural reaction.
Dickens did not limit himself to depicting the evils of London's poverty but savagely satirized the
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rationalizations of political economy. Carlyle denounced the evils of mammonism, and Matthew
Arnold lamented liberalism's cultural poverty (de Ruggiero 1927/1969, 138-139; Arblaster 1984,
246-247, 252, 274-275).
Social Liberalism
The reaction against laissez-faire prompted a new direction in liberal thought in Britain and
Germany in the later nineteenth century and, to a much lesser extent, in France and the United
States. This amounted to a major rethinking of liberalism in the light of the conservative and
socialist critiques of laissez-faire. Accepting part of the critique, the social liberals (the English
"new liberals") maintained that this did not mean an abandonment of liberalism but rather its
reformulation. Under the conditions of industrial society the insistence on the minimal state and the
view that trade unions obstructed economic progress no longer promoted liberal values but became
obstacles to their realization.
In Britain, where John Stuart Mill had initiated the debate, T. H. Green in the 1880s and L. T.
Hobhouse in the early twentieth century undertook a more thoroughgoing rethinking of liberal
philosophy. Green broke not only with utilitarianism but with the whole tradition equating
liberalism with "negative freedom"—freedom from control by the state. Instead he drew on the
Hegelian idea of "positive freedom"— in Green's words "a positive power or capacity of doing or
enjoying, [not] at the cost of a loss of freedom to others [but] something that we do or enjoy in
common with others." The ideal of true freedom is "the maximum of power for all members of
society to make the best of themselves" (Bramsted and Melhuish 1978, 652-653). Central to Green's
thought is not only positive freedom but equality: the equal claims of all members of society to
realize their potential. Thus reinterpreted, individual freedom remains a core liberal value. A
familiar liberal norm such as freedom of contract is not an end in itself but a means to an end, and
the essential criterion for judging social legislation is whether it is needed to provide the
preconditions for the realization of positive freedom for the less advantaged members of society
(Bramsted and Melhuish 1978, 653-656).
Hobhouse presents the history of liberalism as advancing toward the more comprehensive theory
of his time, which looks to the positive realization of individual potential in the context of industrial
society (Hobhouse 1911/1994; Meadowcroft 1994). Like Green, he sees this as requiring a far more
positive role for the state, as a means to this end, than the classical liberals—preoccupied with the
struggle against absolutism, aristocratic privilege and anachronistic economic regulations—had
allowed. Also like Green, he emphasizes equality, indeed equality of opportunity (1911/1994, 15)
and, whether consciously or not, he echoes a Kantian theme in contending that "liberty . . . rests not
on the claim of A to be let alone by B, but in the duty of B to treat A as a rational being"
(1911/1994, 59). Normatively, Hobhouse espouses liberal individualism but seeks to balance it with
a doctrine of what the individual owes to the community. Empirically, he breaks more decisively
with an individualist conception of society, replacing it with an organic theory (1911/1994, 59-66;
Meadowcroft 1994, xi, xvii-xx). Like others at the time, Hobhouse was well aware there was a
problem of distinguishing liberalism, thus redefined, from socialism in its local (Fabian, nonMarxist, eclectic) version—just as, from a more extreme socialist perspective, the Fabians were
difficult to distinguish from liberals.
The Great Depression
Despite the efforts of policymakers in the 1920s, it proved impossible to restore the liberal
international economic order that had been shattered by World War I. By the 1930s liberalism was
rejected in central and eastern Europe in favor of totalitarian or authoritarian regimes. In Britain and
France, as political conflict became polarized in different ways between left and right, liberalism
was discredited, even though the political culture remained essentially liberal-democratic. Only in
the United States, despite the unprecedented shock of the Depression, was there no ideological
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conflict and no threat to the liberal order. We may note two significant liberal responses to the
Depression: that of John Maynard Keynes in Britain and the New Deal in the United States.
Keynes identified with liberalism and the Liberal Party, not as a political theorist but through
his personal and political commitments. Hostile to diehard conservatism, he had some sympathy
with the Labour Party but not with socialism or class conflict. "He could never take [Marxism]
seriously as a science. But he did take it seriously as a sickness of the soul" (Skidelsky 1992, 517).
By contrast, he drew much of his inspiration from the classical political economists. He exemplified
the core liberal values and cast of mind, placing the highest value on individual cultural pursuits,
and shared the liberal confidence in science and, ultimately, progress (Arblaster 1984, 292-295;
Skidelsky 1992, 405-430). Sympathizing with the young generation's rejection of capitalism but
scorning their marxist solution, he held that the system could be salvaged, but only through a
fundamental rethinking of its operation. His anger and polemics were directed against the crippling
economic orthodoxies of the day—their rationalizations, their acquiescence in mass unemployment,
their blindness to new issues that challenged their models, their refusal to struggle for new models
adequate to new situations. From his struggles emerged his model of the macroeconomy, his
proposals for demand management by the state, and later, his ideas for reforming the international
financial system.
The New Deal was not the product of a single doctrine or theory but consisted rather in a
sequence of pragmatic expedients—"bold, persistent experimentation"—that reflected Roosevelt's
temperament and found a positive response from the electorate. If the economic policies eventually
came to appear Keynesian, this was due mainly to the logic of events but also to openness to new
ideas. But there was no revision of liberal theory in favor of greater state initiative. Many of the
New Deal's policies were relatively old, in European terms, yet in the absence of an effective
socialist movement they appeared radical in American terms and, accordingly, were assailed from
the right. Because American political culture remained individualist (Lockean), there was good
reason to avoid formulating a social-liberal doctrine vulnerable to attack within that culture. But this
would leave social-liberal measures highly exposed to subsequent critique.
Embedded Liberalism
For Western societies the decades after 1945 were a time of unprecedented economic growth, its
benefits distributed relatively equitably, and of politically stable democracy, except for a handful of
southern European countries. The period is often identified with the welfare state. The question is
whether, when economies are so much subject to state initiative and regulation and the goals of
politics are identified with welfare rather than freedom, the societies in question are rightly termed
liberal. Those who followed Green and Hobhouse had no difficulty in answering affirmatively: the
expanded economic and social role of the state was a necessary means in modern industrial society
to enable individuals to achieve freedom—to realize their potential. Ruggie, following Karl Polanyi,
makes a related point: an unregulated market economy would create a degree of deprivation and
social disruption that would prove intolerable. Governmental regulation of the market is therefore
necessary in the interests of social stability and balance (Ruggie 1982, 393-398). The logic of the
market does not completely dominate society, but the economy is "embedded" within a social and
political order that limits its potential for unraveling social bonds. German thinking on the socialmarket economy followed similar lines.
The differences between classical and social liberalism are partly over values but even more
over institutional means: how can liberal values best be realized in contemporary society? Classical
liberalism does not constitute the whole of the tradition but refers to a particular historical phase.
There is no reason to regard any one conception of political economy as defining liberalism for all
time—Adam Smith's conception, for example, any more than those of Alfred Marshall or Keynes.
Social liberalism is as much part of the liberal discourse as its rival; the attempt to exclude it is
essentially a political act seeking to exploit a traditional association of ideas. It is also an attempt to
narrow down liberal values, marginalizing equal rights, redefining liberalism so that "economic
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freedom," understood in a particular way, becomes the supreme, defining value. This view could
not survive a reading of the classical liberal texts but amounts to a distortion and narrowing of the
history of liberal thought.
The Neoliberal Ascendancy
In the European context the resurgence of classical liberal thinking in the 1970s and its subsequent
dominance of public discourse came as an astonishing, barely comprehensible turning back the
clock—a return to laissez-faire, as it was often perceived. In the first instance it was a rejection of
Keynesian economics, but viewed more broadly, it amounted to a revival of the political-economic
thinking that preceded Green and Hobhouse, with its determination to minimize the economic role
of the state—the philosophy of "small government." Indeed, contemporary neoliberal ideology, as it
shall be termed, seeks to go further: it amounts to an attempt, far more thoroughgoing than that of
its nineteenth-century predecessor, to subordinate the state to the market and to transform the
political culture to this end. Its effect on political practice has been varied, but even though it has
not always been successful in reducing the level of state expenditure, the neoliberal offensive has
succeeded in eroding the legitimacy of the welfare state and, more broadly, the public sector and in
impoverishing publicly funded institutions, especially those such as universities and libraries for
which there is no mass electoral lobby. Deregulation and privatization have been the leitmotifs. In
Thatcher's Britain, the extreme case, social provision by the state was pared back and the public
sector extensively privatized, but equally striking were the new centralization of government, the
lack of accountability of services formerly publicly provided, and the elimination of many of the
institutions and traditions of English conservatism (Gray 1997, 1-10, 97-155).
In the United States, on the other hand, the revival of an earlier liberalism aroused no sense of
shock but seemed quite normal. Although many American economists had become Keynesian and
certain welfare programs had achieved wide acceptance, public rhetoric had never endorsed social
liberalism or the welfare state. Whereas the sudden canonization of Friedrich Hayek in Britain
required something like a paradigm shift, Milton Friedman was able to invoke familiar themes in
the American public discourse that had survived in the pragmatic eclecticism of the New Deal and
the Great Society.
In Britain there was indeed a change in the political and intellectual climate in the 1970s, but it
did not amount to a paradigm shift. What Hayek offered was not a new paradigm but essentially the
reaffirmation of an old one, albeit in the unfamiliar idiom of the "Austrian school." He offered an
appealing image of the spontaneous order created by the market, coordinating the myriad individual
decisions in the economy in a way that was beyond the knowledge or capacity of governments; not
only central planning but any effective regulation of the economy was impossible. He was at pains
to demolish as meaningless the concept of social or distributive justice, in the name of which
governments restricted individual freedom (Hayek 1960, 1976; de Crespigny 1976). Hayek's ideas
caught on in Britain, which was experiencing serious economic problems in the 1970s, a good deal
earlier than elsewhere in Europe.
Hayek was the leading figure among the initially small number of free market economists and
publicists in the early postwar years (Cockett 1994). His many political writings offered an
uncompromising reaffirmation of the antistatist tradition, entirely unresponsive to the concerns of
embedded liberalism. The Road to Serfdom (1944) ranks as one of the classic liberal statements
against totalitarianism, but it has not aged well. Its claim that any move beyond the minimal state
placed a society on the slippery slope to totalitarianism lacked plausibility, neglecting as it did the
liberal political culture in twentieth-century Britain and France.
If Hayek provides the most wide-ranging case for neoliberalism, Milton Friedman is its most
effective publicist—the new authority figure, displacing Keynes in the public discourse. Free to
Choose (1980) written with Rose Friedman—the practical application of the principles advanced in
Capitalism and Freedom (1962)—ranks among the most polemical of the liberal texts. Showing
little awareness of the concerns of liberalism's critics, or for that matter historical scholarship, the
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Friedmans are able to present nineteenth-century England as a golden age. Public health services,
public education, consumer protection, and labor legislation are unable to achieve their goals and
incapable of reform: salvation lies in a return to the minimal state (1980, 118-291). When all the
institutions of the welfare state have been eliminated, any residual welfare concerns can be met
through a negative income tax, though it is not explained why the majority of self-interested voters
would agree to such generosity to the disadvantaged.
The Friedmans do not engage with issues of liberal political theory, but they acknowledge the
influence of "exciting work in the economic analysis of politics," that of public choice theorists
such as Anthony Downs and James Buchanan (1980: 10). Public choice theory applies the
economist's mode of analysis—the use of highly simplified, ahistorical, "parsimonious" models—to
political processes and decisions. Political actors such as voters, politicians, and bureaucrats are
viewed as "economic men," seeking to maximize their material interests, and occasionally other
self-regarding, power-seeking interests. The ensuing simplification of politics complements and
reinforces the simplification of social and economic issues and the neoliberal denigration of the
state. Through thus buttressing neoliberalism, public choice may well be the most influential of the
schools of contemporary political theory; it offers a ready-made, congenial political doctrine and
contributes to the spread of the "economic discourse" in public affairs as well as to the devaluing of
normative concerns and the cynicism toward politics and government that is readily evoked in most
Western political cultures.
Public choice may be included within liberalism, both for its association with liberal economics
and its extreme analytical individualism. But it has little in common with liberal normative theory;
in effect, it bypasses liberal political thought, presenting itself as empirical theory. Nonetheless, a
narrow range of normative presuppositions, in particular a commitment to negative freedom,
underpins its sceptical-to-hostile attitudes toward the state.
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