liberalism

—liberalist, n., adj. —liberalistic, adj.

/lib"euhr euh liz'euhm, lib"reuh-/, n.

1. the quality or state of being liberal, as in behavior or attitude.

2. a political or social philosophy advocating the freedom of the individual, parliamentary systems of government, nonviolent modification of political, social, or economic institutions to assure unrestricted development in all spheres of human endeavor, and governmental guarantees of individual rights and civil liberties.

3. (sometimes cap.) the principles and practices of a liberal party in politics.

4. a movement in modern Protestantism that emphasizes freedom from tradition and authority, the adjustment of religious beliefs to scientific conceptions, and the development of spiritual capacities.

[1810-20; LIBERAL + -ISM]

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Political and economic doctrine that emphasizes the rights and freedoms of the individual and the need to limit the powers of government.

Liberalism originated as a defensive reaction to the horrors of the European wars of religion of the 16th century (see Thirty Years' War). Its basic ideas were given formal expression in works by Thomas Hobbes and John Locke, both of whom argued that the power of the sovereign is ultimately justified by the consent of the governed, given in a hypothetical social contract rather than by divine right (see divine kingship). In the economic realm, liberals in the 19th century urged the end of state interference in the economic life of society. Following Adam Smith, they argued that economic systems based on free markets are more efficient and generate more prosperity than those that are partly state-controlled. In response to the great inequalities of wealth and other social problems created by the Industrial Revolution in Europe and North America, liberals in the late 19th and early 20th centuries advocated limited state intervention in the market and the creation of state-funded social services, such as free public education and health insurance. In the U.S. the New Deal program undertaken by Pres. Franklin D. Roosevelt typified modern liberalism in its vast expansion of the scope of governmental activities and its increased regulation of business. After World War II a further expansion of social welfare programs occurred in Britain, Scandinavia, and the U.S. Economic stagnation beginning in the late 1970s led to a revival of classical liberal positions favouring free markets, especially among political conservatives in Britain and the U.S. Contemporary liberalism remains committed to social reform, including reducing inequality and expanding individual rights. See also conservatism; individualism.

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▪ politics

Introduction

      political doctrine that takes the abuse of power, and thus the freedom of the individual (individualism), as the central problem of government. For liberals, power is most importantly abused by governments, but it may also be abused by the wealthy; by monarchs, aristocrats, and others with inherited authority and privileges; and indeed by any group that has the means and the inclination to act oppressively.

      Historically, liberalism has come to mean two rather different things. The doctrine originated as a defensive reaction to the horrors of the wars of religion of the 16th century and then divided into two strands, the first a narrowly political doctrine emphasizing the importance of limited government, the other a philosophy of life emphasizing individual autonomy, imagination, and self-development. In addition, contemporary liberalism has come to represent different things to Americans and Europeans: In the United States it is associated with the welfare-state policies of the New Deal program of Democratic President Franklin D. Roosevelt (Roosevelt, Franklin D.), whereas in Europe liberals are more commonly conservative in their political and economic outlook.

      Liberalism derives from two related features of Western culture. The first is the West's preoccupation with individuality, as compared to the emphasis in other civilizations on status, caste, and tradition. Throughout much of history, the individual has been submerged in his clan, tribe, people, or kingdom. Liberalism is the culmination of developments in Western society that produced a sense of the importance of human individuality, a liberation of the individual from complete subservience to the group, and a relaxation of the tight hold of custom, law, and authority. The emancipation of the individual can be understood as a unique achievement of Western culture, perhaps its very hallmark.

      Liberalism also derives from the practice of adversariality in European political and economic life, a process in which institutionalized competition—such as the competition between different political parties in electoral contests, between prosecution and defense in judicial procedures, or between different producers in a free-market economy—is used to generate a dynamic social order. Adversarial systems have always been precarious, however, and it took a long time for the belief in adversariality to emerge from the more traditional view, traceable at least to Plato, that the state should be an organic structure in which the different social classes cooperate by performing distinct yet complementary roles. The belief that competition is an essential part of a political system and that good government requires a vigorous opposition was still considered strange in most European countries in the early 19th century.

      Underlying the liberal belief in adversariality is the conviction that human beings are essentially rational creatures capable of settling their political disputes through dialogue and compromise. This aspect of liberalism became particularly prominent in 20th-century projects aimed at eliminating war and resolving disagreements between states through organizations such as the United Nations and the International Court of Justice (World Court).

      It is evident that liberalism has a close relationship with democracy, but not too much should be made of this association. At the centre of democratic doctrine is the belief that governments derive their authority from popular election; liberalism, on the other hand, is primarily concerned with the scope of governmental activity. Liberals often have been wary of democracy because of fears that it might generate a tyranny by the majority. One might briskly say, therefore, that democracy looks after majorities and liberalism after minorities.

      Like other political doctrines, liberalism is highly sensitive to time and circumstance. Each nation's liberalism is different, and it changes in each generation. The historical development of liberalism over recent centuries has been a movement from mistrust of the state's sovereignty on the ground that power tends to be misused, to a willingness to use the power of government to correct inequities in the distribution of wealth resulting from a free-market economy. The expansion of government power and responsibility sought by liberals in the 20th century was clearly opposed to the contraction of government advocated by liberals a century earlier. In the 19th century liberals were generally hospitable to the business community, only to become hostile to its interests and ambitions for much of the 20th century. In each case, however, the liberals' inspiration was the same: a hostility to concentrations of power that threaten the freedom of the individual and prevent him from realizing his potential, along with a willingness to reexamine and reform social institutions in the light of new needs. This willingness is tempered by an aversion to sudden, cataclysmic change, which is what sets off the liberal from the radical. It is this very eagerness to encourage useful change, however, that distinguishes the liberal from the conservative.

Classical liberalism

Political foundations

      Although liberal ideas were not noticeable in European politics until the early 16th century, liberalism has a considerable “prehistory” reaching back to the Middle Ages and even earlier. In the Middle Ages the rights and responsibilities of the individual were determined by his place in a stratified hierarchy that placed great stress upon acquiescence and conformity. Under the impact of the slow commercialization and urbanization of Europe in the later Middle Ages, the intellectual ferment of the Renaissance, and the spread of Protestantism in the 16th century, the old feudal stratification of society gradually began to dissolve, leading to a fear of instability so powerful that monarchical absolutism was viewed as the obvious solution to civil dissension. By the end of the 16th century, the authority of the papacy had been broken in most of northern Europe, and each ruler tried to consolidate the unity of his realm by enforcing religious uniformity. These efforts culminated in the Thirty Years' War, which did immense damage to much of Europe. Where no creed succeeded in wholly extirpating its enemies, toleration was gradually accepted as the lesser of two evils; in some countries where one creed triumphed, it was accepted that too minute a concern with citizens' beliefs was inimical to prosperity and good order.

      The ambitions of national rulers and the requirements of expanding industry and commerce led gradually to the adoption of economic policies based on mercantilism, a school of thought that advocated state intervention in a nation's economy to increase state wealth and power. However, as such intervention increasingly served established interests and inhibited enterprise, it was challenged by members of the newly emerging middle class. This challenge was a significant factor in the great revolutions that rocked England and France in the 17th and 18th centuries—most notably the English Civil Wars from 1642 to 1651, the Glorious Revolution of 1688, the American Revolution from 1775 to 1783, and the French Revolution of 1789. Classical liberalism as an articulated creed is a product of those great collisions.

      In the English Civil Wars, the absolutist king Charles I was defeated by the forces of Parliament and eventually executed. The Revolution of 1688 resulted in the abdication and exile of James II and the establishment of a complex form of balanced government in which power was divided between the king, his ministers, and Parliament. In time this system would become a model for liberal political movements in other countries. The political ideas that helped to inspire these revolts were given formal expression in the work of the English philosophers Thomas Hobbes (Hobbes, Thomas) and John Locke (Locke, John). In Leviathan (1651), Hobbes argued that the absolute power of the sovereign was ultimately justified by the consent of the governed, who agreed, in a hypothetical social contract, to obey the sovereign in all matters in exchange for a guarantee of peace and security. Locke, who also held a social-contract theory of government, argued that it was the role of the sovereign to protect the person and property of individuals and to guarantee their natural rights to freedom of thought, speech, and worship. Significantly, Locke thought that revolution was legitimate in cases where the sovereign failed to fulfill these obligations, and it was long assumed that Two Treatises of Government (1690), his major work in political theory, was written precisely in order to justify the revolution of two years before.

      By the time Locke had written his Treatises, politics in England had become a contest between two loosely related parties whose members were known as Whigs and Tories (Whig and Tory). These parties were the ancestors of Britain's modern Liberal Party and Conservative Party, respectively. Locke was a notable Whig, and it is conventional to view liberalism as derived from the attitudes of Whig aristocrats, who were often linked with commercial interests and who had an entrenched suspicion of the power of the monarchy. The Whigs dominated English politics from the death of Queen Anne (Anne) in 1714 to the accession of King George III (George III) in 1760.

Economic foundations

      If the political foundations of liberalism were laid in Great Britain, so too were its economic foundations. By the 18th century British monarchs were constrained by Parliament from pursuing the schemes of national aggrandizement favoured by most rulers on the Continent. These rulers fought for military supremacy, which required a strong economic base. Because the prevailing mercantilist theory understood international trade as a zero-sum game—in which gain for one nation meant loss for another—national governments intervened to determine prices, protect their industries from foreign competition, and avoid the sharing of economic information.

      These practices were challenged by the Scottish economist and philosopher Adam Smith (Smith, Adam), who argued in The Wealth of Nations (1776) that free trade would benefit all parties. According to this view, if individuals are left free to pursue their self-interest in an exchange economy based upon a division of labour, the welfare of the group as a whole necessarily will be enhanced. Smith described a self-adjusting market mechanism whose one propelling force is the selfishness of the individual. The self-seeking individual becomes harnessed to the public good because in an exchange economy he must serve others in order to serve himself. But it is only in a genuinely free market, according to Smith, that this positive consequence is possible; any other arrangement, whether state control or monopoly, must lead to regimentation, exploitation, and economic stagnation.

      Every economic system must determine not only what goods will be produced but also how those goods are to be apportioned, or distributed. In a free-market economy both of these tasks are accomplished through the price mechanism. The theoretically free choices of individual buyers and sellers determine how the resources of society—labour, goods, and capital—shall be employed. These choices manifest themselves in bids and offers that together determine a commodity's price. Theoretically, when the demand for a commodity is great, prices rise, making it profitable for producers to increase the supply; as supply approximates demand, prices tend to fall until producers divert productive resources to other uses. In this way the system achieves the closest possible match between what is desired and what is produced. Moreover, in the distribution of the wealth thereby produced, the system is said to assure a reward in proportion to merit. The assumption is that in a freely competitive economy in which no one is barred from engaging in economic activity, the income received from such activity is a fair measure of its value to society.

      Presupposed in the foregoing account is a conception of human beings as economic animals rationally and self-interestedly engaged in minimizing costs and maximizing gains. If, as Enlightenment liberals assumed, human beings rarely fail to act rationally in any of their activities, it follows that people would meticulously balance benefits against costs in the marketplace. Since each human being knows his own interests better than anyone else does, his interests could only be hindered, and never enhanced, by government interference in his economic activities.

      In concrete terms, classical liberal economists called for several major changes in the sphere of British and European economic organization. The first was the abolition of the host of feudal and mercantilist restrictions on nations' manufacturing and internal commerce. The second was an end to the tariffs and restrictions that governments imposed on foreign imports to protect domestic producers. In rejecting the government's regulation of trade, classical economics was based firmly on a belief in the superiority of a self-regulating market. Quite apart from the cogency of their arguments, the views of Smith and his 19th-century English successors, the economist David Ricardo (Ricardo, David) and the philosopher and economist John Stuart Mill (Mill, John Stuart), became increasingly convincing as Britain's Industrial Revolution generated enormous new wealth and made that country into the “workshop of the world.” Several generations of Europeans were eventually persuaded that policies of free trade would make everyone prosperous.

      Inspired by the need to remove the state from destructive interference with economic life, the guiding political principle of classical liberalism became an undeviating insistence on limiting the power of government. The English philosopher Jeremy Bentham (Bentham, Jeremy) cogently summarized this view in his sole advice to the state—“Be quiet”—and the American statesman Thomas Jefferson (Jefferson, Thomas) asserted that that government is best that governs least. Classical liberals freely acknowledged that government must provide education, sanitation, law enforcement, postal delivery, and other public services that were beyond the capacity of any private agency. But liberals generally believed that, apart from these functions, government must not try to do for the individual what he is able to do for himself.

Liberalism and utilitarianism

      In the late 18th and early 19th centuries, Bentham, the philosopher James Mill (Mill, James), and James's son John Stuart Mill applied classical economic principles to the political sphere. Invoking the doctrine of Utilitarianism—which asserts that an action is right if it tends to promote the happiness not only of the agent but of everyone affected by his act—they argued that the object of all legislation should be “the greatest happiness of the greatest number.” In evaluating what kind of government could best attain this objective, the utilitarians generally supported representative democracy, asserting that it was the best way to make the interest of government coincide with the general interest. Taking their cue from the notion of a free-market economy, the utilitarians called for a political system that would guarantee its citizens the maximum degree of individual freedom of choice and action consistent with efficient government and the preservation of social harmony. They advocated expanded education, enlarged suffrage, and periodic elections to ensure government's accountability to the governed. They also developed a doctrine of individual rights—including the rights to freedom of religion, freedom of speech, freedom of the press, and freedom of assembly—that lies at the heart of modern democracy. These rights received their classic advocacy in John Stuart Mill's essay On Liberty (1859), which argues on utilitarian grounds that the state may regulate individual behaviour only in cases where the interests of others would be perceptibly harmed. Today, this work is justly celebrated as one of the great testimonials to civil liberties and a classic of liberal thought.

      The utilitarians thus succeeded in broadening the philosophical foundations of political liberalism while also providing a program of specific reformist goals for liberals to pursue. Their overall political philosophy was perhaps best stated in James Mill's article “Government,” which was written for the supplement (1815–24) to the fourth through sixth editions of the Encyclopædia Britannica.

Liberalism and democracy

      Politically, liberalism ultimately aspired to a system of government based on majority rule—i.e., one in which government executed the expressed will of a majority of the electorate. The chief institutional devices for attaining this goal were the periodic election of legislators by popular vote and the election of a chief executive by popular vote or by a legislative assembly.

      But in answering the crucial question of who is to be the electorate, classical liberalism fell victim to ambivalence, torn between the great emancipating tendencies generated by the revolutions with which it was associated and middle-class fears that a wide or universal franchise would undermine private property (democracy). Benjamin Franklin (Franklin, Benjamin) spoke for the Whig liberalism of the founding fathers of the United States when he stated, “As to those who have not landed property the allowing them to vote is an impropriety.” John Adams (Adams, John), in his Defense of the Constitutions of Government of the United States of America (1787), was more explicit, finding that, if the majority were to control all branches of government, “Debts would be abolished first; taxes laid heavy on the rich, and not at all on others; and at last a downright equal division of everything be demanded and voted.” French statesmen such as Franois Guizot (Guizot, François) and Adolphe Thiers (Thiers, Adolphe) expressed similar sentiments well into the 19th century.

      Most 18th- and 19th-century liberal spokesmen thus feared popular sovereignty, and for a long time suffrage was limited to property owners. In Britain even the important Reform Act of 1867 did not completely abolish property qualifications for the right to vote (see Reform Bill). In France, although the Revolution of 1789 proclaimed the ideal of universal manhood suffrage and the July Revolution of 1830 reaffirmed it, there were no more than 200,000 qualified voters in a population of about 30 million during the reign of Louis-Philippe, the “citizen king” installed by the ascendant bourgeoisie in 1830. In the United States, Thomas Jefferson's brave language in the Declaration of Independence notwithstanding, it was not until 1860 that universal white male suffrage prevailed. In most of Europe universal male suffrage remained a remote ideal until late in the 19th century.

      Despite the misgivings of the propertied classes, a slow but steady expansion of the franchise prevailed throughout Europe in the 19th century. But the principle of majority rule also had to be reconciled with the liberal requirement that the power of the majority be a limited one. The problem was to accomplish this in a manner consistent with the democratic ideal. Given that hereditary elites were discredited, how could the power of the majority be checked without giving disproportionate power to property owners or to some other “natural” elite?

Separation of powers

      The liberal solution to the problem of limiting the power of a democratic majority rested on various devices. The first was the separation of powers (powers, separation of)—i.e., the distribution of power between such functionally differentiated agencies of government as the legislature, the executive, and the judiciary. This arrangement, and the system of checks and balances by which it was accomplished, was given its classic embodiment in the Constitution of the United States (Constitution of the United States of America) and its political justification in The Federalist (1788), by Alexander Hamilton (Hamilton, Alexander), James Madison (Madison, James), and John Jay (Jay, John). Of course, such a separation of powers also could have been achieved through a "mixed constitution"—i.e., one by which a monarch, a hereditary chamber, and an elected assembly share power with some appropriate differentiation of function. This was in fact the system of government in Great Britain at the time of the American Revolution. But it was despotic kings and functionless aristocrats (more functionless in France than in England) who thwarted the interests and ambitions of the middle class, which turned, therefore, to the principle of majoritarianism.

Periodic elections

      The second part of the solution lay in using staggered periodic elections to make the decisions of any given majority subject to the concurrence of other majorities distributed over time. In the United States, for example, presidents are elected every four years and members of the House of Representatives every two years, and one-third of the Senate is elected every two years for terms of six years. Therefore, the majority that elects a president every four years or a House of Representatives every two years is different from the majority that elects one-third of the Senate two years earlier and the majority that elects another one-third two years later. These bodies, in turn, are "checked" by the Constitution, which was approved and amended by earlier majorities. In Britain an act of Parliament immediately becomes part of the unwritten constitution; however, before acting on a highly controversial issue, Parliament must seek a mandate from the people, which represents a majority other than the one that elected it. Thus, in a constitutional democracy, the power of a current majority is checked by the verdicts of majorities that precede and follow it.

Rights (human rights)

      The third part of the solution was related to liberalism's basic commitment to the autonomy and integrity of the individual, which the limitation of power is, after all, intended to preserve. In the liberal understanding, the individual is not only a citizen who shares a social compact with his fellows but also a person with rights upon which the state may not encroach if majoritarianism is to be meaningful. A majority verdict can come about only if individuals are free to some extent to exchange their views. This involves, beyond the right to speak and write freely, the freedom to associate and organize and, above all, the freedom from fear of reprisal. But the individual also has rights apart from his role as citizen. These rights secure his personal safety and hence his protection from arbitrary arrest and punishment. Beyond these rights are those that preserve large areas of privacy. In a liberal democracy there are affairs that do not concern the state. Such affairs may range from the practice of religion, to the creation of art, to the raising of children by their parents. For liberals of the 18th and 19th centuries they included, above all, most of the activities through which individuals engage in production and trade.

      Eloquent and persuasive declarations affirming such rights were embodied in the English Bill of Rights (Rights, Bill of) of 1689, the United States Declaration of Independence and Constitution (1776 and 1788, respectively), the French Declaration of the Rights of Man and of the Citizen of 1789, and the basic documents of nations throughout the world that later used these declarations as their models. Freedom thereby became more than the right to make a fractional contribution in an intermittent mandate to government; it designated the right of people to live their own lives.

Liberalism in the 19th century

      As an ideology and in practice liberalism became the preeminent reform movement in Europe during the 19th century. Its fortunes, however, differed with the historical conditions in each country—the strength of the crown, the élan of the aristocracy, the pace of industrialization, and the circumstances of national unification. The national character of a liberal movement could even be affected by religion. Liberalism in Roman Catholic countries such as France, Italy, and Spain, for example, tended to acquire anticlerical overtones, and liberals in those countries tended to favour legislation restricting the civil authority and political power of the Catholic clergy.

      In Great Britain the Whigs had evolved by the mid-19th century into the Liberal Party, whose reformist programs became the model for liberal political parties throughout Europe. Liberals propelled the long campaign that abolished Britain's slave trade in 1807 and slavery itself throughout the British dominions in 1833. The liberal project of broadening the franchise in Britain bore fruit in the Reform Bills of 1832, 1867, and 1884–85. The sweeping reforms achieved by Liberal Party governments led by William Gladstone (Gladstone, William Ewart) for 14 years between 1868 and 1894 marked the apex of British liberalism.

      Liberalism in Continental Europe often lacked the fortuitous combination of broad popular support and a powerful liberal party that it had in Britain. In France the Revolutionary and Napoleonic governments pursued liberal goals in their abolition of feudal privileges and their modernization of the decrepit institutions inherited from the ancien régime. After the Bourbon restoration in 1815, however, French liberals were faced with the decades-long task of securing constitutional liberties and enlarging popular participation in government under a reestablished monarchy, goals not substantially achieved until the formation of the Third Republic in 1871.

      Throughout Europe and in the Western Hemisphere, liberalism inspired nationalistic aspirations to the creation of unified, independent, constitutional states with their own parliaments and the rule of law. The most dramatic exponents of this liberal assault against authoritarian rule were the founding fathers of the United States, the statesman and revolutionary Simón Bolívar (Bolívar, Simón) in South America, the leaders of the Risorgimento in Italy, and the nationalist reformer Lajos Kossuth (Kossuth, Lajos) in Hungary. But the failure of the Revolutions of 1848 (1848, Revolutions of) highlighted the comparative weakness of liberalism on the Continent. Liberals' inability to unify the German states in the mid-19th century was attributable in large part to the dominant role of a militarized Prussia and the reactionary influence of Austria. The liberal-inspired unification of Italy was delayed until the 1860s by the armies of Austria and of Napoleon III of France and by the opposition of the Vatican.

      The United States presented a quite different situation, because there was neither a monarchy, an aristocracy, nor an established church to which liberalism could react. Indeed, liberalism was so well established in the United States' constitutional structure, its political culture, and its jurisprudence that there was no distinct role for a liberal party to play, at least not until the 20th century.

      Liberalism ended up transforming Europe in the 19th century. The forces of industrialization and modernization, for which classical liberalism was the rationalization, wrought great changes. The feudal system was destroyed, a functionless aristocracy was deprived of its privileges, and monarchs were challenged and curbed. capitalism replaced the static economies of the Middle Ages, and the middle class was left free to employ its energies expanding the means of production and vastly increasing the wealth of society. Representative government came into its own, and, as liberals set about limiting the power of the monarchy, they converted the ideal of constitutional government into a reality.

Modern liberalism

Problems of free-market (capitalism) economies

      By the end of the 19th century, some unforeseen but serious consequences of the Industrial Revolution in Europe and North America had produced a deepening disenchantment with the principal economic basis of classical liberalism—the ideal of a free-market economy. The main problem was that the profit system had concentrated vast wealth in the hands of a relatively small number of industrialists and financiers, with several decisively adverse consequences. First, great masses of people failed to benefit from the wealth flowing from factories and lived in poverty in the slums of dreary cities. Second, because the vastly expanded system of production created many goods and services that people often could not afford to buy, markets became glutted and the system periodically came to a near halt in periods of stagnation that came to be called depressions. Finally, those who owned or managed the means of production had acquired vast economic power that they used to influence and control government, to manipulate an inchoate electorate, to limit competition, and to obstruct substantive social reform. In short, some of the same forces that had once released the productive energies of Western society now restrained them; some of the very energies that had demolished the power of despots now nourished a new despotism. Such, at any rate, was the verdict of 20th-century liberals.

The modern liberal program

      In attempting to correct the problems that accompanied industrialization, classical liberalism underwent several major modifications. Most notably, its traditional emphasis on minimizing the role and power of government was reversed. By the early 20th century, liberals instead had begun looking to government to minimize economic inequalities and to prevent the exploitation of labour and the abuses of monopolies by redistributing wealth and regulating private industry. The result, which may be termed modern liberalism, has at times been difficult to distinguish from the social democracy movement that arose among the European working classes in the late 19th century. Nevertheless, the outlines of modern liberalism are fairly discernible.

Limited intervention in the free market

      Because they appreciated the real achievements of the free-market system, modern liberals did not seek its abolition but rather its modification and control. They saw no reason for a fixed line eternally dividing the private and public sectors of the economy; the division, they contended, must be made by reference to what works. The spectre of regimentation in centrally planned economies and the dangers of bureaucracy even in mixed economies deterred them from jettisoning the free market and substituting a putatively omnicompetent state. On the other hand—and this is a basic difference between classical and modern liberalism—most liberals came to recognize that the operation of the free market needed to be supplemented and corrected in substantive ways. Liberals asserted that the rewards dispensed by the free market were too crude a measure of the contribution most people made to society and that the free market ignored the needs of those who lacked opportunity or who were economically exploited. They contended that the enormous social costs incurred in production were not reflected in market prices and that resources were often used wastefully. Not least, liberals perceived that the free market biased the allocation of human and physical resources toward the satisfaction of consumer appetites—e.g., for automobiles, home appliances, or fashionable clothing—while basic needs—e.g., for schools, housing, public transit, and sewage treatment—went unmet. Finally, although liberals believed that prices, wages, and profits should continue to be subject to negotiation among the interested parties and responsive to conventional market pressures, they insisted that price-wage-profit decisions affecting the economy as a whole must be reconciled with public policy.

Greater equality of wealth and income

      To achieve a more just distribution of wealth and income, liberals relied on two major strategies. First, they promoted the organization of workers into trade unions in order to improve their power to bargain with employers. Such a redistribution of power had political as well as economic consequences, making possible a multiparty system in which at least one party was responsive to the interests of wage earners.

      Second, enlisting the political support of the economically deprived, liberals introduced a variety of government-funded social services. Beginning with free public education and workmen's accident insurance, these services later came to include programs of old-age, unemployment, and health insurance; minimum-wage laws; and support for the physically and mentally handicapped. Meeting these objectives required a redistribution of wealth that was to be achieved by a graduated income tax and inheritance tax, which affected the wealthy more than they did the poor. Social-welfare measures were first undertaken in Germany in the late 19th century and were soon adopted by other countries of northern and western Europe. In the United States such measures were not adopted at the federal level until passage of the Social Security Act of 1935.

World War I and the Great Depression

      The further development of liberalism in Europe was brutally interrupted in 1914–18 by the prolonged slaughter of World War I. The war overturned four of Europe's great imperial dynasties—Germany, Austria-Hungary, Russia, and Ottoman Turkey—and thus at first appeared to give added impetus to liberal democracy. Europe was reshaped by the Treaty of Versailles (Versailles, Treaty of) on the principle of national self-determination, which in practice meant the breakup of the German, Austro-Hungarian, and Ottoman empires into nationally homogeneous states. The League of Nations (Nations, League of) was created in the hope that negotiation would replace war as a means of settling international disputes.

      But the trauma of the war had created widespread disillusionment about the entire liberal view of progress toward a more humane world. The harsh peace terms imposed by the victorious Allies, together with the misery created by the Great Depression beginning in 1929, enfeebled Germany's newly established republic and set the stage for the Nazi seizure of power in 1933. In Italy, meanwhile, dissatisfaction with the peace settlement led directly to the Fascist takeover in 1922. Liberalism was also threatened by Soviet communism, which seemed to many to have inherited the hopes for progress earlier associated with liberalism itself.

      If liberalism came under political attack in the interwar period, the future of the free-market economy was called into question by the Great Depression. The boom-and-bust character of the business cycle had long been a major defect of free-market economies, but the Great Depression, with its seemingly endless downturn in business activity and its soaring levels of unemployment, confounded classical economists and produced real pessimism about the viability of capitalism.

      The wrenching hardships inflicted by the Great Depression eventually convinced Western governments that complex modern societies needed some measure of rational economic planning. The New Deal (1933–39), the domestic program undertaken by U.S. President Franklin D. Roosevelt to lift the United States out of the Great Depression, typified modern liberalism in its vast expansion of the scope of governmental activities and its increased regulation of business. Among the measures that New Deal legislation provided were emergency assistance and temporary jobs to the unemployed, restrictions on banking and financial industries, more power for trade unions to organize and bargain with employers, and establishment of the Social Security program of retirement benefits and unemployment and disability insurance. In his great work The General Theory of Employment, Interest, and Money (1936), the liberal English economist John Maynard Keynes (Keynes, John Maynard) introduced an influential economic theory that argued 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 minimal unemployment.

Postwar liberalism to the 1960s

      Liberalism, in strategic alliance with Soviet communism, ultimately triumphed over fascism in World War II, and liberal democracy was successfully reestablished in West Germany, Italy, and Japan. As Western Europe, North America, and Japan entered a period of steady economic growth and unprecedented prosperity after the war, attention shifted to the institutional factors that prevented such economies from fully realizing their productive potential, especially during periods of mass unemployment and depression. Great Britain, the United States, and other Western industrialized nations committed their national governments to promoting full employment, the maximum use of their industrial capacity, and the maximum purchasing power of their citizenry. The old rhetoric about “sharing the wealth” gave way to a concentration on growth rates, as liberals—inspired by Keynes—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. Here, clearly, was a program less disruptive of class harmony and the basic consensus essential to a democracy than the old Robin Hood method of taking from the rich and giving to the poor.

      A further and final expansion of social-welfare programs occurred in the liberal democracies during the postwar decades. Notable measures were undertaken in Britain by the Labour government of Prime Minister Clement Attlee (Attlee, Clement, 1st Earl Attlee of Walthamstow, Viscount Prestwood) and in the United States by the Democratic administration of President Lyndon B. Johnson (Johnson, Lyndon B.) as part of his Great Society program of national reforms. These measures created the modern welfare state, which provided not only the usual forms of social insurance but also pensions, unemployment benefits, subsidized medical care, family allowances, and government-funded higher education. By the 1960s social welfare was thus provided “from the cradle to the grave” throughout much of Western Europe and in Japan, Canada, and the United States.

      The liberal democratic model was adopted in Asia and Africa by most of the new nations that emerged from the dissolution of the British and French colonial empires in the 1950s and early '60s. The new nations almost invariably adopted constitutions and established parliamentary governments, believing that these institutions would lead to the same freedom and prosperity that had been achieved in Europe. The results, however, were mixed, with genuine parliamentary democracy taking root in some countries but succumbing in many others to military or socialist dictatorships.

Contemporary liberalism

The revival of classical liberalism

      The three decades of unprecedented general prosperity that the Western world experienced after World War II marked the high tide of modern liberalism. But modern liberalism was unprepared to cope with the slowing of economic growth that gripped most Western nations beginning in the mid 1970s. By the end of that decade economic stagnation, combined with the cost of maintaining the social benefits of the welfare state, pushed governments increasingly toward politically untenable levels of taxation as well as mounting debt. Equally troubling was the fact that the Keynesian economics practiced by many governments began to lose its effectiveness. The use of government spending to stimulate economic growth was causing increased inflation and producing ever-smaller declines in unemployment rates.

      With modern liberalism seemingly powerless to boost stagnating living standards in mature industrial economies, the more energetic response to the problem turned out to be a revival of classical liberalism. The intellectual foundations of this revival were primarily the work of the Austrian-born British economist Friedrich von Hayek (Hayek, F.A.) and the American economist Milton Friedman (Friedman, Milton). One of Hayek's greatest achievements was to demonstrate, on purely logical grounds, that a centrally planned economy is impossible. He also famously argued, in his work The Road to Serfdom (1944), that interventionist measures aimed at the redistribution of wealth lead inevitably to totalitarianism. Friedman, as one of the founders 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. These arguments were enthusiastically embraced by the major conservative political parties in Britain and the United States, which had never abandoned the classical liberal conviction that the free market, for all its faults, guides economic policy better than governments do. Revitalized conservatives achieved power with the lengthy administrations of British Prime Minister Margaret Thatcher (Thatcher, Margaret) and U.S. President Ronald Reagan (Reagan, Ronald W.). Their ideology and policies, which properly belong to the history of conservatism rather than liberalism, became increasingly influential, as illustrated by the official abandonment of socialism by the British Labour Party in 1995 and by the cautiously pragmatic policies of U.S. President Bill Clinton (Clinton, Bill) in the 1990s.

Civil rights and social issues

      Contemporary liberalism remains deeply concerned with reducing economic inequalities and helping the poor, but in recent decades it also has tried to extend individual rights in new directions. The concept of rights always had been used by liberals to argue against tyranny and oppression, but in the later 20th century it was massively expanded, becoming the most common way of formulating political demands. The prototypical mass movement in this regard was the American civil rights movement of the 1950s and '60s, which resulted in legislation forbidding most forms of discrimination against a large African-American minority and fundamentally altered the climate of race relations in the United States. In the 1970s there arose similar movements demanding equal rights for women, gays and lesbians, the physically handicapped, 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 blacks, women, homosexuals, and the physically or mentally disabled.

      Liberalism has influenced the changing character of Western society in other ways as well, though its contribution in this regard has not always been distinguishable from the effects of modernization, technological change, and rising standards of living. For example, the abolition in most developed countries of traditional restrictions on contraception, divorce, abortion, and homosexuality was inspired in part by the traditional liberal insistence on individual choice. In similar fashion, the liberal emphasis on the right to freedom of speech has led to the loosening of inherited restrictions on sexual content and expression in works of art and culture. Indeed, liberalism proved so successful in enlarging a variety of personal freedoms that, to some critics, liberal values appeared to be eroding the strictures of basic morality and dissolving the traditional bonds of family life and religion.

Conclusion

      Liberalism survived the powerful totalitarian challenge of fascism in the 1930s and '40s, and with the collapse of the Soviet Union and the fall of its satellite regimes in eastern Europe in 1989–91, liberalism triumphed over its last remaining major ideological enemy, Soviet-style communism. But today's liberals, sobered by the tragic events of the 20th century and chastened by abundant evidence of the defects and limitations of human nature, no longer share their 19th-century predecessors' robust confidence in human rationality, human perfectibility, and the inevitability of progress. They are now more likely to agree with those who warn that human nature is ineradicably flawed than with those who hope to apply scientific methods to the solution of society's problems. Nevertheless, the continuing commitment of liberals to social reform suggests a persistent optimism and a belief that human beings can control their fate and build a better world.

      Max Lerner (Lerner, Max)'s article on liberalism appeared in the 14th edition of the Encyclopædia Britannica (see the Britannica Classic: ).

Harry K. Girvetz Kenneth Minogue Ed.

Additional Reading

Classic works

The philosophical foundations of liberalism were laid in Thomas Hobbes, Leviathan (1651); and John Locke, Two Treatises of Government (1690), especially the second treatise. See also Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (1776); Alexander Hamilton, James Madison, and John Jay, The Federalist (1788); Jeremy Bentham, An Introduction to the Principles of Morals and Legislation (1789); Alexis de Tocqueville, De la démocratie en Amérique (1835; Democracy in America,1835); and John Stuart Mill, On Liberty (1859).Classic works of the 20th century include L.T. Hobhouse, Liberalism (1911); John Maynard Keynes, The General Theory of Employment, Interest, and Money (1936); and F.A. Hayek, The Road to Serfdom (1944), The Constitution of Liberty (1960), and Law, Legislation, and Liberty (1973–79). John Rawls, A Theory of Justice (1971), defends a liberal political philosophy on non-utilitarian grounds; see also his Political Liberalism (1993).

General studies

General studies of liberalism include Guido de Ruggiero, The History of European Liberalism (1927, reprinted 1981; originally published in Italian, 1925); Robert Denoon Cumming, Human Nature and History: A Study of the Development of Liberal Political Thought (1969); Louis Hartz, The Liberal Tradition in America: An Interpretation of American Political Thought Since the Revolution (1955, reprinted 1991); John Kenneth Galbraith, The Affluent Society (1958, new ed. 1999); Kenneth R. Minogue, The Liberal Mind (1963, reissued 2000); Eldon J. Eisenach, Two Worlds of Liberalism: Religion and Politics in Hobbes, Locke, and Mill (1981); Knud Haakonssen (ed.), Traditions of Liberalism (1988); John Gray, Beyond the New Right: Markets, Government, and the Common Environment (1993), and The Two Faces of Liberalism(2000); and Charles K. Rowley (ed.), The Political Economy of the Minimal State (1996).Kenneth Minogue Harry K. Girvetz

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